More tax savings from NPS in Budget 2024? Expect employer's share to rise to 12%, additional Rs 50,000 NPS deduction in new tax regime
Budget 2024.
NPS deductions that are currently available under old and new income regimes
It is a defined contribution-based retirement savings scheme to provide old age security and is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It follows the Exempt Exempt tax regime wherein contributions and accruals are tax-exempt, but withdrawals are partially taxable.
Deduction in respect of NPS contributions under the Income Tax Act, 1961 is available as below:
Individual contributions: Up to 10% of salary (for salaried individuals) or 20% of gross total income (for self-employed individuals) under section 80CCD(1) of the Act, clubbed with the limit of Rs 150,000 under Section 80C in the old tax regime.
Additional flat deductions up to Rs 50,000 are available for voluntary contributions to NPS under Section 80CCD(1B) of the Act in the old tax regime.
Employer contributions: Up to 10% of the employee's salary are eligible for deduction under Section 80CCD(2) of the Act in both the old income tax and new income tax regime.
Budget 2024 expectations: What are the changes salaried taxpayers want in NPS?
Presently, the additional deduction in respect of voluntary contribution of Rs 50,000 under section 80CCD(1B) is allowed under the old tax regime only. The government may consider allowing the said deduction under the new tax regime also. This would serve a two-fold purpose with the taxpayers enjoying additional deduction under the new tax regime and higher investment in the retirement scheme
Read more on economictimes.indiatimes.com
