NPS dilemma: Record keeping agencies say deadline for contribution extended till June 30

Amid confusion over date extension for making voluntary contributions to Tier 1 Accounts of National Pension System (NPS), KFintech Central Recordkeeping Agency (KCRA), in its letter to NPS subscribers said that the date has been extended till June 30, 2020 for the pension system to avail avail tax benefits for the financial year (FY) 2019-20.

In its communication, KCRA said, “As per Ministry of Law and Justice (Legislative Department) ordinance (CG-DL-E-31032020-218979) dated March 31, 2020, timelines have been extended for making tax saving investments for FY 2019-20 to June 30, 2020. If subscriber wishes to take the tax benefit for FY 2019-20, he/she may do so by investing in NPS till June 30, 2020.”

While the ordinance didn’t specify name of any tax-saving instrument, a subsequent Press Note of Department of Revenue, Ministry of Finance, Government of India mentioned almost all such instruments and the sections under which tax benefits are available, except name and section of NPS.

Date extension: Clarification given on investment instruments, but no mention of NPS!

In a pop up on its website, Pension Fund Regulatory & Development Authority (PFRDA) appointed CRA, National Security Depository Limited (NSDL), said that the date for making various investment for tax benefits is extended from March 31, 2020 to June 30, 2020.

Subsequently, it says, “Make the best use of the extension by investing in NPS.”

On the same pop up, NSDL also reminds that by investing in NPS, investors may enjoy exclusive tax benefit up to Rs 50,000 u/s 80CCD(1B) of the Income Tax Act over and above Rs 1.5 lakh allowed u/s 80C.

Although the record keeping agencies clarify their stand on effect of date extension on NPS investments, things are not very clear at the level of Point of Presence (POP) Service Providers.

While, India’s largest mutual fund (MF) distribution company NJ India Invest Pvt Ltd, which also offers online POP services for NPS, said that NPS contributions for FY 2019-20 were accepted till March 31, 2020, ICICI Securities informed Financial Express Online that it is up to an investor to choose if he/she wants to take tax benefit for FY 2019-20 or for FY 2020-21 against NPS contribution made till June 30, 2020.