Tuesday, 14 February 2012

Claim More Tax Deduction Now By Investing in New Pension Scheme

Are you looking for some more investment plans apart from those specified in Section 80C and 80CCF of Income Tax Act? Now, one can make use of the section 80CCD (2). As per this section, one can claim a deduction up to 10% of his/her basic salary, if it is invested in New Pension Scheme.  Salary includes Dearness allowance but it excludes perquisites and other allowances.

But, the main thing is only the employer can deposit the amount on employee’s behalf. Employee cannot make the deposit under this New Pension Scheme.

This will come into effect from 1.4.2012 as per the proposed budget plan.

Plus Points of this New Pension Scheme investment option
Contribution by the employers’ to New Pension Scheme (NPS) will be deducted as business expenditure (Subject to a limit of 10% of the basic salary + dearness allowance).

The money which will be deposited under this scheme will not be included in the 1 lakh limit as prescribed under section 80C. It means one claim additional tax exemption.

This investment option will be very handy to the employees who fall under 30% tax bracket.

What is the age limit for this New Pension Scheme?

Anyone who is between 18 and 55 years of age can open an account.

What will be the registration and transaction charges?

Subscribers have to pay a fee of Rs.100 as registration charges and 0.25% as transaction charges of the opening amount to be contributed.  Thereafter, they will be charged 0.25% as transaction charges for further investment amount

What is the minimum annual contribution under this scheme?
Under this scheme, one has to contribute a minimum of Rs.6000 annually.

When this amount can be withdrawn? 

The amount deposited under this scheme can be withdrawn only at the age of 60.

The above stated minimum annual contribution amount of Rs.6000 and the age at which the amount can be withdrawn will apply only to Tier-I New Pension Scheme account.

One can also open Tier-II New Pension Scheme account and they can withdraw the amount without any restrictions on it.

Now, you can convince your employer to include this NPS deduction in your salary and I am hopeful that most of the employers will give a positive nod since they can claim that amount as business expenditure

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