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.
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.
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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