If I invest in NPS, can my office refuse to take note of it while calculating my tax?
The Central Board of Direct Taxes' (CBDT) circular issued for FY15 provides for considering NPS investment made by employee for deduction purposes before calculating the tax withholding amount. You may share a copy of the said circular with your employer (Circular 17/2014). This year, the Budget proposed the additional deduction of Rs 50,000 towards NPS. Although the circular for 2015-16 has not been issued as yet, it is likely that the circular would allow the employer to consider the additional deduction of Rs 50,000 for contribution to NPS. Your employer should, therefore, not refuse to allow you the deduction as the CBDT will issue the circular for FY16 in due course.
As I have not yet made investments for this year, can I ask my office to calculate the tax based on last year's investments?
Yes, you can ask your office to calculate taxes based on your last year's investments. However, you need to ensure that you make those investments and would also need to submit the proof of those investments with the employer in due course. It may also be noted that in this year's Budget, there was an amendment wherein the CBDT prescribed the form and manner in which proofs need to be obtained by the employer in order to allow any deduction to the employees. In such a case, employees will need to comply with those requirements.
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
