NPS and TAX REBATE

Published by Anand(B.Tech, M.Tech, MBA Finance) Whatsapp 9415283904

NPS account and how can we take tax rebate from it

1.   NPS stands for National Pension System, which is a Indian government-sponsored pension scheme launched in 2004. It is designed to provide a pension corpus to all citizens of India, especially to those who are not covered under any other pension scheme.

2.   To open an NPS account, you can approach any Point of Presence-Service Provider (POP-SP) authorized by the Pension Fund Regulatory and Development Authority (PFRDA) and submit the required documents. You can also open an NPS account online through the eNPS portal, bank or consult me.

3.   Contributions to an NPS account are eligible for tax benefits under Section 80C and Section 80CCD(1) of the Income Tax Act, 1961. As per the current tax laws, an individual can claim a tax deduction of up to Rs. 1.5 lakh under Section 80C and an additional deduction of up to Rs. 50,000 under Section 80CCD(1B) for contributions made to an NPS account.

4.   Apart from the tax benefits, the NPS also offers the option of withdrawing a certain portion of the accumulated corpus tax-free at the time of retirement. However, any premature withdrawals from the NPS account may attract a tax penalty.

5.   To claim tax benefits on your NPS contributions, you need to submit the details of your NPS contributions while filing your income tax return (ITR) using Form 10-BA. It is also important to note that the tax rebate is subject to the overall limit under Section 80C and 80CCD(1B).