The country’s budget (Budget 2024) is going to be presented today. In such a situation, Finance Minister Nirmala Sitharaman can make many big announcements. In this budget, big announcements can be made for everyone from middle class to farmers, women and senior citizens. However, if the government announces relief for senior citizens, then there may be an increase in tax exemption under the National Pension System (NPS). Currently, the tax exemption under NPS is up to Rs 50 thousand, which can be increased up to Rs 1 lakh.
This much tax exemption is available now
An individual can avail a deduction of up to Rs 50,000 for his contribution to the National Pension Scheme (NPS) under Section 80CCD (1B) in the old tax regime, which is not applicable in the new tax regime. This deduction is available under section 80CCD (1B) of the Income Tax Act. These tax benefits make NPS a good investment option.
Under this scheme, employees can claim tax deduction on contribution up to 10 percent of their basic salary (plus DA). Which comes under the total investment limit of section 80C up to Rs 1.5 lakh. Apart from this, an additional deduction of Rs 50,000 can be made under section 80CCD (1B). It is also expected from this budget of Modi government that NPS should also be given exemption in the new tax regime.
This demand from the budget of PFRDA
To attract more people towards NPS, the government can provide tax benefits to senior citizens above 75 years of age. PFRDA has demanded that the tax exemption on corpus of 10% in NPS should be increased to 12%. Experts demand that tax exemption should be given on contribution up to 12 percent in NPS. It has been argued by PFRDA that under EPFO, tax exemption up to 12 percent is given.
Demand for tax exemption in the new tax regime also
According to the report published on Business Today, experts are giving importance to tax exemption for contribution up to Rs 50,000 in the National Pension System (NPS) under Section 80CCD (1B) in the new tax regime. He suggests that it would be more beneficial to include this exemption in the new tax regime. If the government takes such a decision, then one of its benefits will be that there can be an incentive to shift to the new tax system like the old tax regime.
NPS customer base 180 million
The government had started NPS to provide pension income to the people. It is operated by the Pension Fund Regulatory and Development Authority (PFRDA). The number of people investing in it is continuously increasing. PFRDA added 947,000 new subscribers to NPS from non-government sectors in 2023-24, increasing NPS AUM by 30.5% year-on-year to Rs 11.73 lakh crore. The total NPS subscriber base till 31 May 2024 is Rs 18 crore.