Unified Pension Scheme: Central Govt Employees Must Know About The Latest Rules Regarding Taxation

New Delhi: The finance ministry has recently said that tax benefits available under NPS shall apply mutatis mutandis to Unified Pension Scheme (UPS).

Tax Benefits Under Unified Pension Scheme

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, said the Ministry of Finance.

These provisions ensure parity with the existing NPS structure and provide substantial tax relief and incentives to employees opting for the Unified Pension Scheme, Ministry of Finance added.

The Department of Financial Services, Ministry of Finance had notified introduction of the Unified Pension Scheme (UPS) as an option under NPS for the recruits to the Central Government civil service w.e.f. 01.04.2025 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 19th March 2025.

UPS operational from 1 April, 2025 

Unified Pension Scheme (UPS) has been made operational from 1 April, 2025 for central government employees. 

Declared last year by the Narendra Modi government, the UPS seeks to provide fixed pension security to employees working in central government offices. People who are in a government job and are already enrolled in the NPS will have the opportunity to choose UPS.

What is the minimum assured-payout under UPS?

A minimum assured payout of Rs.10,000 per month has been guaranteed under Unified Pension Scheme in case superannuation is after 10 years or more of qualifying service, subject to timely and regular credit of contributions and no withdrawals.