National Pension Scheme (NPS) New Changes: The central government on Monday has announced that decision has been taken to increase contribution to the National Pension Scheme (NPS) including the changes of other components of the scheme. According to reports, the Finance Minister has said that the government is going to contribute 14% along with exempting tax on NPS withdrawals and also exempting tax on contribution of up to Rs. 1.5 lakh under the scheme.
The scheme will now have its own benefits that will be a boon for the employees working under the central government. The employees after their retirement would be able to withdraw all the money kept under the NPS without paying tax. It has been reported that tax exemption of enhanced 60% has been approved for a lump sum withdrawal. Earlier, the government’s contribution to the employees covered under NPS Tier-I was 10%.
As per reports, this changes by the government is likely to benefit about 18 lakh central government employees. However, the government would have to add Rs. 2,840 crore in the budget of financial year 2019 to 2020. Governemnt has also decided to approve introduction to freedom of choice by allowing central government employees to select pension funds according to their choice. This initiative of the Central government is on the verge to increase old-age security as per the proposal. Moreover, those who have entered service after January 1, 2004 have also been included under National Pension System (NPS)’s new guidelines.