Can I consist of my employer’s contribution to NPS in my taxable revenue?

My employer contributes 10 % of my fundamental income+ D.A. to Countrywide Pension Technique (NPS)Will this be bundled in investment decision ceiling of 1,50,000 or is it is individual from the 1.50 lakh limit.

-Mohit Somani

By Balwant Jain, Chief Editor, ApnaPaisa

The tax deduction for NPS is out there underneath Portion 80 CCD of Cash flow Tax. Contribution produced by an employer is permitted beneath Section 80 CCD(2) topic to a ceiling of 10% of the wage (14% for central federal government employees). Even so if the mixture of contributions created by the employer in direction of worker provident fund (EPF), NPS and superannuation exceeds rupees 7.50 lakh in a yr, the extra is addressed as taxable perquisite.

Different deductions are permitted for contributions created by the taxpayer himself to the NPS account less than two Sections. Under segment 80 CCD(1) contribution created by the tax payer is qualified for deduction upto 1.50 lakh, alongside with other suitable goods, as for every the restrictions laid down underneath Part 80 CCE, which also handles the various merchandise of section 80 C and 80 CCC. This deduction is subject to limit of 10% of the income for salaried (14%for Central government Personnel) and for some others it is capped at 20% of the gross whole profits.

In addition, Part 80 CCD (1B) enables an additional and special deduction of 50,000/- for contributions manufactured by the taxpayer himself towards NPS account about and previously mentioned the one out there below Section 80 CCD(1). The restriction of share of wage or of gross overall cash flow is not applicable for contribution manufactured underneath Section 80 CCD(1B).

So the additional gain beneath Part 80CCD(1B) can only be claimed in regard of contribution made by the personnel himself and the exact same cannot be claimed for the contribution produced by the employer, even though successfully it is also created by the employee indirectly, for which separate deduction is available beneath Segment 80CCD(2).

(Views as expressed by the expert.)

Subscribe to Mint Newsletters

* Enter a legitimate electronic mail

* Thank you for subscribing to our newsletter.