Get NPS Tax Benefits Today and Safeguard Your Future Tomorrow! 

Planning for the future is an important step toward ensuring a secure and comfortable retirement. The National Pension System (NPS), introduced by the Government of India is a comprehensive scheme designed to help individuals achieve financial stability in their later years. Beyond its role in building a retirement corpus, NPS also offers attractive tax benefits. In this blog, we will explore how NPS can help you save on taxes today while providing peace of mind for the future.

Benefits of NPS

Let’s have a look at the NPS features briefly before discussing the NPS tax saving scheme benefits:

1. Regulated: The National Pension System is regulated by the Pension Fund Regulatory and Development Authority which maintains the transparency of the scheme.
2. Portable: NPS is a portable retirement and tax-saving scheme. It means a subscriber doesn’t need to make changes in the scheme if his job, location, area, or city changes.
3. Low Investment: Any subscriber in India can open an NPS Tier I account with a mere ₹500. This makes it an attractive option among all the other traditional retirement plans.
4. Potential of Returns: NPS invests in a diverse range of asset classes such as equities, corporate bonds, government securities, and AIFs. Thus, it has the potential to provide higher returns in the long term.
5. Flexible: NPS gives a subscriber to choose between auto and active mode. This means depending on their risk profiles, financial goals, and investment horizon they can change their approach from aggressive to moderate to conservative in active mode.

National Pension System – Eligibility

1. Any Indian citizen between the ages of 18 and 70 can open an NPS account.
2. A subscriber should have an active bank account.
3. A subscriber needs to have the necessary documents such as a PAN card, Aadhar Card, and bank details to open an NPS account.

National Pension System – Tax Benefits

• NPS Tax Benefit on Self-Contribution: Salaried individuals can claim up to ₹1.5 tax benefit under Section 80 (C) of the Income Tax Act. Additionally, they can have ₹50,000 tax benefits under Section 80 CCD (1B) which is over and above Section 80 (C).
• NPS Tax Benefit on Employer Contribution: The employer’s contribution to an employee’s NPS is eligible for a tax deduction of up to 10% of the salary (basic plus DA), or 14% of the salary.
• NPS Tax Benefit on Partial Withdrawal:  Up to 25% of the self-contribution amount is eligible for tax exemption for partial withdrawals. However, this is subject to the circumstances and criteria given by the PFRDA.  
• NPS Tax Benefit on Upon Retirement: Up to 60% of your accumulated corpus is exempt from tax and comes under EEE (Exempt, Exempt, Exempt), and the remaining 40% should be used to buy annuities to receive the taxable pension.

Final Thoughts

The National Pension System comes with various tax benefits while you invest today and it also safeguards your golden years. It can be a great choice for individuals looking to secure their financial future knowing that their money is invested and regulated by the Government of India.