Monday, June 30, 2014

Review: Lottery's tax leg-up over pension!

Selling lottery has a tax leg-up over selling pension! This and some other quibbles for the FM to consider this budget:

  1. Exempt income from distribution of NPS & NPS lite from Service Tax (ST). Income from sale of lottery tickets is exempt from ST so why not income from sale of socially relevant products like NPS and NPS Lite?
  2. Make NPS and pension plan of mutual funds tax exempt on withdrawal. PPF & EPF are tax exempt on withdrawal & NPS and mutual fund’s pension plan should get the same treatment. This should be extended to all long term savings (incl. infrastructure bonds), of - 15 years & above.
  3. Extend NPS Lite Swawalamban benefit till FY 18-19. Currently available only till FY 16-17.
  4. Increase annual co-contribution limit to to  Rs 2400 pa, up from the existing Rs 1000 decided in 2010. Keep the Rs 1000 as min. savings eligible for getting the matching co-contribution.
  5. Offer Jan Shree Bima Yojana (JBY) free to NPS lite customers who have saved at-least Rs 1000 in the previous FY. Make this a scheme feature.