look news india
New Delhi. National Pension System (NPS) is a great investment option for retirement fund and monthly pension. By investing in NPS, you can not only secure your retirement but also avail tax benefits. In NPS, the investor gets a lump sum amount after retirement and along with it he also gets the benefit of monthly pension. The special thing is that there is no tax on the amount received on maturity. If you think that investing in NPS can be done only while working, then you are wrong.
According to the new rules, investing in NPS can be continued even after retirement. The Pension Fund Regulatory and Development Authority (PFRDA) has made several changes to make the NPS more flexible. Now investments can be made even between the age of 60 to 65 years and the customer can continue contributing to NPS till the age of 70 years.
60% amount can be withdrawn on maturity
The entire fund cannot be withdrawn from NPS on maturity. 40 per cent of the total fund is mandatorily used for annuity, which provides pension after retirement. The remaining 60 percent amount can be withdrawn in lump sum. If you do not want to withdraw your money deposited in NPS even after retirement, then the government allows you to do so.
tax exemption available
Investing in NPS also gives the benefit of tax exemption. You are entitled to tax deduction under sections 80CCD(1), 80CCD(1B) and 80CCD(2) of the Indian Income Tax Act, 1961. An additional deduction of up to Rs 50,000 can be availed on investments in NPS under Section 80CCD(1B), which is in addition to the tax exemption of Rs 1.5 lakh under Section 80C.
Types of NPS Accounts
There are two types of accounts in NPS: Tier 1 and Tier 2. Tier 1 account is a retirement account, in which certain conditions are applicable on withdrawal of money. Whereas Tier 2 account is like a savings account, from which you can withdraw money without any restriction.
