Budget 2016: PFRDA seeks complete tax exemptions for NPS

Budget 2016: PFRDA seeks complete tax exemptions for NPS

With an aim to increase its customer base, PFRDA Chairman Hemant Contractor today urged the government to provide 'Triple E' benefits to the schemes under the National Pension System (NPS) to bring them at par with EPFO and PPF where the maturity amount is not taxed.

"Our request to the government is with regard to making NPS a Triple E product," Contractor said on his expectations from the Union Budget to be presented by Finance Minister Arun Jaitley on February 29.

Under the 'Triple E' category investment, all three accrued interest and withdrawal are exempt from tax.

Talking to reporters, he said making the NPS a 'Exempt, Exempt, Exempt' product would go a long way in increasing the customer base of PFRDA.

"If this happens then our customer base will surely increase and it will help raise our corpus substantially," he said.

He said as compared to other pension schemes, NPS is a bit disadvantageous as both EPFO and PPF enjoy the 'Triple E' benefit.

"If our schemes too offer such facility, we think this will help us make join in a large number with our scheme, Contractor said.

The retirement saving scheme NPS falls under EET (Exempt-Exempt-Taxable) category, wherein investment gets deduction in the taxable income and also income/interest/gains are not taxed. However, maturity proceeds are taxable.

Pension Fund Regulatory and Development Authority (PFRDA) runs the NPS.

Contractor further said PFRDA has urged the government for continuation of the additional deduction of Rs 50,000 for contribution towards the NPS under Section 80CCD.

The PFRDA is also demanding that service tax on purchase of annuity should be removed.

Source:BankingUpdates