Currently, the Central Government contributes 14 percent of the salary of its employee to the National Pension System (NPS) Tier-I. This is allowed as a deduction in computing the income of the employee.

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However, such deduction is allowed only to the extent of 10 percent of the salary in case of employees of the State government. To provide equal treatment to both Central and State government employees, the Budget has proposed to increase the tax deduction limit from 10 percent to 14 percent on employer’s contribution to the NPS account of state government employees as well.

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This would help in enhancing the social security benefits of the state government employees and bring them at par with central government employees.

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(Edited by : Priyanka Deshpande)

First Published:Feb 1, 2022 1:42 PM IST