New Delhi, Jan 29, 2026, 12:46 IST
- A KPMG tax partner advised that employees holding two UANs should retain the most recent one and transfer their older PF balance via a transfer request.
- PF withdrawals often become tax-free after five years of “continuous service,” yet pulling from the wrong account may still lead to a tax hit.
- Earlier reports indicated that EPFO is developing UPI-based withdrawal options alongside a major tech revamp, which includes a new portal and AI language tools.
Parizad Sirwalla, a senior tax partner at KPMG India, advised employees with multiple provident fund accounts to merge them under a single active Universal Account Number (UAN). She flagged that withdrawing funds directly from an older account could still trigger tax liabilities. Sirwalla emphasized that “the latest UAN linked to your last employer should be retained, and the older one linked to your first employment must be merged.” https://www.livemint.com/money/how-to-merg…
The timing is crucial as India’s Employees’ Provident Fund Organisation (EPFO) pushes to speed up access to PF funds and reduce reliance on employer paperwork. This shift raises the stakes for maintaining clean account records and current identity details. If duplicate UANs remain unresolved, transfers and withdrawals risk getting stuck just when they’re needed most.
The tax result depends on one clear but strict rule: the five-year “continuous service” test. Withdraw early or mishandle the funds, and you could face a tax penalty.
Sirwalla noted that EPFO advises keeping only the latest UAN and transferring previous balances into it by submitting Form 13, the PF transfer form, via the unified member portal. She also urged members to update their KYC details—like Aadhaar, PAN, and bank account—on the active UAN, and to notify EPFO and former employers about duplicate UANs so the older ones can be blocked after verification.
She noted that a member can request to withdraw PF accumulations if they haven’t been employed by an establishment covered under the EPF Act for a continuous two months. This often affects workers shifting to jobs without EPF coverage.
The bigger hit comes from the tax rule. Sirwalla pointed out that PF withdrawals are usually tax-free if an employee has at least five years of continuous service. Service at past employers counts too, but only if the PF balance is transferred instead of withdrawn. She also warned that interest earned during non-contributory periods might still face taxation, even when the main withdrawal itself is exempt.
EPFO’s FAQ states that tax deducted at source (TDS) may apply if a member withdraws funds before completing five years of service, provided the accumulated amount exceeds a certain threshold. It also clarifies that service periods from both previous and current employers are combined to determine the five-year total.
Reports this month suggest a broader move to streamline EPF withdrawals through India’s UPI real-time payments platform. Amar Ujala says EPFO plans to roll out a UPI-based withdrawal option by April 2026, dividing balances into an “eligible” amount and a minimum balance. The initial per-transaction limit will be capped at 25,000 rupees, with users authenticating via their UPI PIN. The report also notes a 75% to 25% split on how much of the corpus can be accessed immediately under this scheme. Additionally, EPFO has extended auto-settlement for some advance claims up to 500,000 rupees, with payouts processing typically within three days. https://www.amarujala.com/business/busines…
Live Hindustan, referencing a report from Indian Express, said these updates are part of a wider “EPFO 3.0” overhaul. The plan includes launching a new portal, upgrading backend software, moving to a core banking system, and introducing AI-driven language tools powered by the government’s Bhashini translation platform to better support members in regional languages. https://www.livehindustan.com/business/epf…
The direction is clear: banks already tap UPI rails for instant transfers, and EPFO aims to function more like a bank behind the scenes, centralising processing and cutting down office-by-office hurdles. For members, that means the essentials—one active UAN, clean KYC, and smooth transfers—become less about paperwork and more about simply meeting the basics.
But watch out for the fine print. The UPI withdrawal option and the larger portal revamp remain under development, according to media reports. Early launches often come with limits and protective measures that might shift or get delayed. On the member front, issues like mismatched KYC, absent exit dates, or withdrawing funds before the service period is fully counted can cause hold-ups—or lead to unnecessary tax and TDS deductions.
