FM proposes incentives to boost investment in NPS

 In a bid to boost NPS, Finance Minister Arun Jaitley has proposed higher tax rebate for investment in flagship social security programmes and allowed tax relief on partial withdrawal of up to 25% of the contribution.

Under the Income Tax Act, employee or other individuals are allowed deduction for amount deposited in the National Pension System Trust (NPS). The deduction cannot exceed 10% of salary in case of an employee or 10% of gross total income in case of other individuals.

Allowed up to 10%

However, further deduction to an employee in respect of contribution made by his employer is allowed up to 10% of the employee’s salary.

Effectively, it means that in the case of an employee, the deduction allowed under section 80CCD adds up to 20% of salary whereas in case of other individuals, the total deduction is limited to 10% of gross total income.

“In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposed to amend section 80CCD so as to increase the upper limit of 10% of gross total income to 20% in case of individual other than employee,” Jaitley said while unveiling his tax proposals in Parliament.

DH Newsletter Privacy Policy Get top news in your inbox daily
Comments (+)