Big news for those putting money in the National Pension System, new rules released

The Pension Fund Regulatory and Development Authority (PFRDA) has issued new guidelines for the National Pension System Tier-2 (NPS Tier-2) Income Tax Saving Scheme under Section 80C of the Income Tax Act. Under the new rules, income tax benefits will be available to employees of both government and private sector on the contribution made to NPS.

new Delhi. The Pension Fund Regulatory and Development Authority (PFRDA) has issued new guidelines for the National Pension System Tier-2 (NPS Tier-2) Income Tax Saving Scheme under Section 80C of the Income Tax Act. According to the new rules, only central government employees will get income tax benefits under the NPS Tier-2 scheme. The exemption available in this is different from the income tax benefit available under the NPS Tier-I scheme. In easy terms, the central employees will get the benefit of income tax exemption available under both NPS Tier-1 and Tier-2.

Also Read: Airtel Plan! Once recharged, this plan will run for the whole year, you will get free calling and many benefits

Money cannot be withdrawn from NPS Tier-2 account for three years
Only government employees will get the benefit of income tax exemption on contributions made in NPS Tier-2 account. Central government employees will not be able to withdraw any amount up to Rs 1.50 lakh per annum for an NPS Tier-2 account for three years, ie the lock-in period of investment is three years. However, on the death of an NPS subscriber, his nominee or legal heir can withdraw money.

One of the three NPS accounts of the employee will have a lock-in period

Under the NPS Tier-2 scheme, there will be three NPS accounts of a central employee willing to avail tax exemption. The first Tier-1 will be a Mandatory Account. The second Tier-2 will be an Optional Account, from which money can be withdrawn independently. At the same time, the third account will be a tier-2 optional account. Its lock-in period will be three years. In this, tax exemption under Section 80C will be available. Let us know that all the government and private sector employees get income tax benefit on the contribution made in NPS.

The exemption amount should not be more than Rs 1.5 lakh in a financial year.
Contribution in NPS Tier-1 account gets a rebate of Rs 50,000 under Section 80 CCD (1B) of Income Tax Act. This exemption is separate from the exemption provided under Section 80CCD (1) on contributions up to Rs 1.5 lakh. It is important to note here that the exemption amount under Section-80C, 80CCC (Investment in Pay-Pension Plan given by an Insurer) and Section-80 CCD (1) (NPS) is 1.5 lakh in a financial year. Should not be more than Rs.

Nominee can withdraw money in
case of death of NPS Subscriber. If an NPS Subscriber opts for new income tax slab from April 2020, then special exemption of Rs. 50,000 / – under Section-80 CCD (1B) or Section-80 CCD (1 ) Exemption of Rs 1.5 lakh and under Section 80C will not be applicable. If the taxpayer does not choose the new tax slab, then the old tax rule will apply. Explain that even if you choose the new tax slab, you can claim the income tax exemption on the company’s contribution to the employee’s NPS account.

The post Big news for those putting money in the National Pension System, new rules released appeared first on informalnewz.