Even if the government contributed 14 percent, the exemption was available only up to 10%. But now a provision has been made to increase it to 14%.
The National Pension System, or NPS, has received some good news for state government employees. State government employees, like central government employees, will be eligible for a tax deduction on the government’s 14 percent contribution. Until today, there existed a gap in NPS contribution tax exemptions for state and central workers.
Workers of the federal government used to be exempt from paying the government’s 14 percent contribution, while state employees were free from paying the government’s 10 percent contribution. Even though the employer, i.e. the government, contributed 14%, the exemption was only accessible up to 10%. However, a provision has since been established to raise it to 14%.
In addition to the 80C exemption, there is a tax deduction possible on the employer’s payment. According to the Economic Survey, the number of NPS pension system participants reached 4.63 crore, up 24% over the previous year. Obviously, the state government employees have been relieved by this budget.