Proposal to make employers’ contributions to NPS tax free.

Pension Fund Regulatory and Development Authority (PFRDA) proposes that the employers’ contribution of 14 per cent under the National Pension Scheme (NPS) be made tax free for all categories of employers, irrespective of whether they are private entities or state government. If the proposal is approved, all employers’ contribution of 14 per cent will be made tax free. Right now, the 14 per cent limit applies only to the central government employers. The state governments have been demanding 14 per cent tax benefit too. In addition, the PFRDA proposes to extend the benefit of tier-II NPS account and make it tax free for all subscribers. Recently, this was done for the Central government employees under Section 80C.