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August 16, 2016

National Pension System (NPS)

National Pension System (NPS) [yes it is system and not scheme] is a defined contribution based Pension Scheme launched by Government of India with the following objectives:
  • To provide post retirement income
  • Reasonable market based returns over long run

The product is regulated by Pension Fund Regulatory and Development Authority (PFRDA)

Tax Benefits

Where contribution is by Employer

  • Opportunity to get up to 10% of basic as tax-free salary u/s 80 CCD (2) without any upper cap in terms of absolute value
  • This benefit is over and above the limit of 80 CCE and 80 CCD (1B)

Contribution by Employee - 1

  • Upto Rs 50,000 deductible under seciotn 80 CCD(1B)
  • This benefit is over and above the limit of 80 CCE

Contribution by Employee - 2

  • Eligible for 10% of Basic Salary under section 80 CCD(1A) within Rs 150,000 limit under section 80 CCE.

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August 15, 2016

Indian Income Tax - Rebate on Savings Bank Interest

Are you aware that you can get deduction for the savings bank interest earned. Section - 80TTA of Income-tax Act, 1961-2014 deal with Deduction in respect of interest on deposits in savings account. You need to include this in Schedule VI A under 80TTA. Currently savings bank interest till Rs 10000 is deducted from your earnings.

BTW you have to include entire savings bank interest earned during the year in Schedule OS as interest income.

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