National Pension System i.e. NPS allows you to avail yourself of an additional benefit of Rs 50,000 in terms of income tax. Talking about tax saving options, it includes PPF, National Pension System (NPS), ELSS, pension schemes.
You can get an additional exemption of Rs 50,000 by investing in NPS. The government gives an additional exemption of Rs 50,000 under section 80CCD (1B) to promote investment in NPS, which is in addition to the exemption of Rs 1.5 lakh available under section 80CCE. That is, in such a situation, you can get a tax exemption on a total investment of Rs 2 lakh.
Great ways to save on tax
Actually, people resort to many options to save income tax. During inflation, the limit of Rs 1.50 lakh under section 80C of the Income Tax Act is crossed in a jiffy. Under Section 80C, all your expenses are covered, for example, education fees for children (which only increase from year to year), home loan EMI (part of principal), life insurance premium, etc.
Talking about tax saving options, it includes PPF, National Pension System (NPS), ELSS, pension schemes. For salaried people, their Employee Provident Fund ie PF also comes in this category. The question is how to save more than 80C tax. Come, know how you can save tax.
Take Advantage of Section 80CCD (1B)
In the National Pension System i.e. NPS, you get the benefit of availing an additional benefit of Rs 50,000 in case of income tax. If a taxpayer's investment under section 80C has been completed, then he can invest Rs 50,000 in income tax by investing in NPS. Apart from investing in the Tier 1 account of NPS, if a taxpayer has already invested Rs 1.5 lakh, then he can take advantage of it. That is, NPS can become a great way for you to save tax.
How to get the benefit of Rs 50,000
If a person has completed an investment of Rs 1.50 lakh under section 80C but still wants to save more in tax, then he will have to open a Tier 1 account of NPS. He can invest a maximum of Rs 50,000 in this account in a financial year to get the benefit of Income Tax. Keep in mind that this investment of Rs 50,000 will have to be claimed under 80CCD (1B) while filing an income tax return. Thus, any taxpayer can get the benefit of a deduction up to Rs 2 lakh instead of Rs 1.50 lakh.
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