Hi Mr Basu. I am working in one PSB wherein my employer has opted for NPS (National Pension Scheme). My monthly contribution is 10 % of gross salary. I want to know whether I have 1.5 lacs available for tax savings (MF,PPF,FD,ect) including my NPS contribution or 2.00 lacs in total as proclaimed by few. Kindly clear my confusion.
Ajinkya-The contributions are split as below.
- Your contribution-This contribution will come under Sec.80CCD(1) of IT Act. Here you have option to save up to Rs.1,50,000. However, this action along with other sections like Section 80C will be totally to the cap of Rs.1.5 lakh.
- Your employer contribution-This contribution will come under Sec.80CCD(2). Here no such upper limit is provided. Hence, whatever the employer contribution is there, the whole will be available for deduction.
- Along with the above-said acts, Finance Ministry included another act Section 80CCD (1B). Here additional Rs.50,000 exemption is available. This contribution must be from your end. This is not the part of Sec.80CCD(1) and Sec.80C.
Considering all these, you can now calculate how much is the contribution towards NPS from you and employer end and accordingly can claim deduction. But don’t try to invest another Rs.50,000 for the sake of tax saving. Currently you may be saving, but during retirement, the benefits under this scheme are taxed.