InvestorQ : How capital gain is calculated for NPS Tier 2 gains? Is exit load applicable for redemption under NPS Tier 2?
Niharika Kamble made post

How capital gain is calculated for NPS Tier 2 gains? Is exit load applicable for redemption under NPS Tier 2?

Answer
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Nikita Damle answered.
1 month ago


NPS (National Pension Scheme) is a pension scheme available for both government employees and other private citizens. There are two types of accounts in NPS-

Tier I
Tier II

Tier II: This is in the nature of a voluntary savings account that allows its subscribers to make withdrawals as and when necessary. The contribution to this account is not eligible for any deduction under the Income-tax act. Whereas, government employees are eligible for tax deduction under section 80C for investment in NPS Tier II. The corpus when withdrawn becomes completely taxable as income at the applicable slab rates of the taxpayer. The withdrawal of the corpus is deemed as income and hence no capital gains tax to be charged.

There is no lock-in-period for NPS Tier II investment for private employees, however, for government employees, it is mandatory to stay invested for a period of 3 years.