Budget Announcements Related to Pension Reforms

Budget Speech 2004-2005

Para No. 70


A 'defined contribution' pension scheme for new entrants into Central Government Service has come into effect from January 01, 2004 for the Central Government employees recruited on or after the date. A suitable legislation to provide a regulatory framework for the scheme will be introduced in Parliament.

Para No. 100


A 'defined contribution' pension scheme for new entrants into Central Government Service has come into effect from January 01, 2004. The tax treatment of contributions made to the scheme has engaged the attention of Government. I propose to adopt the universally accepted formula of EET that is, the contributions will be excluded from income for tax purposes; the accruals will also be exempt from tax; and only the terminal benefits will be taxed at the applicable rate in the year of receipt.