The Pension Fund Regulatory and Development Authority will pitch for tax exemption status at the withdrawal stage under its National Pension System (NPS) product to further expand its subscriber base, a top official has said.
Not having tax exempt status at the withdrawal stage is a clear dampener for NPS and PFRDA will seek this fiscal support from the Government in the run up to budget, R V Verma, Member, PFRDA, told BusinessLine here.
To encourage the subscribers of superannuation funds under EPFO to move to NPS, the pension regulator will also seek tax exemption at withdrawal stage for the subscribers who decide to move to NPS, Verma said.
As on date, any subscriber moving from a superannuation fund to another within corporates or under EPFO would not be required to fork out tax at the withdrawal stage.
However, this benefit of tax exemption at withdrawal stage is not available if a subscriber moves from a superannuation fund to NPS, Verma said.
Twin benefits
PFRDA will seek two tax benefits to widen the subscriber base for NPS. One is provide general tax exemption at the withdrawal stage for NPS on the lines of those available for superannuation funds under Employees Provident Fund Organisation.
The second is allow tax exemption at withdrawal stage even for subscribers who have opted to move from a superannuation fund to NPS.
"We will seek a level playing field on taxation front. This will help us grow our subscriber base," Verma said, adding that PFRDA is particularly focused on corporate and private citizens segments.
In the first week of October, NPS subscriber base had crossed 1 crore mark, while the assets under management of NPS crossed Rs 1 lakh crore mark.
Verma also said that PFRDA is looking to harmonise the scope of NPS for the government and private/corporate sector by bringing parity in terms of choice of pension fund managers and investment allocation choice.
As on date, NPS subscribers in the government sector do not have the option to decide their own fund managers. The Finance Ministry is looking into providing such a flexibility to such NPS subscribers.