Early Withdrawal from National Pension System- NPS will be Tax-Free - 25% OF CORPUS CAN BE TAKEN OUT..! - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Thursday, February 02, 2017

Early Withdrawal from National Pension System- NPS will be Tax-Free - 25% OF CORPUS CAN BE TAKEN OUT..!

Early Withdrawal from National Pension System- NPS will be Tax-Free - 25% OF CORPUS CAN BE TAKEN OUT..!

Mr. Narendra Nathan, ET

Early withdrawals from the National Pension System (NPS) will not attract tax, the Budget has clarified, and experts suggest using this route to increase the tax-free component of your retirement corpus. An NPS subscriber can withdraw 25% of his contribution to the corpus for emergencies before retirement.

For instance, let us assume that your corpus now is Rs. 2 lakh - Rs. 1 lakh contributed by you and the remaining by your employer. Instead of withdrawing the entire amount at retirement, you can withdraw Rs.25,000, or 25% of your contribution, earlier, without any tax incidence.

The remaining Rs.1.75 lakh is withdrawn on retirement. Since 40% of this Rs. 1.75 lakh or Rs.70,000 is tax-free at retirement, the total tax-free amount goes up to Rs. 95,000 (Rs. 25,000 + Rs.70,000). Had the entire amount been withdrawn at retirement, the tax-free component would have been Rs.80,000.
Moreover, till now salaried NPS subscribers enjoyed an extra advantage. While they can contribute up to 10% of their income to NPS as own contribution and another 10% as employer's contribution, the selfemployed were allowed to contribute only 10% of their income.

Now, self-employed individuals are eligible for deduction up to 20% of gross total income for contribution made to NPS. “It is good that the anomaly regarding the NPS exemption has been rectified in the Budget,“ said Mr. Manoj Nagpal, CEO, Outlook Asia Capital.


Early Withdrawal from National Pension System- NPS will be Tax-Free - 25% OF CORPUS CAN BE TAKEN OUT..! Reviewed by S. Chitra on February 02, 2017 Rating: 5 Early Withdrawal from National Pension System- NPS will be Tax-Free - 25% OF CORPUS CAN BE TAKEN OUT..! Mr. Narendra Nathan, ET Ea...

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