National Pension System (NPS) for All Citizen of India (Including NRIs)
The Central Government has introduced the National Pension System (NPS) with effect from January 01, 2004 (except for armed forces). NPS was made available to All Citizens of India from May 01, 2009 between the ages of 18 to 65 years. Pension Fund Regulatory and Development Authority (PFRDA), the regulatory body for NPS, has appointed NSDL as Central Recordkeeping Agency (CRA) for National Pension System. CRA is the first of its kind venture in India which will carry out the functions of Record Keeping, Administration and Customer Service for all subscribers under NPS. CRA shall issue a Permanent Retirement Account Number (PRAN) to each subscriber and maintain data base of each Permanent Retirement account along with recording transactions relating to each PRAN.
National Pension System (NPS), Regulated By PFRDA, is an important milestone in the development of a sustainable and efficient voluntary defined contribution pension system in India. It has the following broad objectives:
Provide old age income
Reasonable market based returns over the long term
Extending old age security coverage to all citizens
Benefits of NPS are:
It is voluntary - A Subscriber can contribute at any point of time in a Financial Year and also change the amount he wants to set aside and save every year.
It is simple - Subscriber is required to open an account with any one of the POPs (Point of Presence) or through eNPS (https://enps.nsdl.com/eNPS/).
It is flexible - Subscribers can choose their own investment options and pension fund and see their money grow.
It is portable - Subscribers can operate their account from anywhere, even if they change the city and/or employment.
It is regulated - NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.
Tax Benefit available to Individual:
Any individual who is Subscriber of NPS can claim tax deduction up to 10% of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE.
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.
Tax Benefits under the 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.
How to make the Investment to avail the Tax Benefit:
If you are an existing Subscriber, you can approach any POP-SP or alternatively you can visit eNPS website (https://enps.nsdl.com) for making additional contribution in your Tier I account.
Please note: Tax benefits are applicable for investments in Tier I account only.
Opening an NPS account is very easy, it can be opened through Online or by visiting to your nearest Point Of Presence.
Through POP: The applicant is required to submit duly filled in Subscriber Registration Form (CSRF) along with supporting KYC documents to the branch of POP called as POP-SP or visit the online portal of the respective POPs.
Online (through eNPS): The applicant needs to visit eNPS website of NSDL-CRA (https://enps.nsdl.com) and register himself/herself through Aadhaar or PAN Card details. After filling up other necessary details and payment of initial contribution, PRAN will be generated online. If you select "eSign" option, your account will be opened paperless (you are not required to send the physical copy of form to NSDL-CRA).
For more details, you may go through "How to open NPS account" under "Important Links" section available on Home page of this website.
Upon successful enrolment, a Permanent Retirement Account Number (PRAN) is allotted to the subscriber under NPS. Once the PRAN is generated, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the subscriber by NSDL-CRA (Central Record Keeping Agency).Subscriber contributes periodically and regularly towards NPS during the working life to create the corpus for retirement. On retirement or exit from the scheme, the Corpus is made available to the Subscriber with the mandate that some portion of the Corpus must be invested in to Annuity to provide a monthly pension post retirement or exit from the scheme.
National Pension Scheme for Non-Resident Indians
Please download the NRI Information leaflet: https://mea.gov.in/images/pdf/nps-for-nri.pdf
NRI FAQ document: https://npscra.nsdl.co.in/download/pdf/FAQ%20for%20NRIs.pdf