In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced an increase in the deduction rate for employers’ contributions to the National Pension System (NPS). The deduction for employers will rise from 10 percent to 14 percent of the employee’s basic salary.
This change applies to both public sector companies and private sector businesses under the new tax regime. Government employees already benefit from a 14 percent deduction. The higher rate of 14 percent will now be available under the new simplified tax regime, as well as under the existing system.
Sitharaman highlighted the importance of this move, stating, “To improve social security benefits, the deduction of expenditure by employers towards NPS is proposed to be increased from 10 to 14 percent of the employee’s salary.”
This adjustment aims to enhance retirement savings and provide better social security benefits for employees, reflecting the government’s focus on strengthening financial security through increased pension contributions.
