News about NPS: New Income Tax Benefits, Withdrawal Rules And Other Details
News about NPS: New Income Tax Benefits, Withdrawal Rules And Other Details
In Budget 2018, Finance Minister Arun Jaitley has proposed an expansion to non-employee subscribers for the benefit of tax-free return from NPS (National Pension System). Under the current income tax rules, an employee contributing to NPS is exempted in respect of 40 percent of the total amount, which is given to pay on the account closure or exiting it. This discount is not available to non-employee members. According to the Finance Bill 2018, "In order to provide a level playing field, the amendment in section 10 of section 10 (12A) is proposed to extend the benefits given to all the members." Non-Employee members will be available from Financial Year 2018-19
NPS return
NPS offers two types of accounts: Tier I and Tier II Tier 1 account is not withdrawn until the age of 60 is reached. Earlier, partial withdrawal is allowed in specific cases. A Tier II NPS account is like a savings account in which customers are free to withdraw money and whenever they need them.
Recently, pension regulator PFRDA (Pension Fund Regulatory and Development Authority) has reduced the rules for partial withdrawal from NPS. According to the latest rules, a NPS subscriber who completes three years in the scheme is eligible for partial withdrawal. Partial withdrawal of NPS kitty was already allowed 10 years after joining the pension system. (Read: Explanation of the latest NPS partial withdrawal rules)
NPS return - Income tax rules
According to the existing tax laws, tax exemption is allowed if the money is withdrawn from the NSPS, if the customer gets paid up to 40 percent to get the age of 60 years. Also, up to 60 percent of the maturity fund of 60 years can be withdrawn once. The balance should be converted into annuity. If the customer exits from NPS before 60 years, then only 20 percent of the funds can be withdrawn and the rest are converted into annuity
In Budget 2018, Finance Minister Arun Jaitley has proposed an expansion to non-employee subscribers for the benefit of tax-free return from NPS (National Pension System). Under the current income tax rules, an employee contributing to NPS is exempted in respect of 40 percent of the total amount, which is given to pay on the account closure or exiting it. This discount is not available to non-employee members. According to the Finance Bill 2018, "In order to provide a level playing field, the amendment in section 10 of section 10 (12A) is proposed to extend the benefits given to all the members." Non-Employee members will be available from Financial Year 2018-19
NPS return
NPS offers two types of accounts: Tier I and Tier II Tier 1 account is not withdrawn until the age of 60 is reached. Earlier, partial withdrawal is allowed in specific cases. A Tier II NPS account is like a savings account in which customers are free to withdraw money and whenever they need them.
Recently, pension regulator PFRDA (Pension Fund Regulatory and Development Authority) has reduced the rules for partial withdrawal from NPS. According to the latest rules, a NPS subscriber who completes three years in the scheme is eligible for partial withdrawal. Partial withdrawal of NPS kitty was already allowed 10 years after joining the pension system. (Read: Explanation of the latest NPS partial withdrawal rules)
NPS return - Income tax rules
According to the existing tax laws, tax exemption is allowed if the money is withdrawn from the NSPS, if the customer gets paid up to 40 percent to get the age of 60 years. Also, up to 60 percent of the maturity fund of 60 years can be withdrawn once. The balance should be converted into annuity. If the customer exits from NPS before 60 years, then only 20 percent of the funds can be withdrawn and the rest are converted into annuity
In the budget of 2017-18, the government allowed partial withdrawal of 25 percent of the contribution made by the customers who received exemption from income tax.
No comments:
Post a Comment