The Central Board of Direct Taxes (CBDT) recently through a notification extended the time limit by a month till July 31, 2020, for making various investments for claiming deductions under the I-T Act, which includes Section 80C (insurance premium, PPF, NSC etc), 80D (mediclaim), 80G (donations) etc, for 2019-20. This also includes investments made under NPS or National Pension Scheme.
Key are key updates your should know:
1) "Tax-saving investment date for FY2019-20 extended up to July 31, 2020; invest ₹50,000 in NPS for additional tax benefits," the pension fund regulator said in a tweet.
2) Contribution towards NPS tier 1 account allows you to claim an exclusive deduction of ₹50,000 under Section 80CCD (1B). You can continue to claim this benefit if you stick to the old income tax regime. But this cannot be claimed if you switch to the new tax regime.
3) This additional ₹50,000 tax deduction is in addition to the ₹ 1.5 lakh allowed under Section 80CCD (1) for investment towards NPS. Also note that the total amount of deduction under sections 80C, 80CCC (investment in pension plan offered by an insurer) and Section 80CCD (1) (for NPS) cannot exceed Rs. 1.5 lakh in a financial year. If you opt for the new income tax regime, you cannot claim this benefit. But it will continue under the old regime.
4) Under the new tax rates that came into effect from April 1, there is zero tax for income up to ₹2.5 lakh; 5% for income between ₹2.5 lakh and up to ₹5 lakh; 10% for income between ₹5 lakh and up to ₹7.5 lakh; 15% for income between ₹7.5 lakh and up to ₹10 lakh; 20% for income between ₹10 lakh and up to ₹12.5 lakh; 25% for income between ₹12.5 lakh and up to ₹15 lakh; 30% for income above ₹15 lakh.
5) The pension fund regulator earlier this week introduced one-time password (OTP) based onboarding facility for the National Pension System (NPS) scheme.
In its endeavour to provide digital solutions, the Pension Fund Regulatory and Development Authority (PFRDA) has already enabled opening of online NPS account in a paperless manner through e-signature, it said in a statement.
In order to further facilitate ease of NPS Account opening, the subscribers are now permitted to open their NPS account through OTP also, PFRDA said.