After Budget 2020, what are the NPS tax benefits under Sec-CCD (1), 60 CCD (2) and 60 CCD (1B) and especially if you have chosen a new tax discipline? Let’s understand the changes in detail. You all know that the government introduced a new tax system during the 2020 budget.
Also, the government has given you an option to choose the old tax duty or the new tax discipline. Because of these changes, many of us are confused about what the NPS tax benefit 2020 will be.
Can anyone get the same benefits as we used to get till 2010-201 F? NPS Tax Benefit 2020 – Sections 80 CCD (1), 80 CCD (2) and 80 CCD (1B)
Now let us understand the various tax issues with NPS. Benefits of NPS Tax on Investment, First of all, let us understand the NPS tax benefits that you will get while investing. Due to the 2020 budget,
There has been a big change here and so let us understand what happens if you opt for an old tax system and what are the tax benefits and what happens if you choose a new tax discipline.
- A) Old Tax Conditional NPS Tax Benefit 2020 If you want to retain the old tax system for filing IT returns, the old tax rules with NPS will continue as usual. Display the same image from the image below.
- B) Note that the tax benefits under Tier 1 and Tier 2 are not available to all investors. Tier 2 tax benefits are only available to government employees.
Differences between TPS 1 and Tier 2 accounts in NPS” related to the difference between Tier 1 and Tier 2 in NPS. For others, there is no tax benefit if you invest in an NPS Tier 2 account. Let’s discuss the NPS figure one by one as below.
NPS tax benefit when investing in a Tier 1 account The maximum benefit available under NPS tax facility under Sec .60 CCD is Rs. 1.5 lakhs (with a limit of Sec. 60 cc). Annual would be eligible for a maximum of 20% of a person’s annual income (previously it was 10% but increased to 20% after the 2017 budget) or an employee (Basic + DA 10%) contribution. Ad the above, this section will form part of the Sec .80C restriction. NPS Tax Benefit under Sec.60 CCD (2) There is a misconception among many that there is no upper limit for this category. However, the limit is at least 3 conditions.
1) The amount paid by an employer,
2) BASIC + DA 10% (in case of Central Government employees, it is now effective from 1st April 2019 BASIC + DA 14) and
3) Total gross income. •
This is an additional exemption that the exemption under this section will not be eligible for self-employment. NPS Tax Benefit Income under Sec.60 CCD (1B) It is an additional tax benefit up to Rs.50,000 eligible for income tax exemption and it was introduced in Budget 2015. 1b) can enjoy its financial benefits from 2015-15.
Both self-employed and employees are eligible for this discount. It is above Sec .80 CCD (1) and above. NPS Tax Benefit 2020 Tier 2 Account Under the old regime There was no income tax benefit before you invested in a Tier 2 account. However, due to changes in the rules of the Government of India, If a central government the employee contributes for a Tier 2 account, he can claim tax benefits underSec.60C (the combined maximum limit under Sec.60C will be only Rs 1.5 lakh). Also, if someone takes advantage of such tariffs, the money invested will be locked for 3 years (just like ELSS Mutual Fund).
The employer’s contribution to the NPS is limited due to the 2020 budget.
Also, if your employer’s contribution under Sec.60 CCD (2) In fact, even returns in excess of Rs 7,50,000 (received from NPS, EPF, and supervision) will be taxable every year.
- B) NPStax facility under the new tax duty 2020 20 So, obviously, Sec.80C, Sec.80CD (1) and Sec. NPS Tax Benefit 2020 under 80CCD (1B) will not be available to you no matter what. Sec.80CCD (1) and Sec.80CCD (1B) are part of the Sec.80C limitation. However, regardless of the employer’s contribution under Sec .60CCD (2),
So, It is also eligible for exemption under the new tax system
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