NPS Double benefit: To save tax, you can deposit a maximum of Rs 50,000 in the National Pension System (NPS). Under section 80CD (1B) of the Income Tax Act, you can avail additional tax benefits of 80(C) on the savings made in NPS.
There are many types of confusions regarding tax saving among the people working in the private sector. Often, when tax is deducted from salary in the months of February and March, people then wonder where to save tax by investing. Every employee is aware of the exemption up to Rs 1.5 lakh under 80C. But there is no correct information about how to save more than this.
Question– Where are exemptions available under Section 80C on investment?
Answer- First of all, know that under Section 80C, only investments up to a maximum of Rs 1.5 lakh come under the exemption limit. Life Insurance Premium, Deferred Annuity, Contribution to PPF, Payment of Unit Linked Insurance Plan (ULIP) Premium, Payment in respect of Non-Commutable
Deferred Annuity, Investment in National Savings Certificates, Payment of Children’s Education Fees (Tuition Fees only) Investments in approved debentures/shares/mutual funds, investments in fixed deposits (FD) for 5 years or more, repayment of home loan (principal amount only) and investments in Sukanya Samriddhi Account come under the purview of 80C.
That means you can get income tax exemption on investment up to a maximum of Rs 1.5 lakh. But apart from this, where else can you invest and save more tax immediately? Let us tell you about this. You must have heard about the National Pension Scheme (NPS). Today we tell you the benefits of investing in it.
Question- Why is it necessary to invest in NPS to save tax?
Answer– To save tax, you can deposit a maximum of Rs 50,000 in the National Pension System (NPS). Under section 80CD (1B) of the Income Tax Act, you can avail additional tax benefits of 80(C) on the savings made in NPS. That is, if you invest in NPS, then investment up to Rs 50 thousand will come under the ambit of separate income tax exemption. In this way, you can avail tax exemption on investment up to Rs 2 lakh including 80C.
Question- Can people with private jobs also save tax by investing in NPS?
Answer: Yes, you can save your salary from being deducted by opening an NPS account immediately. Not only this, apart from tax, NPS is also a great retirement scheme. National Pension Scheme (NPS) was started in January 2004. Earlier only government employees could invest in this scheme. But in the year 2009 it was opened to all categories of people. That means everyone can take advantage of this scheme. Now people doing private jobs on a large scale are also joining this scheme.
Question- What is this NPS?
Answer– Apart from tax exemption, if you are looking for better earnings even after retirement, then you can open an account in NPS. You can open this account in your name or in your wife’s name. In this scheme, a lump sum and monthly pension facility is available after completion of 60 years of age. That means after 60 years you will not be dependent on anyone.
Question- How much and how can one invest in NPS?
Answer- According to your income, you can deposit money in NPS account monthly or annually. You can start investing in NPS with Rs 1,000 per month, which you can continue till the age of 65 years. It is necessary to buy 40 percent annuity on NPS investment. Whereas 60 percent amount can be withdrawn in lump sum after 60 years.
