NPS (New Pension Scheme or National Pension System) has drawn attention of many investors since it got a few exclusive tax benefits. With the financial year drawing to a close, the interest has got even stronger.
NPS is a relatively new product. Taxation of maturity proceeds of NPS has been a subject matter of great speculation over the last year. Rules for partial withdrawal and lump sum withdrawal and investment guidelines have also been revised during the last year.
It is not easy for investors to keep track of developments unless they are regular visitors to PFRDA website. During my interaction with clients and readers of the blog, I realize there are a lot of aspects where there is still some confusion. I thought of covering such aspects in this post.
In this post, I will clarify a few misconceptions that investors have about investments in NPS.
Myth 1: NPS provides pension
NPS only helps you accumulate wealth. At the time of retirement, you use the accumulated wealth to purchase annuity plan (or a pension plan) from an insurance company. Your NPS fund manager has no role to play in providing you annuity income. Your pension will be paid by the insurance company. You can see the list of empanelled annuity providers on PFRDA website.
So, the money you invest in NPS goes to the NPS fund manager. He invests the money as per your choice of funds. The returns in NPS are market linked and are not guaranteed. Your money accumulates till the time you retire. At the time of retirement, you must purchase an annuity from the insurance company for up to at least 40% of the accumulated amount.
The remaining amount can be taken out in 10 annual installments till such time you turn 70. The amount that you choose not to convert to annuity continues with the fund manager till the time you withdraw it.
Must Read: Should you invest Rs 50,000 in NPS for extra tax benefit?
Myth 2: Investment in Tier-II account of NPS is eligible for tax benefits
All the tax benefits, annuity restrictions, exit and withdrawal rules are applicable to NPS Tier-I account only. NPS Tier-II account is like an open ended mutual fund. You can take out the money at any time. The tax benefit is only for investment in Tier-I NPS account.
Must Read: NPS Revised Exit and Withdrawal Rules
Myth 3: You can get tax benefit under Section 80CCD(1) for investment in NPS up to Rs 1.5 lacs
Yes, you can. But there is a cap. In case of an employee, this deduction is additionally capped at 10% of his salary (Basic + Dearness Allowance). In case you are self-employed, this deduction is capped at 10% of your gross total income.
Hence, if your salary (Basic + DA) is Rs 4 lacs, the maximum tax benefit under Section 80CCD(1) is limited to Rs 40,000 per financial year.
Of course, you can still seek relief under Section 80CCD(1B) for an additional Rs 50,000 tax benefit. Hence, the tax benefit for investment in NPS (own contribution) is capped at Rs 90,000 per financial year in your case.
Myth 4: Any contribution by employer to your NPS account is exempt from tax
Again not true. Contribution from the employer up to 10% of Basic Salary + Dearness Allowance is eligible for deduction under Section 80CCD(2). If your employer contributes more, the excess amount is taxable in your hands as salary. Therefore, higher your salary, greater the tax benefit.
Do note there is no upper cap (in terms of amount) on this tax deduction. This deduction is over and above the ceiling limit of Rs 1.5 lacs provided under Section 80C. However, this benefit is available to employees. Self-employed cannot avail this deduction.
Continuing with the above example, the contribution from your employer up to Rs 40,000 in a financial year will be exempt from tax.
Therefore, total exempt contribution is as follows:
- Up to Rs 40,000 under Section 80CCD(1). Own contribution
- Up to Rs 50,000 under Section 80CCD(1B). Own contribution
- Up to Rs 40,000 under Section 80CCD(2). Employer contribution
Therefore, in this specific case, the total tax benefit for NPS investment in the financial year is capped at Rs 1.3 lacs per annum.
Do note, even after these investments, you still have option to invest up to Rs 1.1 lacs for tax benefits under Section 80C (in products such as PPF, ELSS etc). Benefit under Section 80CCD(1B) and Section 80CCD(2) is not included under Section 80C cap of Rs 1.5 lacs.
Must Read: NPS Tax Benefits and Tax Treatment at Maturity
Myth 5: Your entire money gets invested in equities
This is not true either. PFRDA has put strict cap on the amount of your corpus that can be invested in equities. For Government Sector subscribers, the cap on equity investments is 15%. For other subscribers (all citizens model), the cap on equity investments is 50%. You can review the investment guidelines for Government Sector NPS and All Citizens model here. This can change in the future. However, till such time that happens, do moderate your return expectations.
These were the common doubts that I have encountered. If you have any other doubts about NPS, do leave your query in the comments section.
Image Credit: The original image and information about usage rights can be downloaded from Pixabay.
279 thoughts on “Common Doubts about NPS”
Sir I am a central government employee having cpf no nps from my employer, I have invested rs 150000 ,lakh under scccion 80 ccc in tax saving instrumcpfs lppf cplic ppf , lic etc. Now I have opened an nps account under all citizen model , I want to invest for rs 50000, will I get additional tax exemption under section 80ccd ib , plz clarify.
Dear Nurul,
You can do that. You can invest Rs 50,000 in NPS for additional tax deduction.
Can Central and State Govt Employee invest in NPS RS 50k alone in tier 1 to get additional tax exemption?
I am not sure if I got your question right. Benefit of Rs 50,000 under Section 80CCD(1B) is available to everyone including central and state government employees.
Will this 50000 withdrawn at the age of 60 along with other accumulated amount will be taxed (considering i have withdrawn 60% and invested 40% in annuity)?
I am not sure if I got your question right. Which 50,000?
HI SIR,
IF A GOVT EMPLOYEE PAY MONEY FOR HIS WIFE NPS. CAN HE CLAIMED DEDUCTION OF NPS AMOUNT DEPOSIT DURING THE YEAR.
NPS tax benefit is only for investments in own NPS account.
You can’t claim tax benefit for investment in spouse’s account.
Hii sir im shyam
I want to know that
One individual can have both NPS and cpf (contributory provident fund) account?????
Hi Shyam,
You can invest in both Provident Fund and NPS.
Can one individual have both EPS ( employee pension scheme 1995)and NPS ?
Yes, you can have both EPF and NPS.
I am confused about total limit of 80CC(1) & 80CC(1B).
I think first I need to have invested full or covered 1.5 lakh on 80CCD(1) and then only can invest under 80CCD(1B)if the total is above 1.5lakh but limited upto still max 10% of salary.
Say I invest 70thousands in NPS then I can claim it only under 80CCD(1). But say if I invest say 1.7lakh (still within <=10%of Salary) then 20K I claim under 80CCD(1B). SO 80CCD(1B) which is residuary should used only 80CDD(1) is exhausted which is primary.
AM I correct.
Dear Bijan
There is no such restriction. You can invest only Rs 50K in NPS and claim it under 80CCD(1B).
You don’t need to exhaust 80CCD(1) before 80CCD(1B) comes into picture.
Sir i m teacher my annual salary is 5.5 lakh . My cpf 55 thousand other savings1.50 lakh . Can i take both benefits of deduction
Is CPF NPS?
Ok thanks
Will the same be applicable if my employee don’t contribute and say I invest 60k in NPS would I be able to claim 50k under 80CCD(1B) and remaining 10 under 80CCD(1).
Yes. It is your choice. You can show whichever way you want to.
Sir, Do I need to pay tax for Employer contribution by showing the amount invested in NPS account in total salary?? If yes what is the benefit of adding in total salary and subtracting it under section 80CCD(2)
Employer contribution is exempt till a certain limit. Anything above that limit is taxable.
I get your point. This is grey area for me too.
My reading of section 17 of the Income Tax Act suggests that it should be included as part of your income and subsequently taken as deduction under Section 80CCD(2).
However, this should not concern you. For you, that contribution is exempt from tax up to a certain limit.
You can check when the employer shares Form 16 with you and take action accordingly.
Suggest you seek help from a tax consultant in filing returns.
I’m a 30 year old self-employed doctor falling in the tax-bracket of 20% as of now…i dont have a pre-set retirement age.
I have exhausted my Section 80c 1.5lakh deduction with PPF contribution & ELSS(sip) in this FY 15-16.
I dont have a NPS account yet. Will i be eligible for further tax relief if i invest 50,000/- in NPS…if yes under which section ?
Am i eligible for section 80CCD (1B) if i hav not invested in NPS for sec 80c benefits.
Awaiting for your valuable feedback.
Sir Iam working in coal India a psu company.our company accept to deposit 9.84% of basic and D.A in every year as per our pay agreement.But my doubt is that can I invest 50000 rupees in NPS for the exemption of income tax or not is because I read that a person should poses only one NPS account.so pls clarify .
You can contribute to the same NPS account.
You can make online contribution too.
https://enps.nsdl.com/eNPS/LandingPage.html
Sir thats means this additional tax exemption for rs 50k is for all , whether u have opened nps account through employer or through all citizen model . And there is no question of whether u r a govt employee with nps or ordinary citizen.
Yes, it is irrespective of the type of employment. So, you can be a government employee, a private sector employee, self employed or an ordinary citizen. Any one can claim benefit of Rs 50,000 under Section 80CCD(1B).
Sir I am central govt employee and now I got state govt job.I interested to join in that job there any problem to join of that job .when I resigned
Hello sir,
I am state government employee.. and invest almost rs. 10000 per month (Rs. 5000 my contri. bsaic plus da + Rs. 5000 employer contribution). My total yearly NPS contribution is around rs. 1,20,000. My investment through other method reach upto rs. 1,50,000 under 80C. Can I claim my contribution in NPS from my sallery for rs. 50,000 additional tax benifit or I have to open additional NPS account in all citizen mode. Please guide me.
You can not open two NPS accounts. if you already have one through your employer (government), then you cannot open account in All Citizen mode.
Lets understand NPS contributions first.
Contribution from your employer (Rs 60,000) is eligible for deduction under Section 80CCD(2). This is not part of Rs 1.5 lac limit under Section 80C.
Your contribution (Rs 60,000 and not Rs 1.2 lacs) is eligible for deduction under Section 80CCD(1) and 80CCD(1B).
As far as your contribution is concerned, as I understand, it is your choice how you want to claim it.
Extra deduction of Rs 50,000 is under Section 80CCD(1B). So, if your 1.5 lacs limit is already complete, you can claim upto Rs 50,000 under Section 80CC(1b).
1. You can claim your contribution under Section 80CCD(1B) for additional Rs 50,000 benefit.
2. You can not open NPS account under All Citizen Mode.
Sir
we are working in an autonoumus Institute and we did not have NPS Scheme but have an CPF Scheme where the deductions is being made on BAsic Pay and DA @ 12% from the salary of employees and equaly the employeer share is being deposited in the employees account on Monthly basis.
in view of above, kindly inform me can we go for the Pension Policy if Yes. will employeer pay share for the same
HI Shabnum,
Talk to your employer. Your employer needs to make a choice.
If it wants, it can.
Sir there are little confusion, the nsdl site says that only voluntary contribution are eligible for additional 50000 benifits.but the government employee have the compulsory contribution then how can it possible?
Yes, there is confusion.
In my opinion, you can show your contribution through employer even under Section 80CCD(1B).
The language of the tax clauses do not seem to prevent this.
AT THE MATURITY TIME (AFTER RETRIEMENT PENSION AND LUMPSUM AMONUT IS TAXABLE?
Nishtha,
Both are taxable.
Wonderfully Explained Thankyou
Thanks Saraswathi. Glad you liked the post.
hello sir
my wife got arrier in 2017. NPS contribution of that arrier is not showing in statements. what I will do?????
Please talk to your employer.
Feedback- when you write myths, you should clearly label them as myths. Otherwise in casual reading it seems you are making these statements, that are obviously false
Konark, thanks for the feedback. Updated.
Dear Sir ,
I work with a govt financial institution and i am enrolled in NPS . For the A.Y 16-17 i have done investment in PPF of Rs. 1.5 lacs . MY NPS contribution and my employer’s contribution in NPS is around 70 thousand.
In the projected income tax sheet given by accounts dept my overall deductions is shown as 1.5 lacs + company contribution of Rs. 70 k under section 80 ccd2 whereas my contribution is shown under 80 ccd 1 which is not counted as part of overall deductions.
I want to know whether my contribution towards NPS can be shown under section 80 ccd1b so that i can avail rebate of upto Rs.50k and if possible in case of employer persisting to show it under 80 ccd 1 whether i can get refund while filing of income tax.
If possible share the relevant clause of income tax. Thanks in advance
You can do that while filing income tax return.
You can refer to Section 80CCD of the Income Tax Act. It does not say at any place that you can not take deduction for contribution as an employee under Section 80CCD(1B).
Can i assume MY CPF UNDER SECTION 80ccd
In absence of employer contribution, how much can I invest and claim as deduction on account of NPS and also under which sections. (Have exhausted 80C limit of 1.5 lacs, I have invested 50000 and claim deduction under 80CCD(1B)). Can I make any additional investments and claim tax benefit
You have already taken the maximum tax benefit.
Benefit under Section 80CCD(1) is subsumed under Section 80C limit of Rs 1.5 lacs.
Since your employer is not contribution, there shall be no benefit under Section 80CCD(2).
Thanks for the clarification.
I am State government employee of tamilnadu, I am already in contributed pension scheme(compulsory)… Shall I join with NPS national pension scheme too? Is there any restriction in being both of the scheme at a time? Shall I get tax exemption for both? And how?
Dear Srimurali,
As I understand, Contribution pension scheme under discussion is different from NPS. So, you can open a NPS account.
Please understand I am not saying you should join NPS. It will depend on your specific case or requirements. Personally, I am not a very big fan of NPS. In your case, you are anyways subscribing to a pension scheme.
Yes, you will get tax benefits for both.
For NPS, you will get under Section 80CCD(1) and Section 80CCD(1B).
I don’t know the specifics of Contributory pension scheme. However, if it is notified under Section 80CCD(1), you can take under Section 80CCD (1).
You can talk to a tax consultant for more on this.
sir,
I am working in public sector company nad retairement age is 58 years. What portion of NPS can i get as a lumpsum amount?
Dear Sir,
Maximum lump sum withdrawal allowed at the time of retirement is 60% of the accumulated amount.
40% must go towards purchase of annuity.
Sir,
It is not necessory to invest upto 60 years? What happen in case of early retairement( e.g. In private sector the retairement age is 58 years) OR the case of permenent disability?
Dear Chetan,
Please go through the following post.
http://www.personalfinanceplan.in/opinion/revised-exit-and-withdrawal-rules-for-nps/
You should get all the answers.
I am State government public sector employee of Karnataka, I am already beneficiary of pension scheme(compulsory)… Shall I join with NPS national pension scheme too? Is there any restriction in being both of the scheme at a time? Shall I get tax exemption for both? However I opened account in NPS in March 2016. Also contributed amount on March 29 2016 in post office for my PRAN number . Amt contributed is not reflected before 31st March 2016. Can i claim amt invested on 29th March 2016 through post office to my PRAN number?
You get tax exemption for investing in compulsory pension scheme?
No seperate investment in compulsory pension scheme as pension is regular. Other savings under 80C inclusive like GPF,
As I understand, the two pension schemes are different.
You can open NPS account and avail tax benefits. As I can see, you have already opened the account.
The date you made the contribution should apply. You must have also got some acknowledgement receipt.
Date of credit of units is secondary. Request you to verify this with a CA.
I will verify with a CA yet your timely advice has given hope for tax exemption for contribution done on 29 March 2016 in post office.
Now, if Date of contribution is considered then I can claim for Tax exempt under Section 80CCD(1B) for FY 15-16 ,
else
Date of credit of units is considered then Tax exempt for same towards NPS for FY 16-17. and further I need not have to contribute towards NPS for FY yr 16-17.
Thank you sir.
You are welcome.
If I have a basic salary of 25K per month i.e. 3lac per annum, then can I claim a tax exemption of 50K under section 80CCD(1b)? Is the contribution under this section also capped by 10% of basic (which is 30K in my case)?
Benefit under Section 80CCD(1B) is capped at Rs 50,000. No other capping such as 10% of basic applies to the tax benefit.
i am a central govt employee. while investing in nps tier-1 account for the fy 2015-16, the money was deducted from my account on 28.03.2016 but the subscriptions of units was made on 04.04.2016. further, the contribution is not being shown for the fy 2015-16 in statement. whether i be eligible for the tax exemption 80CCD(1B)FOR 15-16. PLEASE GUIDE.
ALSO, WHILE MAKING ONLINE PAYMENT, EXCESS PAYMENT OF rS.30000 WAS MADE, WHICH WAS SHOWN NOT A SUCCESSFUL TRANSACTION, BUT MONEY WAS DEDUCTED AND LATER, ITS BEING SHOWN IN THE NPS ACCOUNT STATEMENT. WHETHER I CAN CLAIM FOR THE REFUND OF SAME OR WHETHER I CAN GET SOME EXTRA EXEMPTION OR I SHUD CLAIM EXEMPTION FOR FY 16-17.
1. You should get the tax benefit based on when you initiated the transaction. You must have also got some acknowledgement receipt or your bank account would have been deducted on or before March 31, 2016. In my opinion, you keep all those documents ready and make a claim in FY2016. I am not too sure on this. Suggest you verify this with a Chartered Accountant too.
2. So, essentially you invested Rs 80,000 in March and got units in April. You cannot claim refund of investment that has already gone into NPS.
i work in psu . gross income – 750000. PF,LIC,etc – 150000. i fall in 20% tax bracket. tax payed over 45000. if i start NPS for tax saving purpose(and also expose little in equity) which exemption will i be entitled. if i assume my income to be almost same this year what is the max i can invest in NPS and under which section 80CCD(1b), 80CCD (1) etc etc.will i get exemption. how much tax i can save.
Dear Rajesh,
You can invest in NPS. You can get tax benefit up to Rs 50,000 under Section 80CCD(1B).
You can invest more but the tax benefits will be capped at Rs 50,000 in your case.
i must congratulate you for creating financial awareness and clearing doubts of common man. great job. i have one more question. in my case will i not get the advantage under 80 ccd(1) contribution for NPS from my employers which is 10 % of the gross annual income, in my case 10% of 750000 is 75000. will i not get 75000 under 80ccd(1) if my employer contribute 75000 to my NPS.
SORRY ….ITS 80CCD(2). 10% OF GROSS ANNUAL INCOME AND NOT 80 CCD(1)
Thanks Rajesh!!!
I wrote my previous answer under the impression that you were already utilizing your Section 80C limit of Rs 1.5 lacs.
Total benefit under Section 80C, 80CCC and 80CCD(1) cannot exceed Rs 1.5 lacs.
There is an additional benefit of Rs 50,000 under Section 80CCD(2).
80C, 80CCC, 80CCD(1) and 80CCD(1B) are for your contribution.
80CCD(2) is for employer contribution.
Does your employer offer NPS?
Yes, if your employer is also contributing to NPS, then you will automatically get the deduction under Section 80CCD(2). This is no different from EPF contribution from employer.
Please understand salary includes only Basic and DA.
Here is the definition as per Section 80CCD.
For the purposes of this section, “salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.
yes my employer offers NPS. but the question is… will my employer contribute to both pension scheme epf and nps?? my epf contribution is around 80000 and LIC is 50000 and NSC is 20000. total 150000. secondly can my employer on my behalf deduct from my gross annual income to pay in NPS under EMPLOYERS CONTRIBUTION UNDER 80ccd(2). (it mean indirectly i contribute to both 80CCD(1B) AND 80CCD(2) ) CAN IT HAPPEN ??
An employer cannot offer EPF and NPS to the same employee.
I think you are getting confused. 80CCD(1B) has not for employer contribution.
http://www.personalfinanceplan.in/opinion/nps-tax-benefits-and-tax-treatment-at-maturity-revised/
Sir,
I am public under taking employee and My company is giving CPF. Total CPF,PPF,LIC, ULIP etc which are more than 1.5 lakhs so I get deduction under 80C of Rs 1.5 lakhs. If I take NPS under citizen model can I claim further deduction of RS 50,000/- under 80CCD(1B). Please clarify
Yes Mukesh, you can take tax benefit for NPS investment under Section 80CCD(1B).
Thank you for prompt reply further tell me if contribution to NPS citizen model has to be monthly or one can deposit once in financial year
There is no such limitation. It does not have to be every month. There is also no limitation that you must invest only once every year.
Sir I m working in a government bank and my employer deducts around 3800rs from my salary every month for NPS and bank also invests same amount for me in NPS but i think it is not included in my sallary slip so can I claim under section 80ccd2 on behalf of employers contribution
Dear Bharat,
The deduction under 80CCD(2) is typically automatic.
If employer contribution to NPS does not form part of salary slip or Form 16, you have already received deduction under Section 80CCD(2).
You cannot claim it again.
Dear Sir
I am a Govt. employee and is under NPS. My total contribution towards NPS is Rs.1,06,000 (10% of My Basic+DA). Apart from this I have another 1.3 lakhs saving in different insurance , PPF and ELSS scheme (80C). Can I claim Rs. 200000 as savings i.e. Rs. 1,30,000+20,000 (NPS)and another 50,000 from the remaining Rs. 76000 (1,06,000-30000)?
Yes, you can do that.
Rs 1.3 lacs under Section 80C + Rs 20,000 for NPS investment under Section 80CCD(1).
Rs 50,000 for NPS investment under Section 80CCD(1B).
raghaw sir my nps contribuation is 65000 then how much money i have to save. 1.5 lakh aur 1.35 lakh.
Ajay,
Didn’t get your question.
You want to save money for what? Are you talking about tax-saving?
Save as much a you can.
Thanks a lot for your prompt reply.
As per my company policy, I am eligible for 10% of my basic in 80CCD. Can I invest this 10% in Tier 2 account?
80CCD is applicable only to Tier I NPS contributions.
No tax benefit for Tier II contribution.
Sir,
I am a government employee. My Form 16 shows 98000 deposited in CPF. I have invested 150000 in PPF. Can I take 150000 benefit in 80C & 50000 benefit in 80CCD(1B) for the CPF savings.
Sir,
I already exhausted my 80C limit of 1.5 Lakhs and now I wanted to invest 50,000 in 80CCD(1B) component of NPS.
I also understand that NPS will have multiple asset classes to choose from and each has a NAV associated with it as per Market Value.
My question is, if I make a Lumpsum investment of 60K per year as compared to staggered 5K Per month, will it make difference to my end result? Which approach is preferable?
I am confused because, I downloaded an app in my mobile for NPS and it always shows higher end value if I invest in Lumpsum. Where was my thinking was different as staggered approach will average out the NAV.
Dear Koustav,
Depends on where you are investing. If you are investing in C and G schemes, then invest lump sum.
If you are investing in equity scheme, you need to see if Rs 50,000 makes a significant portion of your equity portfolio (not just NPS).
If it is not significant, then invest lump sum.
Otherwise, stagger your investments.
Keep in mind the charges per contribution. You have to pay 0.25% of the investment amount subject to a minimum of Rs 20. ‘You need to pay service tax too.
Dear Mr. Deepesh
I am currently contributing through employer contribution upto 10% of my basic. My future employer does not have NPS contribution.
I wanted to know what is the way forward/options for me to continue under NPS in future. Thanks in advance
You can continue your NPS account under All Citizens model.
Thanks for your revert.
my wife is unemployed and not getting any income. i have opened an NPS in her name and investment is made by me. shall I claim IT relief for investment in NPS of my wife ? kindly give a reply
Dear Mohandas,
NPS tax benefit is only for investment in own NPS account.
Hence, you won’t be able to claim any tax benefits for investment in your wife’s account.
Hi ,
My employer gives me EPF . I use PPF to exhaust rest of 80C . I plan to use only 80CCD 1B , 50000/- only in NPS . I understand this much is possible . Is it possible for me to add employer contribution to NPS (Of course it will be cut from CTC !) and make the amount non taxable retaining my EPF and not spending additional NPS employee contribution ?
Hi,
Your employer won’t offer both NPS and EPF.
You can open NPS account under All Citizens model. You can do it visiting a bank branch.
You can also open NPS account online using your Aadhaar card or combination of bank account and PAN details.
Once you do that, you can invest Rs 50,000 per financial year to get tax benefit under Section 80CCD(1B).
However, don’t just fall for tax benefits. You must the utility of NPS in your portfolio too.
Hello,
my employer (private company) says they cant contribute to my NPS account. Is there any alternate way this to happen?
Dear Krishna,
Didn’t get your question. Alternate way for what?
Btw, you can open NPS account under All citizens model too (no involvement from employer in that NPS account).
Please note you can’t open more than 1 NPS Tier I account.
my employer says he cant contribute for my NPS as part of 80ccd(2d). Any alternate way?
There is no alternate way. Benefit under Section 80CCD(2) is only for contribution by the employer.
Your employer must already be contributing to your EPF, right?
Dear Sir
I too have same question. My employer does not contribute in nps. Although i am doing volunatry contribution to NPS i.e 50,000. But i wanted to avail tax benefit on 80 CCD(2). Please suggest if there is a way. Yes my employer contribute in EPF but that comes under 80 C. I want to make use of 80 CCD(2)
Ashok,
The benefit under Section 80CCD(2) is for employer contribution to your NPS account.
Therefore, you can get benefit under Section 80CCD(2) only if your employer offers NPS and contributes to your NPS account.
Sir,I m just removed from central govt. Service due to unauthorised absence. I have Rs 2,79,439.93 in my NPS account.Can I able to withdraw my all amounts from my NPS.
Dear Debasis,
You cannot withdraw the entire amount. If you exit NPS before superannuation and the accumulated corpus is greater than Rs 1 lac, you have to use 80% of the corpus to purchase an annuity plan.
dear sir, plz explain me if i contribute 6000 per year upto 19 year, then each year and after 19 year what tax will decucted.
Dear Nitaant,
NPS provides market linked returns. Hence, can’t be sure of the amount after 19 years.
sir, how i can change asset allocation online.
I am yet to figure that out. Btw, you can’t change asset allocation whenever you want.
Can only do once a year.
Sir,tax benefit of Rs.50,000 is under NPS-I or NPS-II A/c.
NPS tax benefit is only for investment in Tier-I account.
Whether a Govt. employee who is not in the new pension scheme can invest i9n Sec. 80ccd(b) of rs. 50000/- and get income tax benefit over and above the Rs.150000/- in sec. 80c
ok good
Yes, you can.
Hello Sir,
I fall under 30% tax bracket,so apart from section 80 C,I am investing in NPS since FY 2015-16 which gives additional tax benefit under section 80ccd(1),but in-spite of this my tax outgo is very high.
I would like to utilize the section 80ccd(2) where employer can contribute up-to 10% of basic + DA. I am fully aware of the rules of withdrawals and other aspects of 80ccd(2). I can contribute this sum of 10 % of basic with out any problem from my end.
The actual problem is, I am private sector employee and my employer has not opted for NPS contribution and hence I am ending up paying huge tax. what options could i explore as an individual to fully utilize the section 80ccd(2) even though my employer has not tied up for NPS ? Can I make a voluntary contribution as I am doing now for 80ccd(1)?.
Highly appreciate your inputs on this issue. as the Financial year is approaching nearing to its end, I would like to make use section 80ccd(2) if i have the option and complete the documentation task.
Thanks
Dear Mr. Singh,
Benefit under Section 80CCD(2) is only through your employer. There is no other way to get it.
IF your employer does not offer NPS, you can not avail tax benefit under Section 80 CCD(2).
Dear Sir,
Thank you for the information.
Thanks
Dear Sir,
Thank you for the information.
Thanks
Thank you very much for providing very good info
You are welcome Bhaskar. Please do share with your friends.
my form 16 provided by my employer he has not calculated employer contribution towards NPS. so i suppose i cannot put any amount under 80CCD(2).
my gross total income in my form 16 provided by my employer is 5,01768(gross salary- Ptax) my gross salary includes b pay+ g pay+ da+ med allowance.
to efile should i add employer contribution towards nps. presently my total income includes my nps( out of that 5,01,768 employee contribution is deducted monthly ).
Dear Kuldip,
If the employer contribution does not show, it means your salary slip is already adjusted for employer contribution under Section 80CCD(2).
In that case, you don’t have to worry much about it.
Sir,
I am working in a Andhra Pradesh State Government. I was the NPS contributor. Our office officials adds Employer Contribution to my Salary…so that without receiving of the amount my gross salary is increased…is it right process? there is at any such rules to add Employer contribution to my Salary…Please Clarify me..
My Total Gross Salary without Employer Contribution is as follows
Pay: 478800 DA:99648 OTHERS: 161490 GROSS: 739938
With Employer Contribution is 739938+57845=739938
so that my Taxable income is high.. please clarify this
Dear Rajesh,
As I see, your employer is contributing 10% of your basic + DA to your NPS corpus.
This amount is exempt under Section 80CCD(2).
Hence, don’t worry about it. There is no additional tax that you have to pay.
Where to get instruction in dis regards
Thanks
Sir, i am a state govt employee. I have a query relatated to employers contribution towards NPS. Can i get tax benifit on employers contribution towards NPS even if dat amount is not shown in my gross salary?
It is automatic. You don’t have to do anything.
Respected Sir,
My employer kept deducting 10% of my basic salary + DA for several years and after my enrollment to NPS he invested existed corpus + equal contribution by employer as a lump sum two years back. This year my employer invested interest accrued on the corpus + same contribution by employer also in NPS. Is this interest taxable to me.
Thanks…
Dear Garima,
Please contact a Chartered Accountant.
Sir although my employer has been making deductions for NPS since many years but I have not opened NPS account beacuse of some legal issue. Now that I am intending to open NPS account can I take refund for previous years’ investments also?
That sounds a bit complex. I don’t have an answer for that.
It is illegal to deduct NPS contribution and not deposit.
Who will you seek refund from?
IT department while I file my ITR for previous and current year
Respected Sir
Is the DA on Transport allowance taxable?
Thanks.
Hi I m Gujarat government servant. My yearly contribution is 80000 and government contribution is 80000.my total gross income was about 920000. And I have total investment in pli,sip,ppf was 159000..so how much tax benefit I will take. Clarify me
Thanks
Rs 1.5 lacs under Section 80C.
Rs 50,000 under Section 80CCD(1)
Adjustment for employer contribution will be automatic.
Rs 50,000 under Section 80CCD(1B) or 80CCD(1) as employer is contributing 80000 in NPS from employees salary
Employer contribution comes under Section 80CCD(2).
For claiming tax benefit on Contribution from the employer up to 10% of Basic Salary + Dearness Allowance is eligible for deduction under Section 80CCD(2), whether individual has to make payment after taking salary from the employer or company need to pay directly to my nps a/c. please clarifies with example.
thanks
Company has to make payment.
I joined state government job and resigned FM central government job but SMS FM government nsdl contribution received . My State government ask for nps my I apply for new nps or wait for old nps to stop old contribution.
Hi,
I am a private sector employee and my company doesn’t provide any NPS facility. Is it possible for me to open a direct NPS tier 1 account with a bank and contribute 50k in lumpsump and claim a tax benefit of 50k as per the section 80CCD(1B)
Thanks,
Yes, you can open NPS account through bank, make a contribution and get tax benefit under Section 80CCD(1B).
You can open NPS account online too using Aadhaar card.
http://www.personalfinanceplan.in/financial-planning/how-to-open-nps-account-online-using-aadhaar-card/
Does 25% withdrawal exemption in budget 2017 increases total non taxable amount in NPS?
This 25% is for partial withdrawals (and not at the time of maturity). Only 25% of own contribution (not the returns or employer contribution).
But yes, it does increase tax-exempt portion.
sir i have completed 60 years in aug 2017 wants to continue My NPS account opened in 2015 can i continue the same if yes . how to go about this ( as i understand we can continue the same till age of 70 i want to continue till 65 please guide)
Suggest you go through the following post.
http://www.personalfinanceplan.in/opinion/you-can-contribute-to-your-nps-account-even-after-you-turn-60/
Sir, can a central govt employee having pensionable job open a account in nps to claim rebate under Section 80 CCD(1B)
You can do that. I assume you do not already own a NPS account.
Sir,my NPS contribution is 24000 in a year. Is it eligible for deduction under section 80CCD(1B). And can I claim exemption of 1.5 Lac under section 80c without including my NPS contribution? Will I be eligible for tax exemption of (24000+150000=174000).Plz clarify. Thanks.I am a government employee.
Yes, you can do that. File your income tax return accordingly.
sir,
i am a goverment employee,i have a doubt about NPS rebate in income tax in fy 2016-17.my own contribution in NPS is rs 51000.00 and same amount by govt. and my other saving like as (ppf.,lic) is rs 58630. so how can i calculate saving under 80cc and 80ccd. plz explain me in detail .
Dear Monika,
NPS comes under Section 80CCD(1).
Therefore, you can claim Rs 51,000 under Section 80CCD(1) and Rs 58,630 under Section 80C.
DEAR SIR,
I AM A STATE GOVT. EMPLOYEE. I HAVE SOME QUERY REGARDING HOW TO CALCULATE TAX BY SHOWING MY SAVING.
THE DETAILS AS:
1. LIC – 70000/-
2. CPF(SELF)-95000/-
3. PPF- 10000/-
MY QUESTION IS, CAN I BREAK MY CPF CONTRIBUTION IN TWO PART FOR SAVING
FOR EXAMPLE
70000+10000+65000=150000/- IN 80C AND REMAINING PART 30000/- IN 80CCD1(B) FOR ADDITIONAL TAX SAVING(UPTO 50000/-)
PLEASE SUGGEST ME.
Hi Ajay,
If CPF is not NPS, you can’t do it.
Dear sir please give information regarding investment under 80 C
I have invested under Section 80C (EPF, PPF,Tution fee, Mutual
fund, SSY)- 134515
80CCD(1) – 48463
80CCD(1B) – Nil
80CCD(2) – 48463
how can i benefited under 80CCD(1) and 80CCD(1B)
regards
Raj Kumar
Benefit under Section 80CCD(1) comes within overall cap of Rs 1.5 lacs under Section 80C. Defined under Section 80CCE.
Benefit under Section 80CCD(1) is over and above Rs 1.5 lacs. This is only for investment in NPS.
Sir,
I am a Central Government Employee and under NPS. Deduction in Tier-1 a/c is Rs. 65,000/- and I have deposited Rs. 1,50,000/- in PPF a/c. Can I claim deduction of Rs. 50,000/- u/s 80CCD(1B) out of that Rs. 65,000/-deposited in Tier-1 a/c.
regards
Dhiraj Dutta
Yes. Do that at the time of filing income tax return.
You can also consult a chartered accountant.
Iam 52 years old. Iam working in Govt. Iam investing Rs.50000 until my retirement. what benefit i will get? excluding income tax benefit.
Dear Sir,
NPS provides market linked returns. Therefore, difficult to tell with certainty what will your corpus grow to.
You will have to use at least 40% of the accumulated corpus to purchase an annuity plan. Remaining amount can be withdrawn lump sum.
Iam 52 years old. Iam working in Govt. Iam investing Rs.50000 in NPS , until my retirement. what benefit i will get? excluding income tax benefit.
Sir , my form16 shows an amount of rs.8 under 80ccd(1b)(01). Please explain this.
Please contact a Chartered Accountant.
Sir I am a state govt. employee with CPF / NPS account. I have deposited Rs 128000 to My PPF account & Rs 72000 (only employee share) is deposited in CPF Now please clarify me that can I claim tax benefit of Rs. 50000 (CPF) under section 80CCD(1B) & additional Rs 22000 under section 80CCD(1)plus 128000 of PPF under section 80C to make it total saving of Rs 200000.
Yes, assuming Rs 72,000 has gone to NPS.
If an employee is not availing any deduction under 80ccd and adds employers contribution in his income statement and pays tax for it every year. Will his maturity amount will be tax free ?
Tax treatment at maturity does not depend on tax benefits you took on investment.
My doubt
1.40% of withdrawal of nps amount is exempt under section10(12A),for getting this exemption who invested before budget will get or only for new investors or both.
Everyone who exits on or after April 1, 2016.
Dear Sir,
Thank you for this informative article. I am a private employee. I have exhausted the limit of Rs. 1,50,000 u/s 80C. My company is registered under the Employees Provident Fund Scheme. There is no NPS registration. I just wanted a clarification if I could get the additional benefit of voluntary contribution of Rs. 50,000 u/s 80CCD(1B) like in the case of a self employed or professional who can get benefit u/s 80C for voluntary contribution to PPF u/s 80C.
You are welcome, Jay.
Yes, you can contribute Rs 50,000 in NPS and get tax benefit.
Request you to share the post with your friends and on your Facebook page/Twitter handle.
Thank you for the clarification.
Can i withdraw valuntary contribution under section 80CCD(1B) at any time?
Now i am 30 years of age. If i continued to invest under 80CCD(1B) principle will be 15 lakh. In that amount i am forced to invest 40% of wealth in annuties. If i pay income tax every year it will be 4.5 lakh. I can invest my amount any where and it will be in my pocket. Guide us which one is correct
You can’t withdraw from your Tier I NPS account whenever you want.
Sir,
Though almost sure from the previous comments but still want a confirmation regarding additional deduction of Rs. 50000 under sec ccd 1b.
I have already invested >1.5L (40000 (PPF) + 98000 (SSA) + 29000 (Children Education Allowance – i.e. tuition fee)
Can I claim my 10% (basic pay + DA = 51000) subscription towards NPS Tier 1 account under sec CCD 1b (Rs. 50k only). The subscription is however being shown under head 80CCE in employers IT register?
Regards
Dear Mr. Kumar,
The benefit under SEction 80CCD(1B) is independent on your salary. It is capped at Rs 50,000.
The one you are talking about is Section 80CCD(1). Section 80CCD(1) comes under overall cap of Rs 1.5 lacs (defined under Section 80CCE).
Dear Deepesh,
I and my wife both are employees.I am in bank and she is in kendriya vidhyalaya. We both are eligible for pension from our employer .On 31.03.2017 , I & she invested Rs 50000/-each in NPS TIER I(Rs 1000/- at the time of opening account & Rs 49000/-separately ,making total Rs 50000/-).Today on verifying our statement accounts,we noticed that TOTAL CONTRIBUTION AS ON date i.e 03042017, balance showing nil in both account. Please clarify where the amount Rs 50000/- gone , i have claimed the amount under 80ccd(1b) for both cases.
pl gude me .
thanks,
dinesh singh
email id -dinesh.singh@sbi.co.in
Dear Mr. Singh,
Allocation of units takes a few days.
There is some confusion in this matter, at least to me.
Some say it should be date of investment (date of debit from your account) while others say it should be date of allocation of units. Tax laws not very clear on this.
Personally, I feel it should be date of debit from your account. If I am correct, you can take tax benefit.
Please talk to a good Chartered Accountant.
Dear Sir,
I am working in a PSU.I have a EPF account with my Employer.My Query is that whether i can open a NPS Tier I account also as I already have a Mandatory EPF account.Please advice me .
Thanking You,
Ranjith Ramachandran
email id:Ranjith6290ksfe@gmail.com
Hi Ranjit,
You can invest in NPS.
Thank You Sir
Hi Deepesh,
I have a query. i work for a private company and i already have EPF account. My employer also offers NPS. can i opt for both or is their any rule that i can only have one of these. second, i already exhaust 80C limit in other investments like ppf, epf etc. Can i ask only employer to contribute 10% of salary for NPS and not from employee side as i want to claim only 80CCD(2) ?
Thanks.
Anurag
Hi Anurag,
You can have both NPS and EPF but you have to check with the employer. Your employer must offer it.
In my opinion, there is nothing that prevents employer only contribution. Again, depends on your employer.
You should ask these questions with your accounts section.
Hi Deepesh,
I have exhausted 1.5 lakhs as part of 80(C).
My query is if my company is contributing 10% of basic in NPS as part of 80CCD(2)
After this can i also claim additional 50000 for tax exemption as part of 80CCD(1).Also,is it possible to contribute voluntary in corporate Zone Model of NPS or only Employer can contribute.
Thanks
Hi Nita,
Are you not contributing to your NPS account? Is the employer only contributing?
Hi Deepesh,
My employer will contribute,I want to know if I can also contribute to my corporate account to avail additional 50000 tax exemption as 80ccd(1)
Yes
Hello Deepak,
The post is very helpful. Thank You for it.
I am into private job.
I have few additional questions about 80CCD(2)- employer contribution. We can avail this option for tax benefit and employer contribution will be a part of our CTC only.
1) What is the minimum lock in period for 80CCD(2) and (1B) for partial or full withdrawal. how will the taxation be handled on it.
2) What is I go on leave without pay or discontinue my jobs. What will be the criteria to keep my NPS account active?
3) Can the contribution be reduced or increased in an year or during the association with NPS? Like if i start investing in 80CCD(2) with 5% of my basic salary and 25 K in 80CCD(1B). Can i decrease the contribution to 3or% and 15K or increase it to 10% max nd 50K? if yes, how often can this be done?
4) Can you help me with a projection of how much pension I will be getting if start investing(current age – 31 years) 60K per year till retirement (60 years) accounting in for inflation?
Thank You in advance,
Hi PAG,
1. Ideally, till the age of 60 or retirement.You can exit prematurely too. For taxation, refer to this post. https://www.personalfinanceplan.in/opinion/nps-tax-benefits-and-tax-treatment-at-maturity-revised/
2. Keep making minimum contribution.
3. NPS has no problem. Your employer may have a problem. If you are investing through your employer, your employer may deduct a certain portion of salary towards NPS. You can always invest over and above. Btw, 80CCD(2) is for employer contribution to NPS (and not yours)
4. NPS provides market linked returns. Therefore, can’t help
Hi Deepak,
What happens if i invest more that Rs 50000 per year? ( for exapmle Rs. 72000 per year)
Thanks
You can do that. There is no upper limit on how much you can invest in NPS.
I am central govt. employee since Mar 2015. Due to late generation of PRAN, my total contribution of NPS till today is Rs. 50,000.00(Rs. Fifty Thousand), which has to be recovered by my DDO. At the same time I wish t o resign from my current job and join another central govt. job. My DDO has intimated that your total recovery of NPS contribution takes at least 3 months while I have to join another job in the end of June 2017. My DDO has also intimated that they will not relieve me before total recovery of NPS contribution ie Rs. 50,000.00.
Sir, is it possible for me to deposit my total contribution of NPS in a single attempt so as to relieve earlier. Kinldly advice , which enables me an early relieving. Please also intimate any rules of central government which could be beneficial to me in this situation.
Dear Raj,
Not the right guy for such queries.
Please contact NSDL CRA.
Hello Deepak
I was a govt employee. I was on leave without pay for over an year. Now after my resignation my department is asking me to remit their contribution as well as mine in NPS Tier -1 account (which they continued making when I was on Leave without pay). Was just wondering how to get this sorted out, when I wasn’t earning any salary, why did my department kept on depositing my NPS? They say it is a norm and correct as per rules. What I understand is NPS should be 10% of my salary, now when my salary is zero, my contribution should also be zero.
Can you guide on this. Do I have to pay?
Regards
Rajveer
Hi Rajveer,
Don’t know. Therefore, can’t comment.
Sir i want to fill itr return in year 2017 for financial year 2016-17 i am a gov. Employee. my ppf saving is 150000 and my mendatory deduction in nps account is 52568 rupees . My employer did not give me the benifit of tax rebate only for 150000 rupees and refused to give benifit for rupees 52568 under 80ccd(1B) . Now please tell me can i clame relaxation under 80ccd(1B) while filing itr return onlind and get refund for extra tax paid…will i have to go to chartered accountent for this process or can i simply claim this deduction by mention the amount 52568 in column of 80ccd(1B) .. please clearify me
You can do that yourself online. If you face issues, contact a CA
Sir i want to fill itr return in year 2017 for financial year 2016-17 i am a gov. Employee. my ppf saving is 150000 and my mendatory deduction in nps account is 52568 rupees . My employer gave me the benifit of tax rebate only for 150000 rupees and refused to give benifit for rupees 52568 under 80ccd(1B) . Now please tell me can i clame relaxation under 80ccd(1B) while filing itr return onlind and get refund for extra tax paid…will i have to go to chartered accountent for this process or can i simply claim this deduction by mention the amount 52568 in column of 80ccd(1B) .. please clearify me
Reply
R/Sir
My Query is different from questions asked in this forum.
My employer implemented NPS for employees in organisation with employer’s Contribution from last two years. Beside this wef appointment employees are member of CPF @ 12% Equal contribution. My query is
1. Can employees be eligible for NPS Scheme in addition to CPF ?
2. Can employee reject the NPS proposal offered by Employer ?
3. My employer deducting NPS (Eýee Share) every month. but failed to transfer/deposit (both Contribution to My PRAN Number. Now this accumulation around more that 1.35 L.
4. Who is the reddressal Authority, if employer deducted NPS (Eýees Contribution) from Salary but not depositing to PRAN No. NPS Authorities saying this problems are related to POP and POP-SP and both are saying that ask your employer. What to do in such situation ?
Hi Umesh,
I assume CPF is same as EPF.
1. Technically, there is no problem in having NPS and CPF/EPF at the same time.
2. I have not seen any employer where both NPS and EPF are mandatory. Employees have an option. Depends on terms of engagement with your employer.
3/4. Contact NSDL CRA and PFRDA. I do not know the exact process. Search for NPS grievance redressal.
Hi, have below querries
1. Can mandatory contribution to nps tier 1 be claimed for exemption u/s 80 ccd(1b) by which the limit u/s 80c can be utilised for claiming exemption thru other investment. Is there any rule, circular prohibiting the same.
2. Does NPS CRA/ fund manager provide any capital gains statement to ascertain tax liability on withdrawl from Tier 2 account. If not, how to calculate the gains on part withdrawl from long term investment say 5 years.
3. Any update on taxation on withdrawl from Tier 2 accounts.
Hi Latish,
1. Yes, you can do that. Not written anywhere. It is an interpretation.
2. No
3. No clarity still. Suggest you go through the following post.
https://www.personalfinanceplan.in/opinion/should-you-invest-in-nps-tier-ii-account/
My assessment has changed a bit from what is mentioned in the post.
I believe you can take relief under Section 57(iii) and pay tax at your marginal rate on the gains made.
Btw, I don’t see any reason for investing in Tier II NPS.
Hii sir its shyam
I want to know that
Can one individual have both NPS and CPF(contributory provident fund ) account ????
I read this article and its extremely well written. Here I would like to go ahead as I have a query.
On 22nd Oct 2017, I applied for NPS using the online website. I deposited 50K and now I have a confusion regarding an offering from my company known as Corporate NPS wherein the AMS is HDFC securities.
My 80C is 1.5 Lakhs and its all of my contribution. The PF is over this amount.
I invested in NPS and now I want to move to Corporate NPS as there is a 10% tax rebate on Basic+DA. I want to know that would it be over and above the tax benefit as I added 50K myself?
Where does the corporate come here in picture? Do I need to make deductions every month through my monthly Payroll or How exactly it is if I move to coorporate NPS?
Please tell me do I need to move to corporate NPS ?Can I save some more money? Or it would be a monthly SIP from the date I enroll till the financial year? How do we go ahead with it?
Thanks Apoorv for the kind words.
AMC will be HDFC AMC (and not HDFC Securities).
You get benefit for investment in NPS under three sub-sections.
Section 80CCD(1), Section 80CCD(1B) and Section 80CCD(2).
Secion 80CCD(1) is subsumed under Rs 1.5 lacs under Section 80C.
You get an additional tax benefit under Section 80CCD(1B) for up to Rs 50,000.
Section 80CCD(2) offers another additional benefit but this is for employer contribution to your NPS account.
Suggest you go through the following post.
https://www.personalfinanceplan.in/opinion/nps-tax-benefits-and-tax-treatment-at-maturity-revised/
You have opened NPS account under All Citizen’s model.
If you want your employer to contribute to your NPS account, you need to shift to corporate sector. Investment guidelines are same. As I see, this is just for operational convenience.
https://www.personalfinanceplan.in/opinion/how-to-shift-nps-account/
Your employer will contribute to your NPS account (your CTC will be structured accordingly). Since the amount is exempt under Section 80CCD(2), your overall tax liability will go down.
In my opinion, if it is a choice between EPF and NPS, stick with EPF.
Hope this answers your query.
What is the taxation on withdrawal from Tier 2 accounts? IS LTCG benefit is there…
Taxation on NPS Tier II account is unclear.
It may get capital gains taxation or the profits may be taxed at marginal income tax rate.
My doubt is, let’s say i have made nps contribution of 1 lakh in past financial year . Which was invested 50% in debt and 50% in equity. In current financial year after few month of same pattern of contribution. I feel like equity is overvalued at this stage let switch to 100% debt pattern for upcoming months. While doing this can I switch the equity corpus that has been invested in last financial year and few months of this year.
Hope for your clarity
You can do that twice a year.
Suggest you go through following circular on PFRDA website.
http://www.pfrda.org.in/WriteReadData/Links/multiplechoice123ea68491f-d4cf-44ca-bcb6-61f9c3db58e2.pdf
or this article in Mint
http://www.livemint.com/Money/Ze45tIyLho2CEPsi4nMsrL/You-can-now-change-your-NPS-allocations-twice-a-year.html
However, I will suggest you not to do this. Stick to asset allocation.
I am central govt employee, my tier 1 is under default scheme, I want to change it as active scheme with 50/ in equity, please suggest me in which fund I should switch, and how? my age is 44 years
As I understand, for central Government employees, equity exposure is capped at 15%.
Hi,
I am 35 year old private company employee, I have opted for NPS to save taxm have option to get 100000 as employer contribution, however, i am worried if i would be able to withdraw from NPS, enough when i need it at the time of retirement, which obviously is not 60, it could be some where in 45 only. i hope my money will not get locked untill I turn 60, not sure will be alive till than :).
Is it good idea to invest more in NPS rather than MF as i straight away get 30% tax saving here. not sure if it would be beneficial in long term or not.
Hi Ashok,
An early retirement can be a problem if you have good amount of assets tied up in NPS.
Before 60, you can exit whenever you want. However, you need to use 80% of the accumulated wealth to purchase an annuity plan.
hlw sir i m working as a state govt employee. my gross income (salary+other sources like FDs) is 7lakh with nps contribution of 72k each( me and employer’s). I have 1.5l investments in insurances and ElSS to Cover my 80c limit. My questions are:
1. Do i have to take employer’s contribution in my gross income i.e. in excess of my salary income while filing my return?
2. Can i claim 50000/- under 80 CCD(1B) in excess of 80c i.e. 2lakh claim.
3. Can i claim 50000/- (employer’s Contribution) under 80 CCD(2). taking my total claim to 2.5Lakh?
4. Employer’s Contribution claim upto 50000 is it restricted that i can claim only if i take employer’s contribution in gross income. As by this i will take in account of 72K but will be able to claim only 50K so ultimately will be paying 20% on 22K.
5. if i dont take employer’s contribution in IT filing m i violating IT laws i.e. in case of IT raids will it be a objectionable point?
Thanking you, Ashish Gupta, AEE.
1. Go by how your employer shows it in Form 16.
2. Yes
3. It will be automatically adjusted. You don’t have to do anything. But yes, the employer contribution qualifies for benefit under Section 80CCD(2).
4. 80ccd(2) has no absolute cap on benefit. The benefit is capped at 10% of your basic.
5. Why wouldn’t you take it?
Suggest you talk to a chartered accountant too.
Sir,
I am central government employees . Amount deducting from my salary every month but not posting in my central provident fund account till now. I talked about it but not respond. What I do.
You mean deductions happening from your payslip, but does not show in NPS statement?
Hello sir
I am state government employee.
I have cpf account in government.
Now amount deducted for cpf is invested in nps tier 1 in state government scheme.
76000 invested in this financial year.
So can I get extra 50000 tax exemption in nps from this 76000?
Rest 26000 I take exemption in standard 1.5 lakh amount under 80 c.
Please guide
Thanks
Hi Mihir,
Yes, you can do that.
50,000 under Section 80CCD(1B)
Remaining under Section 80CCD(1), which effectively comes under Section 80C limit of Rs 1.5 lacs.
Dear Sir,
I had appointed in Central govt. Institute in 2002 with old pension scheme.
In 2005, I had terminated,
Then I had appointed in State University in 2008 with NPS and worked there for 7 and half year.
I won the case in Apex Court in 2015,. I rejoined the Central Govt. in Jan 2016 and technically resigned from state University.
1. How my NPS amount will be refunded?
2. Whether my full NPS amount will be transferred in my GPF account or Cash/DD will be refunded?
3. Is there any rule for my case?
Dear Dileep,
You will get EPF or NPS under the Central Government job?
IF NPS, you can shift your account from State Government to Central Government. Suggest you go through the following post.
https://www.personalfinanceplan.in/opinion/how-to-shift-nps-account/
If you have GPF, then you may have to exit NPS. Currently, there is no provision to transfer money from NPS to EPF.
Sir
I am a central govt employee. My NPS deduction i..e 10% of basic +DA is around Rs.58000. So my query is that can I show Rs. 50000 in 80CCD1(B) and remaining 8000 Rs in section 80ccd(1). Here our AO is not allowing to show Rs. 50000 in 80CCD1(B) before 80CCD(1). Please provide the rule link as well so that I cam explain to my tax deductor i.e AO if it is possible. They are saying that 80 CCD1(B) deduction can be claimed only when you voluntary invest in NPS over your mandatory 10% deduction. Please clarify the same.
Thanks
Hi Saurabh,
They will not agree. Neither point (mine or theirs) is written anywhere.
You make this adjustment while filing the return.
So you mean I can make Rs. 1,42,000 investment in addition to Rs. 8000 of my NPS deduction and show remaining Rs. 50000 NPS deduction under 80CCD1(B) at the point of ITR filing. Will I be eligible to get deduction of total Rs. 2 Lacs exemption in this case ?
Please guide.
yes
OK. Thanks for your suggestion 🙂
same problem for most of the tax payer..how to convince our officer..
No need to convince. File your returns accordingly and seek refund of the tax paid.
SIR I AM LOKENDRA A GOVT. EMPLOYEE….SIR MY ANNUAL CONTRIBUTION TO NPS is 124000(62000 govt. or employers contribution and 62000 is employee mandatory contribution)
my other saving include 1300000 approx in pf and lic and sip…
Sir i want to know can i show my 50,000 (that is my mendatory contribution toward nps not any extra investment toward nps) from that 62000 in 80ccd(1b) and include rest 12000 in 80C…
Or it need to contribute extra 50000 to claim 80ccd(1b)…
Yes, you can do that.
Your accounts office won’t agree. You can make that adjustment while filing IT return.
SIR I AM GOVT. EMPLOYEE AND JOINED ON JAN. 2001 & UNDER GPF OLD PENSION SCHEME CAN I OPEN NPS TO CLAIM 50K ADDITIONAL TAX BENIFIT.
Yes, you can.
Sir, Is there a difference between a central government employee paying a particular amount for a particular period for NPS (which is mandatory) and a private employee paying the same amount for same period ( voluntarily joined) ? I mean, is there any benefit to a government employee under the new pension scheme, compared to other citizens .
Hi Srihari,
Tax benefits are same for everyone.
Hi Sir,
In terms of the amount we contribute every year and the amount we get back after retirement, is there any difference? (Govt vs others)
As per my understanding, government will contribute an amount equal to employee contribution irrespective of whether the employee is government or otherwise. Is it correct?
Hi Sreehari,
The Government contributes to NPS accounts of only Government employees (and not for everyone).
Govt. sector NPS and All Citizens model NPS have different investment guidelines.
My father is 58 years old public sector bank employee. He has defined benefit pension scheme. Can he subscribe to NPS and will he be able to receive both the pensions simultaneously. And for how many hears he has to contribute to NPS to be eligible for the benefits.
Hi Nitin,
Yes, he can subscribe.
NPS does not provide pension per se. You purchase an annuity plan with the accumulated corpus.
Yes, he can get both pensions.
Till 60. He can continue the account till the age of 70.
1- Is NPS compulsory for new employees of Central Government or they can opt for provident fund account and take pension plan of some other company?
2- How will monthly pension increase after retirement under NPS considering inflation ?
1-Yes
2-Typically stays constant (not inflation adjusted). Depends on the annuity products available at the time of retirement
I am a private sector employee, my employer doesn’t deduct NPS,
I have invested 1,50,000 in PPF & 45000 in NPS.
In which section i need to claim NPS, because if i used 80CCD section its come under 1,50,000 limit which i have already consumed in PPF, than which section i am eligible to use my 50000 NPS amount contribution, if my employer doesn’t deduct NPS.
Thanks
Claim NPS contribution under Section 80CCD(1B)
The money received by nominee is taxable or not?
I am not very sure about this. Did not find any relaxation on this front in Section 10 of Income Tax Act.
Will get back when I have better clarity.
Sir,
I and my employer pays 10% of my salary + DA in NPS. Employer’s Contribution to NPS is covered u/s 80CCD(2). My contribution is covered under which section 80CCD(1) or 80CCD(1B) ?
Thanks in advance
About your contribution, it is your choice.
Dear Sir
If my employer has deducted NPS contribution of the employee (me) and has not deposited the same in the NPS Account; can i claim Income Tax Rebate for the concerned financial year.
Thanking you in anticipation.
sir
my PRAN generated on26.03.18and I made a contribution of around 50000rupees on 28.03.2018,now in my transaction statement upto 31.03.2018,the contribution towards pension fund showing nil,and the total valuation of unit showing 47780?, kindly confirm me weather I am eligible to show this amount for income tax rebate for the financial year 2017-18.thanks
Hi Srinivas,
What is the value date of investment?
I mean what day’s NAV did you get?
Sir the statement generated on 3 April and the period is upto 31 March 2018,also NAV date is also 31st March
I am a bit confused.
See, your year-end value is about 50K, then the transaction would have gone through before March 31.
If NAV is as on March 31, 2017, you can take the benefit in FY2018.
Sir,
I have open accounts under National Pension scheme along with a cheque of Rs 50,000/- during March 2018 (around 15th March, 2018). Account open date is 29/03/2018 but cheque cleared from my bank account on 7/4/2018. Statement of March and April as on date attached herewith for your reference.
Can i consider investment under 80CCD for last year i.e accounting year 2017-18 ( AY 2018-19) nor Not ?
Please advice.
Hi Sir ,
Suppose my investments under 80C is not exhausted and its sums much less than 1.5 lakhs.
In that case, if i invest 50K in NPS, will it be considered as a tax exemption separately?
Yes.
Btw, it is your choice how you show your NPS investment in income tax returns.
I am a govt primary teacher.MY employer is deducting amount from my salary since January 2018 but not a single rupee has been deposited in my NPS account. Whom should I complain to?
Hi Brajesh,
Your employer is the Government.
Do you have PRAN?
Yes, I have
I contact my finance officer he told me that grant for 10% of employer’s contribution has not been provided by govt since now.So he is unable to deposit any amount in my NPS account.
I am very unpleased with it. If he doesn’t have funds for employer’s contribution then why is it being deducted from my salary
Dear Sir,
I am working in pvt ltd company and my company gives PF contribution but to get extra tax benefit I want to invest in 80CCD (2) NPS. In this scheme can we get benefit in below options?
(1) Employer is not registered under NPS so employer is giving NPS contirbution to employees with his salary and employee will pay NPS contribution both employee’s & employer
(2) only employee has opened NPS account & investing some amount say Rs.50000/- will he able to take benefit in 80CCD(2).
Dear Shraddha,
Benefit under Section 80CCD(2) is for employer contribution to your NPS account.
The approach pointed by you is not eligible for benefit under Section 80CCD(2).
You can take benefit up to Rs 50,000 per annum for own contribution under Section 80CCD(1B).
I joined govt job before 2004. Can I go for NPS though i am eligible for govt pension and GPF.
In future, can it happen that govt say, choose either pension (NPS or Govt pension) or choose GPF or NPS.
Hi Deepak,
You can have both NPS and GPF. You will get pension from both.
You can open NPS account under “All Citizens model”.
Thanks for prompt reply. Will I get both pensions i.e. from Govt for old pension and from NPS (as i would be subscribing as All Citizens model. Do you have any url or doc from any authority which says that govt servant joining before 2004 can have both (old pension + GPF) and NPS.
Pl clarify.
Thanks
Yes, you will get both pensions.
Pension from NPS is by an insurance company (and not by Government).
Dear Sir,
Pl look the comments offered by someone on following website. It creates doubt and needs clarification.
Thanks and regards
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Anonymous March 21, 2016 at 5:50 PM
I am cover under old pension scheme, as i joined state govt job before 2004. Can I open account under National Pension Scheme as Individual and avail tax benefit of rs. 50,000 under 80CCD (1B). Will this violet any clause /rule as I am already covered under old pension by state govt.
Reply
Replies
Anand VijayaKumarMarch 23, 2016 at 3:32 PM
As a Government Employee I dont think you are eligible to open an NPS Account.
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The only restriction is that you can’t have two tier-I NPS accounts.
A Government employee can open NPS account under All citizen’s model (if he does not already have an NPS account under Govt. NPS)
Dear Deepesh,
I have found your blog very useful and interesting. The way you have articulated the differences and similarities between PF (EPF and PPF) versus NPS is really worth reading for anybody who wants to get an idea. Coming to the point, My friend is working for a private engineering college and has got an offer as a Government employee where NPS is mandatory. She wants to know what are the options available to manage the EPF account.
Can she contribute to the EPF account once she switches her current job? In other words, can she operate both accounts EPF and NPS
Should she withdraw the complete amount (excluding the EPS amount)?
Please advise.
Thanks
Ravi Kiran
Dear Ravi,
Unlike, your friend can’t contribute on own in EPF. Has to be through the employer.
The amount in EPF continues to earn interest till such time it is withdrawn (or retirement age).
If the amount is big, she can let the amount be in EPF account.
If the amount is small, she can exit EPF. No point in maintaining account for a small investment.
Dear Sir
First of all, thanks for the very informative article.
I have a doubt, for which I couldnt get the answer yet. Is there amy “due date” or “last date” for the remittance of NPS contribution (employer+employee) to the NPS fund? If yes, under which regulation is this mentioned?
Regards
Ajay
Hi Ajay,
I am not aware of any such provision
What is the issue?
Sir, I am a central government employee. 10% of salary (I. e. 60000) is being deducted for NPS contribution from my side. I am investing 1.5 lakhs through PPF and LIC. Am I eligible to take the additional benefits of of Rs 50000 u/s 80 CCD (1B) for my nps amount deducted from my salary??
If yes, please provide me relavent circular or order.
Thanking you
Hi Naveen,
Yes, Rs 2.0 lacs in total.
There is no circular in this regard.
This is an interpretation that you can claim your contribution (through employer NPS) to NPS account under Section 80CCD(1B).
Hello Deepesh Sir, i am a government employee.
I took home loan LIC HFL in 2017 for purchasing house. i read that under section 80 c in income tax rule, the amount of registry and court fees can be included in 80C.
so i already had 2,80,000 as registry amount in 80C,
Now my 80C limit of 1,50,000 is already exhausted by adding registry amount ,
my NPS deduction is rs 60,000 approx. which my employer has included under 80C in form 16. AY 2018-19
so my query is that can i add rs 60,000 NPS amount in section 80ccd(1B) while filing IT return to get benefit,.or i have to necessary add it to 2,80000+60000 in section 80c.????
do i have to give this information to my employer before taking tax benfit under 80ccd(1B)
Hi Garima,
While filing return, you can show your NPS contribution under Section 80CCD(1b) instead of Section 80CCD(1) (or Section 80C).
With this, you will get additional tax benefit of Rs 50,000.
Dear Sir,
I am private sector employee. I have got NPS account, can i also open for my wife seprately.
Regards
Sanjeev
Yes, you can open for your wife too. However, you will not get tax benefit for investment in her NPS account.
Hello sir,
I have joined my company in march 2010 . My employer started pension contribution in NPS from year F.Y 2017-18. Now he is also adding arrear amount of all the previous years in F.Y 2017-18.
According to NPS rule, contribution made by employer upto 10% of salary(basic+da) is exempted from tax
Now with arrear amount contribution made by employer for FY 2017-18 is more than 10% of salary for FY 2017-18. This will attract a huge amount of tax.
How can i claim tax relief on this amount because this amount if given in previous years which it belongs to would not attract any tax on that year.
kindly suggest
As I understand, you can seek relief under Section 89.
Please talk to a Chartered Accountant.
Can we exit from nps?
Yes, you can. There are a few rules around that.
Dear sir,
Can the employer alone contribute to NPS with no contribution from employee? In that case, will the employee be allowed to avail tax deduction u/s 80CCD(2)?
Thank you.
Dear Sir,
I am a central Govt . employee under new pension scheme. I have invested Rs. 1.50 lac in PPF under 80 C during A.Y. 2019-20. Deduction of 10 %( BP+DA) made from my monthly salary is Rs. 60,000/- and deposited in my NPS Tier -I account. Their is a confusion as to whether 10 % deduction Rs. 60,000/- invested in NPS Tier -I account can be claimed under section CCD 1(B) or otherwise.
Hi Deepesh,
I have recently opened an eNPS account with HDFC as the pension fund management. Now I need to get one of my previous employers to transfer some amount they owe to me to this new eNPS account. Is this allowed? If so, what would be the bank details for POP ‘eNPS-Online’.
Any information on this would be greatly appreciated.
Thanks!
I am working in a state university. University agreed to pay NPS but they don’t know how to open account for the faculty. Could you please guide the procedure how the university has to enroll as paying authority ? How it can add faculty to NPS?