Govt contribution to NPS to rise to 14% of basic salary

  • The Cabinet has raised the government’s contribution to National Pension Scheme (NPS) to 14% of basic salary from the current 10 per cent.
  • Minimum employee contribution will, however, remain at 10%. Earlier the contribution of both Employee and the employer was equal at 10% each.
  • The Cabinet also approved tax incentives under 80C of the Income Tax Act for employees’ contribution to the extent of 10%.
  • The committee also allowed government employees to commute 60% of the fund accumulated at the time of retirement, up from 40% at present.
  • These changes may come into effect from April 1, 2019. However the final date is yet to be decided.