What are the tax benefits available for NPS?
The employer’s contribution to your NPS account is tax free up to 10\% of your salary subject to an annual overall ceiling of Rs. 7.50 lakhs for NPS, provident Fund and Superannuation contribution made by the employer taken together. 1.50 lakhs under Section 80CCD(1) along with other eligible items of section 80 C.
What is NPS tier2?
The NPS Tier 2 is a voluntary account that can be opened only if you have a Tier 1 account. At the time of opening an NPS Tier 2 account, you are required to make a minimum contribution of Rs 1,000. When you put your money into NPS, you have four asset classes to choose from to invest your corpus.
What is the difference between Tier I and Tier II NPS accounts?
Tier I is a mandatory account for all NPS investors while Tier II is voluntary. Tier I investments are eligible for NPS deductions or tax benefits, under Section 80C and Section 80CCD (1B) of the Income Tax Act, 1961. NPS tax benefits for annual contributions are as follows:
What is the tax deduction for NPS Tier 1?
Contribution to NPS Tier I qualify for tax deduction under Section 80C up to Rs 1.5 lakh. Tax deduction is available under Section 80CCD (1B) up to Rs 50,000 in addition to Section 80C benefits. Should you opt for Tier II NPS? You know that structurally, all aspects of Tier I and Tier II NPS are the same.
What is the lock-in period for NPS Tier-II?
Private sector employees contributions to the NPS Tier II account will remain free from lock-in, but will not get tax deductions. 2. The contribution of the central government employee to NPS Tier-II for the deduction of income tax under Section 80C (up to 1.5 lakh) per year will be having a lock-in for a period of 3 years.
What are the tax-saving benefits of NPS?
Here are the other NPS tax-saving benefits: After 3 years of investment, an investor can withdraw up to 25\% of the corpus from the NPS Tier I account for specific purposes such as medical expenses, children’s higher education, marriage, etc. This withdrawal is exempt from tax.