NPS (National Pension Scheme) is one of the pre-defined contribution pension systems, operated by the government of India. When we talk about NPS (National Pension Scheme), the first thing that comes to mind is retirement plans or pension schemes. However, there is certainly more to it than just that. There are several benefits that you can enjoy, both as an individual or as a corporate, while you invest in NPS.

NPS for the individual employee

Under NPS corporate model employee can deposit contribution directly or he can route the contribution through the employer he is working with. Both the contributions are eligible for tax deduction as shown in the scenario below.

Up to 40% of Corpus withdrawn in lump sum is exempt from tax. Balance amount invested in Annuity is also fully exempt from tax

Pension received out of investment in Annuity is treated as income and will be taxed appropriately