NEW DELHI: State employees will receive improved social security coverage and will be treated on an equal footing with state employees, as the center has proposed raising the tax deduction limit to 14 percent for state employees under the National Pension System (NPS), PFRDA chairman Supratim Bandyopadhyay said Wednesday.
At present, the state contributes 14 percent of the salary to the National Pension System, which is allowed as a tax deduction in the employee’s income.
For the state government, the tax-free contribution from the employer is 10 per cent.
Finance Minister Nirmala Sitharaman proposed, while on Tuesday presenting the Union’s budget 2022-23 in parliament, to raise the tax deduction limit from 10 per cent to 14 per cent in employer contributions to the NPS account for state employees in the state as well.
“This is an important announcement to bring government employees on a par with government employees, and this will help government employees get extended social security benefits in line with their counterparts in the trade union government,” said Pension Fund Regulatory and Development Authority (PFRDA) President Bandyopadhyay.
Sitharaman said the move would provide equal treatment to both central and government employees.
This would help improve the social security benefits for government employees in the state and bring them on par with government employees, the minister said.