Tax Benefits
Tax Benefits
In addition to securing your retirement, you also get deductions on NPS contributions.
Tax Benefits on NPS Contributions
Following Tax benefits are available on NPS contributions made by an Individual:
Sec. 80 C
Max. Rs. 1.50 Lacs (including other eligible Investments of 80C)
Sec.80CCD (1B)
Rs. 50,000 (Exclusive for NPS)
Sec. 80CCD(2)
The individual gets tax benefits on contributions made an borne by the employer
*Kindly note tax benefits under sec 80C and 80CCD(1B) is available under the old tax regime only.
Exclusive Tax Benefits on NPS Contributions by Employer
Under Corporate sector model: Contribution made and borne by employer of up to 10% of Salary (Basic and DA) in the Old Tax Regime and up to 14% of Salary (Basic and DA) in the New Tax Regime towards NPS is eligible for additional tax deduction under section 80 CCD (2) of the Income Tax Act, 1961*
Under Government sector model: Government contribution of up to 14 % salary (Basic and DA) towards NPS is eligible for additional tax deduction under section 80 CCD (2) of the Income Tax Act, 1961*
*Kindly note that all contributions by both Employee & Employer under all the sections listed for tax benefits have a maximum limit of ₹7.5 lakhs that include contribution to PF, Superannuation Fund and NPS under Old Tax Regime. However under new tax regime, the entire limit of Rs. 7.5 lakhs is available under section 80CCD(2)
Tax Benefit on Withdrawal and Exit
Partial Withdrawals: Up to 25% of self-contributed amount allowed as partial withdrawal in case of pre-defined emergencies, shall be tax exempt
Withdrawals on pre-mature exit: Up to 20% of accumulated corpus eligible for withdrawal upon pre-mature exit shall be tax-exempt
Withdrawals upon attaining Superannuation or exit on maturity: Entire corpus amount is tax free. Maximum 60% allowed as withdrawal with remaining 40% to be invested in annuity for receiving your pension.
Annuity Investment: There’s no GST applicable on NPS corpus being invested in Annuity plan provided by PFRDA-approved insurance companies, for receiving a pension.
Pension Projector