NPS

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The employer's contribution to the National Pension System (NPS) is not included in your gross taxable income. Instead, it's eligible for a tax deduction under Section 80CCD(2) of the Income Tax Act, up to 10% of your basic salary and dearness allowance. This deduction is separate from and in addition to the Rs. 1.5 lakh limit under Section 80C.

ashvini dehkwal

ashvini dehkwal (Querist)
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23 February 2021 Hi please tell if employer's contribution is included in gross taxable income.

Ashvini

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 February 2021 Employer's contribution is not included in gross taxable income.

CA.Pujah

CA.Pujah (Expert)
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24 February 2021 Income Tax Act allows benefits under NPS as per the following sections:
On Employee’s contribution: Employee’s own contribution is eligible for tax deduction under sec 80 CCD (1) of Income Tax Act up to 10% of salary (Basic + DA). This is within the overall ceiling of Rs. 1.50 Lacs under Sec. 80 CCE of the Income Tax Act.
On Employer’s contribution: Up to 10% of Basic & DA (no monetary ceiling) under 80CCD (2). This rebate is over and above 80 CCE limit of Rs. 1.50 lacs.
Voluntary Contribution: Employee can voluntarily invest an additional amount of Rs. 50,000 (or more) to the NPS Tier I account and claim tax deduction on the same under section 80 CCD 1(B), subject to a maximum of Rs. 50,000.

So, You should include it in your taxable income as a part of salary and claim deduction under section 80CCD (2)

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