if a person aged 57 yrs comes in 20% tax bracket, is it beneficial for him to get an NPS account opened?
how much tax can be saved by doing so?
also how do we withdraw money from NPS account,is it taxable and how do we get pension in it?
National Pension System (NPS) is a voluntary defined contribution retirement savings scheme.
On turning 60, an investor can exit from the NPS but 40% of the pension wealth has to be utilised for purchase of an annuity. If an investor withdraws the corpus before reaching 60 years of age, he will have to invest 80% of the accumulated corpus for buying an annuity.
NPS is currently subject to Exempt Exempt Tax (EET) tax structure. This means that contributions to NPS and accumulation/growth of these are not taxed but the lump sum withdrawn on exit from NPS is taxed. This is in contrast to the EEE tax structure applicable to other long term investment instruments like PPF and EPF where the maturity amount is also not taxed. After finance bill 2016, withdrawals from NPS on maturity tax free upto 40% of the total corpus accumulated. So, after 60 years you can withdraw upto 60% of the corpus and out of this 40% will be tax-free.
For 20% slab investor can save 10 K under 80CCD(1B) by investment of 50K......
While advisable to invest in PPF for 80C benefit, as its withdrawal will be tax exempt.
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