REGULATOR WANTS EQUAL TAX BENEFIT FOR NPS

Ahead of the budget, interim pension regulator Pension Fund Regulatory and Development Authority (PFRDA) on Saturday demanded equal tax treatment for New Pension Scheme (NPS) for government employees vis-a-vis provident funds like EPF, PPF and GPF. “We have taken up this issue with the government and I am hopeful that this will receive favourable consideration,” PFRDA chairman D Swarup said at a workshop on NPS here. While contribution, returns and withdrawals under Public Provident Fund (PPF), Employee Provident Fund (EPF) and General Provident Fund (GPF) are exempt from tax, in case of NPS, only contribution and returns do not attract tax. However, withdrawal under NPS attract tax. This is called exempt, exempt and tax (EET) system, unlike exempt, exempt and exempt (EEE) system for PPF, EPF and GPF. “At present, NPS is subject to EET tax regime. On the other hand, EPF, GPF and PPF have a more favourable tax treatment. EEE is available to them. This goes against the basic philosophy of encouraging long-term contractual savings, which provide long-term funds for investment,” he said. Swarup clarified that NPS only replaces old pension system and is not a substitute for other retirement benefits like gratuity and leave encashment. A high-level task force appointed by the Union government is already looking into the matter. – www.financialexpress.com