Tax benefit is one of the key consideration for arriving at an investment decision. The tax benefits of NPS are as under:
1. Employee Contribution is eligible for deduction u/s 80CCD (1) subject to overall maximum cap of Rs. 1.50 Lacs admissible u/s 80C.
2. Employer Contribution is also allowed as deduction in the computation of total income of the employee to the extent that it does not exceed 10% of employee’s salary. Deduction of employer contribution is available over & above the deduction of Rs. Rs. 1.50 Lacs as mentioned in (1) above.
3. Self Employed and others: In addition to deduction as mentioned in (1) & (2) above, an additional deduction of Rs. 50,000/- is also provided u/s 80CCD (1B) for contribution in NPS. It is over and above & is in addition to deduction u/s 80C. Deduction from income simply means that, higher the tax bracket- higher the benefit, lower the tax bracket- lower is the benefit. But benefit is there if an individual has taxable income. For example, an individual in the 30% tax bracket could save tax of Rs. 15,450/- whereas those in 20% & 10% tax bracket would be able to save tax of Rs. 10,300/- & Rs. 5,150/- of the tax amount respectively.
Refer a picture below:-
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
Notification No. 7/2016
New Delhi, Date: 19th February, 2016
2. This notification shall come into force from the date of its publication in the Official Gazette.
DEEPSHIKHA SHARMA, Director