However, the Budget of FY 2020-21 has put a monetary limit on the tax-exempt contribution by the Employer to NPS account, EPF & Super Annuation Fund. Accordingly, employer's contribution to EPF, NPS and Superannuation Fund exceeding more than Rs 7.5 lakh in a financial year will be taxable in the hands of an employee
Tax benefits mentioned in point (i) & (iii) above are exclusive deduction available for investments in NPS only.
- A Product with EEE Status (Exempt Exempt Exempt): There is complete tax exemption to the withdrawals from NPS on maturity. NPS in its present form has acquired the status of EEE (Exemption at the time of Investment, Exemption at the time of accretion and finally Exemption at the time of Withdrawal).
- Lower Expense Ratio: NPS is perhaps the world’s lowest cost pension scheme. The total recurring expenses inclusive of the Fund Management fee and all other handling and administrative charges would work out to be around 0.26% p.a. The low cost would lead to generation of higher Retirement Corpus and hence the retirement benefits.
- Ensures Complete Portability: NPS provides seamless portability across jobs and across locations, unlike all current pension plans. NPS account can be operated from anywhere in the country irrespective of employment and geography.
- Flexibility: NPS offers a range of investment options and choice of Pension Fund Managers (PFMs) for planning the growth of your investments in a definitive manner and see your money grow. The Subscribers have a freedom to change the PFM or the Investment Mix twice a year. Choice of Life Cycle Fund is also available.
- Well Regulated: NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust/PFRDA.