What are the expectations regarding NPS in the budget: Financial experts believe that Finance Minister Nirmala Sitharaman should make changes in the National Pension System, so that it can become more attractive for investors. Experts are hopeful that in her budget speech of 2025, Finance Minister Sitharaman will announce some changes in the National Pension Scheme (NPS).
According to Rajni Tandale, Senior Vice President, 1 Finance, a mutual fund, there are a lot of retirement related challenges in India. A large number of people do not have adequate financial planning for their later years. He believes that NPS can be a better option for retirement planning and to increase its attractiveness there is a need to increase tax exemption on investment in it.
According to Tandale, the Narendra Modi government should increase the exemption limit under section 80CCD (1B) in this case from Rs 50,000 to Rs 1,00,000. He said, ‘This will encourage taxpayers to invest more and support long-term retirement savings.’ Apart from this, the limit of deduction under section 80CCD (2) in the old tax regime is currently 10% of the basic salary, whereas in the new tax regime this limit has been increased to 14%. Under the new tax regime, this limit should be increased to 20% of the basic salary. This change will increase the attractiveness of NPS among the private sector workforce.
Tandale is also of the opinion that the mandatory condition of purchasing annuity in NPS is also a big obstacle in the path of potential investors. Alternatively, through the provision of sequential withdrawals, investors will be able to easily access their funds and will also be able to avoid annuity losses. According to him, apart from this, provision should also be made in Budget 2025 to reduce the tax burden on annuity income.