1. What are the tax benefits of NPS?
Income Tax Act allows benefits under NPS as per the following sections:
On Employee’s contribution: Employee’s own contribution is eligible for tax deduction under sec 80 CCD (1) of Income Tax Act up to 10% of salary (Basic + DA). This is within the overall ceiling of Rs. 1.50 Lacs under Sec. 80 CCE of the Income Tax Act.
On Employer’s contribution: Up to 10% of Basic & DA (no monetary ceiling) under 80CCD (2). This rebate is over and above 80 CCE limit of Rs. 1.50 lacs.
Voluntary Contribution: Employee can voluntarily invest an additional amount of Rs. 50,000 (or more) to the NPS Tier I account and claim tax deduction on the same under section 80 CCD 1(B), subject to a maximum of Rs. 50,000.
2. Which document can a Subscriber use as investment proof in order to avail the tax benefit?
A copy of the Annual Transaction Statement (Tier I) can be used as investment proof in order to avail tax benefits.
3. Can a Subscriber get loan under NPS?
No. At present, a Subscriber cannot avail loan against NPS holdings.
4. Are NPS returns guaranteed?
There is no investment return guarantee. As per the present guidelines of Pension Fund Regulatory & Development Authority (PFRDA, the regulator for NPS), in case of government employees, contributions towards pension are invested by three Pension Fund Managers (PFMs), viz., LIC Pension Fund Limited, SBI Pension Funds Private Limited and UTI Retirement Solutions Limited as per the stipulated guidelines.
The returns under NPS are totally market based i.e. they are based on the NAV of the Pension Fund schemes. The benefits will entirely depend upon the amount contributed and the investment growth upto the point of exit from NPS.
Related to Your Search:
- Income Tax benefits for NPS
- NPS returns are market linked – Tax Benefit on NPS
- New Benefits announced for NPS Subscribers: Budget 2017
- New Benefits announced for NPS Subscribers in Union Budget 2017-18
- Save Income Tax on the Contribution made by Government in pension fund of NPS Subscribers
- Tax benefits under NPS, the Government Subscribers can make an additional investment in their NPS Tier I account
- FAQ for Scheme Preference under NPS for Central Government Subscribers
- New Income Tax Rates And Deductions Applicable From April 1, 2017
- PFRDA: ATAL PENSION YOJANA – BENEFITS AND FEATURES