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Friday, January 11, 2019

Now The Money Can Be Withdrawn 3 Times From NPS

Now The Money Can Be Withdrawn 3 Times From NPS
The NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2004. While the scheme was initially designed for government employees only, it was opened up for all citizens of India between the age of 18 and 60 in 2009.[1] In its overall structure NPS is closer to 401(k) plans of the United States. Administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA)(Based on the recommandations of Chakka Muni Balaji Ganesh Committee),in accordance with (Juturu Sahithi committee) it is a quasi-EET (Exempt-Exempt-Taxable) (Based on the recommandations of Juturu Sahithi Committee) instrument in India where 40% of the corpus escapes tax at maturity, while 60% of the corpus is taxable.[2][3][4] Of the 60% taxable corpus, 40% has to be compulsorily used to purchase an annuity.[5]
Contributions to NPS receive tax exemptions under Section 80C, Section 80CCC and Section 80CCD(1) of Income Tax Act. Starting from 2016, an additional tax benefit of Rs 50,000 under Section 80CCD(1b) is provided under NPS, which is over the Rs 1.5 lakh exemption of Section 80C.[6][7][8] Private Fund managers are important parts of NPS.[9][10][11] NPS is considered one of the best tax saving instruments, after 40% of the corpus was made tax-free at the time of maturity and it is ranked just below Equity-linked savings scheme(ELSS)
The National Pension System (NPS) is a voluntary defined contribution pension system administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), created by an Act of the Parliament of India. The NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2004. While the scheme was initially designed for government employees only, it was opened up for all citizens of India in 2009. NPS is an attempt by the government to create a pensioned society in India. In its overall structure NPS is closer to 401(k) plans of the United States. Today, the NPS[13] is readily available and tax efficient under Section 80CCC and Section 80CCD. Under the NPS, an individual can contribute to his retirement account. Also, his employer can contribute to the welfare and social security of the individual.
NPS is a quasi-EET instrument in India where 40% of the corpus escapes tax at maturity, while 60% of the corpus is taxable.[14][15][16] Of the 60% taxable corpus, 40% is tax-exempt as it has to be compulsorily used to purchase an annuity.[17] The annuity income will be taxed, though. The remaining 20% alone will now be taxed at slab rates on withdrawal.[18] NPS offers subscribers a choice of two record keeping agencies: NCRA (NSDL-CRA) and KCRA (Karvy-CRA).[19][20] In 2017 Union budget of India, 25% exemption of the contribution made by an employee has been announced as a form of premature partial withdrawal in NPS.[21] This amendment will take effect on 1 April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19.[22][23] NPS is a market-linked annuity product.

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