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August 16, 2016

National Pension System (NPS)

National Pension System (NPS) [yes it is system and not scheme] is a defined contribution based Pension Scheme launched by Government of India with the following objectives:
  • To provide post retirement income
  • Reasonable market based returns over long run

The product is regulated by Pension Fund Regulatory and Development Authority (PFRDA)

Tax Benefits

Where contribution is by Employer

  • Opportunity to get up to 10% of basic as tax-free salary u/s 80 CCD (2) without any upper cap in terms of absolute value
  • This benefit is over and above the limit of 80 CCE and 80 CCD (1B)

Contribution by Employee - 1

  • Upto Rs 50,000 deductible under seciotn 80 CCD(1B)
  • This benefit is over and above the limit of 80 CCE

Contribution by Employee - 2

  • Eligible for 10% of Basic Salary under section 80 CCD(1A) within Rs 150,000 limit under section 80 CCE.

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