In the Indian context, in the absence of a universal state-sponsored welfare scheme, individuals have to rely on provident fund and similar schemes to build their retirement nest
Across the globe, retirement planning is a critical issue for individuals. In the Indian context, in the absence of a universal state-sponsored welfare scheme, individuals have to rely on provident fund and similar schemes to build their retirement nest. A few tax incentives have been provided under the Income Tax Act, 1961, which promote contributions to specified social security funds namely Provident Fund (PF), National Pension Scheme (NPS) and Superannuation Funds (SAF) by employees and their employers.
Till financial year 2019-20, only contribution by the employer to the account of an employee more than the prescribed thresholds was taxable as perquisite in the hands of the employees. (See Chart 1)
Contributions up to the prescribed threshold did not get taxed at any point of time, since Exempt-Exempt-Exempt (EEE) regime was followed for these retiral funds.
Source: Mint
