Modi government planning to give NPS a tax-exemption status like provident fund

NEW DELHI: Financial services secretary, Anjuly Chib Duggal has said that there is a case for giving Exempt Exempt Exempt ( EEE) status for contributions under the National Pension System ( NPS).

“We, however, need to take a closer look at all aspects,” she added.

Under the current rules, the Tier-I account under the NPS has an exempt-exempt-taxed ( EET) status, that is any contributions to the schemes and its earnings are not taxed but amount received on withdrawal is taxed.

The seventh Central Pay Commission in its report submitted on Thursday had recommends Exempt Exempt Exempt (EEE) status for NPS to be at par with other pension schemes.

The Pension Fund Regulatory and Development Authority ( PFRDA) has also favoured the move and its chairman Hemant Contractor said that the government should make suitable changes in the tax structure.

The seventh pay commission had also recommended that government in consultation with Pension Regulator should come up with different options for investment mix in NPS and provide subscribers a range of options. The commission had further recommended setting up an ombudsman for redressing individual grievances relating to NPS.

Assets under management (AUM) of NPS have crossed Rs one lakh crore. At present, NPS has 93 lakhs subscribers with total Asset Under Management (AUM) of Rs 1,00,163 crore. The state and central government employees constitute almost half the NPS subscriber base.

As per the latest PFRDA data, in the equity segment, NPS has given a return of 9.20% since its inception in 2009, while NPS Lite has given a compound annual growth return (CAGR) of 9.68%