NPS Subscriber? Here’s what you need to do before June 30
New Delhi: Due to a lockdown which had been imposed because of the Coronavirus outbreak, the government had extended the last date till June 30 for making various investment/payment for claiming a deduction for FY 2019-20.
To incorporate this deadline extension, the income tax department has added a special provision in the latest ITRs or income tax return forms when a taxpayer can mention details of tax-saving investments made during April and June and claim a tax deduction for the financial year 2020.
Also, during this period the Pension Fund Regulatory and Development Authority (PFRDA) had also eased the NPS withdrawal process due to the ongoing pandemic. This exception is valid until June 30.
The nodal offices or point of presence NPS service providers have been advised to accept the scanned and self-certified images of documents through digital means as a special case and process their withdrawal requests of NPS subscribers.
After submission of withdrawal documents by NPS subscribers, it is the responsibility of the nodal officers/POPs to check the genuineness of the documents and verify the identity of the subscriber before authorizing their withdrawal requests in the CRA or central record-keeping system.
Tax implications under the new tax slab
People, who opt for the new tax rates, will not be eligible for some of the tax benefits on NPS contribution. However, if you opt for the new tax rates, you can still claim an income tax deduction on employer contribution towards the employee’s NPS account. If your employer is contributing towards your NPS account, a deduction of up to 10% of salary (basic salary + DA) irrespective of any limit qualifies for income tax deduction under Section 80 CCD(2).
Also, it is worth mentioning that the central government employees enjoy a higher limit of 14% of the salary. For others, the limit is 10%.