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.
Salient features of Investment Choices
- Portfolio is adequately diversified across financial securities
- Judicious mix of investment instruments and asset classes like Equity (E), Corporate Bonds (C) and /or Government Securities (G) ensures minimal impact on the returns on subscribers contributions even if there is a market downturn
- The individual subscriber has a choice of selecting investment mix (E,C,G), as per his/her risk appetite
Key question comes in NRI's mind is - Are they eligible to invest in NPS ? The answer is yes. Here is a quick guide for NRI's 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.
How NRI can join NPS ?
Any NRI individual, between age group of 18-60 years (as on the date of submission of NPS application) complying with KYC norms can join NPS. However, PIOs/ OCIs are not eligible to apply for NPS.
What are the sources of contribution for NRI to NPS ?
NRI can contribute from NRE or NRO account to NPS.
NRI can contribute from NRE or NRO account to NPS.
How much minimum amount can NRI contribute ?
- Minimum Contribution at the time of account opening - Rs.500
- Minimum amount per contribution - Rs.500
- Minimum contribution - Rs. 6000/- per annum
I am an NRI, How can I open NPS account online
To open NRI NPS account, one should use Aadhar based KYC process or one can use Registration using PAN (KYC verification
by Bank
What are the Exit & Withdrawal Rules ?
Following are the conditions when an individual can exit and withdraw from NPS:
- Upon attaining the age of 60 years
- Annuitisation- minimum 40%, Lump sum withdrawal- maximum 60%, If Corpus is under Rs. 2.00 Lac, complete withdrawal; Subscriber can stay invested in the NPS upto the age of 70 years. Fresh contributions are allowed during such a period of deferment; Can defer the withdrawal of eligible lump sum amount till the age of 70 years. Annuity purchase can also be deferred for maximum period of 3 years at the time of exit
- Exit from NPS before the age of 60 years
- Compulsory Annuitisation- minimum 80%; Lump sum withdrawal- maximum 20%; If Corpus above Rs.1.00 Lac, complete withdrawal
- Upon Death of the Subscriber In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum.
For NRIs, what would be the status of repatriation of the pension/ annuity and lump sum to be paid out of the invested funds ?
When the pension/ annuity is to be paid, it shall be in local currency only (i.e. in INR). However, there is no restriction on repatriation of pension, whether paid as annuity or in lump sum. Provisions of Income Tax Act, 1961 subject to amendments from time to time, would be applicable.
Will payment of pension and withdrawal of the lump sum amount be treated as a current account transaction or a capital account transaction ?
Since withdrawal of lump sum or payment of pension is treated as income and chargeable to Income Tax, therefore both the operations will be treated as a current account transaction.
What income tax reliefs are available to the individuals contributing to NPS?
Tax benefit to self-employed:
Eligible for tax deduction up to 10 % of gross income earned from Indian sources under Sec 80
CCD(1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE of IT Act, 1961.
Additional Tax benefit w.e.f 2015-16 From F.Y. 2015-16:subscriber are allowed extra tax deduction in addition to the deduction allowed under Sec. 80CCD(1) for additional contribution in his NPS account subject to maximum of Rs. 50,000/- under sec. 80CCD 1(B) of IT Act, 1961.
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.
What is the process to apply ?
Go to PFRDA/ NPS Trust website and choose “eNPS”. Click on “Registration” button and select “New Registration” option to initiate the registration process. Select 'Non Resident Indian (NRI)' and Select type of account “Repatriable” or “Non- repatriable” and select option for registering with as “Aadhaar”. Generate OTP.
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
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