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Sunday, April 21, 2024

Budget Forecasts for 2024: PFRDA Desires Tax Exemption for Corporate Contributions Similar to EPFO

<p>According to a senior official on Thursday, the pension fund regulator Pension Fund Regulatory and Development Authority (PFRDA) has requested “parity” with the Employees’ Provident Fund Office (EPFO) over the taxation of employer contributions.</p>
<p><img decoding=”async” class=”alignnone wp-image-341860″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/01/theindiaprint.com-budget-forecasts-for-2024-pfrda-desires-tax-exemption-for-corporate-contributions-.jpg” alt=”theindiaprint.com budget forecasts for 2024 pfrda desires tax exemption for corporate contributions” width=”1073″ height=”715″ title=”Budget Forecasts for 2024: PFRDA Desires Tax Exemption for Corporate Contributions Similar to EPFO 3″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/01/theindiaprint.com-budget-forecasts-for-2024-pfrda-desires-tax-exemption-for-corporate-contributions-.jpg 510w, https://www.theindiaprint.com/wp-content/uploads/2024/01/theindiaprint.com-budget-forecasts-for-2024-pfrda-desires-tax-exemption-for-corporate-contributions–150×100.jpg 150w” sizes=”(max-width: 1073px) 100vw, 1073px” /></p>
<p>PFRDA chairman Deepak Mohanty was reported by news agency PTI as stating, “We have requested to make it 12 per cent, to at least bring parity (with EPFO)”.</p>
<p>Currently, there is a discrepancy in the amount that employers contribute to creating employee corpuses. For NPS payments, corporations are free from tax up to 10% of basic income and dearness allowances, but EPFO contributions are subject to 12% of the same.</p>
<p>According to him, the PFRDA hopes to eventually raise it to 14%, which would be comparable to the exemption granted for the federal government’s employee contributions. However, for the time being, it will aim to achieve parity with EPFO.</p>
<p><strong>A New Tax System and Pension</strong></p>
<p>According to a PFRDA official, the pension funds have already been affected by the new tax system, which does not allow for any deductions, since the advantageous tax status disappears.</p>
<p>According to Mohanty, the PFRDA is currently falling short of its FY24 subscriber acquisition objective. In the first nine months of the fiscal year, the agency has only been able to attract 5.83 lakh new corporate customers, compared to the target of adding 13 lakh new users.</p>
<p>Mohanty acknowledged that more work has to be done in the area of awareness, noting that there hasn’t been a significant increase in subscribers.</p>
<p>He claimed that the PFRDA has been disseminating its thoughts via TV and social media.</p>
<p>But he said that the PFRDA believes the goal is “achievable” since, on average, it observes a faster rate of additions in the most recent quarter as people search for ways to save money on investments and taxes.</p>
<p>Regarding Assets Under Management (AUM), Mohanty said that the thriving markets have made a significant improvement possible, with the whole AUM exceeding Rs 11 lakh crore as opposed to the targeted Rs 12 lakh crore.</p>
<p>Currently, 32% of AUMs are invested in corporate bonds, while 17% are in the stock markets. He added the remaining funds are in government bonds.</p>
<p>Regarding corporate bonds, he said that 97–98% of the funds have been allocated to papers issued by AAA-rated corporations, with a small number of instances involving deployments in lower-rated AA papers.</p>
<p>The PFRDA has also approved a QR code-based payment method, which makes it easier to fund an NPS account than it is to pay a merchant, in an effort to improve flow rates.</p>
<p>According to the PFRDA official cited earlier, there has been a greater tendency recently to create accounts from points of presence, and the early surge in online account creation seems to be leveling down.</p>
<p>According to Mohanty, there are no plans to raise the intermediaries’ commissions since the authority believes the current level is enough.</p>

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