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Other employees to get NPS tax sop at par with Centre’s staff

Other employees to get NPS tax sop at par with Centre’s staff

Similar to the Central government staff, employees with state governments, PSUs and the private corporate sector may also get full deduction for the contributions made to the National Pension system subject to a ceiling of 24% of basic salary and dearness allowance. An announcement is expected in the coming Union Budget.

Since financial year 2019-20, the Central government staff has been eligible for deduction of 24% of salary (employees’ contribution of 10% and employers’ share of 14%) for NPS contributions under Section 80C of the Income Tax Act. But the limit continues to be 20% (10% contribution of each by employer and employees) for other employees. This is despite the fact as many as 15 state governments and public sector banks have subsequently enhanced employers’ share to NPS to 14%.

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