Investment in Tier II NPS eligible for tax deduction under Sec 80C

This is only applicable for Central government subscribers, for which their contributions will be locked in for three years


Investment in the Tier II account of the National Pension System (NPS) will now be eligible for tax deduction under Section 80C, as per the latest government notification. Contributions by Central government employees in Tier II account will be locked in for three years, to be eligible for income tax benefits.

Only if a subscriber has an active Tier I account can she/he open a Tier II NPS account. Tier II account can be activated online or through the associated offices or any Point of Presence (called as POP).

A minimum contribution of Rs 1,000 is required to activate the account, and subsequently,the minimum contribution will be Rs 250.

No fee is charged for maintenance or exit load on withdrawal. Also, the subscribers enjoy the flexibility to choose their investment, which can be changed once/twice a year, if desired.

As a low-cost investment, the NPS helps accumulate funds for retirement. The investment management fee or the fee for managing funds in NPS is 0.01 per cent, that is, Rs 100 for every Rs 10 lakh.

For those who have invested in NPS and have retired, the NPS offers assured annuity amount/income stream along with taxation benefits similar to PPF and EPF. Considered the best investment for retirement planning in the country, NPS investments focus mainly on generating funds for the retirement of investors, also ensuring them a pension. The scheme is best for self-employed professionals and those who work in the unorganised sector.


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