Industry hails proposal for 40% tax benefit on NPS scheme

Ahead of possible changes on tax benefits on pension investment in the Budget, the industry has hailed the existing proposal to provide tax benefit on 40% of withdrawal amount at the maturity of any National Pension System (NPS) scheme.

It is for the first time that government has allowed any tax benefit to NPS in the form of Budgetary proposals.

As of now, while the PF money enjoys EEE (exempt, exempt, exempt) status, NPS withdrawal falls under the category of EET (exempt, exempt, tax).

So, while the government's decision to tax 40% withdrawal under PF comes as a taxing step for EPFO, it has come as a bonanza for the pension fund industry as it hopes that the move will help increase investment coming under NPS.

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