Changes in National Pension System (NPS)
The Government has proposed the following in the Finance Bill, 2016 with regard to the National Pension System (NPS):
i. Allowing 40 per cent of the NPS corpus tax exempt on lump sum withdrawal.
ii. Waiving service tax on the NPS corpus utilized for purchase of annuity.
iii. The amount receivable by the nominee in case of death of the subscriber covered under NPS has been made tax exempt.
iv. One-time portability without any tax implication has been allowed to the subscriber for shifting from recognized provident fund to NPS.
v. One-time portability without any tax implication has been allowed to the subscriber for shifting from superannuation fund to NPS.
As per the provisions of the Finance Bill, 2016, 40 per cent of the pension corpus under NPS is proposed to be tax exempt on lump sum withdrawal. Also, the proposal in the Union Budget, 2016-17 for taxation of 60 per cent of provident fund corpus under the Income Tax Act, 1961 has been withdrawn by the Government. Employees’ Provident Fund (EPF) remains an Exempt Scheme.
However, EPF and NPS are different schemes available to separate categories of subscribers and they are not comparable on one-to-one basis.
This information given by Shri Bandaru Dattatreya, Minister of State (IC) for Labour and Employment, in reply to a question in Rajya Sabha today.
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