Union Finances 2022 for NPS: Finance Minister Nirmala Sitharaman whereas presenting the Finances 2022 has proposed to convey parity between the Central authorities workers and the state authorities workers so far as employer’s contribution to NPS is worried. The Nationwide Pension System (NPS) is being administered and controlled by the Pension Fund Regulatory and Improvement Authority (PFRDA) arrange underneath the PFRDA Act, 2013.
“Deduction for employer contribution to NPS elevated from 10% to 14% for state govt workers on par with central govt workers, however not prolonged to non-govt workers,” says Saraswathi Kasturirangan, Associate, Deloitte India.
Going ahead, the contribution made by the state authorities into the NPS account of state authorities workers can even be 14 per cent as a substitute of 10 per cent.
The deduction for NPS contribution was elevated to 14 per cent from 10 per cent of wage in case the contribution is made by the Central Authorities in NPS account of central authorities workers underneath Part 80CCD.
Employer’s contribution in the direction of NPS Tier-I is eligible for tax deduction underneath Part 80CCD (2) of the Earnings Tax Act (14% of wage for central authorities workers and 10% for others). This tax profit is over and above the restrict prescribed underneath Part 80C.
Earlier, via a notification dated thirty first January 2019, the Central Authorities had enhanced the employer’s share of contribution for Central Authorities NPS subscribers from 10% to 14%. In a while, the 14% employer’s contribution rule has now been prolonged for workers of Central Autonomous Our bodies (CABs) as properly.
Now, as per the Finances 2022 proposals, the employer’s contribution for each central authorities workers and state authorities workers might be 14 per cent of wage thus bringing parity between them.
There are tax advantages galore in NPS and the scheme offers market linked funding funds to develop financial savings over the long run. For many who want to take extra tax profit over and above Rs 1.5 lakh accessible underneath part 80 C, the deduction as much as Rs 50,000 exists underneath Part 80CCD(1B). The deduction underneath Part 80CCD(1B) is over and above the deduction availed underneath Part 80CCD(1), nonetheless, the identical quantity can’t be claimed underneath each the sections.