As we are heading towards the final quarter of this Financial Year and everyone wants to freeze Tax Planning, National Pension System gives an opportunity to all such people to Save Additional Tax over & above limit of Rs. 1.50 Lakh u/s 80C. National Pension System allows an individual to save Rs. 50,000/- u/s 80CCD(1B). Any individual within the age group of 18-65 years now can enrol under NPS and avail additional tax benefits.
NPS was launched by PFRDA in the year 2004 for Central and State Government Employees only and subsequently, in the year 2009 the same was made open for all citizens of India. However, the scheme was unable to attract the masses at that time. PostBudget 2015 announcements, NPS has become much sought-after investment option just because a taxpayer can save additional tax upto Rs. 15,000/- by opening an NPS account and investing Rs. 50,000/per FY- in the scheme, provided he is in 30% tax bracket.
Entry Age - 18 years to 65 years
Exit Age: Any time between 60 - 70 years.
There are 2 types of Accounts in NPS:
Tier I- Non-withdrawable account. The contribution made in Tier I is exempted from Tax.
Minimum contribution per year – Rs. 1,000,
Minimum amount per contribution – Rs.500,
Minimum number of contributions - One per year
Tier II- Voluntary A/c with withdrawal facility. The contribution made in tier II is completely taxable.
Minimum contribution per year - Nil, Minimum amount per contribution – Rs.250
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