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New Rules Introduced by EPFO

The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) recently introduced key policy changes during their 236th meeting led by Union Minister Mansukh Mandaviya. These updates are aimed at improving benefits for over 7 crore EPFO members and optimizing fund management.

Why Maintaining Your EPFO Account for 5 Years Matters

Under the revised rules, EPFO members must maintain their provident fund account for a minimum of five years to ensure eligibility for certain benefits. Failing to do so may lead to financial disadvantages, including tax liabilities and the potential forfeiture of accrued interest on inactive accounts.

Key Highlights of the Policy Changes:

1. Investment in ETFs and CPSEs:
   Half the funds generated from Exchange Traded Funds (ETFs) will now be reinvested in Central Public Sector Enterprises (CPSEs) and the Bharat 22 Index to boost income for members.
2. Diversified Investments:
   Remaining funds will be allocated to government securities, corporate bonds, and units issued by Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) backed by public sector enterprises.

Enhanced Benefits for Members

• Interest Accrual Until Settlement:
  Members will now earn interest on their contributions up to the date of settlement, not just until the end of the previous month as per earlier rules. This change ensures better financial returns and reduces grievances.
• Streamlined Claims Resolution:
  EPFO has processed 3.83 crore claims, disbursing over ₹1.57 lakh crore in the current financial year, showcasing improved operational efficiency.

What Happens if You Don’t Comply?

Failing to maintain your EPFO account for five years could result in:

• Taxation of Withdrawals: The entire withdrawal amount may be taxable if contributions were not made for five continuous years.
• Loss of Interest: Dormant accounts may stop accruing interest after a specific period.

Stay Informed and Act Early

With these new policies, it’s vital to stay proactive with your EPFO account. Regular contributions and understanding the latest updates can secure your long-term financial benefits and avoid unnecessary setbacks.