What is NPS ( National Pension System )?

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.

Invest in NPS | NPS Registration

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

Features & Benefits of NPS

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. Individuals can switch over from one investment option to another or from one fund manager to another subject to conditions.

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 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

Employee is eligible to claim tax deduction on employer’s contribution upto 10% of salary (Basic + Dearness Allowance) under section 80CCD(2) of IT Act. This is over and above of Rs. 1.50 lac limit available under section 80CCE. There is no upper cap in term of absolute value on employer contribution.

Tax benefits for Corporate

Corporate can claim tax benefits for the amount contributed towards pension of employees. Up to 10% of the salary (basic and dearness allowance) of employers contribution can be deducted as ‘Business Expense’ from Corporates Profit & Loss Account as per section 36(1)(iv)(a) of IT Act.