homepersonal finance News

How to avail income tax benefits under National Pension System

How to avail income tax benefits under National Pension System

How to avail income tax benefits under National Pension System
Profile image

By Anshul  Apr 17, 2020 5:58:23 PM IST (Published)

While the Tier 1 NPS account offers income tax benefits, there is no tax benefit on the fund parked in Tier 2 account.

The National Pension System (NPS), is a government-sponsored retirement planning instrument that gives investors the option to set preferred allocation to different asset classes. It offers two kinds of accounts -- Tier 1 and Tier 2 -- for instruments including government bonds, equity market and corporate debt.

Recommended Articles

View All

While Tier 1 NPS account offers income tax benefits, there are no such benefits on funds parked in Tier 2 account. Tier 2 is known as investment account.
Also read:
Here are the tax benefits allowed under NPS:
Tax benefits for individuals
Any individual who is subscriber of NPS can claim tax deduction up to 10 percent of gross income with in the overall ceiling of Rs 1.5 lakh.
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.
Tax benefits for corporate sector
Additional tax benefit is available for subscribers under corporate sector. Employer's NPS contribution (for the benefit of employee) up to 10 percent of salary, is deductible from taxable income, without any monetary limit.
Employer’s contribution towards NPS up to 10 percent of salary can be deducted as 'business expense' from profit and loss account in case of corporates.
How to avail income tax benefits under NPS scheme
An existing subscriber can approach any Point of Presence - Service Providers (POP-SP) or alternatively can visit the e-NPS website -- enps.nsdl.com for making additional contribution to the Tier I account.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Top Budget Opinions

    Most Read

    Market Movers

    View All
    Top GainersTop Losers
    CurrencyCommodities
    CompanyPriceChng%Chng