National Pension Shceme

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National Pension Scheme
(NPS)
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What is National Pension Scheme?

• The national pension scheme is launched by the
  government of India and handled by Pension Fund
  Regulatory and Development Authority (PFRDA).
• NPS is also known as long term retirement plan
  which provides old age security to the
  individual.
• The national pension scheme is available for all
  employees from the public, private and
  unorganized sectors.

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What is National Pension Scheme?

• PFRDA has made this scheme open for all Indian
  citizens so, an Indian citizen aged between 18 to
  60 years can open an NPS account.
• In this scheme, subscribers can invest a certain
  amount regularly and after retirement, they can
  withdraw a certain percentage of the corpus and
  the remaining percentage goes into the annuity.
• Subscribers will receive a monthly pension from
  the annuity after their retirement.

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What are the different accounts available in NPS?

• There are two types of tier account available for
  NPS account holders
• Tier 1
• Tier 1 account is the default retirement account.
• Subscriber can open an account by investing a
  minimum of Rs.500 (minimum investment p.a Rs.1000
  is compulsory).
• There are three withdrawals are allowed. First
  after the 3 years of account opening.
• The other two should have a 5 to 7 years gap
  between the withdrawals.
• This account is eligible for an additional tax
  deduction benefit of up to Rs. 50,000/- under
  section 80CCD (1B), over and above Rs.1,50,000/-
  u/s 80C.

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What are the different accounts available in NPS?

• Tier 2
• Tier 2 account is the Voluntary investment
  account. Subscribers can invest an additional
  amount in this account.
• Subscribers can open this account after they open
  a tier 1 account. It is not compulsory to open
  this account.
• There are no tax benefits and lock-in period
  features in this account. Subscribers can
  withdraw the entire amount from this account.
• Subscribers can open this account by investing a
  minimum of Rs.1000.

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Tax benefits under National Pension Scheme

• Tax Benefit available to Individual
• Any individual who is a Subscriber of NPS can
  claim tax benefit under Sec 80CCD (1) within the
  overall ceiling of Rs. 1.5 lac under Sec 80CCE.
• Exclusive Tax Benefit to all NPS Subscribers u/s
  80CCD (1B)
• An additional deduction for investment up to Rs.
  50,000 in NPS (Tier I account) is available
  exclusively to NPS subscribers under subsection
  80CCD (1B). This is over and above the deduction
  of Rs. 1.5 lakh available under section 80C of
  the Income Tax Act. 1961.

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Tax benefit under National Pension Scheme

• Tax Benefits under the Corporate Sector
• Corporate Subscriber
• Additional Tax Benefit is available to
  Subscribers under Corporate Sector, u/s 80CCD (2)
  of Income Tax Act. Employer's NPS contribution
  (for the benefit of employee) up to 10 of salary
  (Basic DA), is deductible from taxable income,
  without any monetary limit.
• Corporates
• Employers Contribution towards NPS up to 10 of
  salary (Basic DA) can be deducted as Business
  Expense from their Profit Loss Account.

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Benefits and Features

• Risk Analysis At present, the cap range for NPS
  is 75 to 50 on the equity aspect. For the
  government employees, the equity capsize is 50.
  Between the prescribed cap ranges, the equity
  portion will get reduced by 2.5 each year
  starting from the year the investor/ subscriber
  turns 50 years of age. For the 60 years and
  above, the fixed equity cap size is 50. Thus the
  risk-return analysis here is in the interest of
  the investors, ensuring the invested money is
  safe from the volatility in the equity market.

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Benefits and Features

• Returns A part of the national pension scheme is
  invested into equities (irrespective of the
  assured returns). Although compared to the
  traditional tax saving scheme such as PPF NPS
  offers higher returns.
• Change in scheme/ Fund Manager In case you see a
  drop in the NPS performance, you can anytime
  change the fund manager or the pension scheme.
• Voluntary Service for the Indian Citizens During
  a financial year you can contribute any time and
  also you enjoy the privilege to change the amount
  saved each year.

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Benefits and Features

• Premature withdrawal and exit Subscriber can
  withdraw 25 of the invested amount from the tier
  1 account after 3 years of account opening. These
  include childrens wedding, Studies, buying a
  house, medical treatment, etc. three times
  premature withdrawal is available.
• Transparency and flexibility Subscribers can
  open and access account online. They can make
  contributions and track their investments.
  Subscribers also have flexibility to choose the
  investment options, fund managers annuity
  options.

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THANK
YOU
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