Should I withdraw my PF account corpus?

Recently, I resigned from a job where I worked for over five years. The company managed my provident fund (PF) in their private trust associated with my UAN (unified account number). Now, I am working for a smaller company that is not subject to the Employee Provident Fund (EPF) Act. Therefore, they will not make PF deductions and deposits into my account. My previous employer has requested that I withdraw the accumulated PF amount. Is it possible for me to transfer my PF balance from the private trust to the EPFO through my UAN? Also, can I transfer it to another organization in future if I switch jobs?

Since your present employer is not under the purview of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, they cannot open a PF account for you. As per the EPF Act and its rules, PF balance transfers can only occur between two PF accounts. Given that you do not have a new PF account with your current company, transferring your old PF balance is not possible. Also, the existing laws don't offer a method for employees to move their PF balance from a private trust to the Employees’ Provident Fund Organization (EPFO) directly, especially when the current employer isn't covered by the EPF scheme.

However, if you plan to stay within the PF scheme, anticipating your present employer becoming eligible soon, you can choose not to withdraw your PF balance. Then when your current employer becomes part of the PF scheme, you may then transfer your funds from your former employer to your current one. It is important to realize that the interest on your PF balance will stop accruing three years after your resignation date. After this period, any accrued interest from the resignation date till its transfer or withdrawal will be taxable.

Under Section 10(12), alongside Rule 8 of Part A of the fourth schedule of the Income tax Act, 1961, the PF balance at the time of employment cessation, payable to the employee, is tax-exempt if the individual has been employed continuously for five or more years. Since your employment period with your previous company was over five years, your entire accumulated balance, payable upon employment cessation, is tax-exempt.
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