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National Pension System
Overview
National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life.
Under the NPS, individual savings are pooled into a pension fund which is invested by PFRDA regulated professional fund managers into the diversified portfolios comprising of government bonds, bills, corporate debentures and shares. These contributions grow and accumulate over the years, depending on the returns earned on the investment made.
Features & Benefits
A safe retirement fund
Introduced by the Government of India and regulated by the Pension Fund Regulatory & Development Authority (PFRDA).
Simple
Opening an account with NPS provides a Permanent Retirement Account Number (PRAN), which is a unique number and it remains with the subscriber throughout his lifetime.
Portable
NPS provides seamless portability across jobs and across locations, unlike all current pension plans, including that of the EPFO. It would provide hassle free arrangement for the individual subscribers
Flexible
NPS offers a range of investment options and choice of Pension Fund Manager (PFMs) for planning the growth of your investments in a reasonable manner and see your money grow.
Who can Join NPS
Citizen of India; Resident or Non-Resident
Age between 18-65 years, as on date of joining
Salaried or Self Employed
Tax Benefits of Investment
Tax benefits for Individuals (All Citizen Model) - Self employed individual is eligible for tax deduction of up to 20% of Gross Income under section 80CCD (1) of Income Tax Act, 1961 within Rs.1.5 Lacs limit under section 80CCE. Additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of Income Tax Act, 1961. This is over and above of Rs. 1.5 lacs limit under section 80CCE
Tax benefits for Salaried Individuals (Corporate Model) -
Contribution made by Employee - Salaried individual is eligible for tax deduction of up to 10% of Salary ( Basic + Dearness Allowance) under section 80CCD (1) of Income Tax Act, 1961 within Rs.1.5 Lacs limit under section 80CCE. Additional investment of Rs.50,000 will be eligible for tax deduction under section 80CCD (1B) of Income Tax Act, 1961. This is over and above of Rs. 1.5 lacs limit under section 80CCE
Contribution made by Employer - Employer contribution to the NPS scheme on behalf of employee, the employee would also be allowed deduction u/s 80CCD (2) to the extent of 10% of Salary (Basic + Dearness Allowance). There is no upper cap in terms of absolute value in case of section 80CCD (2)
Tax benefits for Corporate - Contribution made by the Corporate towards NPS account of Employee is eligible for tax deductions under section 36 (iv) of Income Tax Act, 1961
