Complete guide on New Pension Scheme (NPS) in India
Govt. of India launched new pension scheme (NPS) in Apr 2009. NPS scheme has out beaten even equity markets and provided returns of 12% to 14% in 2012-13. Several people call with various names such as NPS, National Pension Scheme, National Pension system, New Pension scheme and New Pension system. Whatever name you call, NPS scheme is launched with an aim to promote security of income to Pension fund subscribers in old age. It helps to save for life after retirement + provides good returns. This topic has been chosen from "Suggestion a topic" requested by Sara and several others.
What is New Pension Scheme (NPS)?
NPS is a good retirement scheme for employees of Government and private employees. NPS can be taken by all citizens of India. NPS is available in 3 approaches. Tier-I, Tier-II and Swavalamban Scheme. NPS was already available for government employees and it is extended to other citizens of India w.e.f. 1-May-2009.
Tier-I Account: You cannot withdraw the amount up to retirement. Government employees have to mandatorily invest 10% of their salary into NPS Tier-1 account. Tier-1 account is mandatory to open for Tier-2 account.
Tier-II account: You can invest and freely withdraw money from this Tier-II account. Minimum contribution is ₹ 1000 during registration and ₹ 2000 for the entire year. You need to contribute atleast one contribution per year.
Swavalamban account: This type of NPS is provided for encouraging poor workers. Under this scheme, Govt of India would pay ₹ 1,000 per year for first 4 years as its contribution. However there are several conditions attached to this.
Also Read: SBI Pension Plan Scheme-Annuity Plus-Review
What is the eligibility to join New Pension Scheme (NPS)?
- Every citizen of India whether resident or non-resident is eligible to join New Pension Scheme (NPS). However an individual should be 18-55 years of age as on the date of submission of application to the authorized companies (called POP-SP’s which I would tell you little later).
- They should comply with KYC Norms.
How to enroll to the New Pension Scheme (NPS)?
- Fill the registration form and submit it to POP-SR of your choice. Currently there are 22 POP’s from whom you can choose.
- NRI’s should have a bank account in India to open NPS. Contributions from NRI’s are subject to RBI and FEMA regulations time to time.
- After the account is opened, IRDA CRA would mail you welcome kit which contains Permanent Retirement Account Number (PRAN).
- You will get Telephone Pin (TPIN) to access toll free number of 1800-222-0808. You also get Internet Pin (IPIN) to access CRA website about your pension account. The site is npscra.nsdl.co.in
How much a subscriber should contribute to NPS?
- Subscriber should pay a minimum of ₹ 500 per month and yearly contribution of ₹ 6,000.
- Contribution should be paid by local cheque, cash or DD. Outstation cheques are not acceptable.
Also read: Should you buy Mutual Funds pension plans?
Benefits of investing in NPS
- Voluntary NPS: NPS is open for all citizens of India who want to voluntarily contribute.
- Process is simple: You can open account with any of the POP’s and get PRAN.
- Flexible: NPS is flexible and you can choose your own investment options and pension funds and secure your money to grow
- It is portable: You can open account anywhere in the country and can use the same account even if you change job or move to other city or change the pension fund.
- Well regulated: NPS scheme is regulated by PFRDA. NPS trust would do performance reviews of fund managers and monitors regularly.
- On attaining 60 years of age: 40% of pension wealth should be annuitized and 60% can be withdrawn as lump sum in a phased manner. Phased withdrawal should be done: a) Minimum 10% should be withdrawn every year b) Any amount lying and credited at 70 years of age should be compulsorily withdrawn in lump sum.
- Withdrawals before 60 years of age: Compulsory annuitization of 80% of pension wealth with any IRDA regulated insurance company and balance 20% can be withdrawn in lump sum.
- Death: In case of death, option for nominee to receive 100% of pension wealth in lump sum. If he/she want to continue NPS, he/she need to subscribe for NPS and comply with KYC norms.
- Tax benefits: NPS is eligible for tax benefits under section 80C (Maximum of ₹ 150,000). From FY 2015-16, an additional ₹ 50,000 is eligible u/s 80CCD (1b) for the contribution made towards NPS.
What are the Investment choices available for NPS subscribers?
There are two approaches. Active Choice (Individual Funds Asset Class E, C and G) and Auto Choice (Life cycle fund).
a) Active Choice – Individual Funds:
Asset Class-E: Investment predominantly would be equity markets. Investment in this option would be high risk, high return.
Asset Class-C: Investment would be fixed income investments other than Government Securities. This option would be moderate risk, moderate returns option.
Asset Class-G: Investment in Govt. Securities. This option is low risk, low returns option.
You can invest entirely in Asset Class-C and Asset Class-G and up to 50% in Asset Class-E.
Choosing an Asset class is important as the returns would depend upon this.
b) Auto Choice-Life cycle fund
This auto choice – Life cycle fund is good for people who has little knowledge where to invest and not able to decide on the investment options.
Age: Asset Class-E Asset Class-C Asset Class-G
35 50% 30% 20%
50 20% 15% 65%
55 10% 10% 80%
NPS charges also are too small. They charge 0.009% fees on the asset value along with other small charges on additional transactions basis.
Bank of India is the functioning as NPS Trustee Bank.
Also read: Ways for retirement planning in India
Points of Presence (POP)
There are some institutions which are acting as POP’s for customer interface for non government subscribers who wish to open PRAN for NPS. You can approach them to open NPS account and start investing.
- Allahabad Bank
- Axis Bank
- Central Bank of India
- Citibank
- Computer Age Management Service Ltd
- ICICI Bank
- IDBI
- ILFS
- Kotak
- LIC of India
- Oriental Bank of Commerce
- Reliance capital Ltd
- State Bank groups
- South Indian Bank
- Union Bank of India
- UTI Asset Management Company
There are some intermediaries like ICICI Direct, Fundsindia.com through whom you can subscribe for NPS.
Conclusion: There are various investment opportunities for retirement investment plans which provide annualized returns 6% to 8%. However in FY 2012-13, NPS has provided a return of 12% to 14%. It has provided 18% to 20% in 9 months of the financial year 2014-15. The performance may not repeat in future, however there are greater changes that NPS would provide higher returns to you over long run. In case you are doing retirement planning, consider NPS as the top item.
Detailed application and features are available at this link.
Readers, what is your opinion about NPS? Do you have any other better investment options for retirement investment plans?
If you liked this article, share it with your friends and colleagues on Facebook and Twitter. The links are provided below.
Suresh
New Pension Scheme (NPS)
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My daughter is 49 yrs.old. She wants to enroll in NPS to avail the benefit of Rs.50000/- benefit in I/T over and above 1.5 L under 80c If she contributes 5000/- pm for 11yrs. what will be her probable pension. Pl. confirm if she can pay directly to NPS An ealry reply is requested
I am from Udaipur Rajasthan does this plan work there post office and bank say this plan is not available in Rajasthan
I have started NPS with an amount of Rs. 50000.00. Will it allow me to contribute as per my choice like minimum of Rs. 500/- per month from the next month onward.
You can invest minimum of Rs 500 per month and minimum contribution should be Rs 6,000 per year. You can invest per month or Quarterly based on your cash flow
RRESPECTED SIR/MADAM,
I AM A STATE GOVERNEMNT EMPLOYEE HAVING GPF ACCOUNT AND COVERED WITH OLD PENSION SCHEME. CAN I OPEN NPS ACCOUNT.
Can an individual hold 2 nps schemes? Say one with icici and other with sbi?
Hi ,
I am going through different links to get the information regarding NPS scheme. On one site I saw an information which I want to validate . It is written that NPS scheme interest is compounded monthly. Could you plz confirm me on this as a part is getting invested in equity because of which I dnt think so it is possible to compound it on monthly basis but still if some thing like this is there kindly confirm.
1. I don’t have any option of NPS in my company (Pvt ltd), can i open account for NPS
2. can i invest only for 5 years or what is the lock in period
3. do i need to deposit same amount of money every year in NPS
4. if i deposit in NPS and not my emplyer, still i will get 50,000/- exemption over and above 1,50,000/- u/s 80C
5.
What is Ipin and Tpin?
Identity pin and Transaction pin. Correct?
how does nps scheme work in case my next employer does not have nps plan yet
Contribution is from employer (not mandatory) and from you. If you change your job, your new employer does not provide NPS option, your account would be still active and you can make your contribution.
Hello suesh,
i have opened my swalamban account through abhipra capital, monthly investment 1000 per month.
In current I want to increase my amount, kindly let me know how can i move swalamban to main NPS tier 1.
I have already pran card of swalamban scheme, how will my money of swalamban sxheme will transfer to my NPS tier 1 account…..
Reply plz in clear way.
Regards
Rajkumar
I would like to talk to a representative
Hello Suresh,
Thank You for the nice article . I am keep following your articles for better understanding .
Need your help here .
My doubt is ,
I have done PPF of 1.5L which means my 80C is done .
Now if i paid max 10% of my basic toward NPS , then it will be calculated on top of 80C ??
I should get 1.5L +30K tax exempted –Is my understanding is correct or not ?
My NPS contribution is around 30K but my HR site is not calculating this NPS amount in chapter VI on top of 1.5L .
How i can get this NPS benefit ?
during TAX retrun should i show this NPS ?on which section i should show this ?
My 30K towards NPS is falling on which category – Section 80CCD(1B) or Section 80CCD(2)
Thank You in Advance
Hi Prasan, Yes, beyond 80C of Rs 1.5 L, you can claim 50K thru NPS (see guidelines, it should be from Tier-1 a/c only). If your HR is not computing, you should re-check with them as it is IT rule and not specific to any company. In case of further dispute, you can always claim through IT Return
I HAVE A PRAN CARD, I WANT TO KNOW FROM WHERE I COULD INVEST ON IT, TELL SOMETHING ONLINE.
IF NOT TELL ME MY NEAREST BRANCH.
PRAN NO. 500074180832
D.O.B- 10/05/1972
Hi suresh.
Thankyou very much for your valuable information.That was really informative.
Suresh please let me know whether a government employee belonging to pension system prior to 2009 can open an account in NPS and can he claim u/s 80DDB. please respond to query of Jaycee khurana as i am also having the same doubt.
Thankyou
Regards
Rahul Nair
Can you please clarify on tax benefit under 80ccd. Is exemption available only when employer contributes as part of salary, or is it available even when an employee contributes directly? Thank you
Hello. Please help me understand NPS more. I work in a private firm. My 80C limit is taken care by home loan and LIC policies. If I deposit only Rs. 50,000/- in NPS account, will it be good to claim u/s 80DDB (1b). or do I need to deposit Rs. 200,000/- ….The word “additional” is confusing. Thanks.
Sir I want to take painsion plan call me 9589042543
In case of job loss, can a subscriber close the nps account and how much amount he will get returned.
Sir,
Can you please tell me about nps of public sector bank employees.
Regards,
Athira
CALL ME 8866303006
sir ,
I was opened nps Non Swavalamban account at india infoline finance ltd one year back. But now where i pay my monthly priemum amount .
I want to open a NPS account.but I can’t do this.I went to SBI for open this account but bank officer told me that this account was not open in B/Budge branch.
u can contact agdretator who act for nps pention scheme, or u can contact me for the same..
I want to calculate the maturity amount of NPS.
if i invest 6000 pm till 30 years.
and increase the investment by 10%
like in first year invest 6000 pm
in second year: invest 6600 pm and so on… till 35 years
Dear sir,
I am going to buy a house. So my question is after how many years of opening NPS account I can withdraw amount and how much?
Nagesh Dhankhar
Dear Sir,
My organisation( Government sector) and me contributed to Tier I Account. Now I have resigned and joined a concern which does not subscribe to NPS. I am 46 years old. My question is:
1. As an individual can i keep depositing minimum 6000/= in my tier i account so that it doesnt freeze til retirement and how do i do it?
Dear suresh,On May 20 (2014) for my question,if it is possible to increase or decrease monthly/yrly contributions depenfing on the availability og funds,you answered ,it is not possible.But when Iam going through older replies on NPS on august 8th(2013) for one question by other reader you replied ,we can increase the amount.Please clarify
With regards,
Dr.p.sudhakar.
Can someone explain how tax is going apply on this scheme? If I transfer 100% fund to annuity scheme at age 60. Do I need to pay any tax?
No . only if your total yearly income( including annuty ) fall in taxalbe slab
Thanks Pavan. I appreciate you reply.
As I understand tax implication after receiving annuity income. What about corpus before transferred annuity scheme. For example if I accumulate 2 crore INR. I am going to transfer 100% fund to annuity scheme. Do I need to pay any tax at age on 60 when I transfer 100% fund not withdrawing single paisa.
hi,,m Ravinder,, can u suggest me ,,that govt. is giving compound interest in ''Swavalamban Yojana" every year
Dear suresh ,according to axis bank (POP for customer) any indian citizen upto 60years can apply for- nps .But you have mentioned the age limit as55 years.Please clarify.
Hello Dr.Sudhakar, Earlier NPS was offered by few banks only. If it is being offered upto 60 years, it is good news. You can stay invested.
Dear suresh , In nps(new) is it possible to increase or decrease (like flexi accounts) monthly/yearly contributions depending on the availability of funds? With regards-Dr.sudhakar.
Hmmm. As per my knowledge we cannot.
hello sir
how r u
what do u do
I m promoting Central Govt. project NPS-Swavlamban PRAN CARD …..We are giving Pran Card Free of Cost alongwith a business opportunity to make upto 2000/- daily …..r u interested in making gud money by Indian Govt. Pension Scheme ????
Good to hear this Sandeep. Please provide more details about this by replying to this message so that if I am satisifed, I would approve this commnet. FYI, i visited the FB page you linked here and it says page not available. I removed your contact details and FB page as I am yet to get confidence about your message.
Hello Sir
Plz provide me with your email id. I will mail u complete details about this wonderful opportunity to make money by Indian Govt. Pension Scheme.
Sandeep goel
please mail to suresh@myinvestmentideas.com
sir I m working in sbi n they have opened tier 1 account so how can I open teir 2 as in teir 2 account full can be withdrawn…so please guide me in this regard that I don't want to continue in teir 1 as its been three years no have left the job..now want to continue but in teir 2 ..so that I can withdraw if required..
Manali, You cannot convert Tier-1 ccount of NPS to Tier-2 account of NPS. However you can open tier-2 account and you can withdraw amount from this second account.
Hi, I am interested in this oportunity. could you please send me the details?
Thanks,
Mahesh
Hello suresh,
I am a PSU employee.Neither I nor my employer contribute in NPS Scheme.
1.As u have mentioned is it compulsory for wholely Govt employees only & not mandatory for PSU employee?
2. Even though my employer doesnt contribute,can i subscribe in NPS scheme as an indivisual??
Hi Priyajit, It is not compulsory. It is flexible for govt or private employees. While their employers need not contribute, employees can contribute to NPS scheme for Rs 500 per month. You can do that even though your employer is not doing it.
hi
I have read repeatedly that NPS is a good retirement scheme.But it does not answer the most important question of all-how much do we get monthly at the end of 60 years?
since it is equity based if the markets are down when we reach 60, will that affect our deposit?
is there a provision to put the entire amt as annuity instead of withdrawing 30 %?
do we get pension till death?
if i want a monthly pension of 10000 how much amt should there be in my nps account by the time i reach 60
I wish someone would start a pension scheme like an RD where we put in so much per year and are assured of a safe income monthly till death-without insurance cover.is there any such scheme?
thankyou
pranav
Hi Pranav, I would try to answer your queries.
Q) But it does not answer the most important question of all-how much do we get monthly at the end of 60 years?
Answer: It depends on your investment amount and interest earned. In last financial year NPS earned 14% returns. It does not mean every year it would earn this rate. It depends on the investments made and it could be between 8% to 14% returns on yearly balance.
Q) since it is equity based if the markets are down when we reach 60, will that affect our deposit?
Answer: Yes. Last fin year you would have got 14%. But next year you may get only 6% as an example
Q) is there a provision to put the entire amt as annuity instead of withdrawing 30 %?
Answer Yes I understand there is a provision. However reversal cannot happen that you can withdraw entire amount
Q) do we get pension till death?
Answer: Yes.
Q) if i want a monthly pension of 10000 how much amt should there be in my nps account by the time i reach 60
Answer: Difficult to compute as the body which is operating this have several combinations which considers before arriving the annuity amount.
Q) I wish someone would start a pension scheme like an RD where we put in so much per year and are assured of a safe income monthly till death-without insurance cover.is there any such scheme?
Answer: Currently all private pension schemes are providing such pension schemes towards that, but with insurance cover.
Hello Suresh,
I am government servant working in Karnataka state. I have Tier-I account in which every month 10% of my BASIC+ DA is deducted. The same amount i am claiming for tax benefit under 80CCD. The same of amount 10% of my BASIC+DA is contributed by government.If the government contribution is shown in GROSS salary and claimed under 80CCE there is no extra benefit for employers contribution.Whether employers contribution should added to Gross salary or not.If added there is nor extra tax benefit.
Please clarify how to calculate employees contribution to NPS under 80CCE.
Thank you
Arvind
Dear Suresh,
I have 2 questions regarding NPS,
1) If I joined NPS and after paying some years, I was not able to pay for next year (due to loss of Job or any other concesquences) what is the way to get the money out. Is this the same way like I get only 20 % before 60years. Or to make it alive I need to put minimum 500/ per month correct?
2) If after started getting pensions after 60 years, death is happening Just few months, the pension will be getting to the nommine or lumpsum will be getting to the nomine.
3) Also I have a doubt that after 70 years I need to get all the remaining amount as lumpsum? that means after 70 years I will get the remaining 40% which deducted during 60 years and my pension will continue upto my death ? Correct.
Hi Mahesh, Here are my comments 1) You are correct. Minimum subscription to be done to be active. I am not sure about penalty if you do not subscribe min amount 2) Yes, your nominee would get pension 3) Yes. I indicated that any amount lying credit would need to be withdrawn at 70 years of age.
Dear Sir,
Thanks for you helpful article.
Please calculate the lumpsum amount and monthly pension for a person of age 35 now and contribute about 10k p.a. under low risk factor.
and also the simple formula for calculate the pension amount.
Regards,
Manoj
Manoj. It may not work that simple. If you invest 10K for 15 years, the interest would be dependent on the NPS schem performance. Also you have options to withdraw amount to certain limits. Balance would be paid thru pension.
Hi Suresh Garu,
If i wanted to invest 3,00,000 lumpsum amount , what are the options i have. I dont want to take any kind of risk. And if i wanted to invest 10000 every month , what are the options i have? Plz clarify me…
Regards
Aparna
Aparna, 1) Please refer this article to invest lumpsum investments
2) Regd your second question about Rs 10,00o investment, since you are low risk or zero risk taker, you can invest in Bank FD or Post office Saving schemes or if you can take some risk, you can invest in debt funds. In debt funds invest in SBI Dynamic bond fund or IDFC Dynamic bond fund
Good Day,
having gone through the article and all the questions and answers, self do not find answer to one basic question, what will be the monthly/yearly pension drawn after 60yrs. For example assume that there is 30lacs in my acount on completion of 60yrs( i will make sure that this amount is reached by increasing my contribution) now after 60yrs i do not do any lumpsum withdrawal, kindly tell me how much pension will be due to me. And i assume this pension is for life long?
thanks
Pirate
Pirate, The amount computed after 60 years would depend on various parameters like the amount of investment, age at which you are starting the expected return. The return could be 8% to 14%. It depends on all these factors. Finally considering your example, you may be issued an Annuity where generally insurance company may pay around Rs 20,000 for life long if you keep Rs 30 L. The amount may vary as it depends on insurance company and the annuity value and tenure.
Hi Sursh
I wantto open a NPS Account indivialy, and i planinigto invest 12000.00 per year. can u tell me the approx return on retierment. now my age is 30.
Biswajit
Hi Biswajit, As indicated, the returns would vary between 8% to 14% per annum. Your investment would be Rs 360,000 (Rs 12,000 x 30 years approx) and the maturity value can be Rs 15L to Rs 35L depending on the returns.
Hi , being in EPF already , can we additionally invest in NPS also? is it advisable? or should i just increase EPF amount?
Hi Latha, EPF can be invested only by salaried employees. Whereas NPS can be done by any individual. The returns on EPF are 8.5% (approx) whereas NPS the returns are between 8% to 14% (varies). There are several other features which they differ. I would write an article next week on NPS Vs EPF so that you can make the differences
hi suresh, i have several question about taking nps can u either call me on 9711125950 or message your mobile no on 9711125950
Harsh, I may not be able to provide my contact details. You can call any bank who is offering such service and they can clarify all your doubts.
Hi Suresh,
Thanks for the information. I just want to confirm my understanding quoting an example.
I am 24 years of age now. I pay 10000 per year and so i would be paying for 36 years till my age is 60. So my total payment would be 36*10000 = 3,60,000. Considering I have opted for investment in Fixed Deposit for 8%, the total amount at the age of 60 would be 3,60,000 * 8% = 3,88,800.
Now can you please let me know, how this 3,88,800 will be provided to me, considering that I dont want to withdraw till 70 years of age.
My doubts are :
1) Will this 3,88,800 be provided to me on monthly basis upto 70 years of age?
2) If yes for the above question then will the interest continue upto 70 years for the remaining amount?
3) Will there be any loyalty amount given at the end of 70 years?
Once again thank you for your post.
Fixed Deposit for 8% is just for an example to make the understanding more easy. Main intention is to come up with a total amount with benefits at the end of 60 years 🙂
Elavarasu, The computation is not correct. If you deposit Rs 10,000 every year, the interest would be computed every year based on the closnig balance. Hence you would get compounding interest on the amount invested every year. The interest would continue upto the retirement age where you need to withdraw the NPS amount as per guidelines. There would not be any loyalty additions.
Thanks for your reply Suresh
Sir ,My age is 34 . Iam working as a sales man in a medical shop , my income is 7000 per month .I want to join in pension schme,my doubt is after finishing my 60 years will they pay me pension upto my death.what is the amount to pay per month how much year i want to pay , I need not any money from that . but I want money after
60 years ,as per month like before our grandfather pension. please give me a clarification
Hi Bala, Yes one would get pension from retirement date to the death of the individual. There are various schemes available like NPS, LIC Pension plans etc. Please review them and buy a suitable one suitable for you.
thank you for kind reply sir.
Thanks for giving information.Can I increase my contribution in future.Like today my monthly contribution is 1000,can I increase it to 2000 monthly after one year…..
Satyam, Yes you can increase.
Dear Mr.Suresh,
Greetings!
Hope doing good and enjoy sharing good things……,
Interesting to know that NPS is one of the best option for Private / Public ltd company employees like me!
Could you please send me a RETURN (with low risk and Moderate) example from NPS for a person whose age is 35 now and want to invest in NPS to get a Reasonable Pension to satisfy his wants and needs (Now he requires Rs.10,000 per Month) after the retirement. Please consider the inflation during the year 2035 to 2050.
If anything special reference to female categories in NPS kindly notify that too.
With regards,
R.Balasubramanian.
Balasubramanian, I could not understand your question. If I understood correctly, you are asking what would be the returns on such pension amount ? As indicated, this would be around the same as PF interest rate. However computing 10K per month after 25 years of period considering inflation would be tough. There are no special preferences for females in NPS.
Hi Suresh!,
Nice article.Thanks for posting.I am Gulf based NRI planning to start investment in NPS.I have few queries pls. help me out.
*Can we invest say as single premium(once a year) if so what is the maximum
*Suppose we did pay 1-2 year or we discontinue after 5-6 years what will happen to the investment
*PPF or NPS Pls advice.
Thanks Many
Saleem
Saleem 1), You can pay Rs 6,000 minimum yearly contribution 2) It is no where written about what happens if one doe snot contribute any year, hence not able to comment
Thanks Indeed Mr.Suresh.
Some corrections (as of Jun-2013. These rules are subject to revision)
– The fund management fees have been revised. Asset managers are allowed to charge up to 0.25% of total assets. This is still low compared to other avenues of investment.
– The number of minimum contributions per year for tier-II is 1, and not 4.
– There is no monthly contribution required for tier – I. The minimum contribution is INR 6,000/ year.
– The minimum balance at the end of the year in tier-II account should be INR 2,000 (not the minimum contribution for every year)
All details can be found on the official site
https://www.npscra.nsdl.co.in/all-faq-contribution.php
Thanks Venkatesh. Tks for pointing it out Point no.1 and 2 are updated now. 3rd point, I have not specified anywhere. 4th point, I have already specified it.
Kishore says:
June 17, 2013 at 1:58 am
Hi Suresh,
Thanks for the information. I heard like we have to open NPS account through emloyer. and one morething please clarify on tax benifit.
If 80C is exahusted and investing in NPS will give us extra taxt benifit?
Kishore
Reply
Suresh says:
June 19, 2013 at 1:02 am
Kishore, You can open the NPS account through your employer also. However many employers would not agree for that as they need to contribute in your NPS scheme. You can enjoy a benefit of utp 10% of basic which is beyond 80C. If as an individual if you are investing, it would form part of 80C.
Please explain me in detail about the highlighted sentence regarding tax benefit?
Hi Abhi, While the employee contribution up to 10% of basic plus dearness allowance, or DA, is eligible for deduction under Section 80CCD within the Rs 1 lakh limit, the employer’s contribution up to 10% of basic plus DA is eligible for deduction under Section 80CCE over and above the Rs 1 lakh limit.
nice article Suresh. I am 30 and looking foward to strat invest in NPS. Thanks again for sharing this…
Very useful information about NPS
Hi Suresh,
Thanks for the information. I heard like we have to open NPS account through emloyer. and one morething please clarify on tax benifit.
If 80C is exahusted and investing in NPS will give us extra taxt benifit?
Kishore
Kishore, You can open the NPS account through your employer also. However many employers would not agree for that as they need to contribute in your NPS scheme. You can enjoy a benefit of utp 10% of basic which is beyond 80C. If as an individual if you are investing, it would form part of 80C.