Govt Wants Pension Contribution To Be Tax-Free For All Private, Govt Employees!
The pension fund regulator, PFRDA will be proposing to the government to make the employers’ contributions to the NPS tax free for all categories of subscribers.
As of now the limit of 14% is given only to the employees of the central government employers.
Read on to find out what is being proposed by the PFRDA right here!
Pension Fund Regulatory Body To Propose 14% Employer’s Contribution Tax Free
For the next budget, the pension fund regulator, the Pension Fund Regulatory and Development Authority, PFRDA, will be asking the government to make the employer’s contribution of 14% free for all categories of subscribers.
This contribution is offered under the NPS or National Pension Scheme tax, and is currently given only to the employees of the central government.
As revealed by the PFRRDA Chairman Supratim Bandyopadhyay, “We may propose things like 14% contribution by employers to be made tax free to all. So we are requesting the government to give it to all the employers, whether it is state governments or other corporate entities, so that subscribers across the board can get this benefit.”
After Central Govt Employees, State Government Employees To Be Given 14% Tax Benefit
As of now, if an employer is contributing towards the employee’s NPS account, up to a certain percentage of salary (basic + DA) is deducted from the salary, no matter if the limit qualifies for income tax deduction under Section 80 CCD(2). The limit for this deduction is 14% of salary for central government employees, and 10% for others.
As per the PFRDA chairman, the states are also asking that a 14% tax benefit should be given to the state government employees as well.
The PFRDA will be asking the government to extend this benefit of tier-II NPS account as tax free to all subscribers as well. This was recently granted to the central government employees as well.
As per reports, the contribution of a central government employee towards the Tier-II account of NPS for availing income tax deduction per year (up to Rs. 1.5 lakh) will have a lock-in period of 3 years.