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Photo: iStock

It is important to consolidate all your provident fund accounts

If you continue with the new employer long enough for the combined period to be five years, the entire PF accumulation with your previous as well current employer will be tax free in your hands

I worked at a private firm from October 2015 to September 2017, and moved to a new firm immediately afterwards, joining in October 2017. When I checked my Employees’ Provident Fund Organization (EPFO) account passbook recently there were two different accounts and separate interest amounts getting added annually. Am I losing the power of compounding on my PF corpus because I have not transferred my old PF account to new one? If I do transfer it, will it be taxable?

—Sai Krishna

Yes, you need to transfer the PF account to your new employer. You need to surrender the PF account and have it merged with your new account.

With the introduction of Universal Account Number (UAN ), multiple PF accounts can be merged for each EPFO member. The UAN number is typically mentioned on the salary slip. If it is not in your case, you can seek the help of your employer or the human resources or finance department of your company. Alternatively, you can also log on to the EPFO member portal to activate your UAN.

The accounts can also be merged online by visiting the EPFO website. However, you need to ensure that the KYC (know your customer) and Aadhaar details are updated and registered with the EPFO.

While you are still earning interest on both the EPF accounts, it is important to consolidate them into one account. As you joined the new employer immediately after quitting your previous job, with no gap in employment, it will be counted while computing your continuous period of service, which is five years, for the purpose of tax benefit. So if you continue with the new employer long enough for the combined period to be five years, the entire PF accumulation with your previous as well current employer will be tax free in your hands.

Surya Bhatia is managing partner of Asset Managers. Queries at mintmoney@livemint.com

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