Taking a break from work? Here's what EPFO rules say about your PF balance, interest and withdrawals

Leaving a job doesn't just mean your monthly salary stops—it also raises questions about your retirement savings.

If you're planning a career break or have recently resigned, here's what EPFO rules say about the interest on your EPF balance, withdrawal options and the tax implications you should know.

The good news is that resigning from your job does not mean losing your EPF benefits. Your EPF account remains active, and the money accumulated in it continues to belong to you. Even if no fresh contributions are made because you are between jobs, the existing balance continues to earn interest as per the Employees' Provident Fund Organisation (EPFO) rules.

How long will your EPF balance earn interest?

According to EPFO rules, the money in your EPF account continues to earn interest until you turn 58 years old, even if you have left your job.

However, there is one important exception. If an employee leaves their job at the age of 55 or later, interest is paid for a maximum of three years. After that, the account is treated as inactive and no further interest is credited.

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For the financial year 2025-26, the EPF interest rate has been fixed at 8.25% per annum. This means those taking a temporary career break do not have to worry about their retirement savings immediately stopping earning returns.

Should you withdraw your EPF during a career break?

Under the revised EPF withdrawal rules, employees who lose their job can withdraw up to 75% of their EPF balance immediately. The remaining 25% can be withdrawn only after they have remained unemployed for 12 consecutive months.

The withdrawal amount now includes the employee's contribution, the employer's contribution and the interest earned on both.

However, financial experts advise against withdrawing EPF savings unless absolutely necessary. Premature withdrawals during a career break can significantly reduce your retirement corpus and affect long-term financial security.

Know the tax implications

Tax rules should also be considered before withdrawing EPF savings.

If you withdraw your EPF balance before completing five years of continuous service, the amount withdrawn may be taxable.

However, if you have completed at least five years of continuous service and withdraw the amount due to retirement, resignation, illness, disability, company closure or any other valid reason, the entire EPF withdrawal remains tax-free.

Withdrawing before completing five years of service could therefore result in an avoidable tax liability.

What to do if your EPF claim is delayed

Interest credited by EPFO may sometimes take time to appear in the passbook. However, if the account remains active under the rules, the interest will continue to be credited.

Online EPF claims are generally settled within seven to ten days, provided the account holder has completed the required KYC formalities.

If the claim is not processed within 20 days, members can raise a complaint through the EPFiGMS portal.

Under the latest rules, if a claim is delayed beyond the prescribed timeline without a valid reason, the concerned official may be liable to pay penal interest at the rate of 12% per annum.