Your Money: NPS returns better than EPF

However, taxation has played spoilsport despite double-digit returns

Tinesh Bhasin
Last Updated at January 11, 2017 16:24 IST

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To bring National Pension Scheme (NPS) at par with Employee Provident Fund (EPF), the Pension Fund Regulatory and Development Authority (PFRDA) has recently sought parity of taxation between the two retirement products in the upcoming Union Budget. At present, EPF enjoys the EEE (exempt-exempt-exempt) tax treatment while NPS is subjected to EET (exempt-exempt-tax).

This move has made NPS unpopular among the salaried because when an individual would withdraw his corpus from the former, he has to pay tax on 20 per cent of the final corpus, according to his tax bracket. If the finance minister corrects the tax disparity, most salaried should prefer NPS as it has delivered better returns, say investment advisors.

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