Budget 2024: good news for NPS subscribers..!?

In this budget, before the elections, there is still an expectation whether the government will give some concessions on income tax or not. The national budget will be presented on february 1. Finance minister Nirmala Sitharaman will present the budget. As the lok sabha election is going to be held this time, the Interim Budget is going to be presented. But there is still an expectation whether the government will give some concessions on income tax or not in the budget this time, before the elections. In this regard, demands are being raised from various quarters to bring some changes in the personal and corporate income tax. Similarly, there have been demands to give tax exemption to the National Savings System, a government pension scheme. PFRDA (Pension Fund Regulatory and Development Authority), which oversees the functioning of NPS, has been recommending tax exemption to NPS since last year.
NPS Tax Exemption in NPS:

Recently, PFRDA Chairman deepak Mohanty reiterated his view on tax exemption on NPS. He had presented the demand for this in november last year as well. He says that the amount invested in NPS through employee contribution should be tax-exempt under EPFO's scheme PF (Provident Fund). According to media reports, Mohanty said that the PFRDA has now demanded an increase in the tax rebate to 12 percent as in the PF. But their target is to take it to 14 percent.
What are the current rules?

Employer's contribution to PF is deducted at 12 percent of salary (basic + allowance). The maximum limit is Rs.7.5 lakh. Interest earned on this contribution is tax-free. On the contrary, the employer's / companies' contribution to NPS is tax-deductible only up to 10 percent of salary (basic + gratuity). Employers or corporate entities can claim tax benefits on their contributions to NPS under Section 80CCD(2) of the Income Tax Act. They can claim a deduction of 10 percent of their employee's salary and show it as a business expense. Here the maximum deduction can be availed only up to Rs.7.5 lakhs.

Earlier, the PFRDA chief had reiterated the same demand in november last year. He also said that Systematic sum withdrawal should be 100 percent in this scheme. PFRDA has also issued a new rule regarding SWL. Now the subscriber will get the facility of withdrawing the amount gradually. Now subscribers can withdraw 60 percent of their pension amount monthly, quarterly, half-yearly, or annually till age 75.

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NPS

Sowmiya Sriram

10/01/2024 10:22 PM