NPS Tier 1 and Tier 2 Difference: Only these National Pension System subscribers get PPF-like feature!
National Pension System (NPS) Tier 1 and Tier 2 Difference: If you are tier-II National Pension Systmem (NPS) account holding government employee, here's a good news for you.
![NPS Tier 1 and Tier 2 Difference: Only these National Pension System subscribers get PPF-like feature! NPS Tier 1 and Tier 2 Difference: Only these National Pension System subscribers get PPF-like feature!](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_850x478/public/2018/12/14/64315-nps.jpg?itok=yvot-iG1&c=e2ac7f9e3dbd5b8bfbc142246c09af1a)
National Pension System (NPS) Tier 1 and Tier 2 Difference: If you are tier-II National Pension System (NPS) account holding government employee, here's some good news for you. In an official statement, the government said,"Contribution by the Government employees under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs. 1.50 lakh for the purpose of income tax at par with the other schemes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund provided that there is a lock-in period of 3 years."
New entrants to the central government service on or after 01.01.2004 are covered under the National Pension System (NPS).
NPS Tier-1 and Tier-2 difference:
As per PFRDA, two sub-accounts – Tier I & II are provided under NPS. While the Tier I account is mandatory, the subscriber gets the option to opt for Tier II account opening and operation.
Tier-I account: "This is a non-withdrawable retirement account which can be withdrawn only upon meeting the exit conditions prescribed under NPS," says a PFRDA document.
Tier-II account is a voluntary savings facility. It is available as an add-on to any Tier-1 account holder. Tier-II subscribers can withdraw their savings from this account whenever they wish. Now, they will also get tax benefit under Section 80 C of the Income Tax Act.
The government has also increased the tax exemption limit for lump sum withdrawal on exit. Now, the pensioners will enjoy tax exemption on 60% of the lump sum, effectively making the entire withdrawal exempt from income tax.
Previously, 40% of the total accumulated corpus utilized for purchase of annuity was tax exempted. Out of 60% of the accumulated corpus withdrawn by the NPS subscriber at the time of retirement, 40% was tax exempt and balance 20% was taxable.
The new features added to the NPS are expected to benefit around 18 lakh central government employees covered under NPS.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
![https://www.zeebiz.com/markets/stocks/photo-gallery-this-tata-group-stock-turned-every-rs-10000-of-investment-into-rs-11300-in-just-a-week-investors-richer-by-42722-crore-rupees-any-guesses-share-market-news-304023](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/26/307143-tradingpexels.jpg?itok=rw4R7EfH)
A Tata group stock just turned every Rs 10,000 of investment into Rs 11,300 in just a week, investors richer by Rs 42,722 crore; any guesses?
![https://www.zeebiz.com/markets/stocks/photo-gallery-large-cap-midcap-stocks-shares-to-buy-for-long-term-check-out-targets-nifty-sensex-303617](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/25/306716-stockks.jpg?itok=KJTrFUIK)
Stocks to buy for long term: Analysts suggest buying these 5 largecap, 4 midcap scrips; check out targets
![https://www.zeebiz.com/personal-finance/photo-gallery-nps-retirement-planning-budget-2024-nirmala-sitharaman-announcement-how-nps-rulebook-change-can-increase-corpus-income-and-monthly-pension-by-40-compound-return-303984](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/26/307102-indian-currency-pixabay-take.jpg?itok=kN21EW-9)
How your NPS retirement corpus and monthly pension can jump by 40% after this rule change; get details
![https://www.zeebiz.com/personal-finance/photo-gallery-senior-citizen-savings-scheme-scss-2024-interest-rate-calculator-post-office-how-to-get-inr-rs-50000-interest-retirement-planning-guaranteed-return-maturity-amount-small-savings-303930](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/26/307042-fd-interest-file.jpg?itok=45ZbBRWM)
How much investment do you need in this senior citizen scheme to get Rs 50,000 quarterly interest? Know here
10:54 AM IST