NPS: There is a big news for NPS investors. If you invest in the National Pension System (NPS) and think that there will be no benefit in the New Tax Regime, then wait a minute! The New Tax Regime is like a jackpot for NPS holders, you just need to adopt a simple trick and you will get the benefit of direct tax exemption, that too without any documentation or investment.
Activate Employer NPS Contribution. If you transfer your NPS account to the Corporate/Employer model, you get a direct tax deduction on the contribution made by your employer on your behalf. Contribution up to 14% (government employees) or 10% (private employees) of your basic salary is tax free. This exemption comes under Section 80CCD(2) and is also completely valid in the New Tax Regime. However, here this investment is possible only through the employer, which is included in the tax exemption.
Suppose your Basic Salary is Rs 9.6 lakh per year, and your employer contributes 14% to the NPS. Rs 9,60,000 × 14% = Rs 1,34,400. This means Rs 1.34 lakh will be directly deducted from your taxable income. If your salary is Rs 12 lakh, then your taxable income will only be Rs 10.65 lakh. This is the exemption that many people overlook, even though it is an exclusive benefit in the new tax regime. In the Old Regime, individuals can contribute up to Rs 50,000 to NPS and avail the benefit of 80CCD(1B). But for those in the New Regime, the employer portion is the best tax saver.
Login to your NPS CRA (NSDL/Kfintech) portal. Select the Sector Change option – choose “Corporate Sector”. Get the EPS Code from your HR and get registered. The account will be updated in 7–10 days. Yes, but in the Old Regime this exemption is available along with 80C and other deductions. There is no deduction in the New Regime, so this exemption becomes even more special.
