How to invest in NPS; here is your quick guide to save additional tax

 

NPS - National Pension System, an attractive tool to create a habbit of saving and long term investing for future requirements and for retirement. Another gem of the scheme is that, subscribers of the scheme gets additional tax advantage on investments upto Rs50,000 up and above Rs1.5 lakhs by investing in NPS. Here is a quick guide to appply for eNPS (National Pension System) online account

Firstly understand what is National Pension System (NPS)/eNPS ? 

National Pension System (NPS) is a pension cum investment scheme launched by Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. 

Who regulates NPS Scheme?

The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA). National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS. 

What is eNPS ? 

eNPS is none other than electronically opened online NPS account. eNPS account will be opened by submitting documents online. 

Who can join NPS ? 

Any individual citizen of India (both resident and Non-resident) in the revised age group of 18-70 (earlier 18-65) years (as on the date of submission of NPS application) can join NPS. 

Pension Fund Regulatory and Development Authority (PFRDA), the regulator for National Pension System (NPS) has issued a Circular dated 26-Aug-2021 on increase of Entry Age up to 70 Years under NPS. The existing age of entry which is 18-65 years has been revised to 18-70 years. For more details Click here to download the PFRDA Circular on the same

What is tax advantage on NPS?

Yes, Tax Benefit available to Individual: Any individual who is Subscriber of NPS can claim tax benefit under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE. 

What is additional tax benefit under NPS?

It provides Exclusive Tax Benefit to all NPS Subscribers u/s 80CCD (1B). An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available under section 80C of Income Tax Act. 1961.

What are Tax Benefits under the Corporate Sector?

Corporate Subscriber: Additional Tax Benefit is available to Subscribers under Corporate Sector, u/s 80CCD (2) of Income Tax Act. Employer's NPS contribution (for the benefit of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, without any monetary limit. 

Corporates: Employer’s Contribution towards NPS up to 10% of salary (Basic + DA) can be deducted as ‘Business Expense’ from their Profit & Loss Account.

Can I open multiple NPS accounts ? 

No, opening multiple NPS accounts for an individual is not allowed under NPS. However an Individual can have one account in NPS and another account in Atal Pension Yojna. 

Can I open Joint NPS account ? 

No, NPS account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF. 

How to Apply?

If you qualify from the above. Please follow following steps to open online NPS: 

Step 1: Go to NSDL website

Step 2: Enter PAN Number

Step 3: Subimt Mandatory Documents 

Step 4: Upload Photo and Signature 

Step 5: Make payment and e-Sign 

Step 6: Get confirmation of opening of eNPS account 

Step 7: Start contributing to NPS account at regular intervals

I have opened account, How to Contribute ?

Once you have opened account, you can contribute through following of any:

1) Virtual Account Number: You can create Virtual Account Number and contribute online via NEFT from your internet banking/mobile banking etc. Note: Same day NAV, when amount gets credited in your NPS before 12:00pm IST or,

2) Login to your service provider website (here NSDL website) and contribute directly (they charge minimum payment gateway fees)

How much minimum contribution per year?

A Subscriber is required to make initial contribution (minimum of Rs. 500 for Tier I and a minimum of Rs. 1000 for Tier II) at the time of registration. Subsequently, a Subscriber can make contribution 

Further more details and detailed FAQ, please visit  NSDL website