National Pension System i.e. NPS gives you an opportunity to avail an additional benefit of Rs 50,000 in terms of income tax. Talking about tax saving options, it includes PPF, National Pension System (NPS), ELSS, pension schemes.
NPS Latest Update: By investing in NPS, you can get an additional discount of Rs 50,000. The government gives an additional exemption of Rs 50,000 under section 80CCD (1B) to promote investment in NPS, which is in addition to the exemption of Rs 1.5 lakh available under section 80CCE. That is, in such a situation, you can get tax exemption on the total investment of Rs 2 lakh.
Great ways to save tax
Actually, people resort to many options to save income tax. In times of inflation, the limit of Rs 1.50 lakh under section 80C of the Income Tax Act is crossed in a jiffy. Section 80C covers all your expenses, for example, education fees for children (which increases year after year), home loan EMI (part of principal), life insurance premium, etc.
Talking about tax saving options, it includes PPF, National Pension System (NPS), ELSS, pension schemes. For salaried people, their Employee Provident Fund ie PF also comes in this category. The question is how to save tax above 80C. Come, know how you can save tax.
Take advantage of section 80CCD (1B)
In the National Pension System i.e. NPS, you get the benefit of availing an additional Rs 50,000 in case of income tax. If a taxpayer’s investment under section 80C has been completed, then he can invest in NPS and avail income tax benefit of Rs 50,000. Apart from investing in Tier 1 account of NPS, a taxpayer can take advantage of this if he has already invested Rs 1.5 lakh. That is, NPS can become a great way for you to save tax.
How to get benefit of Rs 50,000
If a person has completed investment of Rs 1.50 lakh under section 80C, but still wants to save more in tax, then he will have to open a Tier 1 account of NPS. He can invest a maximum of Rs 50,000 in this account in a financial year to get benefits in income tax. Keep in mind that this investment of Rs 50,000 will have to be claimed under 80CCD (1B) while filing income tax return. Thus, any taxpayer can get the benefit of deduction up to Rs 2 lakh instead of Rs 1.50 lakh.
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