Dear Sid,
Only upto 10% of your Basic + DA is allowed for tax exemption.
Post the Union Budget 2011-12 NPS has been given a special tax treatment wherein NPS contributions of the
Employer have been taken out of the purview of Sec 80CCE. Meaning whereby that the employer’s contribution
to NPS can be debited to CTC of the Employee (shall not exceed the limit of 10% of Basic Salary). In summary,
contribution by employee from CTC via mode “CTC Debit” (Employer’s contribution) is eligible for additional
deduction from Gross Taxable Income subject to a cap of 10% of Basic Salary.
Government has proposed that the investments in NPS be made EEE (Exempt at deposit, appreciation and
withdrawal) under the Direct Tax Code (DTC).
Moreover, for employees who opt for NPS contribution through Salary Process, there is no need to submit
additional proof for claiming the tax deductions. The contributions made would get automatically updated in
your salary statement and will also be included in your Income Tax computation for the Financial Year.
Pon