Transfer of PF balance (Provident Fund- Recognized PF/ Superannuation Fund) to National Pension Scheme (NPS): Pension Fund Regulatory and Development Authority (PFRDA) Clarification on Procedure
Govt. had announced in Budget 2016-17 that the PF subscribers would be allowed to transfer balance to National Pension System (NPS) without any tax liability/ implications. Accordingly, the PFRDA has clarified the process, based on a number of queries raised by subscribers on the balance transfer process, as under:
i) 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
ii) 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.
iii) 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.
iv) 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.)
v) 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.
vi) 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.
vii) 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.
viii) The POP will get the amount collected and the same may be uploaded by the POP in the NPS account of the subscriber.
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.
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