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Any amount becoming due to a member as a result of (i) supplementary contribution from the employer in respect of leave wages/arrears of pay, installment of arrear contribution received in respect of a member whose claim has been settled on account but which could not be remitted for want of latest address, or (ii) accumulation in respect of any member who has either ceased to be employed or died within a period of thirty six months from the date it becomes payable, or if any amount remitted to a person, is received back undelivered, and is not claimed again within a period of 36 months from the date it becomes payable, shall be transferred to an account to be called the “Inoperative Account”.
Your inoperative EPF account would also give interest. The EPF board has decided to give interest again on such accounts. Since Financial Year 2016-17, all the inoperative account would give interest on the balance amount. In fact ministry of labour has changed the definition of inoperative account. An EPF account would become inoperative only if the employee applies for PF withdrawal or takes up another job within two months.
If you are a salaried individual, in all likelihood every month you contribute 12% of your salary to the EPF account and your employer matches the contribution. The contributions made to EPF then compounds at a rate declared by the EPFO every year. Currently that rate of interest is 8.65% per annum.
Contribution of up to Rs1.5 lakh to your EPF account qualifies for tax deduction under Section 80C. The interest accrued is tax free after 5 years, so what you get on retirement is a tax-free corpus.
Inoperative EPF accounts are those accounts which do not get any contribution for at least 36 months. These accounts are created because of the job switch. There are many people who do not transfer their PF account with the change of job. The old EPF accounts remain unused for years. These accounts become inoperative after 36 months. But, now the government has relaxed to conditions for the inoperative account. An EPF account turns inoperative under following situations.
The primary reason of inoperative EPF Account is the non-transfer of EPF balance. However, with the use of UAN, the EPF transfer has become very easy.
In order to plug the pre-mature withdrawals from these accounts, which was possible because of administrative shortcomings, the EPFO in 2014 introduced portability through the Universal Account Number (UAN).
So now, all your EPF accounts get tagged under one UAN. Now when you change jobs and give your UAN to the new employer, the employer tags your EPF account to your UAN.
After bringing in portability, in 2016, EPF also decided that an employee would not be able to withdraw contributions of the employer till he/she turned 58. But this caused other problems. The rule would make it difficult for someone quitting formal workforce to withdraw the entire money, and worse, after 3 years the account would become inoperative with no further interest paid.
The e-governance initiatives of EPFO such as Online Registration of Establishment (OLRE), Online Transfer Claim Portal (OTCP), Online Monthly Return for Exemption Establishment, provision to update the accounts in batches have shown some data regarding the inoperative account holders. The number of such subscribers is in crores.
This help desk is being created to assist these members to trace their accounts, which the member then can get it merged with the present account (UAN) or withdraw the same.
All the persons who require such help are requested to give information as per fields mentioned in proforma created. You may leave fields blank if you do not have the information.
In order to get the benefit out of this facility the members are requested to provide correct contact along with email address, if available and only their own mobile number so that EPFO may easily contact them. In case a member does not have a mobile number then a mobile number where he/she may be easily contacted should be provided. Somebody from EPFO will get in touch with you personally in the language of your choice. In case there is no response on the registered mobile the case will be closed.
All members are urged to immediately get their UAN activated before applying for settlement of his/her PF Accounts, the process for which is available at unifiedportal-mem.epfindia.gov.in/memberinterface/
The main reason of inoperative account is lethargy on the employee’s part. But, there may be some other tricky situations as well.
The EPF money does not get transferred if there is any error in personal details. There are lacs of such account which have incorrect personal data. And people could not rectify their personal details easily. The employers rarely assist their old employees in rectification.
Also, some employees might get employment in abroad. These employees find themselves unable to transfer the EPF account. The withdrawal process was not easy altogether.
These are the genuine cases of inoperative EPF account. It is unfair t not give interest on such accounts.
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