NPS

FOR Citizen of India: Resident or Non-Resident

National Pension Scheme (NPS)

 

What is NPS ( National Pension Scheme)?

National Pension Scheme (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life

Under the NPS, individual savings are pooled into a pension fund which are invested by PFRDA regulated professional fund managers into the diversified portfolios comprising government bonds, bills, corporate debentures and shares. These contributions grow and accumulate over the years, depending on the returns earned on the investment made.

Who can Join NPS?

Citizen of India : Resident or Non-Resident
Age between 18-65 years, as on date of joining
Salaried or Self Employed

NPS TAX Benefits

Tax benefits for Individuals (All Citizen Model)

Self employed individual is eligible for tax deduction of up to 20% of Gross Income under section 80CCD (1) of Income Tax Act, 1961 within Rs.1.5 lakhs limit under section 80CCE

Additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of Income Tax Act, 1961. This is over and above of Rs. 1.5 lakhs limit under section 80CCE

Tax benefits for Salaried Individuals (Corporate Model)

Contribution made by Employee
Salaried individual is eligible for tax deduction of up to 10% of Salary (Basic + Dearness Allowance) under section 80CCD (1) of Income Tax Act, 1961 within Rs.1.5 lakhs limit under section 80CCE.

Additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of Income Tax Act, 1961. This is over and above the Rs. 1.5 lakhs limit under section 80CCE.

Contribution made by Employer

Employee is eligible to claim tax deduction on employer’s contribution upto 10% of salary (Basic + Dearness Allowance) under section 80CCD(2) of IT Act.

This is over and above of Rs. 1.50 lakhs limit available under section 80CCE. There is no upper cap in terms of absolute value on employer contribution.

Tax benefits for Corporate

Corporate can claim tax benefits for the amount contributed towards pension of employees.

Up to 10% of the salary (basic and dearness allowance) of employers contribution can be deducted as ‘Business Expense’ from Corporates Profit & Loss Account as per section 36(1)(iv)(a) of IT Act.