Tax exemption raised to Rs 1.5 lakh under superannuation fund

Government will rationalise the pension sector by a uniform tax treatment and has proposed to raise the exemption limit from Rs 1 lakh to Rs 1.5 lakh for annual contribution in a superannuation fund and also non-levy on taxes upon the death of an employee under NPS.

Besides, 40 per cent of the pension wealth under NPS will be exempted from tax. It is proposed to provide a uniform tax treatment to the recognised provident fund, national pension system and superannuation fund, Finance Minister Arun Jaitley said while presenting Union Budget 2016-17 in Lok Sabha on Monday. "Exemption limit is proposed to be increased from Rs 1 lakh to Rs 1.5 lakh for annual contribution by an employer to a superannuation fund. "Any amount received by the nominee, on the death of the employee at the time of closure of account under National Pension System referred to in section 80CCD of the Income-tax Act is proposed to be exempt", Jaitley said.

Among others, a monetary limit of Rs 1.5 lakh will be provided for annual contribution in a provident fund and exemption for one-time portability from provident fund or superannuation fund to National Pension System (NPS).

The finance minister also proposed that 40 per cent of the pension wealth of an employee under NPS will be exempted from tax.