National Pension System (NPS) – Save Tax u/s 80CCD (1B) worth Rs. 15,450,With All in One TDS on Salary for Govt and Non-Govt employees For F.Y.2015-16

New introduced in
Budget 2015, your contribution in NPS can save you tax of up to Rs. 15,450, if
you are in the highest tax bracket of 30%. NPS provides an additional deduction
of Rs. 50,000 from your taxable income. Interested? Read on.

let’s start our journey to know more about this tax saving investment avenue
and see whether it truly makes sense to invest in it or it is better to pay tax
and invest in mutual funds to earn higher tax-free returns.

Download Automated All in One Income Tax preparation Excel based Software for Govt and Non-Govtemployees for F.Y.2015-16 [This Excel Utility can prepare at a time your Tax
Compute Sheet + Individual Salary Structure for both Govt & Non-Govt
employees + Individual Salary Sheet + Automatic Arrears Relief Calculator with
Form 10E + Automatic H.R.A. Calculation + Automated Form 16 Part A&B and
Form 16 Part B ]

How to open an NPS account?
Online Account – There are 2 ways to
open an NPS account online – one, directly through NPS
Trust’s website
two, through an intermediary, like your bank, ICICI Direct, HDFC Securities etc.

Offline Mode – You can also approach
a POS (Point of Service) and get this account opened.
Documents Required – PAN card copy, address proof copy, 2 passport-size
photographs, investment cheque and Duly Filled Subscriber Registration Form.

Exclusive Tax Benefit u/s 80CCD (1B)
you decide to invest in NPS, you can avail a tax exemption of Rs. 50,000 from
your taxable income. As the minimum investment requirement is Rs. 6,000, you
can contribute any amount between Rs. 6,000 and Rs. 50,000 to save tax.

Which Account is eligible for Rs. 50,000 Deduction – Tier I or
Tier II? –
 Your contribution to
Tier I account is eligible for up to Rs. 50,000 tax deduction u/s 80CCD (1B).
Tier II account does not entitle you to any tax deduction.

Minimum/Maximum Annual Contribution – As per the NPS rules, you need to contribute at least
Rs. 6,000 in this account in a financial year. However, you can do so in
multiple installments and minimum contribution in a single contribution is Rs.
there is no upper limit on your contribution to NPS. You can contribute any
amount to your NPS account. But, as far as tax benefit is concerned, you can
have only up to Rs. 50,000 in tax deduction.

Six/Seven Pension Fund Managers – These are the pension fund managers
(PFMs) which are managing the subscribers’ money in NPS at present.
HDFC Pension Management Company
LIC Pension Fund
ICICI Prudential Pension Fund
Kotak Mahindra Pension Fund
Reliance Pension Fund
SBI Pension Fund
UTI Retirement Solutions
Seven Annuity Service Providers – These are the insurance companies
which would provide you pension as you retire at 60 years of age.
Life Insurance Corporation of India (LIC)
SBI Life Insurance
ICICI Prudential Life Insurance
Bajaj Allianz Life Insurance
Star-Daichi Life Insurance
Reliance Life Insurance
HDFC Standard Life Insurance
Where your money gets Invested? – Your NPS contribution will get invested in Equity (E),
Government Securities (G) or Corporate Debt Securities (C) either as per your
own choice (Active Choice) or as per your age (Auto Choice).

Active Choice – Under “Active
Choice”, you can have your money invested in these three asset classes as per
your own choice. You can allocate your money among these three asset classes
(E, G or C), but there is a cap of 50% for Equity (E) investment allocation.

Auto Choice – Under “Auto Choice”,
your money gets invested based on your age i.e. the higher your age as the
subscriber, the lower would be the allocation for Equity.

Leave a Reply

Your email address will not be published. Required fields are marked *