Interim pension regulator Pension Fund Regulatory and Development Authority (PFRDA) will take up with the new government the matter of tax exemption on withdrawal of money under the New Pension System (NPS).
“We will take up (the issue of tax exemption for NPS) with the government when the new government is formed,” PFRDA Chairman D Swarup told PTI here.
Swarup had sought income tax exemption for NPS earlier also, but it was not granted by the government.
While contribution, returns and withdrawals under the Public Provident Fund (PPF), Employee Provident Fund (EPF) and General Provident Fund (GPF) are tax exempted, in case of the NPS, only contributions and returns do not attract tax.
However, withdrawals 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.
The NPS is applicable on Central government employees since January one, 2004. Under it, employees have to contribute to their pension funds with matching contribution from the employer (in this case, the government).
Besides the Centre, as many as 21 states have adopted the NPS. The PFRDA is also all set to introduce the NPS for all citizens from May 1.