Clarification by Pension Fund Regulatory and Development Authority (PFRDA) on transfer of amount from Recognized Provident Fund & Superannuation Fund to National Pension Scheme (NPS)
In the budget of 2016-17, the Government had announced that the subscribers from recognised Provident Funds and Superannuation Funds would be able to transfer their corpus from these funds to National Pension System (NPS) without any tax implication.
With the NPS gaining momentum vis-à-vis other retirement products and a number of queries being raised on the transfer of amounts from recognised Provident/Superannuation Funds to NPS, Pension Fund Regulatory and Development Authority (PFRDA) has clarified the process through a circular dated 06.03.2017.
Accordingly, in case the subscriber is interested to get his/her recognised Provident Fund/Superannuation Fund transferred to NPS, he/she needs to follow the below mentioned process:
The subscriber should have an active NPS Tier I account which can be opened either through the employer (where NPS is implemented) or through the Points-of-Presence (POPs) or online through eNPS on the NPS Trust website www.npstrust.org.in
The subscriber presently under Government/Private Sector employment should approach the recognised Provident Fund/Superannuation Fund Trust through the current employer by giving request for transfer to his/her NPS account.
The Recognised Provident Fund/Superannuation Fund Trust may initiate transfer of the Fund as per the provisions of the Trust Deed read with the provisions of the Income Tax Act, 1961.
The Recognised Provident fund/Superannuation Fund may issue the cheque/draft in the name of:
a) In case of Government employee: Nodal Office Name (PAO or CDDO Name) <> Employee Name<> PRAN (12 Digit No.)
b) In case of subscriber presently under Private Sector including All Citizen Model: POP (Name of the POP) Collection Account-NPS Trust<>Subscriber Name<>PRAN (12 Digit No.)
In case of Government or Private Sector employee, the employee should request the recognised Provident Fund/Superannuation Fund to issue a letter to his present employer mentioning that the amount is being transferred from the recognised Provident Fund/Superannuation Fund to be credited in the NPS Tier I account of the employee which would be recorded by the present employer or POP as the case may be, while uploading the amount.
It may be noted here that as per the provisions of the Income Tax Act, 1961 the amount so transferred from recognised Provident Fund/Superannuation Fund to NPS is not treated as income of the current year and hence not taxable. Further, the transferred recognised Provident Fund/Superannuation Fund will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make Income Tax claim of contribution for this transferred amount.
SOURCE- Press Information Bureau, Government of India, Ministry of Finance, 07-March-2017 18:31 IST
Related Circular is as follows :-
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
B-14/A, Chhatrapati Shivaji Bhawan
Qutab Institutional Area,
Katwaria Sarai, New Delhi-110016 Phone : 01 1-2651 7503
Fax : 01 1-2651 7507
Website : www.pfrda.org.in
CIRCULAR
PFRDA/2017/11/PD/3
Date: 06 March 2017
To,
All Stakeholders in the National Pension System
Subject: Transfer of amount from recognised Provident Fund/Superannuation fund to National Pension System (Applicable for the individual employees)
1. With a view to facilitate transfer from recognised provident funds to the National Pension System (NPS), Clause (iv) in Rule 8 of Part A of the Fourth Schedule to the Income Tax Act has been inserted through the Finance Act 2016 so as to provide exemption from taxation to one time portability from a recognised provident fund to the NPS. Further, a sub clause (v) to section 10(13) of Income Tax act has been inserted so as to provide for the exemption from tax to any payment from an approved superannuation fund by way of transfer to the account of the employee under NPS referred to in section 800CD and notified by the Central government. With introduction of this provision in the said clause, transfer of funds of an assesse employee from his existing superannuation fund to a pension account under National Pension System (NPS), is not liable to be treated as income of such assesse for the said Assessment Year.
2. Accordingly, in case the subscriber is interested to get his recognised provident fund/superannuation fund transferred to NPS, he may follow the below mentioned process:
• The subscriber should have an active NPS Tier I account which can be opened either through the employer (where NPS is implemented) by filling up the prescribed subscriber registration form or through the Points-of-Presence(POPs) (Banks/non-banks entities registered as POPs with PFRDA) or online through eNPS on the NPS Trust website www. npstrust.orq. in
• The subscriber presently under Govt./Private Sector employment is required to approach the recognised provident fund/Superannuation Fund Trust through the current employer by giving request for transfer of his recognised provident fund / superannuation fund to his NPS account.
• The Recognised Provident fund/Superannuation Fund Trust may initiate transfer of the Fund as per the provisions of the Trust Deed read with the provisions of the Income Tax Act, 1961.
• The Recognised Provident fund/Superannuation Fund may issue the cheque/draft in the name of :
In Case of Govt. employee: Nodal Office Name (PAO or CDDO Name)<> Employee Name<> PRAN (12 Digit No.)
In case of Subscriber presently under Private Sector including All Citizen Model: POP (Name of the POP) Collection Account-NPS Trust<>Subscriber Name<>PRAN (12 Digit No.)
• In case of Government Employee, the employee should request the recognised provident fund/ Superannuation Fund to issue a letter to his present employer mentioning that the amount is being transferred from the recognised provident fund/ superannuation fund to be credited in the NPS Tier I account of the employee.
• The Present employer/POP i.e. nodal office shall while uploading the fund may mention the transfer from recognised provident fund/ superannuation fund in the remarks column while uploading it through Arrears mode. The upload may be made as per the request letter of the ex-employer.
• In case of Private Sector employee including subscriber covered under All Citizen model, the employee should request the recognised provident fund/ Superannuation Fund to issue a letter to his present employer/POP as the case may be mentioning that amount is being transferred from the recognised provident fund/ superannuation fund to be credited in the NPS account of the employee/individual Tier I account.
• The POP will get the amount collected and the same may be uploaded by the POP in the NPS account of the subscriber.
3. It may be noted that as per the provisions of the Income Tax Act, 1961 the amount so transferred from recognised provident fund/Superannuation Fund to NPS is not treated as income of the current year and hence not taxable. Further, the transferred recognised provident fund/superannuation fund will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make IT claim of contribution for this transferred amount.
4. For further clarification, if any, the person may like to contact the undersigned on email akhilesh.kumar@pfrda.org.in , Telephone No. 011-26543158.
Yours faithfully
(Akhilesh Kumar)
Deputy General Manager
