Did you know that having two Employee Provident Fund (EPF) accounts is against the rules? Whenever there is switch of job in pursuit of better opportunities or any other change, employees must get respective EPF accounts transferred to the new employer immediately. Also, such merger of accounts will ensure there is no gap in employment.
Why one account
The EPF rules are very clear that a single employee shall not have more than one EPF account or UAN.
While having two EPF accounts neither attracts penalty or punishment per se, it comes with certain crucial implications where the erstwhile UAN account will be tagged ‘dormant’ due to non-use and will fail to accrue any interest.
It is also important to ensure all accounts are merged for the purpose of availing income tax benefits. Withdrawal from EPF account is exempted from tax after 5 years of continuous service which is calculated from the date of joining the EPF scheme to the date of withdrawal.
The UAN (Universal Account Number) is a 12-digit number allotted by the Employee Provident Fund Organisation (EPFO) to every employee with a Provident Fund account.
Once allotted, an employee’s UAN remains the same irrespective of job changes. However, there may be various reasons for allotment of an additional UAN/ EPF account to an employee, which includes non-disclosure of existing UAN/ EPF account.
When an employee switches his job, he/she has to disclose his existing UAN and EPF account number (Member ID). If he/she does not give these details, the new employer opens a new EPF account for non-furnishing of “Date of Exit” by the previous employer. Every employer has to mention the date of exit of the employee in the ECR (Electronic Challan and Return) during the employer’s monthly filings with the EPF authorities.
An employee can have two or more of his UAN / EPF accounts linked by either making a request for it personally or via email. You can contact the EPFO office by sending an e-mail to email@example.com and informing the existing company about merging the old and new EPF accounts. The EPFO will verify your UAN numbers once they receive your application. Once verification is complete, the EPFO will merge and block your old UAN.
Alternatively, you can fill up and submit the EPF transfer Form 13 which is available with the EPFO (can be availed online or offline). The process is simple and easy and it takes a maximum of 20 days to reflect the merging of the accounts from the date of submission.
Apart from these two ways, the EPFO online portal provides an option of “One Employee – One EPF Account”. Upon selecting the same, the user will be permitted to submit request for merging his/her UAN accounts. You must enter your registered mobile number and UAN. You will then receive an OTP on your registered mobile number.
You can then view details of your old EPF account and initiate transfer of funds from your old EPF account to your new EPF account.
Note that, for merging of EPF accounts, an employee must have an active UAN which is linked to his/her existing EPF account, completed KYC by providing necessary details which would entail linking of email to Aadhaar, verification of PAN, Voter ID and bank details of the employee.
A new UAN must be assigned by the EPF office (EPFO) after KYC verification. The employee should wait for at least three days post activation of the new UAN prior to merging the EPF accounts.
The writer is Partner, Shardul Amarchand Mangaldas & Co.