Budget 2024: As the general elections approach, the demand for reinstatement of the old pension scheme has started rising. Meanwhile, the government is preparing to take several steps to make NPS attractive. For this, many announcements can be made in the interim budget.
The government may make some announcements in the interim budget to make the National Pension System (NPS) attractive. Finance Minister Nirmala Sitharaman will present the interim budget on February 1. This will be his sixth budget. The government can make NPS more attractive by increasing tax concessions on contributions and withdrawals for senior citizens above 75 years of age. Pension fund regulator PFRDA has requested parity with the Employees’ Provident Fund Office (EPFO) on the taxation front for contributions by employers. Some announcements in this regard are expected to be made in the interim budget. Currently, there is a disparity in the contribution of employers towards creating a corpus for employees, with corporate contribution up to 10 per cent of basic salary and dearness allowance being exempted from tax for NPS contribution, while in the case of EPFO ​​it is 12 per cent.
As per Deloitte’s budget expectations, the annuity portion of NPS will be made tax-free for holders from the age of 75 to promote long-term savings through NPS and reduce the tax burden for senior citizens above 75 years of age. should be done. According to financial advisory and audit services company Deloitte, NPS can be clubbed with interest and pension to ensure that senior citizens above 75 years of age do not have to file returns on the income received from NPS. . Currently lump sum withdrawal of 60 per cent is tax free.
Committee Report
There is also a demand to provide tax exemption for NPS contributions under the new tax regime. Currently, under Section 80CCD (1B), an individual’s contribution to NPS up to Rs 50,000 is deductible under the old tax regime, but not under the new tax regime. This is more than the tax relief of Rs 1.5 lakh available under Section 80C in the old tax system. With regard to government employees, the government last year appointed Finance Secretary T.V. to review the pension system and suggest measures for its improvement. A committee was formed under the leadership of Somanathan. This committee has not yet submitted its report.
