What is the advantage of NPS Tier 2?

The account of NPS Tier 2 allows you flexibility of withdrawals or investments into the scheme. You can withdraw from your NPS Tier 2 investments as and when required without any limits. Moreover, no exit load is charged when you withdraw funds from your account of Tier 2 NPS.

What is the NPS Tier 2 account?

Tier I account is the default account that gets opened when you open an NPS account. Tier II, on the other hand, is a voluntary account. When you invest here, it gets invested in different funds – similar to a mutual fund. There is no lock-in period, which means the account holder can withdraw the money any time.

What is difference between NPS tier1 and Tier 2?

There are two types of NPS accounts- Tier I and Tier II. While NPS Tier I is well-suited for retirement planning, Tier II NPS accounts act as a voluntary savings account. Tier 1 NPS investment is a long-term one and the amount cannot be withdrawn until retirement. This is not the case with Tier II NPS accounts.

Is NPS Tier 2 compulsory?

It is not mandatory to have a Tier-II account in order to invest in NPS. The minimum contribution at the time of opening a Tier-II account is Rs. 1,000. At least one contribution must be made in a year.

How long does it take to withdraw money from NPS Tier 2?

In order to withdraw from Tier II account, the subscriber needs to submit a duly filled UOS-S12 to the associated POP-SP. On T+3 days, (T being the date of processing) the funds shall be transferred from the Trustee Bank to subscriber’s bank account as registered in the CRA system.

Is there any charges for NPS Tier 2 withdrawal?

As per Section 10 (12A) of Income Tax Act, 60\% of the amount withdrawn on closure or at the time of opting out from the account referred to in Section 80 CCD are tax-free in the hands of the subscriber. There is no specific and direct provision for taxation of withdrawal from Tier II account under the Income Tax Act.