One must withdraw his/her EPF contribution immediately post retirement to avoid the EPF contribution from being taxed.

A lot of people delay withdrawing their accumulated amount from the EPF account and the same continues to be a liability for the EPFO. Reports say, the EPFO started doing this to discourage provident fund subscribers from neglecting their EPF accounts, especially the ones in which no contributions were being made at all. Thus, in 2011, the EPFO stopped paying interest on accounts that had been inoperative for more than three years, or 36 months.

However, the rule was changed in 2016, and the EPFO said that inoperative accounts will earn interest till the account holder turn 58. But after the retirement of the account holder, the EPFO will not pay interest if the account becomes inoperative.