Central employees get up to 14% tax relief on contribution to NPS, while state employees get 10 percent. Now it has been decided to give 14% tax relief to the employees of the state as well.
Budget 2022: Finance Minister Nirmala Sitharaman presented Budget 2022 on Tuesday. No change has been made in the income tax slab in this budget, although the government has given big relief to the government employees. The scope of tax exemption in the National Pension System (NPS) for government employees has been increased. The Finance Minister said that the government has decided to increase the deduction on investment made by government employees in NPS from 10 percent to 14 percent. Explain that Central government employees get up to 14% tax relief on investment in NPS, while state government employees get 10 percent. Now it has been decided to give 14% tax relief to the state government employees as well.
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What did the Finance Minister say in the budget speech
The Finance Minister said, “Currently, the Central Government is providing the National Pension System (NPS) Tier-I. It contributes 14 percent to the salary of its employees. However, in the case of State Government employees, such deduction has been allowed to the extent of 10 per cent of the salary. In order to treat both Central and State Government employees equally, I propose to increase the tax deduction limit on employer’s contribution to NPS account from 10 per cent to 14 per cent for state government employees also. This will help in increasing the social security benefits of the state government employees and bring them at par with the central government employees.”
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Saraswati Kasturirangan, partner, Deloitte India, says, “The deduction for employer contribution to the NPS increased from 10% for state government employees at par with central government employees to 14%, but not for non-government employees.” This move is to bring equality between state and central government employees and increase social security benefits. Going forward, the contribution made by the state government to the NPS account of its employees will also be 14 percent instead of 10 percent.
What is NPS
This scheme was started in the year 2004 and earlier only government employees could invest in it but in 2009 it was opened to all. Under this scheme, contribution is made till retirement and then at the time of retirement i.e. on attaining the age of 60 years, a part of the accumulated amount can be withdrawn and the remaining amount can be used as regular pension. Can get.
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