Tax savings NPS hack

117°
The PostMighty
Azhar90
Guys as you know NPS provide some tax benefit for both old regime and new regimes . Max 50k can be invested per year. I was going through the faq of permanent exit which says after 5 years one can permanently exit if corpus is less than 2.5L else only 20% will be given and rest 80% in annuity.

My questions are:
Can I invest around 40k per year , claim tax benefit and exit after 5 year with full money back? If I exit with full money, can I rejoin back NPS?

I think this is big hack/loop out of the lockin and get maximum tax benefit

Need expert advice..don't mind if I am wrong..just some idea came to my devil mind pray sweat_smile
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Deal Cadet Deal Cadet
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Deal Subedar Deal Subedar
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The amount also includes the interest as well. What if it grows beyond the threshold? Need to keep a closer look.

This is possible but eps has five year minimum investment rule for tax free withdrawal, I think it should apply here as well(not sure).

Yes, you can rejoin nps anytime.

I also thought of this sometime ago, you are not alone with the devil mind.

Benevolent Benevolent
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NPS has equity/fixed component ... you should closely monitor to not breach 2.5L corpus .. 

also only Employer contribution to NPS is giving tax benefit under new regime... 

Deal Cadet Deal Cadet
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  • On Employer’s contribution: Up to 10% of Basic & DA (no monetary ceiling) under 80CCD (2). This rebate is over and above 80 CCE limit of Rs. 1.50 lacs.


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Helpful Helpful
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Wouldn't you still pay tax on the interest when you exit after 5 years?

Deal Cadet Deal Cadet
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No

The PostMighty The PostMighty
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Thanks all .so we can use the hack right?

Considering we have to deposit manually every year, we can always monitor and  keep it under 2.5L sweat_smile

Btw somewhere I read rules are different for corporate and non-corporate employees , any idea on this?

replyuser
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