What Is Tier 2 And Tier 3?
Tier 2 = Targeted or strategic instruction/intervention. Tier 3 = Intensive instruction/intervention.
What is Tier and Tier 2?
How To Claim Tax Benefits for Tier 1 And Tier 2 If you’re keen on finding out how to claim the National Pension Scheme (NPS) tax benefits on your Tier I and Tier II accounts, this article is for you. NPS is a great tax-saving and long-term investment tool.
One of the prime advantages of retirement planning through NPS is that along with saving for your post-retirement years; you also get to enjoy tax benefits. Let’s take a close look at the NPS tax saving advantages. NPS is a government-sponsored scheme with the dual benefits of retirement planning and tax saving.
It is managed by the Pension Fund Regulatory and Development Authority (PFRDA). The primary objective of the is to aid investors in building a sizeable retirement corpus. Any citizen of India between 18 and 60 years of age can invest in NPS. 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 Tier I NPS investment is a long-term one and the amount cannot be withdrawn until retirement.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.Now that we have seen the difference between Tier I and Tier II NPS accounts, it’s time to explore the different NPS scheme tax benefits.
Under Section 80CCD (1) of the Income-Tax Act, NPS offers a tax exemption of up to Rs.1.5 lakh. In case a company provides an NPS facility, the employer’s contribution to NPS offers a tax rebate of up to 10% of the salary (basic plus DA) under Section 80CCD(2).For salaried individuals who have claimed tax exemption of Rs.1.5 lakh under Section 80C, NPS offers scope for additional tax savings.
Both salaried and self-employed NPS account holders with an investment of up to Rs.50,000 qualify for an additional tax exemption under Section 80CCD (1B) of the Income-Tax Act. However, this additional deduction under Section 80CCD (1B) applies only to Tier I NPS account holders. Unlike a Tier I NPS account, Tier II NPS accounts do not qualify for a tax rebate under Section 80C of the Income Tax Act.When it comes to NPS tax benefits, another point to remember is that the deduction under Section 80CCD (1) is available to both salaried individuals and non-salaried individuals.
However, for salaried professionals, the maximum deduction allowed under Section 80CCD (1) is 10% of the salary for that year. On the other hand, for non-salaried individuals, it is 20% of their total gross income for that year.With this information of the NPS Income Tax benefit in your kitty, we are sure you will be able to grow your wealth and save on tax at the same time! Read more on the here.
What is higher than Tier 2?
The purpose of a tiered system of supports is to ensure that each student’s individual needs are met and that appropriate resources are allocated in a way that matches the student’s level of need. These supports are crucial regardless of whether school is in-person, hybrid or fully remote.
What is a Tier 2 job?
Tier 2 support team members are the folks responsible for handling technical escalations and more advanced inquiries that are beyond the skills or knowledge of your first level customer service representatives. When supporting a highly technical product, a tier 2 team may handle implementation and core product guidance.
In contrast, the tier 2 team supporting a retail product may handle lower priority bugs, dispute resolutions, or triage, as their skills are less about product knowledge and more about service experience. In our examples below, we’ve chosen to use a SaaS (software as a service) product that helps users build and design websites.
In the case of this company, a tier 2 support team would work directly with customers explaining technical details of the product and triaging or resolving bugs. As we outline what a tier 2 support job description for this company might look like, consider which elements work for your team and which may need to be adjusted.
What is tier 1 and Tier 2 in?
NPS Tier 1 vs NPS Tier 2 – The below table illustrates the differences between NPS tier 1 and tier 2.
|NPS Tier 1||NPS Tier 2|
|Any Indian citizen between 18 and 65 can open it.||Any Indian citizen who has an active Tier 1 account.|
|Minimum amount to start investing is Rs.500.||Minimum amount to start investing is Rs.1,000.|
|Tier 1 accounts have a lock-in period until the investor turns 60.||Tier 2 accounts don’t have any lock-in period.|
|Section 80C of the Income Tax Act permits deductions for contributions up to Rs.1,50,000 annually. Section 80CCD(1B) allows for additional deductions of Rs.50,000.||Tier 2 contributions are not tax-exempted.|
|For the first three years, withdrawals are not permitted. After that, you can take up to 25% of the fund’s value, but only for certain things. When the account holder turns 60, 60% of the fund value may be withdrawn, with the remaining funds being utilised to buy an annuity.||The withdrawal and exit rules are flexible. You can withdraw funds anytime.|
|Taxes are not applicable on 60% of the corpus, withdrawn at maturity.||The withdrawn funds are added to the investor’s income and are then taxed at the applicable income tax rate brackets.|
|It is feasible to move funds from Tier 2 to Tier 1 accounts. Moreover, funds from the EPF can be transferred to Tier 1.||Transferring funds is not permitted from an NPS Tier 2 account.|
You should be aware of the following NPS tier 1 and tier 2 tax benefits while investing:
Under Section 80CCE, all NPS Tier 1 subscribers can claim a deduction of up to Rs.1.5 lakhs. The entire amount invested is tax-free if you purchase an annuity. However, the annuity’s income will be taxed at the appropriate rates. When taking a lump sum payout after turning 60, up to 40% of the money is tax-free. With the balance, you have to buy an annuity with taxable returns. 25% of the withdrawn amount is tax-free in cases of partial withdrawals. Under Section 80CCD(1B), Tier 1 investors are qualified for an extra deduction of up to Rs.50,000. Remember that this discount is above the Rs.1.5 lakh deduction provided u/s 80CCD (1) of the Income Tax Act of 1961.
While filing your ITR, consider these elements and claim substantial tax cuts. However, only owners of Tier 1 NPS accounts are eligible for these perks.