The taxation system is applicable on all the inflows that an individual receives and it is also applicable on the amount of the investments and insurances that you make for your future and for your family. There are various ways by which the tax burden can be reduced on the amount that you receive by having the basic knowledge of the taxation system. You can also take the help of the tax consultant in Mumbai or Delhi NCR or wherever you are living. But before planning to save the taxes, you should know about the NPS.
What is NPS?
NPS is an acronym for the National Pension Scheme (NPS). The pension is the fixed amount of sum that is offered regularly to a person retired from his or her work. The pension plan was launched as an investment scheme for the working person to save their money and to use it in the later years of his or her life, to live with the same standards and to enjoy the benefits of the investment after retirement. And when the individual retires, he or she receives the total investment in small and fixed fractions in the form of pension.
NPS is a scheme approved by the government. It was launched in the year 2004, January 1st. The subscription to this scheme by the central and state government employees is mandatory, and it is optional for others.
The National Pension Scheme is regulated and managed by the Pension Funds Regulatory Development Authority (PFRDA). There are various assets classes under the National Pension Scheme (NPS) and you can choose the type of asset allocation. There are various fund managers that are associated with the PFRDA which has to be chosen and they invest your money to get the maximum returns.
What is new in the National Pension Scheme?
The NPS subscribers should welcome the new changes in the National Pension Scheme brought by the Finance Minister in the Union Budget in the year 2016. Earlier it was necessary for the NPS subscribers to pay taxes on the whole amount of the pension scheme but now the new amendments were made in the National Pension Scheme and the 40% of the total amount was made tax free. There are two tiers – tier 1 and tier 2 – categories of investors.
Income Tax benefits in the National Pension Scheme (NPS)?
The income tax benefits are availed by the investors belonging to the Tier 1 category.
There are various tax benefits on the maturity or withdrawal of the National Pension Scheme (NPS).
The tax reduction or benefits that can be availed at the time of the maturity or withdrawal from the National Pension Scheme