Retirement Planning

Govt makes NPS withdrawal limit 100 per cent tax free

Govt makes NPS withdrawal limit 100 per cent tax free

Every organization offers its employees a pension scheme. The National Pension System was launched on January 1, 2004 with the aim of providing people with an income after retirement. The scheme that was earlier meant only for the government employees was opened to all private employees in 2009.

Under NPS, a taxpayer can invest money in pension account, will have the option to take part of the corpus as lump-sum and the remaining in the form of a fixed monthly income. At 60, NPS subscribers are allowed to withdraw 60 per cent of the corpus of which, presently 40 per cent is tax exempt. However, the government has recently proposed to make the entire 60 per cent tax free. The proposed amendment will be effective from the tax year 2019-20. The remaining 40 per cent of the money will have to be invested in monthly pension annuity plan.

The NPS offers two choices to its subscribers:
1) Active Choice: where the investor can decide how to invest the money in different assets

2) Auto choice or lifecycle fund is the default option wherein the money in invested automatically as per the subscriber’s age.

Further the NPS offers two accounts: Tier-I and Tier-II. While Tier-I is a mandatory account, Tier-II is voluntary. Also, you aren’t authorized to withdraw all the money from Tier-I account till your retirement. However, from the Tier-II account, you can withdraw all the money invested in it.

The government’s move to make NPS withdrawal limit tax free can be seen as a positive move to draw more investors into the scheme. Further with tax benefits under various sections of the Income Tax (Act), the investors will surely now look towards enhancing their investment portfolio in the last quarter of the financial year.

HDFC Life offers pension and retirement plans that are aimed at securing your retired life. For details, click on the mentioned link:

Show Full Article
Hide Full Article
Disclaimer ^


Products offered by HDFC Life :

Recent Posts
Subscribe to get the latest articles directly in your inbox
Successful subscribed
Subscription Successful

You will receive the newly posted articles on your email id.

Popular Posts


Speak to our Certified Insurance Experts

All days 9:00 AM to 9:00 PM IST

Instant Callback
Call Us

Mon-Sat 9:30 A.M to 6:30 P.M IST

Locate A Branch Near You
There has been changes in branch operation timings due to COVID 19
+91 8291 890 569   
Call Us
1860-267-9999 (Local charges applicable) 022-68446530 (STD charges applicable)

Available Mon-Sat 10 am to 7 pm IST. DO NOT prefix any country code e.g. +91 or 00.

NRI Service

(For NRI customer only)

Call us


08000006609 to get details on your Fund Value
(Applicable for Unit Linked Plans only),
Premium Amount and Due Date
Stay updated with HDFC Life