In less than 24 hours, Finance Minister Nirmala Sitharaman will be presenting the Union Budget 2021. While the Budget announcement will be keenly watched by all and sundry, it is the aspect of personal tax that has the maximum attraction for the salaried class.
For the salaried class, any savings over and above the one prescribed section 80C of Income Tax is an added benefit. If you are keen on saving some extra bucks rather than the deduction of Rs 1.5 lakh under section 80C, the National Pension System (NPS) is a great instrument.
An additional deduction for investment up to Rs 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs 1.5 lakh available under section 80C of Income Tax Act 1961.
Further tax benefits under the corporate sector:
For corporate subscriber, the additional Tax Benefit is available to Subscribers under Corporate Sector, u/s 80CCD (2) of Income Tax Act. Employer's NPS contribution (for the benefit of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, without any monetary limit.
For corporates, employer's contribution towards NPS up to 10% of salary (Basic + DA) can be deducted as 'Business Expense' from their Profit and Loss Account.
If you are an existing Subscriber, you can approach any POP-SP or alternatively you can visit eNPS website (https://enps.nsdl.com) for making additional contribution in your Tier I account.
However, please note that tax benefits are applicable for investments in Tier I account only. There is no tax benefit on investment towards Tier II NPS Account.
Who can open National Pension System (NPS) Account?
Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS. Although, opening multiple NPS accounts for an individual is not allowed under NPS, an Individual can have one account in NPS and another account in Atal Pension Yojna.
Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS. But, don't be confused with joint account.
National Pension System account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF.
