Tax Rebate on National Pension Scheme

With regards to NPS, currently you can claim the deduction if the amount is debited and remitted by the employer only and not if you are making the contribution on your own. I have three queries: 1. Can I claim the deduction for tier 2 a/c of NPS? 2. Can I claim the deduction if I deposit the money from my a/c to the NPS a/c without the employer being involved? 3. with new provision of additional 50k in this budget, can I claim the deduction if I make the contribution to tier 2 a/c or do I have to make the contribution to tier 1 a/c only?

Mar 11, 2015 by Deepak, Mumbai | Taxation

Firstly, we should clarify that all citizens of India 18 and 60 years as on the date of submission are eligible to join NPS. 80C deduction up to the prescribed limit is applicable to all deposits to NPS Tier 1 account. In order to join NPS Submit duly filled UOS S1 form - PDF file that opens in a new window to open a Permanent Retirement Account (PRA) (Tier I and/or Tier II) in NPS with other supporting KYC documents to POP-SP. POP-SP will validate the form and provide a receipt number to the subscriber. To contribute in Tier I and Tier II account as an individual, a subscriber is required to make his / her first contribution at the time of applying for registration. The minimum contribution is at the time of registration is Rs. 500. Minimum amount per contribution is Rs. 500. Minimum annual contribution is Rs. 6000. Let us now address your specific queries.

1. You cannot claim 80C deduction on deposits made to Tier 2 account.

2. Yes you can claim 80C deduction for Tier 1 deposits subject to the 80C limit even if money is debited from your account.

3. The provision of additional Rs. 50,000 tax deduction in this Budget, is applicable only to deposits made to Tier 1 account of NPS.

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