Government NPS
Government NPS
NPS is a mandatory defined -contribution pension scheme for all those employed in central government services including their autonomous bodies joining on or after 01st January 2004 onwards, (except armed forces). Both Employee contribution and Employer contribution by the Government is deposited in NPS account of these employees for accumulation of pension corpus to meet their retirement needs through a pension.
Most of the State Governments have adopted NPS and have implemented NPS mandatorily through Gazette Notifications for the State Government/ Autonomous body employees joining on or after their respective cut-off dates.
Under Government NPS system, NPS is administered through Nodal officers and as such no Point of Presence (PoP) involved.
Tax Benefits
Employee Contributions
10% of Salary (Basic and DA) is deducted and deposited as Employee contribution in the NPS account of the government employee, is eligible for deduction under 80CCD(1) within ₹1.5 lakh limit of Section 80CCE.
Employee can additionally deposit ₹50,000/- and avail tax deduction under Section 80CCD(1B). This benefit is over and above ₹1.5 lakh limit of Section 80CCE.
Kindly note the benefit available under section 80CCD(1) and 80CCD(1B) can be availed in old tax regime.
Withdrawal and Exit
Partial Withdrawals: Up to 25% of self-contributed amount allowed as partial withdrawal for pre-defined emergencies, shall be tax-exempt. Kindly note Government contribution amount shall not be considered for partial withdrawals.
Withdrawals on premature exit: Up to 20% of accumulated corpus eligible for withdrawal upon premature 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 is no GST applicable on NPS corpus that is invested in Annuity plan provided by PFRDA-approved insurance companies, for receiving a pension.
Pension Projector