Budget 2017 - New Benefits announced for NPS Subscribers
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
PRESS RELEASE
In a bid to provide further impetus to
the National Pension System (NPS), the following provisions have teen
introduced in the Finance bill 2017 laid down in the Parliament today.
1. Tax-exemption to partial withdrawal from National Pension System (NPS)
The existing provision of section
10(12A) of the Income Tax Act. 1961 provides payment from National
Pension System (NPS) to a Subscriber on closure of his account or opting
out shall be exempt up to 40% of total corpus at the time of withdrawl .
The amount utilized for purchase of annuity is also tax exempt. At the
time of normal exit. 40% of the total corpus is mandatorily required to
be purchased for annuity. The subscriber has the option to use higher
amount for purchase Of annuity.
In order to provide further relief to
the subscriber of NPS, it has been proposed to Insert a new clause (12B)
in the section 10 of Income Tax Act, 1961 to provide exemption on
partial withdrawal not exceeding 25% of the contribution made by an
employee in accordance with the terms and conditions specified under
Pension Fund Regulatory and Development Authority Act. 2013 and
regulations made there under.
This benefit will be effective on partial withdrawal made by the subscriber after 1st April
2017.
2. Further, Contribution up to 20% of
the Gross Income of the Self-employed Individual ( Individual other than
salaried class) will be deductible from the taxable income under
Section 8OCCD(1) of the Income Tax Act.1961, as against 10% earlier.
This is with a view to provide parity between a salaried employee and a self-
employed.
This benefit will be available on contribution made by the self employed persons on or
after 1st April 2017.
This increased limit tor tax benefit
will help the self-employed individuals, to save taxes on higher
contribution in NPS and thereby properly plan for their old age income
security.
Additional tax deduction on investment
upto Rs. 50000/- under Section 80CCD(1B) will continue to remain the
same for all NPS subscribers whether salaried or self-employed.
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