The government on Tuesday said that more than 500,000 people have subscribed to its New Pension Scheme till June-end.
The New Pension Scheme (NPS), launched by the government, was extended to all citizens of the country from May 1, 2009. Under the scheme, 50 per cent of the funds is allowed for investment in the stock markets.
"The total number of subscribers in the New Pension System as on June 30, 2009 was 5,40,244," Minister of State for Finance Namo Narain Meena told the Rajya Sabha in a written reply.
He said there were two main tax related issues pertaining to NPS contributions and the Finance Bill, 2009, has given these a consideration.
The benefit under Section 80 CCD of the Income-Tax Act, 1961 was restricted to the employees of the central government and other employers (i.e. the salaried class) and was not available to other individuals (like self-employed).
"The Finance Bill, 2009 has proposed to extend the benefit of Section 80 CCD of the Income-Tax Act, 1961 to all individuals," he said.
Further, he said the accumulated pension wealth was subject to tax at the time of withdrawal and the bill proposes to exempt from tax all withdrawals if such amount is used for purchasing an annuity plan in the year of exit.