Pension Fund Regulatory and Development Authority (PFRDA) chairman Supratim Bandyopadhyay has welcomed the budget announcement of hiking tax deduction limit to 14 per cent for state government employees under the National Pension System (NPS), which, he said will bring them at par with central government employees.
Currently, the central government contributes 14 per cent of the salary to the NPS, which is allowed as a tax deduction in the income of an employee. For the state government, the tax-free contribution by the employer is 10 per cent.
Finance Minister Nirmala Sitharaman while presenting the union budget 2022-23 in Parliament on Tuesday, had proposed to increase the tax deduction limit from 10 per cent to 14 per cent in employer’s contribution to the NPS account of the state government employees as well.
“This is a significant announcement to bring state government employees on par with the central government employees and this will help state government employees getting extended social security benefits in line with their counterparts in the union government,” Mr Bandyopadhyay said.
Ms Sitharaman said the move will provide equal treatment to both central and state government employees.
This would help in enhancing the social security benefits of the state government employees and bring them at par with central government employees, the finance minister had said in her budget speech.