The Employees Provident Fund Organisation or EPFO Board of Trustees, in its 229th meeting on November 20, approved a centralised IT system of PF account whereby employees don't have to get their PF fund transferred when they change jobs.
What does this mean?
The employee now no longer has to worry about the PF account transfer. The PF account number will remain same when the employee changes jobs.
As per the new set of guidelines, if an individual’s EPF contribution goes above Rs 2.5 lakh in a given financial year, they will need to have two separate PF accounts effective from the beginning of this fiscal FY2021-22.
The two accounts should separately indicate taxable and non-taxable contributions separately.
These new regulations were introduced following the introduction of a new set of provisions in Budget 2021. These new sets of regulations were bracketed under the Income-tax (25th Amendment) Rules, 2021.
The CBDT said in the notice, “For the purposes of the first and second provisos to clauses (11) and (12) of section 10, income by way of interest accrued during the previous year which is not exempt from inclusion in the total income of a person under the said clauses (hereinafter in this rule referred to as the taxable interest), shall be computed as the interest accrued during the previous year in the taxable contribution account.
“For the purpose of calculation of taxable interest under sub-rule (1), separate accounts within the provident fund account shall be maintained during the previous year 2021-2022 and all subsequent previous years for taxable contribution and non-taxable contribution made by a person,” added the CBDT.
In the existing rules, after leaving a job, the PF holder has to complete the paperwork at both the old and new workplaces. The PF holder thus has two accounts: one in the old firm and another is created in the new firm based on the previous UAN number. What this does is that the PF holder does not know the total amount in the PF account simply because the account holder has not transferred the PF amount of the previous company.
