You can now switch from EPF to NPS and it's not taxable: Here's how
Pension Fund Regulatory and Development Authority has issued broad guidelines
India's pensions regulator in India has
allowed members of the Employees' Provident Fund (EPF)
option to move their retirement savings to the National Pension System (NPS)
giving effect to a proposal mooted by the government two
years ago in the Union Budget for 2015-16, an offcial statement said on
Tuesday.
"With the NPS gaining
momentum vis-a-vis other retirement products and a number of queries being
raised on the transfer of amounts from recognised Provident/Superannuation
Funds to NPS, Pension Fund Regulatory and Development Authority (PFRDA) has
clarified the process through a circular dated March 6, 2017," a Finance
Ministry statement here said.
As the rules, a member looking to transfer
funds from EPF to
NPS must
have an active NPS Tier-I
account, which can be opened either through the employer where NPS is
implemented or online through eNPS on the NPS Trust
website.
The amount transferred from a recognised Provident Fund or
superannuation fund to NPS would
not be treated as income of the current year and, as such, would not be
taxable.
"Further, the transferred recognised
Provident Fund/Superannuation Fund will not be treated as contribution of the
current year by employee/employer and accordingly the subscriber would not make
Income Tax claim
of contribution for this transferred amount," the statement said.
How to go about it
How to go about it
The subscriber must approach the concerned PF
office where their account is, through her or his employer and request to
transfer their savings to an NPS account.
"The recognised Provident
Fund/Superannuation Fund Trust may initiate transfer of the Fund as per the
provisions of the Trust Deed read with the provisions of the Income Tax Act,
1961," it added.
In
case of a government or
private sector employee, the employee should request the recognised provident
or superannuation fund to issue a letter to his present employer mentioning
that the amount was being transferred from the recognised fund to the NPS Tier
I account of the employee. This should be recorded by the present employer or
POP as the case may be, while uploading the amount.
While
the return on EPF savings
this year is expected to be 8.65%, the NPS offers
multiple asset allocation options and fund managers for its members to choose
from, with varying rates of returns.
So in
essence, the subscriber should have an active NPS Tier-1
account.
The present employer ie the nodal office while uploading the fund has to mention the transfer from PF/superannuation fund in the remarks column while uploading. The upload has to be made as per request letter of the ex-employer. In case of private sector employees, including subscribers covered under All Citizen’s Model NPS, the employees should request the recognised PF/superannuation fund to issue a letter to the present employer/PoP as the case may be mentioning that amount is being transferred from the PF/Superannuation fund to be credit in the NPS account of the employee/individual Tier-I account.
The present employer ie the nodal office while uploading the fund has to mention the transfer from PF/superannuation fund in the remarks column while uploading. The upload has to be made as per request letter of the ex-employer. In case of private sector employees, including subscribers covered under All Citizen’s Model NPS, the employees should request the recognised PF/superannuation fund to issue a letter to the present employer/PoP as the case may be mentioning that amount is being transferred from the PF/Superannuation fund to be credit in the NPS account of the employee/individual Tier-I account.
Source | Business Standard | 8 March 2017
“HAPPY
INTERNATIONAL WOMEN'S DAY – 8th March 2017”
Regards
Pralhad
Jadhav
Senior
Manager @ Library
Khaitan & Co
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