Budget 2024: Tax rebate of up to Rs 100,000 will be available on NPS ? Benefit in both new and old tax regimes

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Tax experts are recommending increasing the tax exemption limit of National Pension Scheme (NPS) in both the taxi regimes to Rs 1,00,000. This step will motivate people to invest money in NPS.

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Currently, a subscriber’s contribution to NPS up to Rs 50,000 gets deduction under section 80CCD (1B). But this facility is available only in the old regime of income tax. Taxpayers using the new regime do not get this deduction. This is in addition to the tax benefit of Rs 1.5 lakh available under Section 80C in the old tax regime.

NPS will be made attractive

Pension fund regulator PFRDA has demanded EPFO-like tax rules on employer’s contribution. Currently, the tax rules on employer’s contribution are different for NPS and EPFO. In NPS, only up to 10 percent of the employer’s contribution to the employee’s corpus (fund) is exempt from tax. This is 10 percent of basic pay and dearness allowance. On the other hand, in EPFO, a total of 12 percent contribution to the employee’s corpus is exempted from tax. For a long time, experts have been demanding to eliminate this difference in tax rules.

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