PFRDA to bat for tax exemption on NPS withdrawals
Pension regulator PFRDA will soon approach Finance Ministry seeking tax exemption for withdrawals under the National Pension System (NPS), its Chairman Hemant G Contractor has said.
This will be the first time PFRDA– after getting statutory recognition in February 2014– will seek a tax break for NPS.
The Finance Ministry will soon start the budget preparation exercise for Budget 2015-16, which will be the first comprehensive budget of the new Modi-Government.
Prior to the statutory recognition, the interim pension regulator had sought tax exemption on NPS withdrawals, but that tax break was not provided by the erstwhile UPA Government.
In his first interaction with mediapersons here on Wednesday, the new PFRDA Chairman, Contractor said there was need for some “fiscal” push from the Government to make NPS popular in the country.
A tax exemption on NPS withdrawals would address the “adequacy” aspect of retirement monies and ensure that taxes don’t eat into the retirement corpus of a subscriber.
Under the current income tax law, there is no tax incidence on contribution or accumulation phase, but tax would be levied at the withdrawal stage
A tax exemption on NPS withdrawals would level the playing field with products such as provident funds.
The direct taxes code proposed by the UPA regime had suggested that ‘Exempt-Exempt-Exempt’ regime be adopted for financial savings products like NPS.
Indications are that the new dispensation at the Centre will look to bring its own version of new income-tax law.
PFRDA Chairman Contractor said the Swavalamban scheme has been made an integral part of the Pradhan Mantri Jan Dhan Yojana (PMJDY), the flagship financial programme of the Modi-led Government.
PFRDA has fixed a target of fifty five lakhs subscribers of Swavalamban under PMJDY.
This target of fifty five lakhs subscribers has been allocated to all the banks working as aggregators. Targets have also been allocated to other categories of aggregators.