Govt looking at cost of giving more tax breaks for NPS, says Sinha

TAKING STOCK MoS finance feels scheme competitive as it is; pulls up govt officials for lack of pvt sector execution mindset

MUMBAI: The government will have to assess possible revenue loss before providing greater tax incentives to the National Pension System (NPS), minister of state for finance Jayant Sinha said here on Tuesday.

“We’ve to analyse and try to figure out exactly what revenue impact would be in case the government gives the exempt, exempt, exempt (EEE) benefit to NPS,” Sinha told a mutual fund meeting organised by Morningstar.

An EEE tax regime is the best tax saving investment under which exemption is granted on the invested amount, the interest/any income earned from the investment and also an exemption on the total income earned from the investment.

The EEE regime is applicable on investments into PPF and EPF. As against this, under the exempt, exempt, tax (EET), exemption is granted on the invested amount as well as on returns or income accumulated but is taxed at maturity or withdrawal depending on the tax slab of the individual. Sinha said the NPS is “very competitive even as it is right now” (in the EET tax regime).

On the soon to be set monetary policy committee, Sinha said the decision to set an inflation target for the Reserve Bank of India, which will be the primary remit of the central bank, as “historic”.

Citing the pickup in indirect JAYANT SINHA, minister of state, finance tax collections, Sinha said the government is comfortable with the revenue situation.

“While direct taxes are little bit below where we would like them to be, indirect taxes are in fact ahead and therefore when you consider the two together we are actually in fairly comfortable fiscal situation — with respect to revenues,” he said. The government had recently said that tax collection may fall short by `50,000 crore this fiscal due to subdued growth in direct taxes.

In an aside, the minister criticised government officials for a lack of an “execution mindset” in comparison to the robustness in the private sector, where he spent over three decades.

“At the government right now, we don’t have enough of an execution mindset. In the private sector, there are targets, milestones, who is responsible for what etc. but there isn’t enough of that in the government,” Sinha rued.

“Execution is not easy, the government is not easy. I have spent 30 years in the private sector, it is easy. The government is hard because you have to work with many stakeholders,” said Sinha, was an investment banker before joining the government last year.

“We have to get more into mission mode and that is something that is not common. We have to build that mindset,” he said.

We’ve to analyse and try to figure out exactly what the revenue impact would be in case the government gives the ‘exempt, exempt, exempt’ (EEE) benefit to NPS

In the private sector, there are targets, milestones, who is responsible for what etc. but there isn’t enough of that in the government