Finance Minister Arun Jaitley on Monday said Cabinet has decided that some changes will be made under National Pension Scheme, NPS.
Briefing media in New Delhi, Mr Jaitley said Central Government contribution will be raised to 14 per cent from existing 10 per cent in NPS.
He said tax exemption limit for lump sum withdrawal on exit has been enhanced to 60 per cent. With this, the entire withdrawal will now be exempted from income tax.
Freedom of choice will be provided for selection of Pension Funds and pattern of investment to central government employees.
Government employees contribution under Tier-II of NPS will now be covered under Section 80 C for deduction up to 1.50 lakh rupees for the purpose of income tax at par with the other schemes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund provided that there is a lock-in period of 3 years.