UPS: The government has taken a big decision for central employees. The tax exemption in the NPS i.e. National Pension System till now, the same tax exemption will now be available in UPS i.e. Unified Pension Scheme. That is, if a government employee chooses UPS, then he will also get the same tax benefits which used to be found in NPS.
Government said this on UPS
This information was given by the Ministry of Finance on 4 July 2025. It was told in the press release that the government wants more and more employees to opt for UPS. For this reason, UPS is also being given the same tax exemption as NPS is given. This will make both the schemes equal and the employees will clearly understand which scheme is better for them. He will be able to choose his pension scheme without any hesitation and trouble.
Now let’s talk about which tax benefits are available in NPS. The NPS provides three types of tax exemption under the old tax system.
Section 80CCD (1): In this, if the employee himself contributes to his salary, then there is a discount of up to Rs 1.5 lakh.
Section 80CCD (1B): Under this, NPS provides additional benefit of up to Rs 50,000.
Section 80CCD (2): In this, there is a discount on the contribution given by the government. Central government employees can get up to 14% discount of basic salary + DA.
Central employees will not have any problem in choosing pension scheme
Now the same discount will also be applicable in UPS. This will now make it easier for the employees to think that if they switch from NPS to UPS, then they will not suffer tax loss.
UPS was started on 1 April 2025
The government has started the UPS i.e. Unified Pension Scheme from 1 April this year. This scheme is special because it gets a firm pension after retirement. For example, if the service of an employee is 25 years old, he will get 50% of his last 12 months of basic salary after retirement every month.
Even if Servi is 10 years or more, it will be guaranteed by Rs 10,000 monthly. That is, central employees will definitely get minimum pension. Both the employees and the government will contribute 10% of the basic salary + DA in the UPS and the government will also give 8.5% more so that the pension can be confirmed.
The government has also given another relief that the last date for switching from NPS to UPS has now been reduced to 30 September 2025, earlier this date was 30 June. Now the employees who did not take the decision have got a little more time to think.
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