Planning Retirement with NPS
The National Pension System (NPS) is a government-sponsored retirement scheme. You contribute regularly until age 60, building a corpus that is partly withdrawn as a lump sum and partly used to buy an annuity that pays you a monthly pension.
At retirement, at least 40% of the corpus must be used to purchase an annuity, while up to 60% can be withdrawn tax-free. NPS also offers an additional tax deduction of up to ₹50,000 under Section 80CCD(1B), over and above the 80C limit.
Frequently Asked Questions
How much of NPS can I withdraw at 60?
You can withdraw up to 60% of your corpus tax-free as a lump sum. The remaining 40% (minimum) must be used to buy an annuity that provides your monthly pension.
What extra tax benefit does NPS offer?
NPS offers an additional deduction of up to ₹50,000 under Section 80CCD(1B), separate from the ₹1.5 lakh Section 80C limit.