What is National Pension Scheme? Eligibility, benefits, tax benefit and everything explained

New Delhi, Apr 29: Department of Posts, Ministry of Communications (DoP) has been providing the National Pension Scheme (NPS-All Citizen Model Scheme), a voluntary Pension Scheme of Government of India managed by Pension Fund Regulatory and Development Authority(PFRDA) through its designated Post Offices since 2010 through physical process system.

Department of Posts has now started providing NPS (All Citizen Model) through online from April 26. Any Citizen of India in the age group of 18-70 years of age group can avail this online facility by visiting the official website of the Department of Posts (www.indiapost.gov.in) under the menu head "National Pension System -Online Services"

The specific link is https://www.indiapost.gov.in/Financial/Pages/Content/NPS.aspx

Facilities like new registration, initial/ subsequent contribution and SIP options under NPS Online are available to the customers at minimum charges for all services. NPS service charge of the Department is amongst the lowest. The subscriber are also eligible for tax deduction in NPS as per declaration made by Ministry of Finance time to time under sec. 80CCD 1(B).

This online facility may be availed by all eligible persons for NPS without physically visiting any post office and to enjoy the hassle free experience at minimum fee structure. NPS Online facility will go a long way in promoting National Pension Scheme (All Citizen Model) and will ensure a secured and dignified life of people in the country in their old age.

What is NPS?

​National Pension System (NPS) is a voluntary retirement savings scheme laid out to allow the subscribers to make defined contribution towards planned savings thereby securing the future in the form of Pension. It is an attempt towards a sustainable solution to the problem of providing adequate retirement income to every citizen of India.

​At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empaneled life insurance company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so. PFRDA is the nodal agency for implementation and monitoring of NPS.​

Eligibility to Open Account

A citizen of India, whether resident or non-resident, subject to the following conditions:

Applicant should be between 18 - 70 years of age as on the date of submission of his/her application and should comply with KYC norms prescribed.

Benefits of NPS Account

1) Low Cost:-

NPS is considered t​o be the world's lowest cost pension scheme. Administrative charges and fund management fee are also lowest.​

2) Simple:-

All applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across india and get a Permanent Retirement Account Number(PRAN)

3) Flexible:-

Applicant can choose his/her own investment option and Pension Fund or select Auto choice to get better returns.

​4) Portable:-

Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc and also make contributio​n through eNPS. The accou​nt can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment.

Tax benefit to employee:

Individuals who are employed and contributing to NPS ​would enjoy tax benefits on their own contributions as well as their employer's contribution as under: -

​Employee's own contribution -

Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE.

​Employer's contribution -​

The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by employer under Sec 80 CCD(2) over and above the limit of Rs. 1.50 lacs provided under Sec 80 CCE.

​Tax benefit for self-employed:

Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.50 lacs under Sec 80 CCE. Subscriber is allowed deduction in addition to the deduction allowed under Sec. 80CCD(1) for additional contribution in his NPS account subject to maximum investment of Rs. 50,000/- under sec. 80CCD 1(B)

More details on: https://www.indiapost.gov.in/Financial/Pages/Content/NPS.aspx