Taxability of Employer’s Contribution to an

Approved Superannuation Fund Vs NPS

Approved Fund- NTPC NPS- PFRDA

Pension Scheme

Exempt upto Rs.1.50 Lakh p.a.
Amount in excess of Rs.1.50
lakh is considered as perquisites
and taxed accordingly.
Fully exempt upto 10% of Salary
(Basic Pay +DA) without any
upper limit
 Taxability in the context of
NTPC Employees
Employees drawing Basic Pay >1.15 Lakh per month is
paying tax on employer’s contribution in excess of
Rs.1.50 lakh p.a. towards DCPS Pension

Number of such employees: 5728

(As per January-19 Pension Data)

More than 25% of Total Manpower

More than 45% of executives manpower

As Dearness Allowances increases, number would increase.

 Tax Saving on Switch to
NPS
As per Jan-19 data, number of such employee are 5728

Average Basic Pay of above group of employees is 165000

DA@8.80% 14520
Salary(Basic Pay+DA) 179520

Annual employer's contribution to Pension @ 10% 215424

Considered as perquisities(Amount in excess of Rs.150000) 65424

Average Tax Saving on switch to NPS 20412

 Employee group wise tax saving
on switch to NPS
Summary of employees paying tax on employer’s contribution
Employer’s contribution to Pension in No of Average Tax Saving on
excess of 1.50 Lacs p.a. employee switch to NPS in Rs.
Pension perquisite amount in Rs. 5739 20316
>10000 4944 23356
>25000 4127 26893
>35000 3624 29313
>45000 3277 31120
>50000 3068 32236
>75000 2356 35965
>90000 1968 37959
>100000 1684 39332
 Tax Savings for employees in higher
grades-Scenario-I
Savings in Tax if company contributes to NPS @10% of Saary
Particulars Amount in Rs. Amount in Rs.

Taxable Salary for the year (Basic Pay +DA +Taxable 4950000 4950000
allowances + Perquisities except pension contrib.) after
chapter VI deduction and set off of loss from income
from house property
Company contribution to DCPS Scheme/NPS 240000 240000
Perquisites( for Co. contribution for DCPS in excess of 90000 0
150000)
Total Taxable Salary 5040000 4950000
Tax Payable-
Income Tax 1324500 1297500
Surcharge 28000 0
Health and Education Cess 54100 51900
Total 1406600 1349400
Saving in Tax on switch to NPS 57200
 Tax Savings for employees in higher
grades- Scenario-II
Savings in Tax if company contributes to NPS @10% of Saary
Amount in Rs. Amount in Rs.
Particulars
Taxable Salary for the year (Basic Pay+DA+Taxable 5000000 5000000
allowances+Perquisities except pension) after chapter VI
deducation and set off of loss from income from house
property
Company contribuiton to DCPS Scheme/NPS 240000 240000
Perquisites( for Co. contribution for DCPS in excess of 90000 0
150000)
Total Taxable Salary 5090000 5000000
Tax Payable-
Income Tax 1339500 1312500
Surcharge 63000 0
Health and Education Cess 56100 52500
Total 1458600 1365000
Saving in Tax on switch to NPS 93600
Thank You