Your EPF account during a 1-2 year career break: what changes

Many workers step away from employment for higher studies, family obligations, layoffs, or health reasons. The immediate question is whether the money in their provident fund account stays safe.

The short answer is yes. The Employees' Provident Fund Organisation (EPFO) keeps crediting interest on the balance even after contributions stop. The interest rate for FY26 is 8.25% per annum, a rate the government announced and credited to 34 crore accounts on July 15, 2026.

Interest continues until the member turns 58. If a worker stops working at age 55 or later, interest runs for a maximum of three more years. After that, the account goes inactive and no further interest is credited.

Withdrawal rules during unemployment

Under the new EPF framework notified last month, a member who becomes unemployed can withdraw up to 75% of the balance immediately. The remaining 25% becomes available only after 12 months of continuous unemployment.

The eligible amount now includes the employee's contribution, the employer's contribution, and the interest earned. That makes the lump sum larger than under the old rules.

Tax treatment

A full EPF withdrawal is tax-free only if the member has completed five years of continuous service. If the withdrawal is due to retirement, resignation, disability, business closure, or death, and the five-year mark is met, the entire balance – employee share, employer share, and interest – is exempt from tax.