Categories: Business

Know, 3 tips to save tax by investing in NPS under new tax system

The National Pension System (NPS) not only saves tax, but you can also plan your retirement by investing in it. That means investing in NPS means hitting two birds with one stone. If there is a tax benefit from NPS (Save Tax While Investing In NPS), then you should also know some tips related to it, so that you can get the most out of it.

1- Exemption will also be given on investment of NPS in new tax system

As you know, the new tax system has eliminated a lot of exemptions. In such a situation, even if you have chosen a new tax slab system, you will get the benefit of NPS. That is, if you want to save your tax from NPS, then the new system is also a profitable deal for you. You can get tax rebate on investments made in NPS.

2- Contribution from Employer required

You can claim tax deduction under 80 CCD (2) on investment in NPS. To take full advantage of this, it is important that your employer contributes to the NPS Tier-1 account. If the employer does not benefit from NPS, you cannot claim it. It is important to note that even if the employer puts money into the NPS account, it will be a part of your CTC and not the net pay.

3 – Exemption on investment in NPS up to 10% of salary

Experts say there is no ceiling on investment in NPS, but according to the new tax rules, the maximum deduction cannot exceed 10% of the employee’s salary. If the contribution to NPS is more than 10% of salary, then keep in mind that it will be taxed. Only up to 10% will benefit you from tax.

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