Mumbai, Oct 27 (IANS) The government needs to assess the possible revenue loss before providing greater tax incentives, including full exemption, to the National Pension System (NPS), Minister of State for Finance Jayant Sinha said on Tuesday.
“We’ve to analyse and try to figure out exactly what revenue impact would be in case the government gives the exempt, exempt, exempt (EEE) benefit to NPS,” Sinha said at a mutual fund event here.
Noting that data suggests that the NPS is an attractive long-term, high-return investment that is better than other pension funds, Sinha said: “I think it is very competitive even as it is right now, especially if compared to provident funds.”
The EEE regime is applicable on investments in the provident funds PPF and EPF.
Instead, under the exempt, exempt, tax (EET) regime, exemption is granted on the invested amount as well as on returns or income accumulated but is taxed at maturity or withdrawal depending on the tax slab of the individual.
This tax is applicable on investments like Ulip-linked pension plans, pension plans, and the National Pension Schemes.
The NPS asset base has crossed Rs.1.1 trillion mark in the first week of October, while the NPS subscriber base also went upwards of 1 crore at the same time.
A majority of NPS corpus is generated from retirement funds of government employees, while retail investors avoid subscribing to it because of EET.