INSUBCONTINENT EXCLUSIVE:
withdrawal of funds on retirement and provided subscribers the option of allocating higher investments in equity.
Higher equity allocations
would add to the flow of funds to the stock market.
The changes will benefit central government employees, who have been enrolled for NPS
contribution of employees will remain unchanged
The total outgo will go up very marginally and will have no impact on the fiscal deficit, said a person familiar with the
developments.
Besides, additional contributions by employees will be eligible for tax benefits under section 80C of the Income Tax Act
within the Rs 1.5 lakh limit.
Employees will be able to withdraw up to 60 per cent of the total funds accumulated at the time of retirement
free of tax, up from 40 per cent at present
The limit is the same for private subscribers, who are required to purchase an annuity for 40 per cent of the amount.
Retiring employees
will have the option of converting the entire amount to annuity and a rough calculation shows that in such a situation, their monthly
pension could be as much as 53 per cent of the last basic salary drawn.
Employees would be allowed to allot a larger share of their funds
for investment in stocks with the aim of accumulating a higher corpus
Under the current rules, 85 per cent is invested in fixed income instruments and 15 per cent in equity and equity-linked mutual funds
Act, which can be done through the Finance Bill
