FUND TRANSFERRED FROM PROVIDENT FUND TO NATIONAL PENSION SCHEME (NPS) NOT TAXABLE.

The pension regulator has unveiled rules for transfer from recognised provident and superannuation funds to the National Pension Scheme (NPS). In the 2016-17 budget, the government had announced that subscribers from provident and superannuation funds would be able to transfer their corpus from these funds to NPS without any tax complications. The Pension Fund and Regulatory Development Authority said any subscriber interested in such a transfer should have an active NPS  Tier I Account which can be opened either through the employer (where NPS is implemented) or through the points-of-presence (POPs) or online through eNPS on the NPS Trust website. The regulator also made it clear that as per the provisions of the Income Tax Act, 1961, the amount transferred from recognised provident or superannuation fund to NPS was not treated as income for the current year and hence not 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 regulator said in a statement. The subscriber presently under government, private sector employment should approach the recognised provident fund or superannuation fund trust through the current employer requesting transfer to the 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", the pension regulator said.

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. The return on NPS for central government employees for one year works  out to 15.9 percent whiel for five years it stands at 11 percent. [Times of India dated 09th March, 2017]. 

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