Budget 2024: The government could declare initiatives to encourage and enhance the appeal of NPS

Budget 2024: The government could declare initiatives to encourage and enhance the appeal of NPS

Budget 2024: The government could declare initiatives to encourage and enhance the appeal of NPS

The Employees' Provident Fund Office (EPFO) and the pension fund regulator PFRDA have been pursuing "parity" in the taxation of employer payments. The interim budget is anticipated to include some announcements about this matter.

The government could declare initiatives to boost NPS and increase its appeal.

By extending tax breaks on contributions and withdrawals, the government may increase the appeal of the National Pension System (NPS), particularly for older residents who are over 75.

The Employees' Provident Fund Office (EPFO) and the pension fund regulator PFRDA have been pursuing "parity" in the taxation of employer payments. The interim budget is anticipated to include some announcements about this matter.

On February 1st, Finance Minister Nirmala Sitharaman could deliver the interim budget. This budget will be his sixth.

Employers now contribute differently to employee funds: corporations are free from tax on up to 10% of basic salary and dearness allowance contributions, whereas NPS contributions are subject to a 12% contribution. in the EPFO instance.

According to Deloitte's budget forecast, the annuity element of NPS will be tax-free for holders beginning at age 75 in order to encourage long-term investments via NPS and lessen the tax burden for elderly residents over 75. ought to be carried out.

In order to guarantee that seniors over 75 who get NPS income do not have to submit taxes, NPS may also be combined with interest and pension.

A lump sum withdrawal of 60% is now tax-free.

Under the new tax system, there is also a push for NPS payments to be tax-exempt.

Currently, under section 80CCD (1B), an individual's contribution to NPS up to Rs 50,000 is deductible under the previous tax system but not under the new tax system.

This exceeds the tax benefit of Rs 1.5 lakh that was previously offered under Section 80C of the tax code.

A committee headed by Finance Secretary TV Somanathan was established by the government last year to examine the pension system and recommend improvements for government workers.

We have yet to get the panel report.

The Committee will recommend any required modifications to the National Pension System (NPS) that are relevant to government workers, taking into account its current design and structure.

As per its mandate, the Committee will recommend actions to amend it to improve the pension benefits of government workers covered by the NPS in a way that makes financial sense, while also taking into consideration the fiscal consequences and effect on the overall budgetary space. The public space is kept up for the people' safety.