Salient Features of NPS

(Last updated on 25.11.2016)

Government of India scheme for providing old age pension security income to all the citizens of India in the age group of 18 to 60 years.

NPS is designed on defined contribution basis wherein the subscriber contributes to his account. There is no defined benefit that would be available at the time of exit from the system and the accumulated wealth depends on the contributions made and the income generated from investment of such wealth

All the Branches of SBT are authorized to open NPS.

Two types of Accounts
  1. Tier -I-non-withdrawable pension account – Minimum amount of contribution per year is Rs.1000/-, minimum amount per transaction is Rs.500/-.
   2. Tier -II-withdrawable savings account. There is no minimum amount stipulation.
Tax Benefit

Investments in NPS are eligible for additional income tax benefit of Rs.50,000/- under section 80CCD2. This extra deduction of Rs.50,000/- will increase the total deduction allowed under Section 80C and 80CCD of Income Tax Act to Rs.2.00 lakhs.
Tax benefits are available on both employee and employer contributions. The employee can save tax on his own contribution[u/s 80CCD(1) of IT Act] as well as the contribution made by employer[u/s 80 CCD(2)]

  1. For employees, deduction from taxable income is available upto 10% salary(Basic+DA)-u/s 80 CCD(1)of IT Act 1961, subject to max. of Rs.1.00 lakh within overall ceiling of Rs.1.50 lakh u/s 80 CCE of IT Act 1961. Additionally, if employer, is also contributing towards pension accounts of the employees, an additional deduction of 10% of salary(Basic+DA) is available to the employees  u/s 80 CCD (2)
  2. Furthermore, the employer, opting for subscribing to can claim these contributions upto 10% of(Basic salary+DA) as a Business Expense u/s 36(1) iv(a) of the IT Act.
  3. Income Tax benefit available only for Tier-I.
Nominations Three nominations can be made for NPS. However the nominations should not be in fraction and the total should add upto 100%
eNPS The online portal for registration and contribution(eNPS) has been provided under NPS. Using the facilities available in the eNPS portal, a Subscriber can register under NPS, generate a Permanent Retirement Account Number(PRAN) and contribute to his/her Permanent Retirement Account. Further, the Subscribers already registered under NPS and having active PRAN can make contributions through eNPS in their Tier I as well as Tier II NPS accounts.
Low Cost of Investment The investment cost is very low as compared to other investment products available in the market.
Flexible The subscriber has the option to choose from an assortment of asset classes(Equity, Corporate Debt & Government Securities) and can have the freedom to invest in a variety of Pension Funds. Taking into account the limited financial wherewithal of some of the subscribers to actively manage their investments PFRDA has further provided two modes of fund investment-Active Choice for them to actively manage their investments and Auto Choice-Lifecycle Fund for them to passively manage their investments.
Online Access 24 x 7 x 365: Riding on a highly efficient technological platform NPS provide online access to accounts to the subscribers.
Returns The returns are attractive and market linked. The CAGR returns, since inception.
Regulated The NPS can be operated from anywhere in the country even if one changes the job location of the job itself.
Portable The NPS can be operated from anywhere in the country even if one changes the job location of the job itself.
NPS for Corporates Corporates can join NPS with SBT for their employees