Experts have raised concerns over employer contributions to the National Pension System and the potential for double taxation under the current income tax rules. The issue arises because contributions made by employers can be treated as part of an employee’s salary and also as a perquisite, leading to the same amount being taxed twice. This ambiguity has created uncertainty for both employees and employers and could discourage participation in NPS, which is intended to promote retirement savings. Tax professionals suggest that Budget 2026 should clarify that employer contributions are taxed only once either as part of salary or as a perquisite.
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