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NPS: What are the benefits under National Pension Scheme and how does it help in saving tax?
The National Pension System is regarded as a credible retirement plan. Benefits under this plan include monthly pensions and tax savings.
Updated : Mar 21, 2023, 06:51 AM IST | Edited by : Raunak Jain
 "National Pension System, pension scheme, tax saving scheme, Benefits of NPS, NPS Tax Saving, NPS Withdrawal Rule")
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Tax saving scheme: One of the best options whereby good money can be saved for retirement is the National Pension System (NPS). The retirement planning process is made simpler by this scheme, which offers a variety of investment options. You can deposit any amount of money into this scheme and you can receive a pension of up to lakhs of rupees.
Investments made through the National Pension System can also help you avoid taxes. Investors are now being encouraged by SBI to invest in this scheme in order to reduce tax obligations.
What are the advantages of the National Pension Scheme?
Anybody between the age of 18 and 70 may invest under this scheme. As this scheme matures, 60 per cent of the money can be withdrawn, and the remaining 40 per cent can be invested by purchasing an annuity. Tax exemptions can be claimed under Sections 80C and 80CCD of the Income Tax Department. You may continue to receive a pension each month under this scheme even after taking a 60 percent withdrawal from the account.
What is the minimum investment limit under this scheme?
The National Pension System opens two new accounts. Under Tier 1, investments must be at least Rs. 500, while Tier 2 investments must be at least Rs. 1000. In terms of tax reductions, only Tier One is eligible for income tax relief. An income tax deduction of up to Rs 50,000 and up to Rs 1.5 lakh may be given under section 80CCD (1B).
What are the options to exit the NPS account?
A minimum of 40 per cent of the total must be put into annuities after 60 years. A withdrawal of 60 per cent is permitted. Up until the age of 75, this sum is withdrawable at any time. If the entire corpus is up to 5 lakhs, it can be withdrawn in full. But, if you take the money out before the age of 60, only 20 per cent of the total corpus can be taken out. It will be necessary to invest 80 per cent of the money. Up to 2.5 lakhs of the money may be withdrawn in full.
Read more: Invest in NSC Scheme for higher returns, tax exemption with less than 2 weeks left to save tax
