As mentioned in the Economic Survey, the National Pension Scheme (NPS) is being widely adopted by the tax payers – with a 42.13 percent increase in Corporate Sector contribution between September 2020 and September 2021. In this context, there was an expectation in respect of enhancement of the limit for deduction towards NPS contribution made by the employer. Following an amendment to Sec 80 CCD of the Income Tax Act in April 2019, the limit for deduction for NPS contribution made by the Central Government was revised to 14 percent, while that for other employers remained at 10 percent.

With the increasing popularity of the NPS and in view of this anomaly, it was expected that the limit for employer contribution would be brought on par to 14 percent for all employers, it has been extended to the State Government alone (with retrospective effect from April 1, 2020). One expects that this benefit will be extended to the corporate sector in due course.

No added retirement or tax-saving benefit

There has also been an increasing clamour for relief under the Income Tax Act for contributions towards and income from various long-term and retirement schemes, including life insurance annuity, provident fund and other retirement savings products. However, the Union Budget has steered clear of any changes in this context and that could lead to a sense of disappointment for the middle class, who may have faced some hardship due to the pandemic.

Notification of the new Labour Codes is one of the reform measures both employees and employers are awaiting. While both stakeholders have their own concerns