• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Home
  • DOPT ORDERS 2020
  • FinMin Orders 2020
  • Railway Orders 2020
  • Contact Us

7th Pay Commission Latest news

Central Government Employees News

  • DOPPW Orders
  • 7th Pay Commission
  • Dearness Allowance
  • Dearness Relief
  • CSD Price List
  • Defence
    • Defence Pension
You are here: Home / National Pension System / NPS Withdrawals Made Partially Income-Tax

Trending
FINMIN Order : Dearness Allowance to Central Government employees from Jan 2022 “hot”
AICPIN for the month of March 2022 “hot”
GPF Interest Rate from April 2022 to June 2022 “hot”
Small Savings Schemes Interest Rate from April 2022 to June 2022 “hot”

NPS Withdrawals Made Partially Income-Tax

March 12, 2016 pcadmin Leave a Comment

NPS Withdrawals Made Partially Income-Tax

Finance Minister Arun Jaitley proposed to make withdrawals from the National Pension Scheme partially tax-exempt in the Union Budget, giving a big boost to the retirement benefit scheme.

Under current tax laws, withdrawals from NPS did not enjoy any tax-free status and this was a big dampener, but once the Budget proposal comes into force, withdrawal up to 40 per cent of the corpus in NPS will be tax exempt.

NPS allows for an exit at the age of 60 years and investors have to annuitise (invest in pension schemes) a minimum of 40 per cent of the corpus. In other words, if investors annuitise a minimum 60 per cent of NPS corpus, they are not required to pay any tax on withdrawal.

But income received from investment in annuity is treated as income and is taxed accordingly. The minimum contribution in NPS is Rs. 6,000 annually.

NPS allows an additional tax deduction of Rs. 50,000 over and above the limit of Rs. 1.50 lakh available under Section 80C. This means that if investors put Rs. 50,000 for getting the additional tax benefit under section 80CCD, they can save Rs. 5,150, Rs.10,300 and Rs.15,450 for the tax brackets of 10 per cent, 20 per cent and 30 per cent, respectively.

NPS also offers additional tax deduction on employer contribution up to 10 per cent of basic salary, plus the dearness allowance, under 80 CCD(2) of the Income Tax Act. Under the NPS Corporate Sector Model, both the employer and employee can contribute equally towards the retirement corpus in addition to contributions towards the employee provident fund.

Financial planners say tax benefits should not be the important factor for investing in NPS. “Tax benefits should not be the deciding factor. NPS money gets locked in for the long term and only partial withdrawal is allowed. So investors should be first comfortable that their money will remain locked in for a long period,” said Manoj Nagpal, CEO of Outlook Asia Capital, a wealth management firm.

Also, tax benefits don’t make a big difference in very long-term investments, he added.

Contributions under NPS get invested across three asset classes: equity, corporate bonds and government securities. Investors are free to decide on their asset allocation among the three schemes but the exposure to equity asset class cannot exceed 50 per cent.

The key benefit with the NPS is that it allows investors to add higher equity component to the retirement kitty as compared to EPF.

Investors also get to choose the pension fund managers to manage their money. The track records of the pension fund managers are on their websites. On the other hand, the Employees Provident Fund Organisation, which manages provident fund money, is allowed to invest just 5 per cent of its incremental deposits in equities.

Source : NDTV

Filed Under: National Pension System

Also Read

AICPIN for the month of March 2022

AICPIN for the month of March 2022

April 29, 2022 By pcadmin Leave a Comment

AICPIN for the month of March 2022 GOVERNMENT OF INDIAMINISTRY OF LABOUR & EMPLOYMENTLABOUR BUREAU `CLEREMONT', SHIMLA-171004DATED: 29 April, 2022 F.No. 5/1/2021-CPI Press Release AICPIN for March 2022 Consumer Price Index for Industrial Workers (2016=100) — March, 2022 The … [Read More...] about AICPIN for the month of March 2022

Disbursement of Railway Pension through Private Sector Banks

Disbursement of Railway Pension through Private Sector Banks: Railway Board

May 13, 2022 By pcadmin Leave a Comment

Disbursement of Railway Pension through Private Sector Banks: Railway Board Government of India (भारत सरकार)Ministry of Railways (रेल मंत्रालय)Railway Board (रेलवे बोर्ड) RBA No. 29/2022 No. 2018/AC-II/21/2/ARPAN New Delhi, dated 12.05.2022 Pr.Financial Advisors,All Zonal Railways … [Read More...] about Disbursement of Railway Pension through Private Sector Banks: Railway Board

CGEGIS 1980 - Table of Benefits from April to June 2022

CGEGIS 1980 – Table of Benefits from April to June 2022

May 12, 2022 By pcadmin Leave a Comment

Central Government Employees Group Insurance Scheme-1980 - Tables of Benefits for the savings fund for the period from 01.04.2022 to 30.06.2022. No. 7(2)/EV/2016Government of IndiaMinistry of FinanceDepartment of Expenditure E-V Branch New Delhi, the 10 May, 2022 OFFICE MEMORANDUM Sub: … [Read More...] about CGEGIS 1980 – Table of Benefits from April to June 2022

Confirmation of inadequacy of representation of SC and ST in consonance - DOPT

Confirmation of inadequacy of representation of SC and ST in consonance – DOPT

May 10, 2022 By pcadmin Leave a Comment

Confirmation of inadequacy of representation of SC and ST in consonance - DOPT F. No. 25/1 1/2022-CS.II(B)Government of IndiaMinistry of Personnel, Public Grievances & PensionsDepartment of Personnel and TrainingCS.II(B) Section 3rd Floor, Lok Nayak Bhawan,Khan Market, New … [Read More...] about Confirmation of inadequacy of representation of SC and ST in consonance – DOPT

Status of Cadre Review as on 5th May, 2022

Status of Cadre Review as on 5th May, 2022

May 9, 2022 By pcadmin Leave a Comment

Status of Cadre Review proposals processed in DoPT as on 5th May, 2022 A. Approved by Cabinet – 24 B. Status of Proposals under consideration – 23 (1) Meeting of Cadre Review Committee held – 10(2) Pending for consideration of CRC – 3(3) Pending with Department of Expenditure – 3(4) Pending … [Read More...] about Status of Cadre Review as on 5th May, 2022

Scrap NPS and restore CCS (Pension) rules, 1972 or Guarantee Minimum Pension : BPMS

Scrap NPS and restore CCS (Pension) rules, 1972 or Guarantee Minimum Pension : BPMS

May 9, 2022 By pcadmin Leave a Comment

Scrap NPS and restore CCS (Pension) rules, 1972 or Guarantee Minimum Pension : BPMS भारतीय प्रतिरक्षा मजदूर संघBharatiya Pratiraksha Mazdoor Sangh (AN ALL INDIA FEDERATION OF DEFENCE WORKERS)(AN INDUSTRIAL UNIT OF B.M.S.)(RECOGNISED BY MINISTRY OF DEFENCE, GOVT. OF INDIA) REF: BPMS/ PMO/ … [Read More...] about Scrap NPS and restore CCS (Pension) rules, 1972 or Guarantee Minimum Pension : BPMS

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

All About Pension

All about Pension

Latest DOPT Orders

Confirmation of inadequacy of representation of SC and ST in consonance – DOPT

Status of Cadre Review as on 5th May, 2022

Percentage of Salary Budget allocated for training and capacity building – DOPT

Reservation in promotions – procedure to be followed : DOPT

Holiday on 14th April 2022 – Birthday of Dr. B. R. Ambedkar

Latest Finmin Orders

CGEGIS 1980 – Table of Benefits from April to June 2022

FINMIN Order : Dearness Allowance to Central Government employees  from Jan 2022

Modification of instructions regarding Air Travel on Government account. – FINMIN

CGEGIS Table of Benefits from Jan 2022 to March 2022

Concessions to person re-employed in Central Government Service – Payment of Travelling Allowance

Latest Railway Orders

Grant of Leave to Probationary officers: Railway Board

Productivity Linked Bonus to all eligible non-gazetted Railway employees for 2020-2021

Cabinet approves Productivity Linked Bonus to Railway Employees for the year 2020-21

Change of Base Year of Consumer Price Index of Industrial Workers – Railway Order

Advance payment of salary on account of Onam festival.

Categories

Copyright © 2022