The tax treatment of the recently launched Atal Pension Yojana lacks clarity and even the country’s pension fund regulator PFRDA itself is in dark.
Subscribers too said they do not know about the tax treatment on this product as banks were unable to give taxation related details.
“Tax treatment of Atal pension is not clearly known but we understand it will be at par with the existing National Pension Scheme (NPS),” PFRDA whole time member B S Bhandari told PTI.
NPS is a EET (Exempt Exempt Tax) product. PFRDA had been batting for EEE (Exempt Exempt Exempt) status for NPS. Under the current rules, the NPS corpus is taxable at the time of withdrawal.
“Tax treatment is an issue that has affected NPS. The taxation is associated with the scheme as it is taxed at maturity. All other competing products, including EPF, Public Provident Fund, are EEE while NPS is EET (Exempt Exempt Taxed), Bandari said.
The Pension Fund Regulatory and Development Authority (PFRDA) has set an ambitious target of having 2 crore subscribers by 2015-end under APY. At present, it has enrolled about 3 lakh subscribers under the scheme.
While the target is ambitious, Bhandari had said, “The system has been put in place to handle such large volume of subscribers. We expect more subscribers to be enrolled as awareness about the scheme increases.”