Indian Press Wire
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NPS Tax Benefit Under the Old and New Regimes: Learn How to Reduce Your Taxes

<p>A long-term, voluntary retirement savings plan, the National Pension System (NPS) is overseen by India’s Pension Fund Regulatory and Development Authority (PFRDA). It is intended to provide users with money in retirement.</p>
<p><img decoding=”async” class=”alignnone wp-image-403761″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-nps-tax-benefit-under-the-old-and-new-regimes-learn-how-to-reduce-your-taxes-news1.jpg” alt=”theindiaprint.com nps tax benefit under the old and new regimes learn how to reduce your taxes news1″ width=”1265″ height=”843″ title=”NPS Tax Benefit Under the Old and New Regimes: Learn How to Reduce Your Taxes 3″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-nps-tax-benefit-under-the-old-and-new-regimes-learn-how-to-reduce-your-taxes-news1.jpg 510w, https://www.theindiaprint.com/wp-content/uploads/2024/02/theindiaprint.com-nps-tax-benefit-under-the-old-and-new-regimes-learn-how-to-reduce-your-taxes-news1-150×100.jpg 150w” sizes=”(max-width: 1265px) 100vw, 1265px” /></p>
<p>NPS is regarded by experts as a fantastic approach to save for retirement while taking advantage of major tax advantages. But it’s crucial to keep in mind that NPS is an investment that requires a lock-in period till retirement.</p>
<p><strong>Tax Advantage for NPS</strong></p>
<p>When the end of the fiscal year draws near, workers begin the annual job of reducing their tax liabilities.</p>
<p>“The National Pension System (NPS), which offers attractive tax benefits, is one of the less known but very important tax saving instruments,” said Kurian Jose, CEO of Tata Pension Management.</p>
<p>When the fiscal year comes to an end, workers are engrossed in the yearly practise of reducing their tax obligations. When the HR department asks for documentation of investments, a lot of people begin looking at ways to reduce their tax liability.</p>
<p>Jose enumerated the following tax advantages for NPS under the previous and current tax regimes:</p>
<p><strong>The Old Regime’s NPS Tax Benefit</strong></p>
<p>deduction allowed under Section 80 CCD (1) of the Income Tax Act up to Rs 1.5 lakhs.</p>
<p>an additional deduction for NPS investments of up to Rs. 50,000 under Section 80 CCD (1B) of the Income Tax Act.</p>
<p>Under section 80CCD (2) of the Income Tax Act, subscribers under the Corporate NPS model are eligible for extra tax advantages on investments up to 10% of Basic Salary.<br />
The maximum amount of this benefit (PF, Superannuation fund, and NPS combined) is Rs 7.5 lakhs.</p>
<p>For people who received advantages under the previous income tax system, all of the aforementioned tax-related exemptions apply.</p>
<p><strong>NPS Tax Benefit Under the New Law</strong></p>
<p>Jose said that people must change their tax-saving strategies in light of the new tax system, which was implemented to give lower tax rates and simplify the tax structure.</p>
<p>“The new tax regime comes with lower tax rates but limited deductions, unlike the previous system with various deductions and exemptions,” Jose continued.</p>
<p>Under the previously stated Section 80CCD (2) of the Income Tax Act, contributions to the NPS are still deductible.</p>
<p>NPS is an Exempt-Exempt-Exempt (EEE) product as well.</p>
<p>As previously mentioned, subscribers are eligible for tax deductions on their NPS payments.</p>
<p>Returns that earn contributions but do not deduct any taxes are covered under the second exemption.-Additionally, withdrawals up to 60% are tax-free. Tax exemption also applies to the purchase of an annuity product with 40% of the corpus. Pension payments from an annuity investment are subject to taxation at the subscriber’s current rate at the time of distribution.</p>
<p>It’s critical to thoroughly assess your financial status, your income, and the effects of the new tax law’s deductions and exemptions. Furthermore, NPS is not the only retirement savings option available. Other investing choices that also provide tax advantages include PPF, mutual funds, and ULIPs.</p>
<p>Speaking with a tax professional may help you get tailored advice based on your unique situation.</p>

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