InvestorQ : I have a Government Provident Fund account & want to invest in NPS?
Samita Patil made post

I have a Government Provident Fund account & want to invest in NPS?

Manisha Mehta answered.
1 year ago
Investment in NPS is voluntary and not mandatory, this means investors can put the money as per their convenience. The central government employees are now also eligible to claim deduction under section 80C on their NPS Tier-II account if the amount is locked in for a period of 3 years. One can claim a maximum deduction of Rs 1,50,000. As per the new rules, the central government employees need to contribute a minimum amount of Rs 1,000 to activate the Tier-II account and can invest Rs 250 from subsequent years.

To gain tax benefits, the subscriber will be able to enjoy liquidity on investments in tier-II. So, this makes it an attractive investment option. NPS is also a zero-maintenance product as there is no cost involved. Whereas, GPF account stands for General Provident Fund account, and it is only available to government employees to contribute a certain percentage of their salary to the GPF account. It a savings-cum retirement scheme for the benefit of government employees.

So far, it appears from the new rules that a government employee can have both and can also claim 80C deduction within deduction limits.