National Pension System: A Complete Tax Saving Guide

The National Pension System (NPS) is a market-linked deferred pension scheme that comes with several tax benefits.

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One can get the tax benefit not only at the time of investment, but even on the partial withdrawals made during the tenure and also on the maturity amount at the vesting age. The vesting age is the age when the annuity i.e. pension begins. The pension that one gets from the vesting age is, however, taxable in the hands of the individual as per one’s tax slab in the year of receipt.

ON THE NPS CONTRIBUTIONS

Section 80 CCD (1): Under Section 80CCD(1) both salaried as well as self-employed may save tax by contributing towards NPS. However, there is a cap on the maximum amount that one may invest for tax benefits and is different for both the categories.