General Studies · National Pension System (NPS)
Regarding the National Pension System (NPS), which specific feature distinguishes the Tier II account from the Tier I account in terms of liquidity and tax benefits?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Government employees can claim tax benefits on Tier II accounts provided they opt for a 3-year lock-in period under the latest amendments.
- 2Contributions to Tier II accounts are eligible for an additional deduction of 50,000 rupees under Section 80CCD(1B) over and above the 1.5 lakh limit.
- 3Tier II is a voluntary savings account with no withdrawal restrictions, but it does not provide any additional tax benefits under Section 80C for private employees.✓
- 4Tier II accounts have a mandatory lock-in period until the age of 60, similar to Tier I, but offer higher equity exposure.
Correct answer
Tier II is a voluntary savings account with no withdrawal restrictions, but it does not provide any additional tax benefits under Section 80C for private employees.
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