As per provisions in the Income Tax Act, the amount transferred from recognised PF/superannuation fund to NPS will not be treated as income of the current year and is hence not taxable.
Are you interested in transferring your employees’ provident fund (PF) or the funds lying in your superannuation account to the National Pension System (NPS)? If so, the Pension Fund Regulatory and Development Authority (PFRDA) has issued broad guidelines for giving effect to such transfer.
Thus, subscribers interested in getting PF or superannuation fund transferred to NPS has to ensure the following:
• The subscriber should have an active NPS Tier-1 account.
• Government/private section employees have to approach the recognised PF/Superannuation Trust Fund through their current employer and give request for transfer of funds to NPS account
• The recognsied PF/Superannuation trust will have to initiate transfer of the fund as per provision of the trust deed and the provision of the Income Tax Act.
• In case of government employees the employee should request the PF/Superannuation fund to issue a letter to his present employer mentioning that the amount is being transferred from the fund to be credited to the NPS Tier-1 account of the employee.
• The present employer or Point of presence (POP) ie the nodal office while uploading the fund has to mention the transfer from PF/superannuation fund in the remarks column while uploading. The upload has to be made as per request letter of the ex-employer.
• In case of private sector employees, including subscribers covered under All Citizen’s Model NPS, the employees should request the recognised PF/superannuation fund to issue a letter to the present employer/PoP as the case may be mentioning that amount is being transferred from the PF/Superannuation fund to be credit in the NPS account of the employee/individual Tier-I account
• The POP will get the amount collected and the same has to be uploaded in the NPS account of the subscriber
PFRDA has pointed out that as per the provisions in the Income Tax Act, the amount transferred from recognised PF/superannuation fund to NPS will not be treated as income of the current year and is hence not taxable. Further, the transfered PF/superannuation fund will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make I-T claim for contribution for this transferred amount.