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How do we Treat Employer NPS in a CTC Structure or in a payslip.

Deepak Kumar Mahapatra (1 Points)

21 August 2024

We are introducing Employer NPS in our organisation. and wanted to know how we can treat NPS in a Compensation Structure and Also payslip.

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Rama chary Rachakonda (Master in Accounts & high court Advocate) (8427 Points)
Replied 22 August 2024

NPS (National Pension System) is a retirement savings scheme in India. When including NPS in a compensation structure and payslip, consider the following: Compensation Structure: 1. *Basic Salary*: NPS contribution can be a percentage of basic salary. 2. *Allowances*: Some companies include NPS contribution as an allowance. 3. *Deductions*: NPS contribution can be deducted from the employee's salary. Payslip: 1. *Gross Salary*: Show the employee's gross salary before NPS deduction. 2. *NPS Contribution*: Display the employee's NPS contribution (both employee and employer contributions). 3. *Net Salary*: Show the net salary after NPS deduction. 4. *Break-up*: Provide a break-up of the NPS contribution, including the employee and employer shares. Tax Implications: 1. *Employee Contribution*: Allowable as a tax deduction under Section 80CCD(1) up to ₹1.50 lakh. 2. *Employer Contribution*: Exempt from tax as a perquisite under Section 10(12A). Reporting: 1. *Form 16*: Include NPS contribution in Form 16 (TDS certificate). 2. *Form 24Q*: Report NPS contribution in Form 24Q (TDS return). Please consult a tax professional or HR expert to ensure compliance with relevant laws and regulations.

Rama chary Rachakonda (Master in Accounts & high court Advocate) (8427 Points)
Replied 22 August 2024

NPS (National Pension System) is a retirement savings scheme in India. When including NPS in a compensation structure and payslip, consider the following: Compensation Structure: 1. *Basic Salary*: NPS contribution can be a percentage of basic salary. 2. *Allowances*: Some companies include NPS contribution as an allowance. 3. *Deductions*: NPS contribution can be deducted from the employee's salary. Payslip: 1. *Gross Salary*: Show the employee's gross salary before NPS deduction. 2. *NPS Contribution*: Display the employee's NPS contribution (both employee and employer contributions). 3. *Net Salary*: Show the net salary after NPS deduction. 4. *Break-up*: Provide a break-up of the NPS contribution, including the employee and employer shares. Tax Implications: 1. *Employee Contribution*: Allowable as a tax deduction under Section 80CCD(1) up to ₹1.50 lakh. 2. *Employer Contribution*: Exempt from tax as a perquisite under Section 10(12A). Reporting: 1. *Form 16*: Include NPS contribution in Form 16 (TDS certificate). 2. *Form 24Q*: Report NPS contribution in Form 24Q (TDS return). Please consult a tax professional or HR expert to ensure compliance with relevant laws and regulations.

Rama chary Rachakonda (Master in Accounts & high court Advocate) (8427 Points)
Replied 22 August 2024

NPS (National Pension System) is a retirement savings scheme in India. When including NPS in a compensation structure and payslip, consider the following: Compensation Structure: 1. *Basic Salary*: NPS contribution can be a percentage of basic salary. 2. *Allowances*: Some companies include NPS contribution as an allowance. 3. *Deductions*: NPS contribution can be deducted from the employee's salary. Payslip: 1. *Gross Salary*: Show the employee's gross salary before NPS deduction. 2. *NPS Contribution*: Display the employee's NPS contribution (both employee and employer contributions). 3. *Net Salary*: Show the net salary after NPS deduction. 4. *Break-up*: Provide a break-up of the NPS contribution, including the employee and employer shares. Tax Implications: 1. *Employee Contribution*: Allowable as a tax deduction under Section 80CCD(1) up to ₹1.50 lakh. 2. *Employer Contribution*: Exempt from tax as a perquisite under Section 10(12A). Reporting: 1. *Form 16*: Include NPS contribution in Form 16 (TDS certificate). 2. *Form 24Q*: Report NPS contribution in Form 24Q (TDS return). Please consult a tax professional or HR expert to ensure compliance with relevant laws and regulations.

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