National Pension System

National Pension System | Post Office NPS Registration (2023)

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National Pension System: The Central Government developed NPS to assist people in having income in the form of pension to meet their retirement demands. In accordance with the PFRDA Act of 2013, the Pension Fund Regulatory and Development Authority (PFRDA) oversees and manages NPS.

National Pension System

NPS is a market-linked defined contribution plan that aids with retirement savings. The program is easy to use, voluntary, transportable, and adaptable. It is one of the best strategies for increasing retirement income and tax savings. It enables you to set up a planned, methodical savings strategy for a comfortable retirement.

National Pension System

The Pension Fund Regulatory and Development Authority (PFRDA), established by the PFRDA Act of 2013, is in charge of overseeing and administering the National Pension System (NPS). NPS is a specified contribution product with a market relationship. The Central Recordkeeping Agency (CRA) creates and maintains a specific Permanent Retirement Account Number (PRAN) for each subscriber under the NPS.

The two account categories that NPS offers are Tier-I and Tier-II. The pension account with limited withdrawals is known as a Tier-I account. A voluntary account called Tier-II provides investment and withdrawal liquidity. Only when the subscriber’s name appears on an active Tier-I account is it permitted. Over time, contributions build up until retirement increases with market-linked returns.

A minimum of 40% of the corpus must be used, upon exit, retirement, or superannuation, to obtain a pension for life by purchasing an annuity from a life insurance firm. The remaining corpus must then be paid out as a lump payment.

Benefits of National Pension System (NPS) Account

i) Low Cost:-

NPS is considered t​o be the world’s lowest cost pension scheme. Administrative charges and fund management fee are also lowest.​

ii) Simple:-

All applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across india and get a Permanent Retirement Account Number(PRAN)

iii) Flexible:-

Applicant can choose his/her own investment option and Pension Fund or select Auto choice to get better returns.

​iv) Portable:-

Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc and also make contributio​n through eNPS. The accou​nt can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment.

Important features of National Pension System (NPS):

•Access and portability: are guaranteed by providing NPS subscribers with online access to their pension accounts via a web portal and a mobile application from any location, as well as the possibility to change jobs.

• Partial withdrawal: During the whole subscription period under NPS, subscribers may withdraw up to 25% of their own contributions at any time before leaving NPS Tier-I, three times at most, for the specific purposes outlined in the regulations. After making contributions for at least ten years, partial withdrawals from NPS Tier-1 are permitted, but there must be a minimum of five years between withdrawals.

• Tax Benefits available under National Pension System (NPS):

a) Within the overall ceiling of Rs. 1.50 lakh under section 80 C of the Income Tax Act, an employee’s own contribution to NPS Tier-I is eligible for a tax deduction under section 80 CCD (1) of the Income Tax Act. In addition to the deduction provided under section 80CCD(1) for contributions to NPS Tier I accounts, the subscriber is additionally permitted a tax deduction beginning in FY 2015–16, up to a maximum of Rs. 50,000 under section 80CCD 1(B).

b) Under Section 80CCD (2) of the Income Tax Act, the employer’s contribution to NPS Tier-I is eligible for a tax deduction (14% of salary for central government employees and 10% for everyone else). This reimbursement is in excess of the amount allowed by Section 80C.

c) The interim or partial withdrawal of up to 25% of the subscriber’s NPS Tier-I contributions is tax-free.

d) Starting on January 1, 2019, lump sum withdrawals from NPS Tier-I of up to 60% of total pension asset are tax-free.

e) At least 40% of the money used to buy an annuity from an entity that is registered with the Insurance Regulatory and Development Authority (IRDA) and has been granted a PFRDA empanelled status is also tax-exempt.

Tax benefits for Salaried Individual Tax Benefits for Self Employed Individual
Under section 80CCD (1B), you are eligible to seek a tax exemption of up to Rs. 50,000. This benefit exceeds the section 80C maximum of Rs. 1,50,000. Under section 80CCD (1B), you are eligible to seek a tax exemption of up to Rs. 50,000. This benefit exceeds the section 80C maximum of Rs. 1,50,000.
Under section 80CCD (1), you are allowed to invest up to 10% of your base wage plus the depreciation allowance. Section 80C of the Income Tax Act of 1961 places a maximum of Rs. 1,50,000 on this tax exemption. According to section 80CCD(1), you may invest up to 20% of your gross annual income and receive a tax exemption on the money you put in. Section 80C of the Income Tax Act of 1961 places a maximum of Rs. 1,50,000 on this tax exemption.

*Employer contribution benefit is capped upto 7.5 lakhs invested as Employer contribution towards NPS, PF & Superannuation

National Pension System Eligibility

All Citizen Model

National Pension System

You are eligible to open your NPS account if you are a citizen of India whether resident, non-resident or an Overseas Citizen of India , if you fulfil the following conditions:

  1. As of the day that you submit your application to the PoP/PoP-SP or online through e-NPS, you must be between the ages of 18 and 70.
  2. In accordance with the Subscriber Registration Form (SRF), you must adhere to the Know Your Customer (KYC) requirements. You must obligitively provide all the paperwork needed for KYC compliance.

Hindu Undivided Families and People of Indian Origin, however, are ineligible to join the NPS.

NPS cannot be opened on behalf of a third party because it is an individual pension account.

Central Government/CABs

With the exception of the armed forces, the Central Government began implementing NPS for all Central Government employees on January 1, 2004.

So, the NPS program is required for all Central Government workers who begin working on or after January 1, 2004.

Employees of Central Autonomous Bodies (CABs) entering on or after January 1, 2004, are also eligible for NPS.

According to the Ministry of Finance’s notice, CABs are permitted to make contributions to the NPS accounts of their employees who started working before January 1, 2004.

State Government/SABs

The NPS covers employees of State and UT governments that have adopted it.

Employees of State Autonomous Bodies that have accepted NPS are likewise eligible for NPS.

Corporate Model

You are eligible to open your NPS account if you work in any corporate and fulfil the following conditions:

  • Your corporate has adopted the NPS scheme.
  • You are a citizen of India, be it a resident, a non-resident or an Overseas Citizen of India.
  • You should be between 18 and 70 years of age.
  • You need to comply with the Know Your Customer (KYC) norms.

The corporate model is available to the following entities:

  • Entities registered under the Companies Act, 2013 or a cooperative society registered under any law relating to Cooperative Societies.
  • Bodies established or incorporated under any Act of Parliament or any law enacted by a state legislature or under any order or notification issued by the Central / state governments.
  • Public Sector Enterprises or a government company.
  • Registered Partnership Firms.
  • Limited Liability Partnerships.
  • Proprietary Concerns.
  • Trusts / Society.
  • Foreign companies having registration under Section 591-608 of the Companies Act, 1956 in respect of their eligible Indian employee(s).
  • Foreign / diplomatic missions operating in India (Embassy / High Commission / Consulate, etc.) in respect of their eligible Indian employee(s).
  • International organizations operating in India (UN / WHO / World Bank / ADB / IMF, etc.) in respect of their eligible Indian employee(s).

An employer has the following options for the implementation of NPS for its employees:

  • Obtain registration from the PFRDA as a PoP; or
  • Register with a CRA as an employer / corporate under NPS Corporate Model by applying as Corporate Head Office (CHO) through a registered PoP.

National Pension System (FAQ’s)

Q. What is National Pension System?

The entire name of the NPS is the National Pension Scheme. The Government of India launched the NPS program with the intention of offering retirement benefits to all of its residents. The NPS aims to help persons develop the habit of saving for their retirement.

Q. How can I get 50,000 pension per month in National Pension System (NPS)?

Your age, your tolerance for risk, and the rate of return on your assets are just a few of the variables that will affect the precise amount you need to invest. To create an income from a pension of $50,000 per month, you would need to invest roughly $40–50 lakhs over the course of 30–40 years.

Q. Who qualifies for the National Pension System (NPS)?

If you are an Indian citizen, whether a resident, a non-resident, or an overseas Indian citizen, and you meet the requirements listed below, you may open an NPS account. As of the day that you submit your application to the PoP/PoP-SP or online through e-NPS, you must be between the ages of 18 and 70.

Q. Does National Pension System (NPS )give lifetime pension?

The NPS member receives a monthly pension from NPS throughout their lifetime under this type of annuity plan. When a subscriber passes away, their monthly NPS pension payments stop, and the nominees get a lump sum payment for the total amount of the annuity’s purchase price.

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