Max Life Group Offers Four different NPS Solutions to meet your retirement Financial Needs
Let's Understand Retail NPS in detail
Who can Join?
All the citizens of India, including OCIs (Overseas Citizens of India) and NRIs
The subscribers, must be between the age of 18 to 70 years at the time of registration
The subscribers, must successfully comply with the KYC requirements
Benefits of Retail NPS
It is extremely well-regulated, regulated by the PFRDA, created by the Act of Parliament
Retail NPS comes with a number of tax-related benefits based on the Income Tax Act
It is one of the most inexpensive pension scheme with low fund management and administrative fees
Tax Benefits
Section 80 CCD (1): Under this subsection, investments made into NPS Tier 1 account qualify for tax deduction of up to Rs. 1.5 lakh in a financial year as part of the overall tax saving limit u/s 80CCE of the Income Tax Act.
Section 80 CCD (1B): This subsection of the Income Tax Act, 1961 allows Retail NPS subscribers to claim an additional deduction of Rs. 50,000 in a financial year for investments made into the NPS Tier 1 account. This is over and above the Section 80 C limit of Rs. 1.5 lakh.
How does Retail NPS Work?
Let's Understand Corporate NPS in detail
Corporate NPS or Corporate National Pension System is available to the organized sector employees as part of an organization that has successfully registered under the Corporate NPS model & it was launched in 2011 and is regulated by the PFRDA.
Who Can Join?
Employees whose employer is enrolled for Corporate NPS
All the citizens of India, including OCIs (Overseas Citizens of India) and NRIs
The subscribers, must be between the age of 18 to 70 years at the time of registration
The subscribers, must successfully comply with KYC requirements
Benefits of Corporate NPS
As an employer helps you gain goodwill of your employees through corporate NPS over and above their PF’s contribution
Enable employees to build their retirement corpus by becoming a co-contributor for their pension
Low administrative cost and as an employer there is no hassle for record keeping
Tax Benefits
Employee (Self) Contribution Tax Benefit
Tax deduction benefit of up to 10% of salary (Basic + Dearness Allowance) can be availed u/s 80 CCD (2) up to the Rs. 1.5 lakh limit in a fiscal under Section 80 CCE of the Income Tax Act, 1961
Employer Contribution Tax Benefit
Employer contributions to NPS Tier 1 account up to 10% of employee’s salary (Basic + Dearness Allowance) under the corporate NPS model qualifies for additional tax deduction
Employee (Self) Contribution Tax Benefit Under Section 80 CCD (1B)
In addition to the tax benefits of corporate NPS contribution discussed above, Section 80 CCD (1B) are also applicable to NPS Tier 1 account
How does Corporate NPS work?
Let’s Understand Government NPS in detail
Government National Pension System was brought into effect for the employees of the Central Government, inclusive of employees working with the Central Government Autonomous Bodies, in the year 2004
Who can join?
As a Central Government / State government Sector employee, you may approach your HR department or the Nodal Office for NPS
How Does Government NPS Work?
A government employee contributes to the pension from the monthly salary and a matching contribution from the employer’s end
The funds are then in the ‘earmarked schemes’ for investment via the Pension Fund Managers
Each of the Pension Fund Managers will invest funds in the proportion of 85 per cent in fixed income and 15 per cent in equity
Now, Government subscribers have the choice to shift their legacy funds to private fund managers (including Max Life Pension Fund Management) to further enjoy better returns and services. To enable help in shifting your pension fund manager, please connect for advise on process and benefits at support@maxlifepensionfund.com
Tax Benefits
Employee (Self) Contribution Tax Benefit
For State Government employees, the limit for this NPS tax benefit is 10% of salary (Basic + Dearness Allowance), while for Central Government employees this limit has been increased to 14% of salary (Basic + Dearness Allowance) as of 1st April 2019. This tax benefit is offered u/s 80 CCD (2) and features a limit of Rs. 1.5 lakh in a fiscal as part of the overall 80 CCE limit specified by the Income Tax Act
Employer Contribution Tax Benefit
Under current NPS rules, employers can contribute up to 10% of salary (Basic + Dearness Allowance) in case of state government employees. While maximum employee contribution can go up to 14% of salary (Basic + Dearness Allowance) in the case of Central Government employees. This tax deduction can be availed under Section 80 CCD (2) and is over and above the Rs. 1.5 lakh tax saving benefit limit in a financial year offered u/s 80 CCE.
Employee (Self) Contribution Tax Benefit Under Section 80 CCD (1B
NPS tier 1 self-contributions made by state and central government over and above the limits specified above are also eligible for tax deduction benefits as per Section 80 CCD (1B) limit
Tier 2 Contribution Tax Benefits for Central Government Employees
Currently only Central Government NPS subscribers are allowed to claim tax benefits for self-contributions made to a NPS Tier 2 account. This NPS tax benefit to central government employees is available under Section 80C of the Income Tax Act, 1961
Let’s Understand Annuity from NPS in detail
An annuity in NPS is a retirement pension type wherein regular income is received for life and option is there to provide a regular income stream for family member as well.
Under NPS, the subscriber is mandatorily required to purchase am annuity from the empanelled life insurance company from part of their accumulated retirement corpus and withdraw the remaining portion of the corpus as a lump sum, as an optional choice. From the 100% NPS corpus, 60% can be withdrawn in the form of a lumpsum post-retirement and the rest of the minimum 40% is paid as regular income post-retirement to the subscriber. Here, subscriber can also choose for higher investment in annuity to enjoy better pension for life.
The annuity schemes are provided by the annuity service providers, empanelled with the PFRDA. Max Life Insurance is one such annuity service provider that you can opt for
Tax Benefits
NPS Withdrawal Tax Benefit at Superannuation
NPS Tier 1 account is eligible for superannuation after the NPS subscriber is 60 years old. Withdrawals made after superannuation can be up to 60% of the Tier 1 account balance and this amount is tax-free as per Section 10 (12A)
Tax Benefit on Annuity Purchase at Superannuation
Under current NPS rules, it is mandatory to utilize at least 40% of the NPS Tier 1 account balance for the purchase of annuities at superannuation. The purchase of annuities at superannuation is eligible for tax exemption under Section 80 CCD (5). However, the income obtained from these annuities is taxable as per the subscriber’s tax bracket under Section 80 CCD (5)
How Does Annuity from NPS Work?
Regarding annuity in NPS, the minimum amount that needs to be invested from a corpus is 40 per cent
In cases wherein an individual wishes to surrender before reaching the age of 60 years, it is mandated to utilize 80%of the corpus to get the annuity scheme
Additionally, annuities are provided by specific annuity service providers