look news india
New Delhi: The employer's contribution to the National Pension System (NPS) has been increased from 10 per cent to 14 per cent in Budget 2024. This deduction has been increased from 10% to 14% of the employee's basic salary. In other words, employers opening employee accounts in NPS will now have to deposit 14% of their basic salary in NPS instead of 10%.
The government has forced almost most of its government departments and public enterprises to accept the NPS option and it already pays 14 percent of the employee's basic salary. So they are not going to make any change in it. But this time due to the announcement made by the government, now the units other than government units that have accepted the NPS option will have to contribute 14 percent of the employee's basic salary to NPS.
Now what this means is that due to the contribution of 10% to NPS, as compared to 12% contribution of the employee's basic salary to PF, employers who had opted for NPS have now come to contribute 14%. Thus, due to a change of two percent at a time, employers who opted for NPS have to pay two percent extra on top. Due to the changed circumstances, employers may no longer offer NPS option to new employees, but existing employees may have to remain in NPS.
Let us tell you here that this option is applicable only to those owners who choose the NPS option. Whereas the owners who opt for EPFO i.e. PF have nothing to do with it. However, due to lack of clarity on many aspects, many private sector companies have not accepted the option of NPS and have adopted PF only. While the government is promoting NPS keeping in mind the long-term economic security of the workforce.
Nirmala Sitharaman has also proposed to start a scheme called NPS Vatsalya in the budget. In this, parents become the guardian of the minor child and deposit the amount in it. This will be converted into a normal NPS account when the child grows up. Thus the government is committed to develop NPS as a comprehensive social security system.
Stating that the government has increased the provision in NPS from 10 per cent to 14 per cent, Preeti Sharma of BDO India Partner (Global Employee Services, Tax and Regulatory Services) said that an additional deduction of four per cent of the basic salary will be available. She gave an example that a person with a basic salary of Rs. 1 lakh plus dearness allowance will now be eligible for an additional deduction of Rs. 4,000 per month. Thus, by contributing more to NPS that year, Rs. 48,000 can save tax of Rs. 14,976.