Cool Title, but what’s the news?
In a recent move by the centre, the government has made the National Pension Scheme (NPS) more tax friendly, by offering complete tax exemption to 60% of the entire money that an investor can withdraw on maturity.
Okay, but what does it mean?
Before the new regulations, only 40% of the total corpus (down from the current 60) was tax-free. But now the entire 60% of the amount will be yours. This step makes the NPS more attractive and brings it at par with other retirement products.
Why should I care?
When someone retires, they can withdraw 60% of their entire corpus and the remaining 40% have to be used to buy an annuity. Earlier, when you wanted to withdraw your NPS savings, out of the 60%, you had to pay taxes on 20% and only 40% was your non-taxable money. And that included both the principal and the gain. With the new move, the entire principal as well as the interest you gain from it, will be completely your money.
Source: Economic Times