Govt makes NPS withdrawal limit 100 per cent tax freeGovt makes NPS withdrawal limit 100 per cent tax free2020-10-23
Every organization offers its employees a pension scheme. The National Pension System was launched on January 1, 2004 with the aim of providing people with an income after retirement. The scheme that was earlier meant only for the government employees was opened to all private employees in 2009.
Under NPS, a taxpayer can invest money in pension account, will have the option to take part of the corpus as lump-sum and the remaining in the form of a fixed monthly income. At 60, NPS subscribers are allowed to withdraw 60 per cent of the corpus of which, presently 40 per cent is tax exempt. However, the government has recently proposed to make the entire 60 per cent tax free. The proposed amendment will be effective from the tax year 2019-20. The remaining 40 per cent of the money will have to be invested in monthly pension annuity plan.
The NPS offers two choices to its subscribers:
1) Active Choice: where the investor can decide how to invest the money in different assets
2) Auto choice or lifecycle fund is the default option wherein the money in invested automatically as per the subscriber’s age.
Further the NPS offers two accounts: Tier-I and Tier-II. While Tier-I is a mandatory account, Tier-II is voluntary. Also, you aren’t authorized to withdraw all the money from Tier-I account till your retirement. However, from the Tier-II account, you can withdraw all the money invested in it.
The government’s move to make NPS withdrawal limit tax free can be seen as a positive move to draw more investors into the scheme. Further with tax benefits under various sections of the Income Tax (Act), the investors will surely now look towards enhancing their investment portfolio in the last quarter of the financial year.
HDFC Life offers pension and retirement plans that are aimed at securing your retired life. For details, click on the mentioned link: https://www.hdfclife.com/retirement-and-pension-plans.
Products offered by HDFC Life :
HOW CAN WE HELP YOU
Stay updated with HDFC Life
Get HDFC Life updates in your mailbox
- Do Not Call Registration
- Terms & Conditions
- Terminated Agent List
- IRDAI Public Notice on Spurious Calls
- Unclaimed Policy Details
- Insurance Ombudsman
- IRDAI Customer Education Website
- Life Insurance Council
- Memories for Life
- NRI Insurance Plans
- Premium Payment
- NAV Summary
- Online Buying
- Tools & Calculators
- Public Disclosures
- Policy Loans General T&C
- FC Appointment T&C
- PWD, PLHA & MI