A notification was issued by Government of India on 10 Feb 2016 in regard to the provisions of restriction of PF withdrawal before the age of 58 years of age. Consequently, it was envisioned that since the employees will not be eligible to withdraw their PF accumulations and the money would remain with Employees’ Provident Fund Organisation (EPFO), the PF accumulations should earn the interest during that period and the accounts should not become inoperative. You may be aware of the hue and cry created on this withdrawal provision at that time.
- Roll back of notification on PF withdrawal
However, the said notification was withdrawn via circular issued by EPFO dated 19 April, 2016 and thus, the withdrawal provisions of PF withdrawal would remain as per earlier provisions of PF Scheme. The interpretation given itself in the press release to resume the interest because withdrawal was not permitted itself loses its grounds as the restrictive withdrawal provisions have itself been rolled back,
- Currently, what does the law say?
The inoperative accounts (or dormant accounts in common parlance) regulations are governed by the EPF Scheme, 1952 as amended from time to time.
Para 72(6) of EPFS states as follows:
“Any amount becoming due to a member as a result of (i) supplementary contribution from the employer in respect of leave wages/arrears of pay, instalment of arrear contribution received in respect of a member whose claim has been settled on account but which could not be remitted for want of latest address, or (ii) accumulation in respect of any member who has either ceased to be employed or died [but no application for withdrawal under paragraphs 69 or 70 or transfer, as the case may be has been preferred] within a period of [thirty six months] from the date it becomes payable, or if any amount remitted to a person, is received back undelivered, and is not claimed again within a period of [thirty six months] from the date it becomes payable, shall be transferred to an account to be called the “Inoperative Account”.
Further, Para 60(6) Employee Provident Fund Scheme 1952 states that: ”Interest shall not be credited to the account of a member from the date on which it has become Inoperative Account, under the provisions of sub-paragraph (6) of paragraph 72.”
- No amendment in the current provisions
We would also like to highlight that as per our understanding the Government of India has till date not made any amendment in the formal EPF Scheme in regard to inoperative account i.e. Para 72 (6) and payment of interest under Para 60. Therefore, as on date, the earlier regulations still remain in the scheme and consequently the inoperative accounts (dormant accounts) will not earn interest unless the scheme is amended by the Government of India which may or may not happen in the future.
Recent Judgement for reference: Click Here