The National Pension System or NPS is one of the long-term investment tools that the government is encouraging and to which the people are responding well. Finance Minister Nirmala Sitharaman used the NPS to deliver one benefit to the salaried class.
“To improve social security benefits, deduction of expenditure by employers towards NPS is proposed to be increased from 10 to 14 per cent of the employee’s salary,” the finance minister announced in her budget speech.
So far the rule stated that for the benefit of the employee, the employer’s NPS contribution up to 10% of salary (Basic + DA), is deductible from taxable income, up-to 7.5 Lakh.
Raising the deductibility from 10% to 14% will mean putting in some extra cash in the hands of the taxpayer since he/she will have to pay less income tax.
Tax practitioners think that this measure will help in making more and more salaried people adopt the National Pension System to accumulate retirement funds.
“Earlier the NPS contributors from the private sector used to get tax deduction on 10% of the contribution while government sector employees gor 14%. The announcement of the finance minister puts them at the same level,” said a CII office bearer.
The NPS uses the power of compounding over a very long term to create a large pool of funds while also paying a pension to the contributor from the age of 60.
Any Indian be it a resident, non-resident or an overseas citizen can open an NPS account. Anyone between 18 and 70 years can start an NPS account.
NPS Deduction: It was expected that Finance Minister Nirmala Sitharaman would announce some relief for the salaried class. One was announced on the National Pension System Front. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
