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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Nov 15, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
SUBIR Question by SUBIR on Nov 13, 2023Hindi
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I am 58 yrs old recently been seperated from a MNC. P? let me know, when I apply for final withdrawal of EPF amount after completion of say another 2-3 years, the way EPFO is crediting interest amount of previous year 8-9 months late, how the interest during the time of exit of that FY would be calculated & credited ?

Ans: The interest on your EPF account is calculated on a monthly basis and is credited to your account at the end of each financial year.

However, the EPFO usually credits the interest amount 8-9 months late. This means that if you apply for final withdrawal of your EPF amount after completing another 2-3 years, the interest for the last financial year will not be credited to your account until 8-9 months after you withdraw the money.
The EPFO calculates the interest on your EPF account using the following formula:
Interest = (EPF balance at the beginning of the year) * (interest rate) * (number of months in the year) / 12.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8093 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 03, 2024

Asked by Anonymous - May 29, 2024Hindi
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Hi Sir, Greetings! I worked in the company for 22 years. I resigned and moved to abroad for better opportunity. Currently my is 50 years and not withdrawn my EPF. I have the following query. 1. When can I withdraw my full EPF? 2. Upto what age I can earn interest on my EPF? 3. Tax on EPF interest.
Ans: Congratulations on your new opportunity abroad. It's great to see you're planning your EPF withdrawal wisely. Let's address your queries in detail.

When Can You Withdraw Your Full EPF?
You can withdraw your EPF under certain conditions:

Retirement: Full EPF withdrawal is allowed at the age of 58.

Unemployment: If you are unemployed for more than two months, you can withdraw your EPF.

Early Withdrawals
Partial Withdrawal: You can partially withdraw for specific reasons like home purchase, marriage, or education.

After 50: Since you are 50, you can withdraw up to 90% of your EPF one year before your retirement.

Upto What Age Can You Earn Interest on Your EPF?
Your EPF account earns interest until you withdraw the amount. However, there are important points to consider:

Active Accounts: As long as you are contributing, your EPF account remains active and earns interest.

Inactive Accounts: If there are no contributions for three years, your account becomes inactive.

Interest on Inactive Accounts
Interest Continuation: Even if your account is inactive, it continues to earn interest until the age of 58.

Post 58: After 58, interest is credited only if you have not withdrawn the EPF balance.

Tax on EPF Interest
Understanding the tax implications on EPF interest is crucial:

Exempted Interest: Interest earned on EPF is tax-free if you complete five continuous years of service.

Pre-Mature Withdrawal: If you withdraw before completing five years, interest is taxable.

Taxation on Withdrawals
After 5 Years: Withdrawals after five years are tax-free.

Before 5 Years: Taxable as per your income slab, and TDS is deducted if the amount exceeds Rs 50,000.

Analytical Insights
Full EPF Withdrawal at Retirement
Withdrawing EPF at 58 ensures you benefit from tax-free interest. Your funds continue to grow, providing a substantial retirement corpus.

Managing Inactive EPF Accounts
It's wise to keep track of your EPF account even if it's inactive. Ensure your KYC details are updated to avoid any complications during withdrawal.

Tax Planning
Consider tax implications before withdrawing your EPF. Plan withdrawals strategically to minimise tax liability.

Benefits of Regular Monitoring
Regularly monitor your EPF account to ensure it's earning interest. Update your bank details and KYC to avoid any issues during withdrawal.

Conclusion
By understanding when to withdraw your EPF, the interest it earns, and the tax implications, you can make informed decisions. Regular monitoring and strategic planning will help you maximise your EPF benefits.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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