After the vicious backlash against the tax on the Employees' Provident Fund (EPF), the government should get ready for opposition to its proposal allowing EPF members to switch to the New Pension System (NPS). Only this time the government may be unfairly targeted because the switching rules it has framed for EPF and NPS are quite flexible and subscriber-friendly.
The proposal to switch from EPF to NPS was announced in last year's budget. This year's budget has extended a one-time tax exemption to such switching. A legislation to amend the Employees' Provident Fund & Miscellaneous Provisions Act has already been framed and is lying with the Law Ministry.
The amendments allows EPF subscribers to make a one-time switch to the NPS. Within 30 days of applying, the entire balance in his EPF account will be transferred to the NPS. Opting for the NPS would also mean the individual exits from Employees Deposit Linked Insurance as well as the Employees' Pension Scheme (EPS). The Bill is silent on what this means for the amount mandatorily deducted from the employer's contribution and put into the EPS.
