Presenting Investor Education Originals, where we simplify the basics of personal finance and investing for you. In this video, you will learn how to avail extra ₹ 50,000 deduction with NPS.
As a tax-payer, you’d be aware of the tax-saving options under Section 80-C, which are life insurance premium, HRA, EPF, PPF, NSC, ELSS, and interest on home loans.
However, as your CTC increases, you will easily exhaust the ₹1.5 Lakh limit. However, there’s a way to get extra ₹50000 deductions with an NPS account.
National Pension System is a retirement investment option. One can open an eNPS account from the NSDL portal itself. Salaried employees have an option to open it through their employers as well. Visit this link to open your account: https://nsdl.co.in/
Section 80CCD (1) is a specific section dedicated to NPS contribution. Under this section, you may avail tax deduction of up to ₹1.5 lakh against self-contribution to NPS account. The sub-section 80CCD (1B) makes you eligible for availing an extra Rs 50,000 tax deduction against self-contribution to NPS.
If you are a salaried employee, you get some additional tax benefit under Section 80CCD (2). This section pertains to employer’s contribution to your NPS account. The maximum tax deduction permissible against NPS contribution is 10% of the annual basic salary + Dearness allowance. And for Self-employed people, the limit is 20% of their gross annual income.
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