Income tax benefits on NPS explained in 5 points
Investment in NPS qualifies for income tax benefits under NPS Section 80CCD (1B) and Section 80CCD (1)
Under Section 80CCD (2), employer's contribution towards NPS also qualifies for income tax benefits
The government has made National Pension System or NPS more attractive by announcing new income tax benefits in Budget 2019 for investors in the pension scheme. NPS is a voluntary, defined contribution retirement savings scheme. It is open for both government, private sector employees and the self-employed. Under NPS account structure, there are two sub-accounts – the mandatory Tier 1 account or the pension account, and the Tier II account, an optional account that offers withdrawal flexibility. Withdrawal from Tier I NPS is not allowed till the subscriber reaches the age of 60 or retirement though partial withdrawal and premature exit is allowed in specific cases.