Union Budget 2017: FM Jaitley gives relief to NPS subscribers
Finance Minister Arun Jaitley while presenting Union Budget 2017 gives relief to employees subscribed unser National Pension System (NPS).
Finance Minister Arun Jaitley while presenting Union Budget 2017 said that in order to provide relief to an employee subscriber of National Pension System (NPS), it proposed to exempt partial withdrawal not exceeding 25% of the contribution made by the employee under Pension Fund Regulatory and Development Authority Act, 2013.
This amendment will be effective from April 1, 2018, Jaitley said.
As per the existing provision of Section 10(12A), it provides that payment from NPS trust to an employee on closer of his account or opting out will be exempt up to 40% of total amount payable to him.
Moreover, the existing provisions of section 80CCD provides that employee or other individuals will be allowed a deduction for amount deposited in NPS trust. The deduction under section 80CCD (1) cannot exceed 10% of salary in case of an employee or 10% of gross total income in case of other individuals.
"However, under the provisions of section 80CCD (2) of the Act, further deduction to an employee in respect of contribution made by his employer is allowed up to 10% of salary of the employee. Thus, in case of an employee, the deduction allowed under section 80CCD adds up to 20% of salary whereas in case of other individuals, the total deduction under section 80CCD is limited to 10% of gross total income," Jaitley said.
In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposed to amend section 80CCD so as to increase the upper limit of 10% of gross total income to 20% in case of individual other than employee.
This amendment will take effect from April 1, 2018, Jaitley added.
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