Will ask govt to make employers’ contribution free: PFRDA
We may propose things like 14 per cent contribution by employers to be made tax free to all, said PFRDA Chairman Supratim Bandyopadhyay
New Delhi: Pension fund regulator PFRDA will propose to the government to make employers’ contribution of 14 per cent under NPS tax free for all categories of subscribers in the next Budget, Chairman Supratim Bandyopadhyay said.
“We may propose things like 14 per cent contribution by employers to be made tax free to all. Currently, it is given only to the central government employers. So we are requesting the government to give it to all the employers, whether it is state governments or other corporate entities, so that subscribers across the board can get this benefit,” Bandyopadhyay said.
The PFRDA Chairman said States are asking that the 14 per cent tax benefit be given to State Government employees also. Besides, the Pension Fund Regulatory and Development Authority (PFRDA) will ask the Government to extend the benefit of tier-II NPS account as tax free for all subscribers.
“There is this tier-II NPS account which was made tax free exclusively for the central government employees recently. So there also, we would request the Government to give the facility to all the subscribers. In the tax-free tier II account we are keeping a lock-in period of 3 years because you are getting the tax-free status. We want it to be extended to all the other employees,” he added.
While tier-I is a non-withdrawable permanent retirement account into which the accumulations are deposited and invested as per the option of the subscriber, tier-II account is a voluntary withdrawable account which is allowed only when there is an active tier-I account. The withdrawals are permitted from tier-II account as per the needs of the subscriber as and when claimed.
Last month, the Finance Ministry had kicked off the exercise to prepare the Budget for 2021-22 amid the urgency to revive the economy hit by the pandemic. Budget 2021-22 is likely to be presented on February 1.
