Pension Fund Regulatory Development Authority (PFRDA) has welcomed the additional Rs 50,000 tax exemption on National Pension Scheme (NPS) but regretted that the Budget ignored the demand for the EEE status for such investments.
"Though I am yet to go through the Budget proposals in full, my understanding is that if one invests Rs 50,000 in NPS alone after already having invested upto Rs 1.5 lakh in other such financial tools which have been exempted from I-T, then one's tax-free investment may go upto Rs 2 lakh a year," PFRDA chairman Hemant Contractor told PTI.
This move will encourage people to go in for NPS in a big way, he added.Read our full coverage on Union Budget
Contractor added that the Budget is mum on the industry's demand to accord the status of EEE (exempt, exempt and exempt) to the sector, falling on the lines of other sectors like equity, mutual fund and life insurance, so as to popularise it.
"There is no announcement of any EEE for the pension fund sector and hence it will continue to carry the status of EET. We had been demanding the EEE status to give a boost to the sector," he said.
Commenting on the Budget announcement of social security fund under the Atal Pension Yojana, he said "subscribers falling under the age-group of 18-40 and who have not subscribed to any pension fund need to pay Rs 1,000 per year, as 50 per cent of the premium will be paid by the government on their behalf. Once the subscriber crosses 60, he/she will become eligible to get monthly pension."
The pension fund players have welcomed the plan saying it will help individuals who are planning retirement.
It will promote savings for a category which is planning retirement," ICICI Prudential Life Insurance managing director Sandeep Bakshi said. The company is having its 100 percent subsidiary in pension sector which is known as ICICI Prudential Pension Funds.
"Various pension schemes have been announced to assure income to the aging population. With these schemes, the minister has ensured that the common man is not only adequately insured but also has enough corpus to enjoy life after retirement," Tata AIG General Insurance chief financial officer Miranjit Mukherjee said.