Pension rules: PFRDA chairman says employer contribution limit should be 12%
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NPS rule changes: PFRDA may provide 100% fund withdrawal facility under SLW
There are not many days left for the budget for the election year. The new budget is going to be presented after about 3 weeks. Since it is an election year, people have high expectations from this budget. Especially amidst the ongoing debate regarding pension, there is a possibility that the government may make some major changes in this regard in the upcoming budget.
PFRDA Chairman’s statement
Amidst all the expectations and debates, the PFRDA Chairman has also made a big comment regarding the pension scheme. Pension regulator Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty was participating in an event in Mumbai on Friday. While talking to the media on the sidelines of the programme, he talked about NPS.
At present exemption is available up to this limit
The pension regulator chief said contributions made by employers to NPS should be tax free up to 12 per cent of the employee’s basic salary. At present, employers get tax exemption only on an amount equal to 10 per cent of the basic salary in the pension scheme for employees enrolled in NPS under private sector individual or corporate scheme.
Get benefits like government employees
Mohanty said he supported bringing the tax benefit on employer contributions to NPS at par with the 12 per cent limit in EPF. He said it should eventually go up to 14 per cent of the basic pay like that of government employees. At present, under EPF rules in the private sector, contributions up to 12 percent of basic salary and dearness allowance are exempt from tax.
What does the Income Tax Act say?
Under existing income tax rules, employers can show NPS contributions up to 10 per cent of their employee’s basic salary as business expense. This helps them to save tax. Employees can also avail tax benefits under section 80CCD(2) of the Income Tax Act on employer contribution equal to 10 percent of their salary. This benefit is available in both new and old tax systems.
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