Have money, but don't know where to save? Here is how
NPS subscriber, who is allotted a unique Permanent Retirement Account Number (PRAN), is also eligible for major Tax Deduction benefits. This retirement planning scheme comes under two account options - Tier I and Tier II.
Money in hand tends to become a problem. You end up spending it fast. This especially happens if you don't know or are uncertain about how and where to save it. Worry no longer, here is how you can do it easily without wasting time or energy. We shed light on one of the best investment options available. Notably, National Pension System (NPS) has become a very popular solution as it provides income with reasonable market based returns in your later years. The NPS subscriber, who is allotted a unique Permanent Retirement Account Number (PRAN), is also eligible for major Tax Deduction benefits. This retirement planning scheme comes under two account options - Tier I and Tier II.
Under Tier I, the subscriber holds the primary account where you contribute to build a retirement corpus, while under Tier II you are offered a short-term investment option where you can withdraw your investments at any point of time. Notably, there is no separate Annual Maintenance Charge (AMC) for Tier II account, and you can also switch funds from Tier II to Tier I account online.
Subscribers should know that under this scheme, pension wealth accumulates over a period of time till retirement and grows with a compounding effect. Those who have subscribed to Tier-I account are eligible for tax deduction under the Income Tax Act, 1961. They can also avail of an additional tax rebate of Rs 50,000 for contributions made to NPS Tier-I under Section 80CCD (1B) of the Income Tax Act, 1961.
They can withdraw up to 25% of their own contributions before attaining the age of superannuation, but with some conditions. Under NPS, PFRDA has increased the maximum age limit from 60 years to 65 years for joining NPS, which provides transparency and portability through online access of the pension account.
How to open NPS account online
To open your NP account online, you need to have a mobile number, an email ID and an active bank account with Net banking facility. Here is how you can open an NPS account online:
1. You should first visit eNPS website, and click on registration.
2. As the online subscriber registration page opens, you should click on new registration. Select new registration, enter your Virtual ID number, and generate an OTP. Now, you should enter the OTP received on your registered mobile number and click on continue.
3. Now an acknowledgement number will be generated along with your name, and you need to select ‘OK’ and enter your personal details. Just click on the ‘Save and proceed’.
4. In the next step, you will be asked to enter your bank details wherein you have online banking facilities. After entering the details, click on ‘Save and proceed’.
5. This step is very crucial as you have to decide portfolio allocation among four available funds: equity fund, in which you can put up to 50% of your money; alternative investment fund, wherein you can’t put more than 5%; a government securities fund; and a corporate bond fund. After entering the allocation details, you would have to update the nominee details in the next step.
6. After you update your nominee details, you need to upload a cancelled cheque of your bank account, photograph and your specimen signature. Now, you have to make your first contribution towards NPS with a minimum investment of Rs 500.
7. After successful payment, your permanent retirement account number (PRAN) will be generated along with the payment receipt.
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8. After your contributions, the next page would be the e-sign/print registration form. If you choose to e-sign with Aadhaar, an OTP for authentication will be sent to your registered mobile number. Once you submit that your Aadhaar will be authenticated, and your registration will be deemed electronically signed.