NPS set to become more beneficial

The central government may make the National Pension System (NPS) more attractive by extending tax concessions on contributions and withdrawals especially for senior citizens above 75 years. Pension fund regulator PFRDA has sought ‘parity’ with Employees’ Provident Fund Office (EPFO) on the taxation front for contributions by employers and some announcements in this regard are expected to be made in the interim Budget.Finance Minister Nirmala Sitharaman is expected to present the interim Budget on February 1. This is going to be her sixth Budget.

At present, there is a disparity in the employers' contributions in building corpus for the employees, wherein contributions up to 10 per cent of basic salary and dearness allowances by a corporate are exempt from tax for NPS contributions, while the same is 12 per cent in the case of EPFO.

To promote long-term savings through NPS and reduce the tax burdens for senior citizens above 75 years, the annuity portion of the NPS should be made tax free for the holders from the age of 75 years, according to Deloitte Budget expectations.