Who can subscribe to National Pension System? know all about the plan
NPS is open to every Indian citizen and a subscriber can choose the amount he wants to set aside and save every year
The government rolled out the National Pension System (NPS) scheme for all citizens of India from May 1, 2009, and corporate sector from December, 2011.
The person (employee/citizen) who joins the NPS will be known as "subscriber" in the NPS. Under the NPS, each subscriber will open an account with Central Recordkeeping Agency (CRA) which will be identified through unique Permanent Retirement Account Number (PRAN).
Under NPS, two types of account would be available to subscribers i.e. Tier I & Tier II.
Tier I account
Under this account, subscribers contribute his / her savings (may include employers contribution in case of Corporate sector) for retirement into a non-withdrawable account.
Tier II account
This account is a voluntary savings account from which subscribers are free to withdraw their savings whenever he/she wishes.
The facility of Tier II account was made available from December 1, 2009, to all citizens of India, including government employees and corporate sector subscribers, not mandatorily covered under NPS.
An active Tier I account will be a prerequisite for opening of a Tier II.
Benefits of NPS
It is voluntary: NPS is open to every Indian Citizen. A subscriber can choose the amount he wants to set aside and save every year.
It is simple: All the subscriber has to do is to open an account with any one of POPs (point of presence) and get a PRAN.
It is flexible: Subscribers can choose their own investment option and pension fund and see their money grow.
It is portable: Subscribers can operate their account from anywhere in the country, even if they change the city, job or their pension fund manager.
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 benefits under NPS
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 lakh under Section 80 CCE.
Tax benefit for corporate subscriber
Additional tax benefit to subscribers under corporate sector u/s 80CCD (2) of Income Tax Act is available. The employer's NPS contribution (towards the employee) up to 10% of salary (basic + DA), without any monetary limit is deductible from taxable income.
Exclusive tax benefit for any NPS subscribers u/s 80CCD(1B)
An additional deduction for the investment up to Rs 50,000 in NPS (Tier I account) has been exclusively available for NPS 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.
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.
Besides that, print out of the transaction statement could be used as a document for claiming tax benefit.
Source: NPS website