ITR Filing: The last date for investing to save income tax (Tax Saving Planning) is 31st March, which is fast approaching. If you want to save tax this year, then you will have to invest by 31st March, because after that you will get the benefit of tax exemption on the investment made next year. If your salary is high and you have made all the investments under 80C.. 80D.. Section 10 13A.., then also you may have to pay a lot of tax. In such a situation, you can get additional exemption on all other deductions by taking contribution in NPS through the employer. Let us know how you will get additional tax exemption by investing in NPS through the employer.
Most people get this tax exemption in NPS
The tax exemption that any employee gets on NPS is available under 80CCD. It also has two sub-sections – 80CCD(1) and 80CCD(2). Another sub-section of 80CCD(1) is 80CCD(1B). In this, you get a deduction of Rs 1.5 lakh under 80CCD(1) and Rs 50,000 under 80CCD(1B), but 80CCD(2) will give you income tax exemption over and above this Rs 2 lakh.
How to get additional exemption under 80CCD(2)?
Under this, you will get exemption on the investment made by the employer in your NPS. Many businesses get tax exemption by showing this investment as business expense in their profit and loss statement. Under this, you can invest up to 10 percent of your basic salary and dearness allowance in NPS and you will get tax exemption on it. If you are a government employee, then this figure can be up to 14 percent for you.
What do I have to do to get this discount?
Most companies provide the facility of NPS. You can talk to the HR of your company and get it invested in NPS. This investment is made from your basic salary and the result will be that your in-hand salary will be reduced every month. The good thing will be that you will be able to get additional tax exemption. If your company does not have the facility of NPS, then talk to HR once, they will guide you on this.
Let’s understand the benefits with an example
Suppose your salary is Rs 10 lakh. Under the old income tax regime, you took advantage of Rs 1.5 lakh under 80C and Rs 50,000 under 80CCD (1B) i.e. NPS, even after which your taxable income will remain Rs 8 lakh. Most companies provide facility to save tax up to Rs 2 lakh by including conveyance allowance, internet, food coupons and other reimbursements. Even if you claim all these up to the maximum limit, your taxable salary will remain Rs 6 lakh.
Understand the calculation on the remaining money
On these remaining one lakh rupees, you can get a standard deduction of 50 thousand rupees, for which there is no need to show any investment. This standard deduction is available only to salaried employees. On the other hand, having a salary of 10 lakh rupees means that your basic salary will be around 5 lakh rupees. That is, under 80CCD (2), if you get your employer to invest in NPS, then about 10 percent of the basic salary, that is, up to about 50 thousand rupees can be invested. In this way, your taxable income will become 5 lakh rupees and you will also get the benefit of rebate under 87A. That is, no tax will be levied on you.
