alexa
Indianmoney.com Missed Call Number

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
Home Articles NPS Contribution

NPS Contribution

IndianMoney.com Research Team | Updated On Monday, December 10,2018, 04:05 PM

5.0 / 5 based on 1 User Reviews

NPS Contribution

 

 

What is NPS?

The National Pension Scheme or NPS is a social security scheme launched by the Central Government that encourages people to invest in a pension account at regular intervals during the course of their employment. This pension program is open to employees from the public, private and even the unorganized sectors with the exception of those from the armed forces. Post retirement, the NPS account holder can take out a certain percentage of the corpus and the remaining amount is locked in an annuity plan.  

Earlier, the scheme was limited only to Central Government employees. Today, NPS stands extended to all Indian citizens. NPS holds immense value to anyone who works in the private sector and requires a regular pension after retirement. The scheme enjoys tax benefits under Section 80C and Section 80CCD.

Want to know more on NPS? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

SEE ALSO: Personal Loans For Self Employed With No Proof Of Income

NPS Contribution

NPS minimum contribution per year:

The initial contribution a Subscriber is required to make is a minimum of Rs 500 for Tier I and a minimum of Rs 1,000 for Tier II at the time of registration. The minimum contribution that the subscriber can make is subject to the following conditions:

  • Tier 1: Minimum amount per contribution – Rs 500
  • Tier 2: minimum amount per contribution – Rs 1000

NPS maximum contribution per year:

Previously the contribution limit of a subscriber per year was only Rs 1 Lakh under Section 80CCD. However, in the 2015 budget, the contribution limit had been increased to Rs 1.5 Lakh. Another subsection, Section 80CCD(1B) had been added to this contribution, where a subscriber can make an additional contribution of Rs 50,000. Now under Section 80C and section 80CCD1(b), subscribers to the National Pension Scheme can claim a tax-rebate up to Rs 2 Lakhs.

NPS contribution by employer:

Government gives special tax exemption for contribution towards NPS made by the employer on behalf of employees under the corporate model. Under this both employer and employees contribution is liable to income tax deduction.  The employer also gets tax benefits for his part of the contribution by showing it as a business expense in the profit and loss account. To make contributions to the employees NPS account, the employer must register himself which is already the case as employer’s makes PF contributions each month. The NPS contribution is in addition to the EPF.

SEE ALSO: Credit Score India

Tax benefits for employees:

There is a tax deduction of up to Rs 1.5 lakhs a year under Section 80C on contributions to NPS. Additionally an investment up to Rs 50,000 a year is deductable from taxable income under 80CCD(1b) of the income tax act.

NPS contribution tax exemption:

Tax exemption for self employed professionals upon an Investment up to 20% of Gross Annual Income is liable for income tax deduction from taxable income under 80CCD (1) of Income Tax Act, 1961 and is subject to the Rs 1.5 lakh limit of section 80C. Also an additional investment of Rs 50,000 is liable for income tax deduction from taxable income under section 80CCD (1B) of Income Tax Act, 1961.

SEE ALSO: IndianMoney Review: Mis-selling by insurance agents to cheat senior citizens

NPS contribution charges:

An NPS account holder must pay the service charges to Point Of Presence for subscribing to the NPS scheme. An Initial subscriber registration charge of Rs 100 and an ad valorem transaction charge of 0.25% of the initial contribution amount from subscribers are subject to a minimum of Rs 20 and a maximum of Rs. 25,000. Any other transaction not involving a contribution from subscriber is subject to a charge of Rs 20.

Other transactions include:

  • Change in subscriber details.
  • Change in investment scheme/fund manager.
  • Processing of withdrawal request.
  • Processing of request for subscriber shifting.
  • Issuance of printed Account statement.

Any other subscriber services as may be prescribed by PFRDA.

How to open NPS account?

The NPS account can be opened through both the online and offline route. The offline method of opening an NPS account is given below:

Offline method: To manually open a NPS account you will have to find a Point of Presence which may be a bank. You must collect an application form from the nearest point of presence. Fill the form and submit it along with the KYC papers.

In case you are already KYC-compliant with the bank, then you can directly proceed to open an NPS. Once the initial investment is made, the bank or the POP will send you a  Permanent Retirement Account Number (PRAN). A number and a password will be sent which you can use to operate NPS account. There is a one-time registration fee of Rs 125 for this process.

How to login to NPS online?

Opening an NPS account online is easy and the entire process takes less than an hour. Opening an account online becomes even simpler, if you link bank account to PANAadhaar and/or mobile number. An OTP will be sent to registered mobile number. Enter the OTP to validate the process. This will generate a PRAN (Permanent Retirement Account Number), which you can use to operate your account.

Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.

You May Also Watch:

Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.

Be Wise, Get Rich. 

 

Did you find this article useful? You can Rate us
5.0 / 5 based on 1 User Reviews
Article Author

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

Subscribe to our Youtube Channel

Most Popular

Why One Must Never Neglect Estate Planning

07 January 2014, Tuesday

Things to Know About Hybrid Mutual Funds

26 November 2013, Tuesday

What is Car Insurance? Why is it important?

21 October 2009, Wednesday

Latest Stories

How to Close a Car Loan?

17 June 2019, Monday

Personal Loan EMI Calculator

17 June 2019, Monday

Why Has Job Growth Slowed In India?

17 June 2019, Monday

Popular Tags

GST
UK

Calculators

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
CIBIL Meter
Get It now!
Attention!

This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.