Budget 2017: Additional benefits for NPS subscribers

Finance Minister has made National Pension System ( NPS) more attractive by providing additional benefits. First, PFRDA has allowed 25% early withdrawal for emergencies and there were confusion about the taxability of this amount. “We are happy that the Budget has clarified about the early withdrawal and these early withdrawals to the tune of 25% of own contribution will now be tax free”, says Sumit Shukla, CEO, HDFC Pension Funds.

Second, the salaried NPS subscribers had an extra advantage. While they are allowed to contribute upto 10% of their income to NPS as their contribution and another 10% of income as employer’s contribution. However, self-employed people were allowed to contribute only 10% of their income. To provide parity between an individual who is an employee and an individual who is self-employed, self-employed individual are now eligible for deduction upto 20% of his gross total income in respect of contribution made to NPS. “It is nice that the NPS exemption anomaly that I highlighted in ET Wealth earlier has been rectified in the budget”, says Manoj Nagpal, CEO, Outlook Asia Capital.