NPS

• Hassle-Free process.
• You can now buy NPS from anywhere in the words!
• Who can Invest
  Any individual between the age of 18 to 65 years including NRIs can invest in NPS.
• National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme. It is an attempt towards finding a sustainable solution to provide adequate retirement income to every citizen of India.
• NPS is regulated by PFRDA, with transparent investment norms, regular monitoring and performance review of fund managers by NPS Trust.
• Additional tax benefits upto Rs. 50000 u/s 80 CCD (1B)
  A subscriber who contributes towards NPS scheme would get an additional benefit of 50,000 under section 80CCD (1B) which would be over and above the ceiling limit of 1,50,000 prescribed under section 80 CCE.
• Tax benefit under NPS is available for investment made in Tier I account only. Investment in Tier II is not eligible for tax deduction.

Difference between NPS tier I or NPS Tier II Account?

Tier I

• Purpose: Primarily for retirement savings with tax benefits.
• Eligibility: Open to all Indian citizens (resident and non-resident) between 18 and 65 years.
• Contribution Limits: Minimum ₹6,000 per year, maximum 10% of basic salary (including Dearness Allowance) or ₹2 lakh per year, whichever is lower.
• Lock-in Period: Mandatory lock-in until retirement (except for specific exemptions), with partial withdrawal options upon reaching 60 years or specific conditions.
• Tax Benefits: Contributions up to ₹1.5 lakh qualify for tax deduction under Section 80C, additional deduction of ₹50,000 available under Section 80CCD(1B). Tax-free maturity if withdrawn as annuity and specific conditions are met.

Tier II

• Purpose: Additional voluntary savings account with investment flexibility.
• Eligibility: Requires existing active Tier 1 account.
• Contribution Limits: No minimum, but cannot exceed employer’s contribution limit (subject to their policy).
• Lock-in Period: No lock-in, partial withdrawals allowed after 6 years.
• Tax Benefits: No tax benefits on contributions, only on maturity withdrawals under specific conditions.