PFRDA
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
PRESS RELEASE
Budget 2017 – New Benefits announced for NPS Subscribers
In a bid to provide further impetus to the National Pension System
(NPS), the following provisions have been introduced in the Finance Bill
2017 laid down in the Parliament today.
(i) Tax-exemption to partial withdrawal from National Pension System(NPS)
The existing provision of section 10(12A)of the Income Tax Act, 1961
provides that 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 withdrawal. 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.
(ii) Further, Contribution upto 20% of the Gross
Income of the Self-employed individual(Individual other than salaried
class) will be deductible from the taxable income under Section 80CCD(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 for 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 up to Rs.50000/- under Section
80CCD (1B) will continue to remain the same for all NPS subscribers
whether salaried or self-employed.