NPS Tax Benefits

For Self-Employed Individuals

Self-employed people can get deductions up to 20% of gross income up to ₹1.5 lacs per Section 80CCD(1) and 80CCE, respectively.

For Government Employees

NPS is mandatory for government employees. They claim tax deductions up to 14% of salary under the employer’s contribution up to ₹1.5 lacs per Section 80CCE.

For Corporate Employees

Private employees will be eligible for deductions up to 10% of their salary under the employer’s contribution apart from ₹1.50 lakhs under Section 80CCE.

Tax Benefits on Lump Sum Withdrawal

After maturity, individuals will be eligible for tax exemption on withdrawal of 60% of the total corpus under Section 10(12A).

Tax Benefits on Partial Withdrawal

On meeting the specificed norms set by PFRDA, individuals can claim tax exemption for the partial withdrawal of up to 25% of the self-contribution.

NPS Tier 1 Tax Benefits

Tax deductions up to ₹1.50 lakhs under Section 80CCD(1). Additional deduction of ₹50,000 under Section 80CCD(1b).

1. 2.

NPS Tier 1 Tax Benefits

The Budget 2017 permits 25% of the amount to be tax-free when withdrawn before maturity.

3.

NPS Tier 1 Tax Benefits

The entire funds of Tier 1 are tax-free in maturity. You can withdraw 60% in a lump sum, with the remaining in the annuity.

4. 5.

NPS Tier 2 Tax Benefits

Only government employees between 18-65 years can claim a deduction of ₹1.5 lakhs under Section 80C if they hold the account for 3 years.

NPS Tax Benefits

Above image shows the tabular representation of the NPS tax benefits.

Final Thought

NPS is an excellent choice for accumulating funds as it is one of the few schemes that offer the EEE tax status.

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