Two years back, the government decided to make the pension sector more flexible by allowing individuals to choose between the Employees’ Provident Fund (EPF) and the National Pension System (NPS). To bring that decision into effect, the Income-tax Act,1961, was amended to make withdrawals from recognised provident funds and superannuation funds tax-free, if the withdrawals were made to transfer the money to NPS. “The Finance Act, 2016, amended the Income-tax Act, 1961, to allow tax-free withdrawals from recognised provident funds (this includes the EPF) and superannuation funds for the purpose of transferring the money to NPS,” said Sonu Iyer, tax partner and people advisory services leader, EY India.
And on 6 March, in order to further facilitate the transfer, the Pension Fund Regulatory and Development Authority (PFRDA) issued a circular laying out the procedure by which individuals could transfer their money, from a provident fund or superannuation fund, to the NPS.
