Budget 2026: Can NPS Tax Incentives Alone Bridge India's Retirement Savings Gap?

• Budget 2026 may increase NPS tax deduction limit from Rs 50,000 to Rs 1 lakh, benefiting salaried and self-employed individuals.
• Rajarshi Dasgupta of Aquilaw suggests salaried employees and the self-employed would gain most, with potential for significant tax savings for middle-income earners.
• Increased NPS deductions could channel some savings from EPF, PPF, or insurance, but these instruments will likely co-exist due to differing risk and liquidity profiles.
• Rohitaashv Sinha of King Stubb & Kasiva believes an enhanced NPS limit would rebalance retirement planning, promoting market-linked savings.
• While tax incentives are crucial for increasing participation, broader policies like auto-enrolment and improved financial literacy are needed to fully address India's retirement savings gap.

Why It Matters: Increased NPS tax incentives are a step towards bridging India's retirement savings gap, but not a complete solution.