Current Affairs · Pension Regulations
What is the specific tax benefit provision introduced for Central Government employees contributing to the Tier II account of the National Pension System (NPS)?
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- 1The Tier II account is mandatory for all bank employees and the employer's contribution to this account is eligible for deduction under Section 80CCD(2).
- 2Only Central Government employees are allowed to open a Tier II account and any interest earned is taxable at a flat rate of 10 percent.
- 3Tier II account contributions are always tax-free for all subscribers regardless of their employment status as long as the withdrawal is made after the age of 60.
- 4Central Government employees can claim a deduction of up to 1.5 lakh rupees under Section 80C for contributions to the Tier II account, provided the funds are locked in for 3 years.✓
Correct answer
Central Government employees can claim a deduction of up to 1.5 lakh rupees under Section 80C for contributions to the Tier II account, provided the funds are locked in for 3 years.
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