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PFRDA expected to provide more tax benefits in NPS

The pension regulator is expected to soon change the rules to allow NPS subscribers who have an accumulated corpus of less than Rs. 2 lakh on retirement to withdraw the complete amount

April 29, 2013 1:53 IST | India Infoline News Service
The Pension Fund Regulatory and Development Authority (PFRDA) on Monday said it will change the withdrawal rules and provide more tax incentive to make National Pension System (NPS) more attractive to small investors, according to a media report.

The pension regulator is expected to soon change the rules to allow NPS subscribers who have an accumulated corpus of less than Rs. 2 lakh on retirement to withdraw the complete amount, the report added.

At present, the subscriber can only withdraw a maximum of 60% of corpus, while the remaining has to be used to buy a monthly annuity.

The central government is expected not to tax the lump sum amount the subscriber will receive on retirement. Currently, the Tier-I account under the NPS has an exempt-exempt-taxed (EET) status, that is any contributions to the scheme and its earnings are not taxed but amount received on withdrawal is taxed.

Under the proposed Direct Tax Code (DTC), tax treatment for contribution in Tier I account will have EEE (exempt-exempt-exempt) status. The regulator is also expected not to increase the minimum amount (Rs. 6,000) to be invested in NPS per annum.

Last month, PFRDA allowed the subscribers to stay invested in the scheme till the age of 70.

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