Question And Answer
Subject: Deduction for NPS contribution by self employed person under new tax regime
Querist: karan balani
Answered by:
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Date: September 23, 2023
Query asked by karan balani

A self employed person makes contribution to National Pension Scheme and wish to opt for new tax regime. whether deduction of contribution made to NPS will be available to him?

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Answer given by

NPS contributions means the contribution to the pension scheme of the Central Government. The National Pension Scheme (NPS) in India is a voluntary and long-term investment plan for retirement. The National Pension Scheme (NPS) is a social security initiative by the Central Government. This pension program is open to employees from the public, private, and even the unorganized sectors.

A self-employed person can also make a contribution to the National Pension Scheme for his investment plan for retirement. Self-employed individual who contribute to NPS can also claim the tax benefits on his own contributions. The tax deduction of up to 20% of gross income under Section 80CCD (1), subject to a total limit of Rs.1.5 lakh under Section 80CCE is available to him.

As far as the New Tax regime is concerned, self-employed individuals who have invested in the NPS, he can compute his income at the new tax rate as per section 115BAC. However, he is not eligible to claim said NPS investment amount, as per the provision of section 115BAC sub-section (2). The said provision restricts to claim of the benefit u/s.80CCD (1)(b), which is for in any other case / self-employed person.

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