Context
Article talks about proposals related to National Pension Scheme (NPS) in the recent Budget
Proposals
- Withdrawal limit increased: Subscribers are now allowed to withdraw up to 25% of their accumulated corpus before retirement without tax
- Investment ceiling increased for self-employed: Self-employed individuals have also been allowed to invest up to 20% of their income into the NPS as opposed to 10% earlier
- No tax on premature withdrawal if NPS allows: If the NPS Trust allows premature withdrawal after five or ten years as per its rules, there will be no tax on that
- Exemption on partial withdrawal: It has also been proposed to insert a new clause (12B) in the section 10 of the Income Tax Act, 1961 to provide exemption on partial withdrawal not exceeding 25% of the contribution made by an employee. This benefit will be effective on partial withdrawals made by the subscriber after April 1, 2017
- Contribution up to 20% of the gross income of the self-employed individual (individual other than salaried class) will be deductible from the taxable income under Section 80CCD (1) of the Income Tax Act, 1961, as against 10% earlier
