Income Tax Exemption for amount withdrawn from NPS and EPF
Income Tax exempted in the case of National Pension Scheme (NPS) and EPF on withdrawal up to 40% of the corpus with effect from 1st April 2016
Finance Minister while presenting the General Budget 2016-17 has announced proposal to provide Income Tax Exemption in respect of 40% of the corpus withdrawn from National Pension Scheme(NPS) and EPF with effect from 1st April 2016. Until now, EPF withdrawn after five years from the date of deposit is totally exempted from Income Tax. This measure i.e To impose income tax for 60% of amount withdrawn from EPF is to make this scheme at par with NPS.
Press Information Bureau
Government of India
Ministry of Finance
29-February-2016 13:17 IST
Measures for moving towards a pensioned society
While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that pension schemes offer financial protection to senior citizens.
He proposed to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme(NPS). In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016. Further, the annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases.
He also proposed a monetary limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit.
He proposed to exempt from service tax the Annuity services provided by the National Pension Scheme (NPS) and Services provided by EPFO to employees. Also, he proposed to reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.