new delhi investments made in the new pension system nps rolled out to all citizens from may 1 this year are likely to be exempted from tax by clubbing it under section 80c of the income tax act maintaining the cap at rs 1 lakhsources said the new proposal is likely to be made in the union budget slated to be presented in parliament in the first week of julycentral and state government employees already enjoy this benefit the tax concession to all citizens is planned so as to bring in a large number of subscribers to the nps fold now that the scheme has been opened to unorganized and private sector workers all central government staff who joined after january 1 2004 have been made subscribers to the nps they were however allowed deduction under 80ccc in 2007 the benefit was extended to state government employees in 2008the nps generated a return of more than 14 last fiscal as against singledigit return of other pension and provident fund schemes the tax benefit to all citizens will encourage subscribers from unorganized sectors to invest in the scheme said a senior finance ministry officialthe regulator pension fund regulatory and development authority pfrda believes that investments in nps positioned as a longterm debt fund will always give returns of 12 to 16 on an average when the stock market experienced erosion of value up to 50 the fund managers were overcautious only 5 of the total subscription money went into investment of equities sources saidin the nps the employees have the option of picking up their choice of fund managers and also determine the ratio in which he or she would like to invest in equities and debt instruments there is however a cap of 50 investment in equitiesthe nps corpus was more than rs 4000 crore before it was rolled out to the unorganised and private sector employees with the merger of the contributory provident fund cpf it was supposed to add an additional rs 1000012 000 crore all citizens can join the nps between the age of 18 and 55 years with a minimum proposed annual investment of rs 6000 pfrda had appointed 22 points of presence and six fund managers including three from the public sector pfrda has allowed investments of pension funds in both nifty50 and bse50 stocks