Online Provident Fund Account Transfers- Now Possible

The filing of online provident fund account transfer claims on changing jobs for subscribers of the retirement fund body EPFO has now become possible. The facility has been made available as the Employees Provident Fund Organization (EPFO) has launched its online transfer claim portal (OTCP) as per circular issued.

According to the circular, handling of transfer cases generates maximum bad publicity and it is expected that this issue shall be resolved after OTCP is made fully functional. After 31October, 2013, there shall be no physical movement of paper in transferring member accounts from one office to another.

The facility of online transfer of provident fund accounts will reduce the work load of the body. EPFO has set up a central clearance house for this purpose and the body envisages reducing the time for transfer of PF accounts to three days through the online service.

Digital signature is a pre requisite for availing this benefit and EPFO started registering digital signatures of companies from 25 July, 2013. As per the data available, 80% of the firms employing more than 500 workers have already registered their digital signatures.

The EPFO managed PF accounts of about 6.9 lakh establishments in 2011-12 and during 2012-13 the EPFO settled 107.62 lakh claims. The organization expects 1.2 crore claims in 2013-14, including 13lakh PF transfer claims, largely from tech-savvy companies from sectors like IT.

Provident Fund is Taxable- If withdrawn before 5 years of continuous service

Provident fund account becomes non operative if there is no credits or contributions for continuous 36 months & interest will not be credited after that period.

Provident fund is taxable if it is withdrawn without rendering continuous services for five years, though employers can be different. Provident fund’s accumulated amount can be transferred from one firm to another.

For example: If you are working in Firm X for 2 years then you joined Firm Y and you transferred accumulated provident fund amount with Firm X to Firm Y, then it will be treated as continuous service and Provident fund will be considered as non taxable. Please note if you withdraw your amount with Firm X then it will be considered as taxable even if you are having provident fund account with Firm Y.

Withdrawal means discontinuance of service.

So, be cautious while switching job.