Hike in employer's contribution to NPS is good news for salaried but this tax deduction is still missing
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While government employees are required to contribute to NPS, it is voluntary for those in the private sector. The NPS is regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act, 2013.
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Hike in deduction on employer's contribution to NPS
Over the past decade, there has been a gradual increase in the number of employees in the private sector who have subscribed to NPS under the 'corporate plan', which is facilitated by their employer. The tax provisions related to employer/employee contributions to NPS and withdrawal from NPS have undergone changes over this period of time. Broadly, subject to certain conditions, contributing to NPS provides employees with certain tax benefits at the time of contribution, during the period of employment and finally at the time of retirement.
With an objective of improving social security benefit for employees in private sector, the Union Budget 2024 has proposed an increase in the threshold for employer's contribution to NPS and tax deduction available to employers / employees towards the same. Before the budget announcement, the central and state government employees were eligible to get a deduction on NPS contributions up to 14% of salary. The Union Budget 2024 has proposed to increase the threshold
