TAX SAVINGS WITH NPS
The NPS (National Pension System) is a modern retirement planning avenue which offers subscribers flexibility with their retirement investment as well as tax benefits. Firstly, any individual subscriber of the NPS can claim tax benefit under Sec. 80 CCD (1) within the overall ceiling of Rs 1.5 lakh under Section 80C of the Income Tax Act.
For taxpayers who have contributions towards other tax saving avenues under Section 80C, there is scope for additional tax saving of up to Rs 50,000 exclusively on their Tier 1 NPS contributions under Section 80CCD (1B).
For subscribers under the corporate NPS, the employer’s NPS contribution (for the benefit of employee) up to 10 per cent of salary (Basic + DA), is deductible from taxable income, with limits under Section 80CCD (2). So, if your employer offers you NPS instead of provident fund, you do not lose on the tax savings available under EPFO (Employees’ Provident Fund Organisation). Tax benefits are also available at the time of withdrawal and exit from NPS.