Budget 2024 makes no changes to National Pension System

Notably, in the prior financial year, a crucial aspect of the NPS was modified.

The deduction of ₹50,000 under Section 80CCD (1b) for NPS subscribers in the new tax regime was discontinued as of April 1, 2023. Advocating for its reinstatement in the upcoming Budget, experts proposed an increase in the limit to ₹1 lakh for both tax regimes.

Tax analysts had emphasised the significant role this deduction played in encouraging NPS investments, urging its reintroduction to foster widespread adoption.

In addition, they had suggested aligning the tax exemption limit for employer contributions under Section 80CCD (2) with provident funds. Additionally, an increase from the current 10% of the basic salary to 12%, and subsequently to 14% was recommended, aligning with the long-standing suggestion of the Pension Fund Regulatory and Development Authority (PFRDA).

The NPS, a government-run investment scheme, allows subscribers to allocate funds across various asset classes.

With two types of accounts, Tier 1 and Tier 2, catering to different investment preferences, the NPS serves as both a pension account and a voluntary savings account associated with the Pension Regulatory Authority of India (PRAN).

Meanwhile, the PFRDA has outlined new provisions for the withdrawal of pensions under the NPS. These rules stipulate that subscribers can withdraw no more than 25% of their contributions from their individual pension accounts, excluding the employer's contribution.