Along with the tax benefits of NPS, there are multiple reasons to subscribe to this government-backed savings scheme for your future. Ever since its introduction, retirement planning has become simplified for Indians. Now, instead of just relying on savings for old age, you can grow money to enjoy a comfortable retirement life.
This way, you can get market-linked returns and savings benefits while you’re working and regular income benefits after the age of 60. That said, it is important to get a comprehensive picture of what NPS has to offer. Read on to know its features, benefits, tax-saving options and more.
It’s a savings/retirement plan backed by the Government of India, providing a structured way of growing a retirement fund. Here are its noteworthy features:
Also Read: Best Tax Saving Investment Options In India
The tax benefits of NPS fall under different sections of the Income Tax Act of 1961, as explained below.
| Section | Condition | Exemption |
|---|---|---|
| Section 80CCD (1) | Self-contribution by NPS subscriber | Deduction of up to 10% of salary up to ₹1.5 lakhs |
| Section 80CCD(1B) | Self-contribution by NPS subscriber | Deduction of up to ₹50,000 over and above the deduction of ₹1.5 lakhs |
| Section 80CCD (2) | Employer contributions in corporate sector | Deduction up to 10% of salary up to ₹1.5 lakhs |
| Section 80CCD (2) | Employer contributions in government sector | Deduction up to 14% of salary up to ₹1.5 lakhs |
| Section 80CCD (1) | Contributions made by self-employed individuals | 20% of gross income up to ₹1.5 lakhs |
| Section 10(12B) | Partial withdrawal | 25% of the contribution amount |
Thus, you can enjoy up to ₹1.5 lakhs tax saving with the National Pension Scheme. This applies irrespective of whether you are self-employed, government, or a corporate employee.
Also Read: How To Invest Your Epf Savings
Apart from the tax benefits of the National Pension Scheme, here are other advantages you can enjoy with it.
Enjoy a regular pension with this option to maintain the cash flow during your golden years.
The investment made in different assets is according to your risk appetite.
Financial experts invest the funds in the most lucrative scheme by analysing the market conditions, ensuring the best results.
Choosing a comfortable subscription amount gives you flexibility, which you can deposit at any time of the year.
You also have the option to make a partial withdrawal to meet your urgent financial requirements, such as children’s education, wedding or buying property.
It also has straightforward eligibility criteria, allowing Indians to easily make small investments toward a better financial future. However, if you need funds for your current financial requirements, then you must opt for a swift and flexible lending solution such as a personal loan.
One such option you can choose for your planned or emergency financial requirement is the Fibe Instant Cash Loan. We at Fibe offer up to ₹5 lakhs with a complete digital application process and minimum documentation.
Enjoy pocket-friendly interest rates for a comfortable repayment plan. You can also choose from a flexible tenure option of up to 36 months, as per your financial capacity. We also opt for an alternative credit scoring mechanism which allows us to extend loans to applicants without high credit scores. Download our Personal Loan App on your smartphone to apply online!
There are multiple types of tax benefits of the National Pension Scheme, some of which include:
While you can enjoy tax savings with the National Pension Scheme during employment, it is not as tax-efficient after maturity. Therefore, it is up to you to choose the options wisely, based on your financial standing or as per the expert’s recommendation.
In addition to the retirement perks, many opt for the National Pension Scheme for tax benefits.
It is important to enjoy a comfortable retirement life and save tax during your working years.
