Universal Pension Scheme: Contribution, income to come under tax benefits
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The revenue board is set to offer tax benefits, including investment rebate and exemption, on contributions and incomes contributed to and derived from Universal Pension Scheme (UPS).
The income tax wing of the National Board of Revenue (NBR) would issue a Statutory Regulatory Order (SRO) in this regard shortly, officials said.
Currently, incomes derived from UPS are taxable as per the Income Tax Act-2023.
After issuance of the SRO, contributors of UPS would also enjoy investment rebate facility on the amount of their contribution to the UPS.
According to the Income Tax Act, taxmen allows taxpayers to avail investment rebate on premium of the Life Insurance Policy, contribution to provident fund, approved gratuity fund contribution, government securities or mutual fund up to Tk0.5 million, investment in Deposit Pension Scheme (DPS) and capital market at a prescribed rate of NBR.
Officials said until the NBR offers tax waiver on the income incorporating the income head of UPS in its law, tax would be levied on it.
However, the Income Tax Act can supersede any other law on tax matter.
The UPS Management Act-2023 has kept the income tax-free which, according to taxmen, would have to be incorporated in the income tax law.
NBR is considering keeping the UPS income tax-free as confusion has arisen as the exemption remains in UPS whereas absent in tax law, said a senior NBR official.
The government has introduced the first-ever UPS on August 17, last. Until September, some 12,892 people have registered for availing the scheme.
Private officials and companies are the highest participants in the scheme titled Pragoti, contributing nearly Tk40 million.
Some 4,964 people have availed the Shurokkha scheme with Tk 28 million followed by 1,321 in Samota scheme with Tk 2.1 million.
However, expatriates have responded less on the UPS so far with 393 registering while their contributions were higher than those of Shurokkha and Samota schemes, worth Tk8.1 million.