Benefits for Central Government Employee

 

Benefits for Central Government Employee

 

Tier – II Investment Account: -

Tax benefits-Only for Central Govt Employees (under Tax saver Scheme) with lock in period of 3 years

 

 Features of NPS Tier II – Tax Saver Scheme (TTS) 2020

•       Eligibility - Any Central Government NPS subscriber

•       Lock-in period – 3 years from the date of unitization of contributions by CRA

•       Account Type – Separate from normal Tier II (which is freely withdrawable)

•       Investment choice & pattern – No investment choice to the subscriber. It will be a composite scheme with the following investment limits for the pension funds:

                Asset class                                              Limits

                Equity                                                       10%-25%

                Debt                                                          Upto 90%

                Cash/ Money Market/Liquid MFs              Upto 5%

•       Subscriber can choose any pension fund. Subscriber will be allowed to have maximum 3 Pension Funds, separately for NPS TTS.

•       PF change will be allowed after the lock-in period. Such re-investments will be treated as fresh investments and will be again locked-in for 3 years.

•       No withdrawals will be allowed during the lock-in period. However, in case of death of the subscriber, the corpus can be withdrawn by the nominee/ legal heir.

•       In case of closure of Tier-I account due to exit from NPS, contributions to NPS TTS will not be allowed and NPS TTS will be closed after completion of lock in period.

•       Lock in period of 3 years from the date of credit in the specified account.

 

Tax benefit Under NPS Tier-I

 

Income Tax Act allows benefits under NPS as per the following sections:

•       On Employee’s contribution: Employee’s own contribution is eligible for tax deduction under sec 80 CCD (1) of Income Tax Act up to 10% of salary (Basic + DA). This is within the overall ceiling of Rs. 1.50 Lacs under Sec. 80 CCE of the Income Tax Act.

•       On Employer’s contribution: Up to 14% of Basic & DA under 80CCD (2).

•       Voluntary Contribution: Employee can voluntarily invest an additional amount of Rs. 50,000 (or more) to the NPS Tier I account and claim tax deduction on the same under section 80 CCD 1(B), subject to a maximum of Rs. 50,000

 

Contribution under NPS

•       A subscriber contributes 10% of his Basic Salary + DA into his Tier-I (pension) account on a mandatory basis every month which is invested along with the contribution from the employer. Further, Subscriber can contribute voluntarily through online contribution facility (www.enps.nsdl.com) or through Point of Presence (POP)

•       Govt. Subscribers may approach their associated Nodal Offices (PAOs/ CDDOs) for processing of Voluntary Contributions in their Tier I account. The Subscribers can also pay voluntary contributions under Tier I online through eNPS.