Financial Daily from THE HINDU group of publications
Friday, May 05, 2006
Financial Daily from THE HINDU group of publications Friday, May 05, 2006 |
|
|
|
|
|
|
|
Money & Banking - Pension Plans Industry & Economy - Social Security Regulator favours benign tax regime for pensions Our Bureau
PENSION PANGS: Mr D. Swarup (left), Chairman, Pension Fund Regulatory and Development Authority (left) with Mr T. N. Manoharan, President, ICAI, releasing a publication titled `Pension Plans' in the Capital on Thursday. - Ramesh Sharma
New Delhi , May 4 The Pension Fund Regulatory and Development Authority (PFRDA) is keen that schemes under the new pension system (NPS) are not placed at a tax disadvantage under an exempt-exempt-tax (EET) regime vis-a-vis any other savings instruments. "We will ensure that pension gets the most favourable tax treatment as any other savings instrument if a EET regime were to be introduced," Mr D. Swarup, Chairman, PFRDA, said after releasing a Institute of Chartered Accountants of India (ICAI) publication on `Pension plans' here on Thursday. He said that if public provident funds (PPF) and Government Provident Funds (GPF) were to continue under the EEE ( Exempt-exempt-enjoy) system, then there was no reason why pensions also should not enjoy an EEE system of taxation. Under an EET system of taxation, contributions as well as interest accumulations are tax-exempt, while withdrawals attract tax. In EEE, there is no tax at contribution, accumulation or withdrawal stage. Although the Government had set up a committee to work out the roadmap for moving towards an EET system for all kinds of savings, it was yet to take a final call on the implementation of the new tax system. The expert committee has already submitted its report to the Government. While underscoring the need for pension reforms, Mr Swarup said that the pension bill of the Central and State Governments put together stood at about Rs 65,000 crore and was registering compounded annual growth of 21 per cent. "If the sixth Pay Commission comes, then the liability is going to go up to a level of Rs 75,000-Rs 80,000 crore. There will come a time when the entire government budget would be spent in salaries and pensions of government employees," he said. The Centre had operationalised the NPS from January 1, 2004. The NPS was made mandatory for new recruits to the Central Government services (except the armed forces in the first stage) from this date. It is yet to be operationalised for the other segments who would like to voluntarily opt for the NPS. Mr Swarup said that chartered accountants had both developmental as well as supervisory role in the pension reforms. He said that the members of the ICAI could help enhance the coverage of the NPS by educating people. In addition, he said that ICAI could improve the financial and accounting system by developing guidance note on the accounting/auditing aspects of various entities involved in pension systems. The President of the ICAI, Mr T.N. Manoharan, said that pensions should not be viewed as liability, but an investment on humanity.
More Stories on : Income Tax | Pension Plans | Social Security
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|