Investment needs are unique to each and every Individual. No single financial plan would be suitable to everyone. It is necessary, that awareness is created. Such awareness ,created and understood , is the Individual’s responsibility, who undertake decisions and apply the same to their situations. This website or any Individual or entity related with this website , would not take or assume any liability towards the decisions undertaken by such individuals. Individuals are encouraged to make inquiries, validate such information, from available resources on both online and offline content , before undertaking any financial decisions.       This website does not charge any fees for such services rendered. Information sought and sharing of such information is permissions based . The website focuses only on the NPS All Citizen model and the Corporate model only as more awareness needs to be created on this models. Government model and the erstwhile NPS swavalamban model (Now Atal Pension Yojana ) are already being undertaken by the Government agencies through their own network and marketing channels.

NPS taxation

Disclaimer: Taxations provisions change from year to year on account of the finance bill revisions. We request you , to kindly go through the provisions of various taxation laws and take advice from your taxation advisor or consultant. It is very important to undertake investment activities, only after considering, your unique needs and the impact of taxation. Please evaluate pre and post tax returns. This website or it‘s attached personnel or persons concerned with this, are not responsible, for any investment decisions undertaken. It is the endeavour of the website, to make the citizen’s of India aware of the existing taxation provisions on the National Pension System. All the information and commentary provided in this write-up is for illustrative purposes only and should not be regarded or relied upon as financial advice. While the content provided is accurate as at the date of first publication, laws and regulations change frequently. Any reliance on the information contained in this write-up is solely at the user's own risk. Specific legal advice should always be obtained before acting upon any information or commentary provided in the mail.

Taxation benefits.

Serial No Type of subscriber NPS model Income tax provisions wef 2015 -16 Benefit
1 Corporate Subscriber Corporate Model Employee Contribution Section 80 CCD (1) : Deduction is allowed up to 10% of ( basic + dearness allowance) within the overall ceiling of Rs 1,50,000 under the section 80CCE
2 Corporate Subscriber Corporate Model Employer Contribution Section 80 CCD (2) : Deduction is allowed up to 10% of the (basic + dearness allowance) over and above the limits of Section 80 CCE
3 For Corporate Subscriber as well as the Indian Citizen not contributing as corporate subscriber Corporate Model / All Citizen Model Section 80 CCD (1B) : Deduction is allowed up to Rs 50,000 per annum or a monthly contribution of Rs 4167 per month.


Taxation on withdrawals

Serial No Type of subscriber NPS model Account Provisions
1 Corporate as well all citizen subscribers Corporate Model / All Citizen Model Tier 1 On subscription
It is to be noted that on the withdrawal, of the corpus at the age of 60, the same shall be taxable on withdrawal. . It is tax exempt at the time of subscription.

On Conversion to Annuity:
It is again to be noted that on converting the part or full corpus to annuity, there is no incidence of taxation.

On withdrawal of the corpus :
On withdrawals of the corpus to that extent, tax will be applicable as the slabs under which the subscriber tax bracket. Annuities received on a periodical basis would also be taxed on receipt basis.


NPS is based on Exempt Exempt Taxable category (EET)

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Serial No Type of subscriber NPS model Account Provisions
2 Corporate as well all citizen subscribers Corporate Model / All Citizen Model Tier 2 There is no tax benefits conferred on the subscription of units to the TIER 2 account. As the account is created for the purpose of liquidity management and emergencies. All withdrawals done in this case would be subject to the taxation as per the existing rules and rates as applicable to that subscriber classification and tax brackets.


Other Taxes


GST Charges


Illustration with effect from Financal year 2015-16 for a corporate subscriber.

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Deductions from taxable salary wef FY 2015-16   Tax savings through NPS Tax savings through NPS
NPS contribution only from Employee NPS contribution only from Employee as well as Employer
Rs in lacs Rs in lacs
Serial No Tax rates as applicable -----> 10% 20% 30% 10% 20% 30%
1 Salary ( Basic + Dearness Allowance ) 4.00 8.00 15.00 4.00 8.00 15.00
2 Allowances 1.00 2.00 3.00 0.60 1.20 1.50
3 NPS Co - contribution from Employer (10% of salary) 0.40 0.80 1.50
Gross Total taxable salary A 5.00 10.00 18.00 5.00 10.00 18.00
Deductions from taxable salary wef FY 2015-16
4 Employee contribution (10% of salary ) under section 80 CCD(1) B 0.40 0.80 1.50 0.40 0.80 1.50
5 Employer contribution (10% of salary ) under section 80 CCD(2) C 0.40 0.80 1.50
6 Investment declaration under Section 80 CCD(1B) D 0.50 0.50 0.50 0.50 0.50 0.50
7 Total deductions E= B+C+D 0.90 1.30 2.00 1.30 2.10 3.50
8 Taxable Salary A - E 4.10 8.70 16.00 3.70 7.90 14.50


Note: It is to be noted that, on registration of the corporate and subsequent contribution allow the employees to save more on taxation. This saved taxed can be now used towards retirement planning.