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Time of India
07-07-2025
- Business
- Time of India
NPS vs UPS: Big move for central government employees! NPS tax benefits now available under UPS - here's what it means
In a significant move aimed at strengthening the Unified Pension Scheme (UPS), the Finance Ministry has extended income tax benefits currently available under the National Pension System (NPS) to the newly introduced UPS. A government release said, 'In a bid to provide further impetus to the UPS, the Government has decided that tax benefits as available under NPS shall apply mutatis mutandis to UPS as it is an option under NPS. These provisions ensure parity with the existing NPS structure and provide substantial tax relief and incentives to employees opting for the Unified Pension Scheme.' The government's decision is expected to address the primary concern that had dampened interest in the UPS — lack of clarity on tax treatment. UPS, which became operational on April 1, 2025, is a guaranteed pension model for central government employees that operates within the broader NPS framework. Tax benefits under NPS: Old vs New regimes Under the old tax regime, central government employees enjoy deductions under three provisions: Section 80CCD(1): For employee's own contribution, capped at 10% of basic salary or Rs 1.5 lakh (whichever is lower), within the broader Rs 1.5 lakh limit under Section 80C. Section 80CCD(1B): An additional deduction of Rs 50,000 for contributions to the NPS Tier-I account. Section 80CCD(2): For employer's contribution, up to 14% of basic pay + dearness allowance (DA) for central government employees. Under the new tax regime, deductions are restricted to Section 80CCD(2), where a government employee can claim up to 14% of basic pay + DA as deduction for employer's contribution. There is no deduction for the employee's contribution under this regime, according to an ET report. With the extension of the same framework to UPS, employees choosing the new scheme can expect equivalent tax savings. Key expert views on UPS tax deductions Naveen Wadhwa, Chartered Accountant and Vice President at told ET, that those choosing the old tax regime will continue to avail deductions under Section 80CCD(1) and Section 80CCD(1B). However, further clarification is required regarding the maximum deduction limit under Section 80CCD(2). The uncertainty stems from the fact that whilst Section 80CCD(2) permits a maximum deduction of 14% of basic salary plus DA under both tax regimes, the government's contribution towards UPS stands at 18.5%, which exceeds the NPS contribution rate, he said. Ashish Niraj, Chartered Accountant and Partner at A S N & Company, noted: 'One of the main reasons for the low choice of UPS was the uncertainty regarding the taxation of UPS. Now that the government has clarified that tax benefits will apply mutatis mutandis, people will get clarity. Earlier, NPS subscribers were eligible for tax deduction up to 14% of salary (Basic + DA) contributed by the employer under Section 80CCD(2) under both the tax regimes over the limit of Rs 1.50 lakh provided under Section 80C and Rs 50,000 under Section 80CCD(1B). Now, as the government contribution is 18.5% in the case of UPS, so in my view, UPS subscribers will get 18.5% deduction under 80CCD(2) if they are government employees.' Contribution structure and assured benefits under UPS As per the government's FAQs, both the employee and the Central Government will contribute 10% each of basic pay plus DA to the individual corpus. Additionally, the government will contribute another 8.5% to a pooled fund, intended to support the guaranteed pension benefits for UPS subscribers. UPS guarantees a monthly pension payout equal to 50% of the average of the last 12 months' basic pay, provided the employee has completed 25 years of qualifying service. Those with at least 10 years of service are entitled to a minimum assured payout of Rs 10,000 per month, subject to regular and timely contributions. Deadline extended for opting in The Finance Ministry has also extended the deadline for central government employees to switch from NPS to UPS from June 30, 2025, to September 30, 2025. This extension offers employees more time to assess the viability of the new scheme in light of the clarified tax treatment. This policy alignment is likely to increase traction for the UPS, especially with the potential for full tax deduction on the 18.5% employer contribution — a feature that could tilt the decision in favour of those seeking assured post-retirement benefits. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
04-07-2025
- Business
- Time of India
Made a political donation? Income Tax Dept launches Tax Assist to help you respond to an income tax notice
What is Section 80GGC? Academy Empower your mind, elevate your skills How to respond to notices from the Income Tax Department? How to respond if your claim is genuine Can you withdraw the claim of deduction u/s 80GGC? What to do if you have claimed incorrectly or you lack supporting documents? What happens if an income tax notice is ignored Many taxpayers who have claimed deductions under Section 80GGC of the Income Tax Act, 1961, have received income tax notices. The Income Tax Department has enabled a new facility on its portal, allowing taxpayers who have received notices under Section 158BC of the Income Tax Act, 1961 on how to respond to such 80GGC of Income Tax Act, 1961, allows individual taxpayers to claim deductions for contributions made to political parties or electoral trusts. These deductions encourage transparent political contributions and have specific eligibility criteria, documentation requirements, and deduction limits. Understanding the features and procedures of Section 80GGC helps taxpayers maximize benefits while complying with tax due to rising instances of fake claim being made, the income tax department has taken this new initiative to curb the misuse of this you have received an SMS or email regarding your claim under this section, do not ignore it. Taxpayers are advised to review their ITRs carefully, as any incorrect or unsupported claim can lead to scrutiny, investigation, or even penalties. Make sure your claim is backed by proper documentation such as valid donation receipts and payment proofs to avoid potential Income Tax Department has introduced 'TAXASSIST" to support all taxpayers' concerns. The Income Tax Department posted on social media,'DONATIONS UNDER 80GGC?Match Claim with an SMS/E-mail from the Income Tax ignore the communication. It relates to your claimed deduction for political your ITR carefully, incorrect claims can lead to scrutiny or penalties.'The Income Tax Department has asked taxpayers who have received notice under Section 158BC to now submit Form ITR-B via the e-Proceeding tab on the Income Tax to the tax department's social media post, 'Taxpayers who have received notice under Section 158BC can now submit Form ITR-B via the e-Proceeding tab on the Income Tax portal'According to CA Ashish Niraj, Partner at A S N & Company:'If your claim is genuine and you have donated to a registered political party, there is no need to panic. Simply reply to the notice with valid donation receipts and be ready to provide bank statements or transaction details if requested later.'Yes, you can withdraw the claim made under u/s 80GGC. 'However, in the spirit of promoting voluntary compliance it is suggested that if for any reason, you would like to withdraw the claim of deduction u/s 80GGC, you can file an updated return u/s 139(8A) withdrawing the claim and paying taxes as required u/s 139(8A) of the Income-tax Act, 1961. In such a situation, you may provide details of the updated return filed along with the proof of payment of taxes within 7 days of receipt of this letter' explains the deduction was claimed incorrectly or you lack supporting documents, CA Niraj advises:'If you believe you have mistakenly claimed the deduction and you don't have required documents to substantiate your claim then you should file ITR U u/s 139(8A) of Income Tax Act as soon as possible with payment of additional tax soon. However there is a Practical Problem in it. Presently ITR U Filing is available for AY 2023-24 and AY 2024-25 Only. As per Budget 2025 provisions ITR U for AY 2021-22 and AY 2022-23 should have enable but presently it is not available on portal to file. On the Home Page of Income Tax Portal in the Announcement section it mentions that 'Facility for filing updated returns for the AYs 2021-22 and 2022-23 as per Finance Act, 2025 will be provided shortly'.Ignoring an income tax notice may lead to a heavy penalty. If you receive such a notice and choose to ignore it knowingly, despite an incorrect claim, be aware that the tax department may initiate proceedings and impose a penalty of up to 200% of the tax sought to be evaded.
Time of India
30-05-2025
- Business
- Time of India
Received your OCI card and want to open an NPS account? Here's what you must know
Overseas Citizens of India (OCI) cardholders, aged 18-70, can invest in the National Pension Scheme (NPS) on either a repatriation or non-repatriation basis. Contributions must be made through NRE/NRO accounts, with NRE accounts recommended for those wanting to remit funds back to their country of residence. But if an NPS subscriber has given up on their Indian citizenship and hasn't yet received or applied for an OCI card, they are not eligible to hold an NPS account. Tired of too many ads? Remove Ads Can OCI cardholders open and hold NPS accounts? Tired of too many ads? Remove Ads Popular in Wealth 1. I am 55 years old and have Rs 50 lakh lump sum. How can I invest it to build wealth in 5 years? Which account can OCIs use for contributing to NPS? Can I hold an NPS account if I don't have an OCI card? Tired of too many ads? Remove Ads Did you know that Overseas Citizens of India (OCI) cardholders, who are individuals of Indian heritage presently holding foreign citizenship, are allowed to hold an NPS ( National Pension Scheme ) account in India? OCI card holders can stay for indefinite periods in India without having to apply for a visa every single time, since having an OCI card grants them a multiple-entry lifelong visa for visiting India. In case they wish to stay here for extended periods, or for as long as they want, OCI cardholders can voluntarily open an NPS account 'applicable to resident Indians,' according to NSDL. However, note that OCIs are not permitted to open NPS Tier-II on to know what documents you need to open an NPS account as an OCI cardholder and steps to close it in case you have acquired foreign citizenship and have not received their OCI all OCI cardholders aged between 18 and 70 years are eligible to open an NPS account on either a repatriation or non-repatriation CA Ashish Niraj, Partner, ASN & Company Chartered Accountants, 'For OCIs, both repatriation and non-repatriation basis options are available in NPS. Repatriation basis means that the proceeds can be taken back to the investor's home country. Non-repatriation basis means that proceeds should remain in India and cannot be taken back by the means that OCIs have the choice to either remit or send their lump-sum withdrawal from NPS or their monthly pension received from India to the country of which they now hold citizenship, or not do so, i.e., not transfer back these funds to that NPS, subscribers can partially withdraw from tier-1 accounts for specific purposes, and such partial withdrawal is tax-free. For lump-sum withdrawal, a maximum of 60% of total corpus is allowed, which will also be tax-freeTo open an NPS account with NSDL using an Aadhaar or PAN card, OCIs will have to provide a scanned copy of their OCI card, proof of their foreign address, and their scanned signatures, according to the NSDL are also required to provide the details of NRE/NRO accounts only, along with a cancelled check/copy of bank passbook/bank statement/bank certificate/letter from the bank containing the applicant's name, bank name, bank account number, and IFS/SWIFT code, per the NSDL that NPS contributions can only be made through an OCI cardholder's NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account. However, in case the OCI NPS subscriber wishes to repatriate, or send back, their funds, they should take care to make their NPS contributions only via their NRE a/c. This is because only NRE, and not NRO a/cs allow individuals to remit back funds to their country of residence at any time, without any for annuities, according to the NDSL website, 'Annuity payable by ASPs (annuity service provider) to NRIs and OCIs will be taxed at source, at rates applicable as per the DTAA (Double Taxation Avoidance Agreements) of the country where the annuitant resides',Niraj adds, saying that while TDS will be applicable on pension received from annuity, subscribers can take advantage of DTAA in their country if there is a DTAA with that country. 'Since in NPS, the minimum rate of return is higher compared to normal saving instruments, OCIs, for whom this avenue was opened in 2019, should explore investing in it,' he an NPS subscriber has renounced their Indian citizenship and hasn't received or applied for an OCI card, they are not eligible to hold an NPS account.A recent circular mandated that all NPS subscribers who have validly renounced their Indian citizenship and do not hold an OCI card will have their PRAN/NPS account closed, and 'the entire accumulated pension wealth may be transferred to a Non-Resident Ordinary (NRO) account.'Explains Rajesh Khandagale, SVP-NPS, KFin Technologies , 'The subscriber will have to submit an application for closure of his/her NPS account along with an undertaking stating that he/she has renounced his/her Indian citizenship and does not hold an OCI card. They should also attach a valid certificate of renunciation of Indian citizenship/surrender certificate/cancelled Indian passport issued by a competent authority.'Note that the total accumulated pension wealth of the subscriber in the PRAN shall be transferred only to the NRO account of the subscriber, in accordance with the FEMA guidelines issued by the to RBI guidelines, balances in an NRO account of NRIs (which includes OCIs) are remittable up to $1 million per financial year (April-March) along with their other eligible assets, as per Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Fund transfers from NRO to NRE accounts also need to be within this limit.
Economic Times
27-05-2025
- Business
- Economic Times
ITR filing last date extended from July 31, 2025, for FY 2024-25 (AY 2025-26): Check the new date here
The Income Tax Department has extended the due date to file income tax return for FY 2024-25 (AY 2025-26) from July 31, 2025, to September 15, 2025. The decision was made after a delay in issuing the notification of income tax return forms. Further, the income tax department is yet to issue the utilities to file the income tax return. The Income Tax Department announced this via a post on X (formerly known as Twitter). As per the post, "Kind Attention Taxpayers! CBDT has decided to extend the due date of filing of ITRs, which are due for filing by 31st July 2025, to 15th September 2025. This extension will provide more time due to significant revisions in ITR forms, system development needs, and TDS credit reflections. This ensures a smoother and more accurate filing experience for everyone. Formal notification will follow." — IncomeTaxIndia (@IncomeTaxIndia) Chartered Accountant Ashish Niraj, Partner A S N & Company, says, 'This extension is a welcome step as today on 27th May 2028, till 5 PM, ITR is not available to be filed on the Income Tax Portal. Even AIS is not getting fetched properly in many cases. Now, as the Income Tax Department is taking time to enable the filing of Income Tax Return on the portal, this extension will give relief to professionals and taxpayers both." The ITR filing of July 31, 2025, applies to most general categories of taxpayers. This includes most salaried employees and all those taxpayers whose accounts are not required to be audited. Salaried employee will get 46 days extra to file their income tax returns. A penalty of up to Rs 5,000 will be applicable if the ITR is not filed by the last date. Also read: Taxpayers should avoid filing ITR before June 15 The Central Board of Direct Taxes (CBDT) has clarified the reasons for extending this due date. As per CBDT, "The notified ITRs for AY 2025-26 have undergone structural and content revisions aimed at simplifying compliance, enhancing transparency, and enabling accurate reporting. These changes have necessitated additional time for system development, integration, and testing of the corresponding utilities. Furthermore, credits arising from TDS statements, due for filing by 31st May 2025, are expected to begin reflecting in early June, limiting the effective window for return filing in the absence of such extension." The tax department further said, "In view of the extensive changes introduced in the notified ITRs and considering the time required for system readiness and roll-out of Income Tax Return (ITR) uilities for Assessment Year (AY) 2025-26, the Central Board of Direct Taxes (CBDT) has decided to extend the due date for filing returns.""Accordingly, to facilitate a smooth and convenient filing experience for taxpayers, it has been decided that the due date for filing of ITRs, originally due on 31st July 2025, is extended to 15th September 2025. A formal notification to this effect is being issued separately. This extension is expected to mitigate the concerns raised by stakeholders and provide adequate time for compliance, thereby ensuring the integrity and accuracy of the return filing process," said the CBDT in the post on X.
Time of India
05-05-2025
- Business
- Time of India
New ITR-2 form notified for income tax return filing AY 2025-26: What's new for taxpayers? Check top points
notified: The (CBDT) has notified the updated ITR-2 Form for AY 2025-26, which includes key changes such as separate reporting of , allowance of capital loss on share buybacks from October 1, 2024, and a raised threshold for reporting assets and liabilities to Rs 1 crore. Tired of too many ads? go ad free now The revised form also mandates reporting of section codes and enhanced disclosures for deductions like 80C and 10(13A). ITR-2 Form FY 2024-25: Top points Capital gains must now be reported separately for transactions before and after July 23, 2024, following changes in the Finance Act, 2024. Capital loss on share buybacks will be allowed if corresponding dividend income is disclosed as 'Income from Other Sources,' effective from October 1, 2024. The threshold for reporting assets and liabilities has been raised from Rs 50 lakh to Rs 1 crore of total income. Reporting requirements for deductions under sections like 80C and 10(13A) have been expanded. A new column has been introduced under Schedule-TDS to specify the section under which TDS was deducted (e.g., 194I, 194J). What does the new ITR-2 mean for taxpayers? Tax experts have expressed mixed opinions on the new ITR-2 form, noting both the simplifications and the added complexity. CA Ashish Niraj, Partner at A S N & Company Chartered Accountants, welcomed the relief for non-business taxpayers from burdensome disclosure requirements: 'If we see till last year, Schedule AL, which was for assets and liabilities, was applicable if total income exceeded Rs 50 lakhs. But now, it's applicable if total income exceeds Rs 1 crore. Preparing details of assets and liabilities as of March 31st every year is a tedious task for non-business entities for which 2 is applicable. By increasing the limit to Rs 1 crore, taxpayers in the bracket of Rs 50 lakh to Rs 1 crore will get relief from preparing the details,' he told TOI. Niraj added that the requirement aims to resolve some of the earlier inefficiencies: 'Earlier, while entering TDS details in ITR 2, it was not required to mention the section under which TDS was deducted, such as Section 194I, 194J, etc. Now, a separate column is provided for the section. Sometimes, when TDS returns were not filed in time by the deductor or were filed with incorrect particulars, taxpayers used to enter TDS details such as TAN, Name, and amount manually. As there was no 'section' column, the tax department faced issues in processing and cross-verifying. Now, this new column will bring clarity in reporting.' The changes to capital gains reporting also reflect recent shifts in tax policy: 'Before July 23, 2024, the Long-Term Capital Gain rate was 20% with indexation. Tired of too many ads? go ad free now After July 23, 2024, a new rate of 12.5% without indexation was introduced. In the newly notified ITR 2, separate columns are added to report transactions before and after July 23, 2024, separately.' Niraj also pointed out the government's tightening of compliance around disability-related deductions: 'In recent years, the department has caught many fake claims for claiming refund or reducing tax liability under Section 80U, 80DD etc for disability. Now, disability certificate details etc. are required.' CA Gopal Bohra, Partner – Direct Tax at N. A. Shah Associates LLP, explained the updates regarding capital gains taxation: 'Considering the two tax rates applicable on capital gains for the FY 2024-25 (i.e. gains accrued up to July 22, 2024, and gains accrued on or after July 23, 2024), CBDT has introduced a split in Schedule Capital Gains to report separately the capital gains where transfer was before July 23, 2024, and where transfer was on or after July 23, 2024. Similarly, separate computation mechanisms are provided in ITR in relation to capital gains from transfer of land or building by resident individuals where such land or building was acquired prior to July 23, 2024. These changes in ITR will help the individual taxpayer to compute the correct tax liability on capital gains while filing the ITR.' Bohra also explained the impact of the Finance Act (No. 2) of 2024, which will affect share buybacks: 'As amended by Finance Act (No. 2) 2024 with effect from October 1, 2024, the buyback receipt will be taxed in the hands of the recipient as dividend under the head 'Income from Other Sources,' and the cost of such shares will be allowed as capital loss under the head 'Capital Gains.' Accordingly, in ITR-2, separate line items are added under Schedule 'Capital Gains' and Schedule 'OS' to disclose capital loss on buyback of shares on or after October 1, 2024, and receipt from such buyback taxable as dividend under section 2(22)(f) of the Act,' he told TOI. Sonam Chandwani, Managing Partner at S Legal & Associates, termed the new form a mixed experience for taxpayers. 'The ITR-2 form for AY 2025-26, feels like a mixed bag compared to last year's version. The new split in Schedule Capital Gains for pre- and post-July 23, 2024, gains is a smart move to align with the Finance Act's tax tweaks, but it's a headache for taxpayers juggling multiple transactions. Allowing capital losses from share buybacks after October 1, 2024, is a win for investors, though tying it to dividend income reporting feels like a bureaucratic trap waiting to trip people up. Bumping the asset and liability reporting threshold to Rs 1 crore is a relief for middle-income filers, sparing them tedious paperwork, but the beefed-up deduction reporting for 80C and 10(13A), plus mandatory TDS section codes, screams overreach. Honestly, while the form tries to balance clarity and compliance, it's tilting toward complexity, likely forcing salaried folks and HNIs to lean harder on CAs to avoid errors.'
