Income tax return benefits: National Pension System (NPS) also offers this 'hidden' tax relief

Income tax return benefits: National Pension System: Much to government's dismay, many people are not convinced that long term investment in National Pension System (NPS) will be a good idea. Since majority of working people are aware of the benefits of old system of pension that employees used to avail after completing their service in an organisation, the massive benefits of the new concept of NPS that covers working people in any organisation is yet to be understood properly by majority of people. Aside from its up front benefits as a pension provider, NPS offers various other benefits and we will focus on the hidden income tax returns benefits here.
 
The NPS plan can be started with an initial contribution of Rs 500 for Tier I and a minimum of Rs 1000 for Tier II accounts. Yes, the NPS investor can also avail tax deduction up to Rs 1.5 lakh under Section 80C! However, what is critical is that there is another, ''hidden'', Rs 50,000 benefit under Section 80 CCD (1B). This is expected to help investors have more options for saving tax. The NPS is a quasi-EET instrument where 40% of the corpus escapes tax at maturity, while 60% of the corpus is taxable. Notably out of the 60% taxable corpus, 40% is tax-exempt as it has to be compulsorily used to purchase an annuity. The annuity income will reportedly be taxed, as the plan is a market-linked annuity product. Since it is market linked, the gains can be massive as stocks are mostly on an upward trajectory and are likely to outperform going forward.
 
If a person is interested to join NPS, he/she should be between the age brackets of 18 to 60 years of age. For registration, just a PRAN (Permanent Retirement Account Number) application is needed from any of the Point of Presence - Service Providers (POP-SP) to register with. Maximum age of joining NPS has now been increased from the existing 60 years to 65 years under NPS- Private Sector. 
 
Notably, the retirement fund will be managed by some of the best fund managers in India appointed by PFRDA. Currently, there are six fund managers, including 1)-ICICI Prudential Pension Funds Management Company Limited, 2)-Kotak Mahindra Pension Fund Limited, 3)-Reliance Capital Pension Fund Limited, 4)-SBI Pension Funds Limited, 5)-UTI Retirement Solutions Limited, and 6)-Annuity Service Provider (ASP). 
 
Under the NPS, once a person attains the age of 60 years, he/she can withdraw up to 60% of accumulation as lump sum and rest 40% will be converted into pension. 

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If a person wants to exit from NPS before 60 years, he/she will be able to withdraw only 20% accumulated amount, but in case the death of the subscriber, a nominee is allowed to withdraw 100% of NPS.