National Pension Scheme Tax Benefits

NPS Tax Benefits

Tax Benefits for Self-Employed Individuals (Available only under Old Tax Regime)

Within 80C limits

Under section 80CCD (1)

The self-employed NPS subscribers can claim a tax deduction up to 20% of their gross income or ₹1,50,000 whichever is less.

Additional tax benefits(beyond 80C limits)

Under Section 80CCD (1B)

NPS subscriber can claim tax deduction on an additional self-contribution upto ₹50,000/-

Tax Benefits for Salaried Individuals (Available only under Old Tax Regime)

Within 80C limits

Under section 80CCD (1)

The salaried NPS subscribers can claim a tax deduction up to 10% of their basic salary or 1,50,000 whichever is less.

Additional tax benefits(beyond 80C limits)

Under Section 80CCD (1B)

NPS subscriber can claim tax deduction on an additional self-contribution upto ₹50,000/-

Additional Tax Benefit for Salaried Individuals under Corporate NPS

Contribution made by employer on behalf of NPS subscriber mapped under the corporate NPS model, tax deduction subject to:

Under Section 80CCD (2)(Applicable under both Tax Regimes)

Old Tax Regime- Up to 10% of salary(Basic + DA)

New Tax Regime- Up to 14% of salary(Basic + DA)

Tax treatment for NPS at the time of Exit.

For Premature Exit from NPS

NPS Subscriber can withdraw lump sum 20% of the entire corpus build. The withdrawal amount is tax exempted.

For Lumpsum Withdrawal at Retirement

Once the NPS subscriber attains the designated retirement age or post 60 years (which ever is early), Subscriber is eligible to withdraw 60% of the corpus in lumpsum. The amount withdrawn is exempted from tax.

For Annuity Purchase

The amount apportioned for purchasing annuity plan from NPS is GST exempt. Income from annuity in the form of pension is part of the income and to be accounted for taxes under IT rules.

Other Benefits

Affordability:

NPS is a low-cost investment option. Over a long term horizon of 20 to 40 years, small savings in operational costs result in a huge difference in the accumulated corpus and the ultimate pension.

Portability:

NPS provides seamless portability across jobs and across locations as the subscriber can shift to the new job/location, without leaving behind the corpus build, as happens in many pension schemes in India.

Online access:

It is easy to register for NPS and manage the same online. Subscriber(s) can also set SIP for contributions through Aditya Birla Sun Life Pension Fund Management limited website in simple steps.

Flexibility:

NPS subscribers get flexibility to choose their investment strategy based on their risk tolerance and investment goals.

Power of compounding:

Till retirement, pension wealth accumulation grows over the period of time with a compounding effect.

Systematic savings:

NPS helps subscribers develop a savings habit, encouraging them to regularly invest a portion of their income towards their retirement.

NPS Tax Benefits

Tax Benefits for Self-Employed Individuals (Available only under Old Tax Regime)

Within 80C limits

Under section 80CCD (1)

Under Section 80CCD (1B)

Tax Benefits for Salaried Individuals (Available only under Old Tax Regime)

Within 80C limits

Under section 80CCD (1)

Under Section 80CCD (1B)

Additional Tax Benefit for Salaried Individuals under Corporate NPS

Contribution made by employer on behalf of NPS subscriber mapped under the corporate NPS model, tax deduction subject to:

Under Section 80CCD (2)(Applicable under both Tax Regimes)

Ensure to claim complete tax benefits with NPS

Tax treatment for NPS at the time of Exit.

For Premature Exit from NPS

For Lumpsum Withdrawal at Retirement

For Annuity Purchase

Other Benefits

Affordability:

Portability:

Online access:

Flexibility:

Power of compounding:

Systematic savings:

Retirement & Tax planning with NPS

TAX BENEFITS UNDER NPS

NPS Tax Benefits

Tax Benefits for Self-Employed Individuals (Available only under Old Tax Regime)

Within 80C limits

Under section 80CCD (1)

Under Section 80CCD (1B)

Tax Benefits for Salaried Individuals (Available only under Old Tax Regime)

Within 80C limits

Under section 80CCD (1)

Under Section 80CCD (1B)

Additional Tax Benefit for Salaried Individuals under Corporate NPS

Contribution made by employer on behalf of NPS subscriber mapped under the corporate NPS model, tax deduction subject to:

Under Section 80CCD (2)(Applicable under both Tax Regimes)

Ensure to claim complete tax benefits with NPS

Tax treatment for NPS at the time of Exit.

For Premature Exit from NPS

For Lumpsum Withdrawal at Retirement

For Annuity Purchase

Other Benefits

Affordability:

Portability:

Online access:

Flexibility:

Power of compounding:

Systematic savings:

Retirement & Tax planning with NPS