Tax deduction limit to NPS for state govt employees hiked from 10% to 14% l NPS Budget 2022

Employees of state governments will be able to claim a tax benefit of 14% on the NPS contribution made by their employer, i.e., state government from FY 2022-23 onwards. Currently, only central government employees are eligible to claim tax benefit of 14% for the employer’s contribution to the NPS account of an employee. In case of private sector employees, the tax benefit is limited to 10%.
“The tax deduction limit in National Pension System (NPS) has increased from 10% to 14% for state government employees. 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,” says PFRDA Chairperson, Supratim Bandyopadhyay. Investment up to Rs 1.5 lakh in NPS in one financial year is eligible for deduction under section 80CCD (1). This deduction comes under the overall limit of Rs 1.5 lakh allowed under section 80C.

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