NPS subscribers can claim this income tax benefit even after opting new regime

 








In the Union Budget 2020, Finance Minister Nirmala Sitharaman introduced a new income tax regime, giving taxpayers an option to choose a tax slab that had lower rates to pay. However, after opting this new income tax slab, the taxpayer had to lose all income tax benefits like Section 80C, Section 80 CCD (1) and many more deductions and exemptions that are around 70 in numbers. But, for those employees, whose employer is contributing to its National Pension System or NPS account, income tax deduction under Section 80 CCD (2) is available even when they have chosen new income tax regime.


Speaking on income tax benefit available for NPS scheme beneficiaries in new income tax regime; Pankaj Mathpal, Founder & CEO at Optima Money Managers said, "Income tax deduction available for NPS subscribers under Section 80 CCD (2) of the income tax act, is on the employer's contribution to one's NPS account. Since, it is not a part of one's annual income, NPS scheme beneficiaries can claim income tax deduction on its employer's contribution to its NPS account, even after opting for the new income tax regime." He said that all those employees whose employer has implemented NPS scheme can claim this deduction even after choosing the new income tax regime.

On how much income tax deduction NPS subscriber can claim after choosing new income tax regime; Amit Gupta, Managing Director at SAG Infotech said, "The new income tax regime allows a deduction under section 80 CCD (2) of the Income-tax Act, 1961, which is available if an employer contributes to an employee's NPS account. The maximum deduction an employee can claim is 10 per cent of annual salary, where annual salary means basic plus dearness allowance (DA)."

The Managing Director of SEBI registered income tax solution provider company went on to add that in new income tax regime, a taxpayer is allowed to claim income tax exemption on the conveyance allowance received to meet the conveyance expenditure incurred as part of the employment as well.

Source:https://www.livemint.com/money/personal-finance/nps-subscribers-can-claim-this-income-tax-benefit-even-after-opting-new-regime-11627889604369.html

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