The tax exemption facility available on EPF is only for employees and after retirement or after leaving the job, the person is no longer an employee, hence tax has to be paid on the interest received from EPF.
Those investing in EPF or Employee Provident Fund get a lot of benefits. The biggest advantage is that under Section 80C of the Income Tax Act, there is a benefit of tax rebate on investments up to Rs 1.5 lakh. At the same time, the interest received from it is also good from the government. For the current financial year 2018-19, the government has fixed an interest rate of 8.65 percent for EPF. Today we are going to tell you how you can save tax on the fund you get after the retirement of EPF.
Do not withdraw money from EPF till retirement, then the entire fund will be tax-free
If you do not withdraw any money from your EPF till the time of retirement, then you will be able to get this fund tax free at the time of retirement.
Keep these things in mind while withdrawing money from EPF after retirement
If you delay in withdrawing money from EPF account after retirement, then you will have to pay tax on the interest of the funds received. Why this happens, the answer is that the tax exemption facility available on EPF is only for employees and after retirement or after leaving the job, the person is no longer an employee, hence tax has to be paid on the interest received from EPF.
Even After 5 Years If you Get Tax Free Interest
If you withdraw money from EPF account before 5 years, then you will have to pay tax on it. At the same time, if you withdraw money from this fund after 5 years, you will get tax free money.
How Long do You Get Interested in EPF Account
Interest is also available on inoperative accounts of EPF till the account holder turns 58, however, if the account holder retires and after that the account becomes inoperative, EPFO does not add interest in such accounts. In 2011, the EPFO stopped paying interest in such accounts which are not active but in 2016, this rule was changed.