NEW DELHI: Even as Finance Minister Arun Jaitley tries to make the National Pension System (NPS) an attractive investment option, there is uncertainty whether investors will take to the scheme. What's making investors wary of NPS The Budget provided a tax benefit on NPS investments but did nothing to address a long-standing problem. Under the current rules, the NPS corpus is taxable at the time of withdrawal.While admitting that NPS is one of the most beautifully designed schemes, Yogesh Agarwal Former Chairman , of PFRDA says that the problem lies in the taxation of the scheme."Apart from marketing problems, an issue that plagues NPS is the taxation associated with the scheme. This is the only pension product or social security product which is taxed at maturity. All other competing products including EPF, Public Provident Fund, are EEE (Exempt Exempt Exempt). NPS is EET," Agarwal told ET Now."When I know that, that whatever I am going to save for my pension, one-third of it is going to be taken away at my retirement age, when I need it the most, people are not willing to come forward," Agarwal explained.Agarwal is of the opinion that to make NPS lucrative it should either be made an EEE investment option, or all other products at par with it should also be made EET. "If you are going to tax NPS when a person retires at 60, most of people will be in the 30% tax bracket. On retirement the corpus will run into lakhs and that will be taxable at 30%. That is the problem with NPS," he said.Even insurance policies give tax-free income under Sec 10 (10d). Dhirendra Kumar , CEO at Value Research is of the opinion that unless the tax treatment of NPS at withdrawal is known with certainty, it simply will not take off.Dhirendra Kumar wrote in a column, "Unlike the EPF and the PPF, NPS withdrawals are taxable income. When an NPS member retires, 40% of the accumulated money in the account has to be used to buy an annuity which will provide a pension. The money is not taxed at the time of the annuity purchase, but the resulting pension is taxed like any other pension.""The problem that people have with the NPS is that the remaining 60% is taxable, in contrast to EPF and PPF. Savers consider this to be unfair and most financial advisors cite this as an overarching reason for disqualifying NPS as a vehicle for discretionary retirement savings," he said.According to Kumar, "With such a huge uncertainty hanging over their heads, it makes little sense for savers to choose the NPS. As things stand, financial advisors are hostile to the scheme because they can't make money out of it."The biggest disadvantage with NPS is that apart from being under the EET regime, returns are not guaranteed. It is supposed to generate good returns, but who has seen the future? The worst part is that it is going to generate your retirement corpus. So making any investment in it would be risky if returns are not guaranteed.Experts say that NPS will become a very good product if it is made tax-free. They say this may happen by the time one retires. But isn't it still a risky bet? True, some new tax benefits announced in the Budget have made NPS attractive, but financial experts say that one should not get swayed by tax benefits or better returns alone.