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Sec 89 benefit on NPS arrear

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DR SUNDEEP NIGAM

DOCTOR

74 Points Posted on 13 February 2021

Dear Sir

I am a government employee. This FY government contributed rs 2 lakh of NPS arrear which was not contributed between 2013-2016. Equal 10 % amount was deducted from my salary. This NPS amount is over and above. My regular NPS contribution

Now since this 2 lakh amount is over and above of regular government contribution it is taxable @ 30%.

Can I take sec 89 benefit as this 10% government contribution was tax free in previous years.Since it is NPS contribution it will be tax free when added in previous years salary but become taxable as it is over and above regular NPS contribution

I will be thankful for your guidance

Replies (2)

Quick Summary

A government employee received a Rs 2 lakh NPS arrear contribution from the government for the period 2013-2016, in addition to their regular NPS contributions. This arrear amount is being taxed at 30% as it's considered over and above the usual contributions. The employee is inquiring about eligibility for Section 89 benefit, as the 10% government contribution in previous years was tax-free. Guidance suggests that Section 89 benefit can be claimed for these arrears if documentary proof of the earlier period is available, and the 10E form can be used to bifurcate previous years' arrears for tax savings.