GST Course

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More


In the last two pieces of this series on NPS, we had understood the basics like objectives of NPS, who can invest in it as well as some of its features in part 1 and part 2 was about investment choices, subscriber base & assets under management under NPS (links given below):

  • National Pension System (NPS) - Part 1: Click Here
  • National Pension System (NPS) - Part 2: Click Here

This piece attempts to cover the following:

  1. Registered Pension Funds
  2. How can one open an NPS account?
  3. Tax Benefits under Income Tax Act
National Pension System (NPS) - Part 3

Pension funds registered under NPS

According to NPS Trust portal, at present, the following are the funds registered under NPS by PFRDA:

  1. SBI Pension Funds Pvt Ltd
  2. UTI Retirement Solutions Ltd
  3. LIC Pension Fund Ltd
  4. ICICI Prudential Pension Fund Management Company Ltd
  5. Kotak Mahindra Pension Fund Ltd
  6. HDFC Pension Management Company Ltd
  7. Aditya Birla Sun Life Pension Management Ltd

How can an NPS account be opened?

An NPS account can be opened online through eNPS platform (http://www.npstrust.org.in/content/open-your-nps-account-online).

The account can also be opened offline by submitting the registration form to the nearest authorized-bank (POP). The enrolment, in case of an employee, will be taken care by his/her employer.

Once the account is opened, a Permanent Retirement Account Number (PRAN) is generated and a login id and password are provided to the subscriber. The subscriber can thereafter login to view or manage his/her NPS account online.

 

Income Tax Benefits

The subscribers can avail a maximum deduction of Rs 2 lacs under the following sections, on contributions made towards Tier1 account:

Section (IT Act)

Deduction

80CCD(1)

Salaried Employee: Own contributions towards Tier1 account up to 10% of salary are eligible for deduction within the ceiling limit of Rs 1.5 lacs u/s 80C.

Self Employed: Contributions towards Tier1 account up to 20% of Gross Income are eligible for deduction within the ceiling limit of Rs 1.5 lacs u/s 80C.

[aggregate of 80C, 80CCC and 80CCD(1) not to exceed Rs 1.5 lacs]

80CCD(1B)

Additional voluntary-contribution towards Tier1 account up to Rs 50,000 for both salaried and self-employed subscribers is also an allowable deduction.

 

Besides, employer's contribution up to 10% of salary (14% in case of Central Government) is also an allowable deduction under section 80CCD(2). This is over and above the deductions under section 80CCD(1) and 80CCD(1B).

  • Salary includes Basic and Dearness Allowance
  • No tax benefits on contributions made towards Tier2 account.

The tax treatment of withdrawal of accumulated wealth from NPS upon exit will be explained in the next part.

Disclaimer: The objective of writing this piece is to share knowledge and create awareness. The views expressed are personal in nature and under no circumstances can this piece be construed as a legal opinion. The readers are requested to exercise caution while forming any opinion or judgment based on the views expressed in this article.

References

  • https://npscra.nsdl.co.in/index.php
  • http://www.npstrust.org.in/
  • https://www.pfrda.org.in/index.cshtml

Tags :



Category Corporate Law, Other Articles by - CMA Poornima Madhava 



Comments


update