Planning to opt for new income tax slabs 2020? You can still claim this NPS account benefit
Income Tax Calculator: The Government of India has extended the income tax return filing by three months to 30th June 2020.
Income Tax Calculator: The Government of India has extended the income tax return filing by three months to 30th June 2020. If you are planning to leave all tax exemptions falling under various income tax section, now available under new rules, then you need to know that even after choosing the income tax slabs 2020, you will remain eligible for the income tax benefit under Section 80CCD(2). According to the tax and investment experts, if tax filers want to switch to new income tax slabs, then they will have to forego the income tax benefit under Section 80C, but not under Section 80CCD(2).
"Deduction under sub-section (2) of Section 80CCD (employer contribution on account of the employee in notified pension scheme) and Section 80JJAA (for new employment) can be claimed," says the Finance Bill passed by the parliament post-budget 2020 presentation. This means, if you are going to file your Income Tax Return opting the new income tax slabs, then you must use the income tax calculator and find out your employer's contribution in your NPS account ad claim tax benefit for that money coming to your NPS account.
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In case your employer is contributing towards your NPS account, which is mandatory for government employees (except Armed Forces) who joined services after 1st January 2004 and voluntary in case of those working in the private sector, a deduction of up to 10 per cent of salary (basic + DA) irrespective of any limit qualifies for income tax deduction under Section 80 CCD(2). For central government employees, the limit is 14% of the salary of central government employees. If their organizations allow, employees can opt to restructure their salary structure to opt for this tax deduction.
However, the income taxpayer should be very clear that if he or she opts for the new tax regime the taxpayer won't be eligible to claim Rs 50,000 deduction under Section 80CCD (1B) for investment in the Tier 1 account of NPS that was available under the existing tax regime.
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