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Some changes are proposed in the Finance Bill for the tax treatment of Recognised Provident Fund and NPS. … (Interruptions)
The purpose of proposed reform in tax regime is to encourage more number of private sector employees to go for pension security after retirement instead of withdrawing the entire money from the Provident Fund Account. … (Interruptions) Towards this objective, the Government has announced that 40 per cent of the total corpus withdrawn at the time of retirement will be tax exempt both under recognised Provident Fund and the National Pension Scheme. It is expected that the employees of private companies will place the remaining 60 per cent of the Corpus in Annuity, out of which they can get regular pension. When this 60 per cent of the remaining Corpus is invested in Annuity, no tax is chargeable. … (Interruptions) This means that the entire Corpus will be tax free, if invested in annuity. Only the periodic return on Annuity will be taxable.