UPS: There is big news for about 48 lakh central employees of the country. The government has announced a big announcement that now the Unified Pension Scheme (UPS) will also get the same tax benefit as so far in the National Pension Scheme (NPS). Meaning government employees who choose UPS will also get relief in income tax. This is very important for all central employees who were concerned about pension for their future whether UPS or NPS?
Why was this decision taken?
The government says that this decision has been taken to promote UPS and provide more facilities to employees. The inequality between NPS and UPS is now over. Now employees can take advantage of equal tax exemption by choosing any of the two plans.
NPS and now tax benefits on UPS
1. Section 80CCD (1)
Employees can invest up to 10% of their basic salary + DA in NPS or UPS and get a tax exemption of 1.5 lakhs of 80C.
2. Section 80CCD (1B)
Under this, there is an additional tax exemption of Rs 50,000, which is outside 80C. Meaning more tax saving.
3. Section 80CCD (2)
In this, the contribution of the employer is given tax exemption. This contribution can be up to 10% of the salary and is also different from the 80C or 1B limit.
Money on retirement
Out of whatever amount is received on retirement, 60% will be completely tax free. An annuity (pension scheme) will be purchased from the remaining 40%, an annual pension will be made, which will be taxed according to your tax slab. If needed, you can withdraw up to 25% from your deposits and it will be tax free (eg treatment, marriage, for studies).
What is UPS and its benefits?
The UPS government has a new pension scheme, which has been implemented from 1 April 2025. It is like an option inside the NPS, but it guarantees fixed pension. Just like the old pension scheme (OPS).
Will get pension
On completing 25 years of service, 50% of the last 12 months of basic salary will be found as pension.
Family pension
After the employee’s death, the family gets 60% pension immediately.
Minimum pension
If there is 10 years or more service, a pension of at least Rs 10,000 is fixed every month.
Security from inflation
Pension will increase every year according to inflation will be applicable).
Gratuity
1/10th part of every 6 months service will be found in the form of lump sum gratuity. It will be different from pension and will not be cut.
Last date to choose UPS
Central government employees can choose UPS by 30 September 2025. After this, this option will be closed. This step of the government makes UPS stronger. Now employees are getting fixed pension, inflation security, gratuity and tax saving everything in the same scheme. If you want to be sure about pension and also want to save in tax, then UPS can become a great option.