Budget 2017: FinMin announces new benefits for NPS subscribers

Ministry of Finance said that in a bid to provide further impetus to the National Pension System (NPS), the government has introduced provisions in the Finance Bill 2017 in the Parliament today. 

Finance Minister Arun Jaitley while presenting Union Budget 2017 said that in order to provide relief to an employee subscriber of National Pension System (NPS), it proposed to exempt partial withdrawal not exceeding 25% of the contribution made by the employee under Pension Fund Regulatory and Development Authority Act, 2013.

As per the Ministry, in a view to provide parity between a salaried employee and a self-employeed, 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.

This benefit will be available on contribution made by the self employed persons on or after April 1, 2017. 

"This increased limit for tax benefit will help the self-employed individuals, to save taxes on higher contribution in NPS and thereby properly plan for their old age income security", the Ministry said. 

Additional tax deduction on investment upto Rs 50000 under Section 80CCD (1B) will continue to remain the same for all NPS subscribers whether salaried or self-employed, Ministry added.