It is that time of the year when you have to submit proof of your investment to the employer to avoid paying excess taxes. The employer then verifies the documents and adjusts the TDS before the end of the financial year. Investment in NPS or National Pension System, which is open for both salaried and self-employed, comes with income tax benefits. For example, investment of up to Rs 50,000 in Tier I NPS account in a financial year qualifies for tax deduction under Section 80CCD (1B) of the Income Tax Act. This extra Rs 50,000 tax deduction is in addition to the Rs 1.5 lakh allowed under Section 80CCD (1) for investment towards NPS.
In order to get tax deduction for the required financial year, the subscriber can submit the transaction statement as an investment proof, according to the Central Recordkeeping Agency for NPS. (Read: Tax-saving through NPS: Income tax benefits explained in 10 points)
The subscriber can also download the receipt of voluntary contribution made in Tier I account by logging into NPS account.
How to download NPS contribution receipt
Once the subscriber logs into the NPS account, the subscriber needs to go to “View” under main menu
Then the subscriber needs to access the sub-menu “Statement of Voluntary Contribution under NPS” available under main menu “View”
NPS contribution statements can then be downloaded for different financial years
Financial planners say that you should avoid making last-minute investment in tax-saving instruments. Investments, they say, should be linked to your overall financial goal, not simply for saving taxes.
In case you could not submit proofs or make tax-savings investments in time and excess tax has been deducted by your employer, you can claim refund when you file your income tax returns. But remember that you have to make tax-saving investments before the end of the financial year.