Budget 2024: The National Pension System (NPS) in India is at the centre of demands for significant reforms by salaried taxpayers. According to Personal Finance experts, there is a growing consensus among taxpayers for critical changes, including increasing the additional income tax deduction limit under Sec 80CCD 1B. Additionally, there is a call to raise the tax-free withdrawal limit at maturity, aligning it with other retirement savings instruments like EPF.
What changes do salaried taxpayers want in NPS from FM Nirmala Sitharaman when she presents the first Budget 2024 under the Modi 3.0 regime?
NPS: 8 critical changes salaried taxpayers in India expect from FM in budget 2024
1)Increase in additional tax deduction limit
Siddharth Maurya, Founder and MD of Vibhavangal Anukulakara, advocates raising Sec 80CCD 1B limit from ₹50,000 to ₹1 lakh, offering potential savings of up to ₹15,600 for those in the 30% tax bracket.
Ashish Aggarwal, Director at Acube Ventures, also supports increasing Sec 80CCD(1B) deduction from ₹50,000 to ₹1 lakh to bolster retirement savings.
2)Enhanced tax-free withdrawal
Siddharth Maurya calls for raising the tax-free withdrawal limit at maturity from 60% to 80%, aligning with EPF taxation standards.
Gaurav Singh Parmar, Associate Director at Fincorpit Consulting, advocates raising the tax-free withdrawal limit at maturity from 60% to 80% to increase the attractiveness of NPS.
3)Flexibility in withdrawals
Siddharth Maurya urges flexibility in premature withdrawals for critical life events without penalties. He also seeks higher equity exposure beyond the current 75% cap for better returns.
4)Demand for guaranteed returns
Siddharth Maurya pushes to introduce guaranteed return options akin to schemes like PPF within NPS.
5)Rationalisation of NPS Tier-II account
Siddharth Maurya calls for restructuring to enhance the attractiveness of short-term savings.
6)Seeking increased tax benefits
Abhishekh Soni, CEO and Co-founder of Tax2win, advocates for higher tax benefits, including potential increases in contribution limits and improved withdrawal flexibility under NPS.
7)Employer’s contribution deduction
Abhishekh Soni proposes raising the employer’s NPS contribution deduction limit from 10% to 12%, aligning it with PF contribution exemptions.
8)Potential new tax regime deduction
Abhishekh Soni suggests introducing an additional ₹50,000 deduction under the new tax regime for NPS.
These proposals aim to make NPS more attractive and beneficial for retirement planning, addressing taxpayers’ evolving needs and expectations nationwide.
(Except for the headline, this story has not been edited by Universal Times Magazine staff and is published from a syndicated feed.)
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