National Pension Scheme (NPS) Tax Benefits Explained
Individuals who are NPS subscribers can claim a tax advantage under Sec 80 CCD (1) up to a maximum of Rs. 1.5 lac under Sec 80 CCE. All NPS subscribers are eligible for a special tax benefit under Section 80CCD (1B) NPS subscribers are eligible for an extra deduction of up to Rs. 50,000 for investments in NPS (Tier I account) under Section 80CCD (1B). This is in addition to the Rs. 1.5 lakh deduction permitted under Section 80C of the Income Tax Act of 1961. Benefits of the Corporate Sector in Terms of Taxation: Subscribers are eligible for an additional tax benefit under Section 80CCD (2) of the Income Tax Act, which applies to the corporate employees. Employer contributions to the NPS (for the benefit of employees) up to 10% of pay (Basic + DA) are tax deductible, with no monetary limit. Corporates Employer contributions to NPS can be deducted as a 'Business Expense' from their Profit & Loss Account up to 10% of pay (Basic + DA). How to Make an Investment to Get a Tax Break: If you are already a subscriber, you can go to any POP-SP or go to the eNPS website (https://enps.nsdl.com) to make an extra payment to your Tier I account. Please note that tax benefits are only available for Tier I account investments.