FAQs on Tax Benefits

  • What are the tax benefits available to subscribers for contribution under NPS?
  • What will be my total tax benefits under NPS this year as an individual contributor?
  • Is the tax deduction under NPS for contributions made available only to Salaried Individuals?
  • What is the maximum amount allowed as a deduction under Section 80CCD(1)?
  • What are the tax benefits for NPS after budget 2016?

Individuals contributing to NPS would enjoy tax benefits on their contributions as under:

  1. Tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of 1.5 Lakh under Sec 80 CCE
  2. NPS also reduces your tax liability by an additional deduction of 50,000/- under section 80CCD (1B) p.a. (applicable from FY 2015-16 and onwards)

The additional tax benefit of 50000 is over and above the benefit of 1.5 Lakhs which can be claimed as a deduction under Section 80CCE. Therefore, the total tax benefits that can be claimed for NPS under Section 80CCD(1) + Section 80CCD(1B) equals to 2 Lakhs for this financial year.

The Deduction under Section 80CCD(1) is not only available to salaried individuals but non-salaried individuals can also avail deduction for the same. The individual claiming deduction under this section could be an Indian citizen or a Non-Resident Indian(NRI). If you are an NRI, please get in touch with Kotak Mahindra Bank for further details.

  • In case of salaried individuals: 10% of salary for the financial year (including Dearness Allowance and excluding all other allowance and privileges
  • In case of non-employees: 10% of the Gross Total Income in the financial year

Tax benefits of NPS are –

  • Tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1.5 Lakh under Sec 80 CCE
  • NPS also reduces your tax liability by an additional deduction of Rs. 50,000/- under section 80CCD (1B) p.a. (applicable from FY 2015-16 and onwards)
Calculate Tax Savings with NPS