National Pension Scheme (NPS) is a Government sponsored pension scheme, was propelled in January 2004 for government workers. It was opened to all segments in 2009. An endorser can contribute consistently in a pension account amid her/his working life, pull back a piece of the corpus in a lump sum and utilize the rest of the corpus to purchase an annuity to anchor a normal pay after retirement.
Types of pension scheme
National pension scheme are of two types:
Tier-1 Account
The first one is a basic pension account which has limitations on withdrawal. This is what you need to be acquainted with.
According to the first pension scheme you are allowed to take only the 20% of the total contribution before 60 years of age. While the remaining 80% has to be used to buy annuity for a life insurance. Annuity means a payment which is made in a serial order on a fixed interval yearly. Annuity plan has to be paid to the insurer throughout his life until the death.
Once you attain 60 years of age, you can then withdraw 60% of your contribution and the remaining 40% can be used to purchase annuity but it has to be approved by the life insurers.
Tier- 2 account
The second type of pension scheme in India is a voluntary savings where you get to withdraw as much as you want to.
NPS scheme apply online
In order to apply for the NPS account follow these simple steps:
Step 1: Visit the eNPS site and then click on registration.
Step 2: You will see the NPS form for online registration. Open the registration tab . Enter the Virtual ID number to generate an OTP. Enter it and click to continue.
Step 3: Once you click on continue you will receive an acknowledgement number. Tap on OK.
Step 4: Enter all the personal details asked for.
Step 5: For the next step enter your bank account details. Once done click on save and proceed.
Step 6: Now choose the portfolio where you would like to invest your funds. Equity fund, alternative investment fund, government securities fund, and corporate bond fund. Choose and allocate your nominee details.
Step 7: Upload a cancellation cheque of your account, a passport size photo and also a specimen of your signature.
Step 8: Once you are done with all the above steps you will have to make a contribution towards your national pension scheme by investing a minimum of Rs. 500.
These steps will create your NPS login and you will receive the PRAN number which is the permanent retirement account number along with the payment confirmation receipt and this is how you open NPS account online.
If you are already contributing to your NPS account and now want to check the NPS account balance then hereтАЩs what you need to do.
- Login to the eNPS website
- Enter login ID followed by the password.
- Now click on Transaction Statement to check the accumulated balance in your NPS account.
- You can also click on transaction statement to see the detailed transaction including your contribution.
NPS Tax benefits
There are many benefits of new pension scheme.
If you have subscribed to NPS then you can claim up to 10% of tax deduction of your gross income under Section 80 CCD. With this an addition of up to Rs. 50,000 is available for Tier 1 account, this is over and above the Rs. 1.5 lakhs tax deduction which is available under the Section 80C.
Tax benefits under the Corporate Sector
If you are working in a corporate sector then you will get additional tax benefits for your NPS account. Under the EmployerтАЩs NPS contribution scheme you will receive up to 10% of salary (Basic+DA), this will be deductible from the taxable income.
National Pension Scheme Returns
NPS pension calculator can be used by everyone who is eligible to invest in the NPS schemes. In order to use the calculator to check the complete national pension scheme details, it will require a few details:
Your present age and also the age when you want to get retired
The amount that you will be investing in monthly pension scheme.
The amount of return that you are expecting.
Your annuity period
The amount of money you have invested
Lastly, the rate of interest you are expecting on your annuity investment.
Once you give all the above mentioned details you will see corpus that you will receive at the time of retirement.
How to deposit money in NPS account online?
If you want to know how does NPS scheme work and how you will deposit money to it online then follow these steps:
For those who already have a PRAN number
- Visit the ENPS site
- Enter your PRAN number along with the date of birth
- You will then receive an OTP on your registered mobile number, enter it and then you can easily start contributing to your tier 1 or tier 2 accounts.
You can use your debit or credit card and even internet banking facility to make the contribution towards the NPS account.
The Budget 2017┬а came up with a great respite for those who have invested in National Pension scheme (NPS) or planning to invest in it.This is so because ┬аnow partial NPS withdrawals will be tax free. Before this partial withdrawals were taxable. Keep visiting the website for more updates.
