Some TV channels and newspaper publication shows that NPS will remain allowed in new slab system of income tax for Fy 2020-21 but as per article published by you (www.cacube.in) NPS benefit will not be allowed in new slab system. except your website all other source of mine says that NPS will remain deductible in new slab system what is truth. Please explain whether NPS is allowed in new slab system of income tax for 2020-21 or not.
As per provision of sec 115BAC , Assessee has the option to choose any from above slab rate and the option shall be exercised for every previous year where assessee has no business income, In other cases option once exercised shall be valid for current & subsequent previous years. If option given under 115BAC is exercised then various deduction & exemption shall not be available to the taxpayers. which includes following:-
Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
Now coming to your Question of deduction regarding NPS. It can be explained in three parts:-
- NPS deduction u/s 80CCD (1): There is a deduction of up to Rs. 1.5 lakhs to be claimed for NPS – for your contribution as well as for the contribution of the employer.– 80CCD(1) covers the self-contribution, which is a part of Section 80C. The maximum deduction one can claim under 80CCD(1) is 10% of the salary, but no more than the said limit. but for the self-employed taxpayer, this limit is 20% of the gross income This will not be allowed in NEW SLAB SYSTEM FOR FY 2020-21.
- NPS deduction u/s 80CCD (2): 80CCD(2) covers the employer’s NPS contribution, which will not form a part of Section 80C. This benefit is not available for self-employed taxpayers. The maximum amount eligible for deduction will be lowest of the below: a. Actual NPS contribution by employer b. 10% of Basic + DA c. Gross total income. THIS WILL REMAIN ALLOWED IN NEW SLAB SYSTEM FOR FY 2020-21.
- NPS deduction u/s 80CCD (1B);- This was the most beneficial deduction. You could claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit. THis was over & above the limit of 1.5 lakh given for 80C. This will not be allowed in NEW SLAB SYSTEM FOR FY 2020-21.
I think it is clear now.
Thanks for your question.