NPS holders will get the benefit of income tax exemption in the New Tax Regime, know how

NPS in New Tax Regime: If you invest in National Pension System (NPS) and think that there will be no benefit in the New Tax Regime, then wait a minute! The New Tax Regime is like a jackpot for NPS holders, you just need to adopt a simple trick and you will get the benefit of direct tax exemption, that too without any documentation or investment.

What is that one trick?

Activate Employer NPS contribution. If you transfer your NPS account to Corporate/Employer model, you get a direct tax deduction on the contribution made by your employer on your behalf.

How much tax deduction is available?

Contribution up to 14% (government employees) or 10% (private employees) of your basic salary is tax free. This exemption comes under Section 80CCD(2) and is also completely valid in the New Tax Regime. However, here this investment is possible only through the employer, which is included in the tax exemption.

Understand by example

Suppose your basic salary is ₹9.6 lakh per annum, and your employer contributes 14% to NPS. ₹9,60,000 × 14% = ₹1,34,400. This means ₹1.34 lakh will be directly deducted from your taxable income. If your salary is ₹12 lakh, then now your taxable income will be only ₹10.65 lakh. This is the exemption that many people miss out on, while it is an exclusive benefit in the new tax regime.

Employer option is the best tax saver

In the Old Regime, an individual can contribute up to ₹50,000 to NPS and avail the benefit of 80CCD(1B). But for those in the New Regime, the employer portion is the best tax saver.

How to transfer NPS?

Login to your NPS CRA (NSDL/Kfintech) portal. Select the Sector Change option – Select “Corporate Sector”. Get the EPS Code from your HR and get registered. The account will be updated in 7–10 days.

Are these exemptions available in the Old Regime as well?

Yes, but in the Old Regime this exemption is available along with 80C and other deductions. There is no deduction in the New Regime, so this exemption becomes even more special.

Big relief in tax

If you are in NPS and have opted for the New Tax Regime, then this one change can reduce your taxable income by up to ₹1.34 lakh. That means you can get huge tax relief without any investment, documents or risk.

The post NPS holders will get the benefit of income tax exemption in the New Tax Regime, know how first appeared on informalnewz.

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