Articles by "Income Tax"

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Showing posts with label Income Tax. Show all posts

April 09, 2019
As many as 7 types of income tax returns have been released by Income Tax Department

Income Tax Returns for Salaried Employees for the year 2019-20 have been notified. Either ITR-1 or ITR-2 will have to be filed by Salaried Employees not having income from profits and gains of business or profession, depending upon total income, number of house property possessed and amount of agricultural income.

Income Tax Department has notified Income Tax Returns for the year 2018-19 (Financial Year) 2019-20 (Assessment Year) recently vide notification No: 32/2019 dated 01.04.2019. As per this notification, Income Tax Returns from ITR-1 to ITR-7 for various types of Income have been notified by the Govt.

As far as Salaried Employees are concerned, ITR-1 and ITR-2 will be applicable.

ITR-1 Income Tax Return is applicable to a Salaried Employee in the following cases:
  • Total income of the salaried employee during the financial year 2018-19 did not exceed Rs. 50 lakh.
  • The employee concerned should not own more than one House Property
  • Agricultural income received the salaried employee if any should not exceed more than Rs. 5000/-
  • Employees having Other income sources such as interest subject total income limit of Rs. 50 lakh can file ITR-1
ITR-2 Income Tax Return will be applicable Salaried Employees in the the following cases:
  1. Total income a salaried employee from salary, other resources such as interest and more than one house property exceeded Rs. 50 lakh.
  2. When a Salaried Employee owns more than one House property
  3. When a salaried employee having income from other than salary such as interest income, rental income, agricultural income exceeding Rs. 5000/- etc.
  4. Salaried Employees receiving income from profits and gains of business or Profession is not entitled to file ITR-1 or ITR-2. In such cases ITR-3 will have to be filed.
 ITR Form  No.Applicable to
ITR-1 SAHAJFor individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs.5 thousand] [Not for an individual who is either Director in a company or has invested in unlisted equity shares]
ITR-2For Individuals and HUFs not having income from profits and gains of business or profession
ITR-3For individuals and HUFs having income from profits and gains of business or Profession
ITR-4 SUGAMFor Individuals, HUFs and Firms (other than LLP) being a resident having total income upto Rs.50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE]
[Not for an individual who is either Director in a company or has invested in unlisted equity shares]
ITR-5For persons other than,- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7]
ITR-6For Companies other than companies claiming exemption under section 11
ITR-7For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D)

January 16, 2019 ,
NEW DELHI: When it comes to save Income Tax (I-T) on your hard-earned money, some of the post office schemes offer attractive interest rates to the investors. The department of posts or India Post is a government-operated postal system which is part of the ministry of communications. The department has nine products in its kitty and out of which five qualifies for the tax saving option. These schemes are Post Office Time Deposit Account (TD), Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), National Savings Certificates (NSC) and Sukanya Samriddhi accounts. 

Under these schemes, a person can claim a deduction up to Rs 1.5 lakh in a financial year from taxable income under Section 80C of the Income Tax Act, 1961.

1) Post Office Time Deposit Account (TD): This scheme comes with four options for a maximum period of five years, which attracts the highest benefit. Investment in time deposits of one-year, two-year and three-year maturity periods fetches an interest of 7 per cent. The five-year scheme is similar to tax-saving five-year bank deposits, that comes with a lock-in period of five years. Currently, the five-year post office deposit scheme fetches 7.8 per cent. 

2) Senior Citizen Savings Scheme (For 60 years and above): The scheme offers an interest rate of 8.7 per cent per annum, payable from the date of deposit of March 31/ September 30 / December 31 in the first instance and thereafter, interest shall be payable on March 31, June 30, September 30 and December 31. Tax deducted at source (TDS) is deducted on interest, if the amount is more than Rs 10,000 per annum. 

3) 15-year Public Provident Fund Account (PPF): PPF offers an interest rate of 8 per cent per annum, which is compounded yearly. The scheme has an EEE or ‘exempt, exempt, exempt’ status and thus, the interest earned is also tax-free. The minimum amount that must be deposited in a PPF account in a financial year is Rs 500 and the maximum allowed is Rs 1.5 lakh. 

4) National Savings Certificates: The NSC fetches an interest rate of 8 per cent per annum and deposits under it also qualify for deduction under Section 80C of the Income Tax Act. This interest is compounded annually but payable at maturity. For instance, an NSC of Rs 100 will offer Rs 146.93 on maturity after five years. 

5) Sukanya Samriddhi Scheme: The Sukanya Samriddhi Scheme is a small deposit scheme for the girl child only. It currently offers 8.5 per cent interest per annum and provides income tax benefits. Even the returns are tax free under the scheme. The Sukanya Samriddhi Scheme also enjoys 'EEE' status, making it one of the most tax efficient schemes.

January 12, 2019 ,
Income-Tax Deduction from Salaries during the Financial Year 2018-19

CIRCULAR NO : 01 /2019
F.No. 275/192/2018-IT(B)
Government of India
Ministry  of Finance
Department of Revenue
Central Board of Direct Taxes
******
North Block, New Delh
Dated the 1st January, 2019
SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2018-19 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

Reference is invited to Circular No. 29/2017 dated 05.12.2017 whereby the rates of deduction of income-tax from the payment of income under the head “Salaries” under Section 192 of the Income-tax Act, 1961 (hereinafter ‘the Act’), during the financial year 2017-18, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2018-19 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in.

2. RATES OF INCOME–TAX AS PER FINANCE ACT, 2018:
As per the Finance Act, 2018, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head “Salaries” for the financial year 2018-19 (i.e. Assessment Year 2019-20) at the following rates:

 2.1 Rates of tax
A.Normal Rates of tax:
S.NOTOTAL INCOMERATE OF TAX
1Where the total income does not exceed Rs 2,50,000/-.Nil
2Where the total income exceeds Rs 2,50,000/-
but does not exceed Rs 5,00,000/-.		5 per cent of the amount by which the total income
exceeds Rs. 2,50,000/‑
3Where the total income exceeds Rs 5,00,000/-
but does not exceed Rs 10,00,000/-.		Rs. 12,500/- plus 20 per cent of the amount by which
the total income exceeds Rs. 5,00,000/-.
4Where the total income exceeds Rs 10,00,000/-.Rs. 1,12,500/- plus 30 per cent of the amount by which
the total income exceeds Rs. 10,00,000/-

January 09, 2019 ,
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December 12, 2018 , ,
No TDS u/s 194A in case of Senior Citizens upto amount Rs. 50,000: CBDT Notification 


F. No. Pr. DGIT(S)/CPC(TDS)/Notification/2018-19
Notification No. 06/2018

Government of India 
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income-tax (Systems) 
New Delhi

Notification No. 06 /2018 
New Delhi, 06th December, 2018

Subject: - TDS deduction under section 194A of the Income-tax Act, 1961 in case of Senior Citizens - reg.-

It has been brought to the notice of CBDT that in case of Senior Citizens, some TDS deductors/Banks are making TDS deductions even when the amount of income does not exceed fifty thousand rupees. The same is not in accordance with the law as the Income-tax Act provides that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees. (Please refer to the third proviso to sub-section 3 of section 194A)

2. Under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Director General of Income-tax (Systems) is authorized to specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.

3. In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby clarifies that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees.
Sd/-
(Dewangi Marthak)
Asstt. Commissioner of Income-tax(CPC-TDS)
O/o the Pr. Director of Income-tax (Systems)
New Delhi

Copy for kind information to:-

  1. PPS to the Chairman and all Members, CBDT, North Block, New Delhi.
  2. All Pr. Chief Commissioners/Pr. Director Generals of Income-tax/Chief Commissioners of Income-tax/Pr. Commissioners of Income-tax/Commissioners of Income­ tax/Commissioners of Income-tax {TDS) with a request to circulate amongst all officers in their regions/charges.
  3. JS (TPL)-1 & II I Media Coordinator and Official spokesperson of CBDT.
  4. ADG(IT) I ADG(Audit) I ADG{Vig.) I ADG(Systems) 1, 2, 3, 4,5 I ADG(TPS) - 1, 2 I CIT{CPC ITR) / CIT (CPC-TDS).
  5. ADG {PR, PP & OL).
  6. Chief General Manager-In-Charge, Department of Government and Bank Accounts, Reserve Bank of India, Opp. Mumbai Central Railway Station, Mumbai 400 008 with request for wide circulation among Banks and necessary complaince.
  7. TPL,ITA and IT(B) divisions of CBDT.
  8. The Institution ofChartered Accountants of India, l.P. Estate, New Delhi.
  9. The Web-Manager, 'incometaxindia.gov.in' for hosting on the website.
  10. Database cell for uploading on www.irsoffi cersonli ne.gov.in and in DGIT(Systems) corner.
  11. ITBA publisher for uploading in ITBA portal.
  12. ITO {CPC-TDS)-11 for uploading on TRACES portal. 
Sd/-
Asstt. Commissioner of Income-tax (CPC-TDS), 
O/o the Pr. Director General of Income-tax (Systems),
New Delhi


Source: https://www.incometaxindia.gov.in/communications/notification/notification6_2018_tds.pdf

February 18, 2017
Sending kids to school has an inbuilt tax advantage for the parents as the tuition fee qualifies for tax benefit under Section 80C of the Income Tax Act, 1961. The amount of tax benefit is within the overall limit of the section of Rs 1.5 lakh a year. 

For tax purposes, the fee (amount) reduces the total gross income, and thereby the tax liability. Say, you fall in the highest income slab and pay not only a 30.9 per cent tax rate, but also Rs 80,000 a year as schools fees, the tax saved would amount to Rs 24,720 in that year 

Here's how to get the maximum benefit out of tuition fees. 

Are all institutions eligible? 
Tuition fees paid at the time of admission or anytime during the financial year to any university, college, school or educational institution based in India qualifies for tax benefit. 

What kind of education? 
It has to be a full-time education, including any play school activities, pre-nursery and nursery classes. The institution can be either private or a government sponsored one. 

What is not covered? 
At times, parents have to make payments, other than tuition fees, to the educational institutions. Payments like development fees or donation or capitation fees, etc., are not covered and do not qualify for tax benefit. Also, if you haven't paid the fees on time, the applicable late fee paid will not be eligible. 

Tax benefit for how many children? 
The benefit applies for the fees paid for up to two children. So if a couple has four children, both can claim tax benefit as both have a separate limit of two children each. 

Which parent gets the tax benefit? 
The parent who makes the payment gets the tax advantage. If both parents are working and pay taxes, both can claim individually up to the amount of fees paid. 

If both are working and want to take the benefit under Section 80C for the amount paid by them respectively, they can do so. So if the fee paid is Rs 2 lakh, of which the father has paid Rs 50,000, while the mother has paid Rs 1.5 lakh, both can claim the amount individually as per the payment made by them. 

Conclusion 
As the upper limit for Section 80C tax benefit is Rs 1.5 lakh a year, see how much of that gets exhausted through tuition fees and then decide on further tax savers. While the tax benefit on tuition fees is incidental and helps you to save tax during the early days of your child's education, do not forget to create a long-term investment plan for his higher education. 

Estimate the amount needed for higher studies and create a savings plan towards that goal, preferably through SIPs in 3-5 equity diversified mutual funds scheme. To ensure that the goal is met, do buy adequate life cover, preferably through a pure term insurance plan.

Source : The Economic Times

February 16, 2017 1


With some tinkering in the income tax rates for 2017-18, Finance Minister Arun Jaitley reduced the tax rate for income between Rs. 2.5 lakh and Rs. 5 lakh to 5 per cent in the Union Budget, while adding a surcharge of 10 per cent on tax for income between Rs. 50 lakh and Rs. 1 crore.

Although the basic income tax exemption limit remains the same at Rs. 2.5 lakh, there are many exemptions available in the Income Tax Act, which can substantially reduce your tax liability.

One needs to plan from the beginning of the next financial year to take maximum benefit of the income tax deductions available.

Here are the new income tax slabs for taxpayers:
General category
Senior citizens
Super senior citizens
(Up to 60 years of age)
(60-80 years)
(Above 80 years)
Income
Tax
Income
Tax
Income
Tax
Up to Rs. 2.5 lakh
Nil
Up to Rs. 3 lakh
Nil
Up to Rs. 5 lakh
Nil
Rs. 2,50,001-Rs. 5 lakh
5%
Rs. 3,00,001-Rs. 5 lakh
5%
Rs. 5,00,001-Rs. 10 lakh
20%
Rs. 500,001-Rs. 10 lakh
20%
Rs. 5,00,001-Rs. 10 lakh
20%
Above Rs. 10 lakh
30%
Above Rs. 10 lakh
30%
Above Rs. 10 lakh
30%
# Surcharge of 10% for income between Rs. 50 lakh and Rs. 1 crore
# Surcharge of 15% for income above Rs. 1 crore
# Rebate of up to Rs. 2,500 for taxable salary up to Rs. 3.5 lakh
# Education and higher education cess of 3%
Here are the some of the deductions available for FY2017- 18: 

House Rent Allowance under Section 10 (13A) of the Income Tax Act
House Rent Allowance, commonly known as HRA, makes up a major chunk of a salaried individual’s total pay. HRA is partly exempted from tax. If you are staying in your own house or not paying any rent, your HRA will be completely taxable. However, those who stay with their parents can also claim HRA benefits by paying rent to their parents.

The amount which is allowed for exemption under HRA is calculated as minimum of:

1) Rent paid annually minus 10 per cent of basic salary plus dearness allowance
2) Actual HRA received
3) 40 per cent of basic and dearness allowance (50 per cent in case of metro cities)

Deductions under Section 80C
Section 80C of the Income Tax Act provides various provisions under which an individual can get deduction benefits up to Rs. 1.5 lakh. Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Sukanya Samriddhi Account, National Savings Certificate and tax-saving fixed deposits are some of the investment options that offer benefits under Section 80C. The premium paid for life insurance plans, National Pension Scheme (NPS) and tax-saving mutual funds (ELSS) also qualify for deduction under Section 80C.
Further, one can claim tuition fees paid for up to two children, principal repayment on home loan, stamp duty and registration cost on the house bought as deduction under Section 80C.
Deductions under Section 80CCD(1B)
Introduced in Budget 2015-16, Section 80CCD (1B) provides deduction up to Rs. 50,000 for investment in NPS Tier 1 account. This deduction is over and above the deduction available in Section 80C. An individual in 30 per cent tax bracket can save up to Rs. 15,450 of tax by investing Rs. 50,000 in NPS.
Deduction of interest on housing loan (Section 24B)
Buying a house is among several other things an individual wants to do during his or her lifetime. The income tax rules also incentivise the same. Under Section 24B of the Income Tax Act, interest paid up to Rs. 2 lakh on housing loan and up to Rs. 30,000 on home improvement loan is allowable as deduction from your taxable income.

The government has however cut down tax benefits borrowers enjoyed on properties let out on rent. As per current tax laws, for properties rented out, a borrower could deduct the entire interest paid on home loan after adjusting for the rental income. On the other hand, borrowers of self-occupied properties get Rs. 2 lakh deduction on interest repayment on home loan.

However, according to the proposed change in Budget 2017, on rented properties, the borrower can only claim deduction of up to Rs. 2 lakh per year after adjusting for the rental income. And the amount above Rs. 2 lakh can be carried forward for eight assessment years.

Since the interest component of home loan repaid in initial years is higher, experts say that the borrower may not be able to fully adjust the interest paid as deduction even in subsequent years.

Deduction under Section 80EE
Under Section 80EE, an additional deduction of Rs. 50,000 is available over and above the limit of Section 24B on interest paid on home loans if the person is buying a house for the first time (the person must not own any other residential property on the date of sanction of loan). However, to avail the benefit of this section the value of the property must be below Rs. 50 lakh and the loan amount should not exceed Rs. 35 lakh. Further, the property must be bought after April 1, 2016.

Deduction under Section 80D
Premium paid for medical/health insurance for self, spouse, children and parents qualify for deduction under this Section. On can claim deduction of Rs. 25,000, if he is below 60 years of age, and Rs. 30,000 if he is above 60 years of age, towards medical insurance premium paid for self, spouse and children. Further, additional deduction of Rs. 25,000 is available if one has bought medical insurance for his parents. This deduction can go up to Rs. 30,000 if parents are above the age of 60 years.

Deduction under Section 80DD
If a tax payer has dependent parents, spouse, children or siblings who are differently-abled, then he can claim deductions up to Rs. 75,000 for expenses on their maintenance and medical treatment under this section. This deduction can increase to Rs. 1.25 lakh in case of severe disability.

Deduction under Section 80DDB
Under this section, one can claim deduction of Rs. 40,000 for treatment of certain diseases for self and dependents. The deduction can go up to Rs. 60,000 if the tax payer is above 60 years of age and if he is above 80 years of age, then the deduction amount is up to Rs. 80,000.

Deduction under Section 80E
According to the provisions of Section 80E, a taxpayer can claim deduction for interest paid on education loan for him, spouse or children. There is no upper limit on the amount of deduction. However, the loan must have been taken from a financial institutional or approved charitable institution and for full-time higher education.

Source: NDTV

February 10, 2017 ,
If you are a salaried employee and staying in a rented accommodation, you can claim the house rent allowance (HRA) exemption under Section 10(13A) of the Income Tax Act, 1961.
The HRA exemption is available for least of the following amounts: a) Actual HRA amount received from the employer; b) the amount of rent you pay for your house in excess of 10% of your basic pay; c) fifty per cent of the basic salary, if you reside in a metro city, and 40% of the basic pay for non-metro cities. 

For claiming the exemption, the employee must stay in a rented house during the period for which the exemption is being claimed and must have actually incurred the expenditure on payment of rent. For computing the HRA exemption, salary means ‘basic salary’, dearness allowance, if the terms of employment so provide, and commission based on a fixed percentage of turnover achieved by the employee. While one can pay rent to parents to claim the HRA exemption, they need to pay tax on the rent received. 

The employee will have to submit rent receipt/rent agreement to the employer for availing the HRA exemption. The employer needs to only obtain a rent receipt/rent agreement from the employee; however, the employer is not required to verify the receipt for granting the exemption to the employees. 

If the amount of rent claimed is more than Rs. 1,00,000 per year, the Permanent Account Number (PAN) of landlord has to disclosed. If the landlord does not have a PAN, the employee is required to submit a declaration to this effect from the landlord along with the name and address of the landlord. 

Moreover, under the Income Tax Act, an employee can claim the HRA exemption even if he owns a house but stays in a rented accommodation. This will be possible in cases where the employee owns a house in some other city and cannot stay in the house because of job location. Also, if an employee has taken a loan from a bank or a housing finance company to buy the house, he can avail the deduction of interest under Section 24 of the Income Tax Act as well as repayment of principal towards loan under Section 80C of the Act, even if one is claiming the HRA exemption while staying in a rented accommodation in another city. 

The rent receipt should have a one rupee revenue stamp with the signature of the person who has received the rent and other details such as the rented residence address, rent paid, name of the person who has paid the rent. While HRA is a major tool to save tax, it is equally important to keep every documentation properly, in case demanded by the tax authority. 


Earning Curve: 
  • Self-employed professionals cannot claim the HRA exemption under Section 10(13A) of the I-T Act, 1961, as they do not earn a salary
  • For claiming the HRA exemption, the employee must stay in a rented house during the period for which the exemption is being claimed
  • While one can pay rent to parents to claim the HRA exemption, they need to pay tax on the rent received
  • The employee will have to submit the rent receipt/rent agreement to the employer for availing the HRA exemption

Thanks to 
Shri. P. N. Yedage,
IP (Mails), Circle office,
Maharashtra Circle, Mumbai-400001.

Mob : 9404222625

February 03, 2017 ,
HIGHLIGHTS

It is said that nothing in this world is certain except for death and taxes. With this nifty Times of India-EY Guide, however, you can soften the blow from the latter, legally of course. Read on for many happy returns.

1. With a decrease in tax rate from 10% to 5%+ for total income between Rs 2.5 lakh and Rs 5 lakh, there is tax saving+ of up to Rs 12,500 per year and 14,806 (including surcharge and cess) for those with income above Rs 1 crore.


2. Tax rebate is reduced to Rs 2,500 from Rs 5,000 per year for taxpayers with income up to Rs 3.5 lakh (earlier Rs 5 lakh). Due to the combined effect of change in tax rate and rebate, an individual with taxable income of Rs 3.5 lakh will now pay tax of Rs 2,575 instead of Rs 5,150 earlier.

3. Surcharge@10% of tax levied on rich taxpayers, with income between Rs 50 lakh and 1 crore. The rate of surcharge for the super rich, with income above Rs 1 crore, will remain 15%.

4. Holding period for immovable property to be considered "long term" reduced to 2 years from 3. This will ensure immovable property held beyond 2 years is taxed at reduced rate of 20% and eligible for various exemptions on reinvestment.

5. Long term capital gains tax will result in a lower payout owing to beneficial amendments. The base year for indexation of cost (adjustment of inflation) has been shifted to April 1, 2001 from April 1, 1981. This means lower profits on sale.

6. Further, tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (in addition to investment in NHAI and REC bonds).

7. A simple one-page tax return form is to be introduced for individuals with taxable income up to Rs 5 lakh (excluding business income). Those filing returns for the first time in this category will generally not be subject to scrutiny.

8. Delay in filing tax return for 2017-18 will attract penalty of Rs 5,000 if filed by December 31, 2018 and Rs 10,000 if filed later. Such fee will be restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh.

9. Deduction for first-time investors in listed equity shares or listed units of equity-oriented fund under the Rajiv Gandhi Equity Savings Scheme is withdrawn from 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, he/she shall be allowed to avail a deduction for the next two years.

10. Time period for revision of tax return cut to one year (from 2 years) from the end of the relevant financial year or before completion of assessment, whichever is earlier.

February 02, 2017 ,
New Benefits announced for NPS Subscribers in Union Budget 2017-18

In a bid to provide further impetus to the National Pension System (NPS), the following provisions have been introduced in the Finance Bill 2017 laid down in the Parliament today. 

Tax-exemption to partial withdrawal from National Pension System (NPS) 

The existing provision of SECTION 10(12A)of the Income Tax Act, 1961 provides that payment from National Pension System (NPS) to a subscriber on closurer of his account or opting out shall be exempt up to 40% of total corpus at the time of withdrawal . The amount utilized for purchase of annuity is also tax exempt. At the time of normal exit, 40% of the total corpus is mandatorily required to be purchased for annuity. The subscriber has the option to use higher amount for purchase of annuity. 

In order to provide further relief to the subscriber of NPS, it has been proposed to insert a new clause (12B) in the section 10 of Income Tax Act, 1961 to provide exemption on partial withdrawal not exceeding 25% of the contribution made by an employee in accordance with the terms and conditions specified under Pension Fund Regulatory and Development Authority Act, 2013 and regulations made there under. 

This benefit will be effective on partial withdrawal made by the subscriber after 1st April 2017. 

Further, Contribution up to 20% of the Gross Income of the Self-employed individual (Individual other than salaried class) will be deductible from the taxable income under Section 80CCD (1) of the Income Tax Act, 1961, as against 10% earlier.

This is with a view to provide parity between a salaried employee and a self-employed.

This benefit will be available on contribution made by the self employed persons on or after 1st April 2017. 

This increased limit for tax benefit will help the self-employed individuals, to save taxes on higher contribution in NPS and thereby properly plan for their old age income security.

Additional tax deduction on investment upto Rs. 50000/- under SECTION 80CCD (1B) will continue to remain the same for all NPS subscribers whether salaried or self-employed.


Source : PIB,  (Release ID :157906)
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