National Pension Scheme (NPS) & Income Tax benefits
National Pension Scheme (NPS) India is a voluntary and long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) and the Central Government.
Tax benefit to Employees:
Employees who contribute to NPS are eligible for the following tax breaks on their contributions:
- a) Tax deduction of up to 10% of pay (Basic + DA) under Section 80 CCD(1), subject to a maximum of Rs.1.50 lakh under Section 80CCE.
- b) A tax deduction of up to Rs. 50,000 under Section 80 CCD(1B) in addition to the overall limit of Rs.1.50 lakh under Section 80CCE.
Section 17(2) provides that in case aggregate of employer’s contribution towards employee’s employee provident fund, National Pension System and Superannuation exceeds seven lakhs fifty thousand in a year, the excess shall be taxed as perquisite in the hands of the employee.
Benefit to Employers: