DFS Issues FAQs on Tax Treatment under Unified Pension Scheme (UPS); NPS Tax Benefits Extended

DFS Issues FAQs on Tax Treatment under Unified Pension Scheme (UPS); NPS Tax Benefits Extended

New Delhi: Department of Financial Services (DFS) has released a set of Frequently Asked Questions (FAQs) to clarify the tax treatment under the Unified Pension Scheme (UPS) for central government employees. This will help Central Government employees make an informed decision about switching to UPS before the deadline of 30 September 2025.

Ministry of Finance notified UPS on 24 January 2025, and it is applicable to all new recruits joining the Central Government service on or after 1 April 2025. Existing employees covered under the National Pension System (NPS) have been given the option to shift to the Unified Pension Scheme (UPS).

Also Read:- FinMin Order: Tax Treatment under Unified Pension Scheme with Existing Income Tax Rules for Central Government Employees

To operationalise this framework, the Pension Fund Regulatory and Development Authority (PFRDA) had earlier issued the PFRDA (Operationalisation of the UPS under NPS) Regulations, 2025 on 19 March 2025.

According to DFS, the FAQs specifically explain how NPS tax benefits will also apply to UPS, ensuring continuity of tax reliefs for subscribers. The document is now available on the DFS website and can also be accessed directly through the official link provided.

Employees and retirees eligible to exercise this option are advised to carefully go through the FAQs and evaluate how UPS fits into their long-term retirement planning.