The option can be exercised by 23 lakh government employees.
Credit: iStock Photo
New Delhi: The central government on Friday announced that the tax benefits available under the National Pension Scheme (NPS) would be extended to the newly introduced Unified Pension Scheme (UPS), which seeks to provide assured retirement benefits.
“The inclusion of UPS under the tax framework marks another step forward in the Government's effort to strengthen retirement security for Central Government employees through transparent, flexible and tax-efficient options,” the Union Finance Ministry said in a statement.
Under the UPS, which was notified by the central government on January 24 this year, there are provisions of fixed assured pension and family pension in line with the old pension scheme (OPS). The unified pension scheme has been implemented from April 1, 2025. The UPS has been implemented as an optional scheme under the national pension scheme, which was implemented in 2004.
The Department of Financial Services, Ministry of Finance has notified introduction of the Unified Pension Scheme (UPS) as an option under NPS for the recruits to the Central Government civil service with effect from April 1, 2025 giving one-time option to the Central Government employees covered under the National Pension System (NPS) for inclusion under the UPS.
To operationalise this framework, the Pension Fund Regulatory and Development Authority (PFRDA) notified the PFRDA (Operationalisation of the Unified Pension Scheme under NPS) Regulations, 2025 on March 19, 2025.
“In a bid to provide further impetus to the UPS, the Government has decided that tax benefits as available under NPS shall apply mutatis mutandis to UPS as it is an option under NPS,” the Finance Ministry said.
“These provisions ensure parity with the existing NPS structure and provide substantial tax relief and incentives to employees opting for the Unified Pension Scheme,” the ministry added.