EPFO alert! This Provident Fund mistake may lead to Rs 50,000 loss; know this EPF account rule

Employees' Provident Fund Organisation (EPFO) subscribers most of the time don't know about various EPFO rules like EDLI scheme giving insurance of up to Rs 6 lakh, pension, income tax deduction on PF withdrawal before five years, etc. Due to the lack of knowledge of these EPFO rules, they keep on bleeding money by making mistakes. Loyalty-cum-life benefit given by the EPFO to the EPF account holders is one such example. In this benefit, an EPF account holder is eligible for up to Rs 50,000 on retirement along with other EPF benefits provided he or she has contributed into for at least 20 years. So, an EPF account holder is advised to continue with the same EPF account even when he or she is switching jobs. It will enable them to meet the minimum 20 years condition to become eligible for the loyalty-cum-life benefit.

Speaking on the loyalty-cum-life benefit approval SEBI registered tax and investment expert Jitendra Solanki said, "The CBT had sent its recommendation on 13th April during lockdown recommending loyalty-cum-life benefit to the EPF account holders who have been continuously contributing in their account for at least 20 years. Now, this has been approved by the central government, which means EPF account holders who have been meeting the condition of 20 years are now eligible for up to Rs 50,000 benefit, which is exclusive from other EPF benefits.

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Asked about the details of this loyalty-cum-life benefit Solanki said, "As per the details of this loyalty-cum-life insurance benefit granted by the government, those whose basic monthly salary is up to Rs 5,000 will be eligible for Rs 30,000 benefit, those whose monthly basic salary is from Rs 5,001 to Rs 10,000 will be eligible for Rs 40,000 loyalty benefit while for those whose monthly basic salary is above Rs 10,000 they will be given Rs 50,000 loyalty benefit."

On how EPF account holders can go deep with their EPF account and become eligible for this up to Rs 50,000 benefit of the EPFO; Manikaran Singhal, a SEBI registered tax and investment expert said, "Best way to continue with one's EPF account even when you are switching jobs. For that, you need to let your current employer and the new employer know about you decision to continue with the same EPF account." He said that PF withdrawal is not advisable at any time as it leads to monetary loss in the form of income tax  if the EP{F account is less than 5 year old, pension benefit loss an loyalty benefit loss as well.