This effectively means that the investor will be allowed tax credit equal to the effective tax on contribution.
The tax liability may be reduced for both self-employed and salaried individuals. You can avail tax credit at your average rate of tax on amount of actual contribution or 20% of your annual taxable income whichever is lower. For participants joining the VPS at 41 years or above and additional tax credit of 2% is allowed for every year over 41 years; the maximum tax credit allowed shall be 50% of the annual tax credit. The additional tax credit is allowed for ten years starting from July 1, 2006.