Mango Company Ltd has written to you as a tax advisor to advise on the tax implication on withdrawal by its employees from contribution to the voluntary third (3rd) tier before its 10th anniversary.
Required:
State the tax implication on such withdrawals? (2 marks)
View Solution
The Pension Act 2008 Act 766 allows the employees or and employers to contribute towards the 3rd tier with an approved fund managers as approved by National Pension Regulatory Authority which contribution should not go beyond 16.5%. This could be contributed by both the employer and the employee or either.
The law allows for withdrawal by the employee only after 10 years of savings.
Conclusion:
Any withdrawal before 10 years shall be subject to tax at the rate of 15% on both the principal and earnings (interest).