What are the tax benefits extended by Budget 2009 in respect of the New Pension System (NPS)?same?
Thosar Investment in NPS (now open to all citizens) attracts tax benefits under Sec 80CCD. This deduction was hitherto available to “employees” only. However, Budget 2009 has amended Sec 80CCD so as to extend the tax benefit there under also to “self-employed” individuals. A significant point of note here is that there is a limit of 10% of salary on the amount of Sec 80CCD deduction for employees. Since there is no mention of any similar limit for non-employees, it may be inferred that for this category the overall limit of Rs 1 lakh will be applicable. That being said, there remains two issues with NPS that yet remain unresolved. The first issue is with the amount of deduction. The combined limit of Sec 80C, 80CCC and 80CCD is Rs 1 lakh. Now most taxpayers exhaust the Rs 1 lakh limit with Sec 80C itself. In such a case, any investment in NPS will be left with no tax deduction. If the objective of the government were to encourage NPS, there is a pressing need to provide additional dedu
