Tax Benefits Under NPS

Contribution to NPS are *tax deductible under 80CCD (1), Section 80CCD (1B) and Section 80CCD (2) of the Indian Income Tax Act, 1961

*Tax benefit is subject to applicable tax laws.

NPS Tax Benefits

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 up to ₹50,000/-

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 The amount withdrawn is exempted from tax.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 of NPS

Retirement & Tax planning with NPS

NPS is Retirement Planning Investment product with various tax benefits.
Contribution under NPS enjoys tax benefit under section 80CCD (1), under section 80CCD (1B) and Section 80 CCD (2) on Indian Income Tax 1961.