Investment Tips: Union Budget 2022: Tax inequality in NPS, tax experts want equal benefits for all in new budget

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#NewDelhi: The Union Budget 2022 will be presented by Finance Minister Nirmala Sitaraman on February 1. His preparations are in full swing. In this situation, experts point out a number of tax inequalities in the national pension system. They demanded that the Narendra Modi government should think about eliminating these inconsistencies in the new budget.

Employee Provident Fund (EPF) or EPF schemes are available to salaried employees. Public Provident Fund or PPF schemes, on the other hand, are open to all. Here anyone can save money for his leisure time. EPF and PPF – both schemes are completely tax free. But in NPS, if the investor is 60 years old or the investor decides to withdraw from the project altogether, he can withdraw up to 40% of the total deposit. With the remaining 80 percent, it is necessary to buy a pension from a few life insurance companies

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Experts say this is the discriminatory behavior of the center. According to them, only NPS customers should not be forced to purchase annuity in this way. In EPF and PPF projects, the customer can decide independently where to invest his money. But he is being forced into NPS. A 70-year-old man knows exactly where to invest his retirement money, so it’s not right to force him to do so.

Experts say the government should make equal provision for EPF, PPF and NPS. And for this NPS has to be completely tax free. One customer can have two NPS accounts. The first is Tier One, which is mandatory. The second is Tier Two, which is optional. Customers can withdraw money from Tier Two account whenever they want or transfer to Tier One account.

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Currently the rules for withdrawing money from a Tier One account are clear. But there is no tax provision in case of withdrawal or transfer of money from Tier Two account. As a result, confusion is spreading among the people. Therefore, to bring transparency in the whole matter, the government should issue similar rules for withdrawing money from Tier Two accounts.

Central government employees can get tax exemption on investment in Tier Two in NPS project. They can apply under section 80C. But other investors do not get this benefit. Experts say it’s not just discrimination, it’s double standards. Only central government employees will get a special benefit in the same project, while the rest of the taxpayers will not get, what a judgment! So they are demanding the same benefits for all the customers of NPS Tier Two.

Any non-government employer that joins the NPS can also get a tax deduction on the amount of grants currently spent on employees under Section CCD (2) of the Income Tax Act. However, the maximum amount of that tax deduction will be 10 percent of the basic salary of the worker. But in the case of the central government, that limit is 14 percent of the basic salary of the workers. According to experts, there is no rationale behind this inequality. Therefore, they are demanding to remove these inconsistencies and amend the NPS project in the new budget.

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