{"id":34,"date":"2019-01-23T19:28:15","date_gmt":"2019-01-23T13:58:15","guid":{"rendered":"https:\/\/freefincal.com\/topical\/?p=34"},"modified":"2025-05-21T08:40:51","modified_gmt":"2025-05-21T03:10:51","slug":"nps-tier-ii-tax-saving-benefit","status":"publish","type":"post","link":"https:\/\/freefincal.com\/topical\/nps-tier-ii-tax-saving-benefit\/","title":{"rendered":"NPS Tier II Tax Saving Benefit: FAQ and clarifications"},"content":{"rendered":"

Here is an FAQ on the NPS Tier II account and clarifications on the proposed tax saving benefits.<\/p>\n

What is a Tier 2 NPS Account?<\/h2>\n

This is a mutual fund you can invest with no lock-in period and no obligation to buy a pension (annuity) like with Tier 1. Please note that Tier 1 is also a mutual fund. You cannot open a Tier 2 account without a Tier 1 account.<\/p>\n

Can I get tax saving benefit with a tier II account?<\/h2>\n

Non-central government employees cannot use Tier II for tax saving<\/span>.\u00a0<\/strong>From 1st April 2019 onwards central government employees with mandatory NPS accounts can save tax with a tier II account<\/a>. However, the total tax saving benefit will be limited to 1.5 lakh under section 80 C. That is, if a central government employee invests Rs. 1 lakh in Tier I, then Rs. 50,000 than be invested in Tier II for tax saving under 80 C.<\/p>\n

What is the taxation for NPS Tier II investments?<\/h2>\n

There is no official information\u00a0in this regard! When I asked NPS authorities regarding this, they only said a switch of money from Tier II to Tier I is non-taxable.<\/p>\n

What is the minimum contribution per year for Tier II<\/h2>\n

It is Rs. 2000 a year with each contribution being at least Rs. 250 and Rs. 1000 as the minimum contribution when opening the account.<\/span><\/p>\n

What are the investment options under Tier II?<\/h2>\n

You can invest 50% in equity (E) and no more. Rest can be in government bonds (G) or corporate bonds (C).<\/p>\n

Should I invest a Tier II account if I have a\u00a0Tier I account?<\/h2>\n

There is no benefit in doing so. Use a mutual fund invest.<\/p>\n","protected":false},"excerpt":{"rendered":"

Here is an FAQ on the NPS Tier II account and clarifications on the proposed tax saving benefits. What is a Tier 2 NPS Account? This is a mutual fund you can invest with no lock-in period and no obligation to buy a pension (annuity) like with Tier 1. Please note that Tier 1 is […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[],"class_list":["post-34","post","type-post","status-publish","format-standard","hentry","category-nps"],"_links":{"self":[{"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/posts\/34","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/comments?post=34"}],"version-history":[{"count":4,"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/posts\/34\/revisions"}],"predecessor-version":[{"id":90,"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/posts\/34\/revisions\/90"}],"wp:attachment":[{"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/media?parent=34"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/categories?post=34"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/freefincal.com\/topical\/wp-json\/wp\/v2\/tags?post=34"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}