7th Pay Commission Update: If someone in your family is a central government employee, then it is a big deal. The government has made a shocking announcement. Central government employees will get the same tax benefits under the Unified Pension Scheme (UPS) which they have been getting under the National Pension Scheme till now.
This means that if government employees choose UPS, they will get relief from income tax. This is considered very important for those employees who were worried about their future pension. A large number of employees will get to see its benefits, which will be a big deal for everyone.
Know why this decision was taken?
According to the central government, this decision has been taken to promote UPS and provide more facilities to the employees. The inequality between NPS and UPS is now going to end. Central government employees can choose any of the two schemes and get equal tax benefits. Which will prove to be a boon.
Employees can invest up to 10 per cent of their basic salary + DA in NPS or UPS. He can avail tax exemption of up to Rs 1.5 lakh under 80C. Under section 80CCD, an additional tax exemption of Rs 50,000 is available. This is outside 80C.
This means more tax savings. Under section 80CCD, tax exemption is given on the employer’s contribution. In this, the contribution can be up to 10% of the salary. This is also expected to be different from the limit of 80C or 1B.
What will be the situation on retirement?
Whatever amount a central employee will get at the time of retirement, 60% of it will be completely tax-free. The annuity that will be purchased from the remaining 40% will be an annual pension on which tax will be levied according to the tax slab. Along with this, if needed, you can withdraw up to 25% of your amount. It will be tax-free (for treatment, marriage and education).