Budget 2022: Tax benefits to NPS for state govt employees hiked from 10% to 14%

With finance minister Nirmala Sitharaman's announcement, the tax deduction limit is now at par with central government employees.

Tabling the Union budget in the Lok Sabha, Union finance minister Nirmala Sitharaman on Tuesday proposed an increase in the tax deduction limit from 10 per cent to 14 per cent on employers' contribution to the National Pension System (NPS) account of the state and central government employees.

Tax deduction limit raised from 10 per cent to 14 per cent on employers' contribution to the NPS account for state government employees. (Representative Photo)

The decision has been taken to bring in parity between state as well as central government employees and enhance their social security benefits, the finance minister announced.

Currently, only central government employees are eligible to claim the 14 per cent on employers' contribution to NPS account.

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At the same time, the NPS tax benefit for private sector employees is limited to 10 per cent.

Among other tax related changes presented today, finance minister Sitharaman has proposed a tax on income from transfer of any virtual digital asset at 30 per cent, including cryptocurrencies in all probablity.

The finance minister also announced an opportunity to taxpayers to “correct an error” and file an updated tax return within two years time from the assessment year.