National Pension System

National Pension System (NPS) is a Pension Fund Regulatory and Development Authority (PFRDA) initiative focused towards retirement savings. An NPS account will not only let you make regular savings during your job tenure, but will also help you build a healthy corpus for your retirement and let you enjoy a regular income in the form of pensions and lump sum withdrawals on retirement.

Any individual between 18 to 65 years of age, who is a citizen of India, is eligible to subscribe to NPS.

Main benefits of investing in NPS:

• They provide retirement income
• Give market-based return over the long term
• Extend old age security coverage to all citizens

In addition to providing a range of investment options to subscribers, NPS allows individuals to decide where their pension fund should be invested.

NPS is based on a unique Permanent Retirement Account Number (PRAN) which is allotted to each subscriber upon opening an NPS account.

Contributions made towards NPS are eligible for tax deductions as mentioned below:

Tax Benefit of National Pension Scheme (NPS) for Salaried Individuals:

• To the extent of 10% of Salary (Basic + Dearness Allowance) is eligible for tax deduction u/s 80CCD (1) of Income Tax Act, 1961 within Rs.1,50,000 limit under section 80 CCE
• Additionally, employees can invest up to Rs.50,000 towards NPS which is eligible for tax deduction u/s 80CCD (1B) of Income Tax Act, 1961

Contribution made by Employer:

• Additionally, Under Sec. 80 CCD (2) Employer’s contribution to NPS Account of the employee up to 10 % of salary (Basic + DA), without any monetary limit is deductible from taxable income.