NPS (National Pension System)
A voluntary, market-linked retirement savings scheme regulated by PFRDA, offering an additional tax deduction beyond the Section 80C limit.
NPS is a voluntary, government-regulated pension scheme where contributions are invested across a mix of equity, corporate debt, and government securities, based on choices the subscriber makes, or a default allocation that automatically shifts toward safer assets as the subscriber ages. It's regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
Its main tax appeal is an additional deduction under Section 80CCD(1B), up to ₹50,000, over and above the ₹1.5 lakh Section 80C limit, available under the old regime. On maturity, typically at age 60, a portion of the corpus can be withdrawn as a lump sum, partly tax-exempt, while the remainder must be used to purchase an annuity, which then provides regular pension income, itself taxable as it's received.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.