NPS, National Pension System

 

About NPS

1. What is National Pension System?

National Pension System (NPS) is a pension cum investment scheme launched by Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.

2. What are different sectors in NPS?

NPS can be broadly classified into two categories and it is further customised for different sectors as mentioned below:

a.   Government Sector:

I.        Central Government: The Central Government had introduced the National Pension System (NPS) with effect from January 1, 2004 (except for armed forces). All the employees of Central Autonomous Bodies who have joined on or after the above mentioned date are also mandatorily covered under Government sector of NPS.Central Government/CABs employee contributes towards pension from monthly salary along with matching contribution from the employer.                   Employer's NPS contribution (for the benefit of employee) up to 14% of salary (Basic + DA).           Employee's NPS contribution up to 10% of salary (Basic + DA).

II.        State Government: Subsequent to Central Government, various State Governments adopted this architecture and implemented NPS with effect from different dates. A State Autonomous Body (SAB) can also adopt NPS if the concerned State Government/UT have adopted the NPS architecture and initiated implementation of the same. State Government/SABs employees also contribute towards pension from monthly salary along with matching contribution from the employer.

b.   Private Sector (Non-Government Sector):

I.        Corporates: NPS Corporate Sector Model is the customized version of NPS to suit various organizations and their employees to adopt NPS as an organized entity within purview of their employer-employee relationship.

II.        All Citizens of India: Any individual not being covered by any of the above sectors has been allowed to join NPS architecture under the All Citizens of India sector from May 01, 2009.

3. Why should I open NPS Account?

Opening NPS account has its own advantages as compared to other pension product available. Below are few features which make NPS different from others:

a.   Low cost product

b.   Tax breaks for Individuals, Employees and Employers

c.   Attractive market linked returns

d.   Easily portable

e.   Professionally managed by experienced Pension Funds

f.     Regulated by PFRDA, a regulator set up through an act of Parliament

4. Who can join NPS?

Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years (as on the date of submission of NPS application) can join NPS.

5. Can an NRI join NPS?

Yes, an NRI can open an NPS account. Contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time.However, OCI (Overseas Citizens of India) and PIO (Person of Indian Origin) card holders and HUFs are not eligible for opening of NPS account.

6. Can I open multiple NPS accounts?

No, opening multiple NPS accounts for an individual is not allowed under NPS. However an Individual can have one account in NPS and another account in Atal Pension Yojna.

7. Can I open an NPS account jointly with my spouse, child, relative, etc.?

No, NPS account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF

8. How NPS works?

Upon successful enrolment, a Permanent Retirement Account Number (PRAN) is allotted to the subscriber under NPS. Once the PRAN is generated, an email alert as well as a SMS alert is sent to the registered email ID and mobile number of the subscriber by NSDL-CRA (Central Record Keeping Agency).Subscriber contributes periodically and regularly towards NPS during the working life to create the corpus for retirement. On retirement or exit from the scheme, the Corpus is made available to the Subscriber with the mandate that some portion of the Corpus must be invested in to Annuity to provide a monthly pension post retirement or exit from the scheme.

NPS Withdrawal

1. How "Exit" is defined under NPS?

An exit is defined as closure of individual pension account of the subscriber under National Pension System.

2. When can a Subscriber exit from NPS?

As per PFRDA (Exits & Withdrawals under NPS) Regulations 2015, in following conditions Subscriber can exit from NPS:

a.   Upon Superannuation - When a subscriber reaches the age of Superannuation/attaining 60 years of age, he or she will have to use at least 40% of accumulated pension corpus to purchase an annuity that would provide a regular monthly pension. The remaining funds can be withdrawn as lump sum. If the total accumulated pension corpus is less than or equal to Rs. 5 lakh, Subscriber can opt for 100% lumpsum withdrawal.

b.   Pre-mature Exit - In case of pre-mature exit (exit before attaining the age of superannuation/attaining 60 years of age) from NPS, at least 80% of the accumulated pension corpus of the Subscriber has to be utilized for purchase of an Annuity that would provide a regular monthly pension. The remaining funds can be withdrawn as lump sum. However, you can exit from NPS only after completion of 5 years. If the total corpus is less than or equal to Rs. 2.5 lakh, Subscriber can opt for 100% lumpsum withdrawal.

c.   Upon Death of Subscriber - The entire accumulated pension corpus (100%) would be paid to the nominee/legal heir of the subscriber.

3. What options for exit from NPS are available for Subscriber at the time of Superannuation/at the age of 60?

Subscriber can decide to remain invested in NPS (Up to 75 years) or can exit from NPS. Following options are available to NPS Subscribers:

I.        Continuation of NPS account: Subscriber can continue to contribute to NPS account beyond the age of 60 years/superannuation (Up to 75 years). This contribution beyond 60 is also eligible for exclusive tax benefits under NPS.

II.        Deferment (Annuity as well as Lump sum amount): Subscriber can defer Withdrawal and stay invested in NPS up to 75 years of age. Subscriber can defer only lump sum Withdrawal, defer only Annuity or defer both lump sum as well as Annuity.

III.        Start your Pension: If Subscriber does not wish to continue/defer NPS account, he/she can exit from NPS. He/she can initiate exit request online and asper NPS exit guidelines start receiving pension.

4. Where shall I find the withdrawal forms? What are the different types of Withdrawal Forms?

You can find the withdrawal form of respective sector from "Form" section available on this website. Based on the different types of Withdrawal request, following forms are made available:

I.        Superannuation

II.        Premature

III.        Death

5. What is an Exit Claim ID and what is its relevance?

For any superannuating subscriber/subscriber attaining 60 years of age, CRA generates a Claim ID six months prior to the date of superannuation or 60 years of age. CRA intimates the generation of Claim ID to the subscriber vides e-mails, letters, SMS.

In case of Superannuation, CRA generates a Claim ID six months prior to the date of superannuation or 60 years of age. Claim ID is intimated to the subscriber vides e-mails, letters, SMS. Intimation of claim ID enable Subscriber six months before to make any changes (like DOB, address etc.) in his/her NPS account before initiating withdrawal request. Withdrawal request cannot be raised without generation of Claim ID.

In case of Pre-mature Exit, the Subscriber needs to contact the POP for generation of Claim ID for Withdrawal of NPS funds. Generation of Claim ID is not required if Withdrawal request is initiated by POP.

Generation of Claim ID is not required to process death online Withdrawal request. POP can directly raise the Withdrawal request for death cases.

6. How can I initiate the Withdrawal request in CRA system?

Subscriber can initiate Online Withdrawal request through their NPS account log-in. Such request needs to be verified and authorized by the associated POP. In case Subscriber is not able to initiate online Withdrawal request, he or she needs to submit the physical Withdrawal form along with the required documents to the POP. Based on Subscriber's request, POP will initiate the online Withdrawal request on behalf of the Subscriber.

For details of steps to be followed, you may go through the "Self running Demo" of "withdrawal process for Non-Government Subscriber" available in "Knowledge Centre" section under "Subscriber Corner" on this website.

7. What are the documents required in case of Superannuation & Pre-mature Exit?

Following documents are required to be submitted alongwith the duly filled Withdrawal form for Superannuation & Pre-mature Exit:

I.        Original PRAN card

II.        Advanced stamped receipt, to be duly filled and cross-signed on the Revenue stamp by the Subscriber.

III.        KYC documents (address and photo-id proof)

IV.        ‘Cancelled Cheque’ (having Subscriber’s Name, Bank Account Number and IFS Code) or ‘Bank Certificate’ on Bank Letterhead having Subscriber’s name, Bank Account Number and IFS Code required to be submitted as bank proof. ‘Copy of Bank Passbook’ can be accepted, however, it should have Subscriber’s photograph, Name and IFS Code on it and should be self-attested by the Subscriber.

V.        "Request Cum Undertaking" form if eligible for complete Withdrawal.

After submitting required documents, POP will authorize the Withdrawal request.

8. Can I claim 100% Withdrawal in case of Superannuation and Pre-mature Exit?

Yes, a subscriber can claim withdrawal in following cases: In case of Superannuation- A Subscriber can claim 100% Withdrawal if the total accumulated corpus is less than or equal to Rs. 5 lakh at the time of Superannuation/attaining age of 60 years.

In case of Pre-mature Exit- If total accumulated corpus is less thanor equal to Rs. 2.5 lakh, the Subscriber can avail the option of complete Withdrawal. However, you can exit from NPS only after completion of 5 years.

9. Can I withdraw some amount during my tenure in NPS and still continue to subscriber to my NPS Account?

Yes, NPS Subscriber can withdraw certain amount out of his own contribution. It is considered as partial withdrawal under NPS, for Conditions of partial Withdrawal, please refer question no. 10.

10. What are the conditions for Partial Withdrawal?

Following are the conditions of Conditional Withdrawal:

I.        Subscriber should be in NPS at least for 3 years

II.        Withdrawal amount will not exceed 25% of the contributions made by the Subscriber

III.        Withdrawal can happen maximum of three times during the entire tenure of subscription. GAP 5 years

IV.        Withdrawal is allowed only against the specified reasons, for example;

§   Higher education of children

§   Marriage of children

§   For the purchase/construction of residential house (in specified conditions)

§   For treatment of Critical illnesses. GAP 5 years not manadatory.

11. How can the Partial Withdrawal be processed?

Partial withdrawal request can be initiated online by Subscriber. Alternatively, Subscriber can submit physical partial withdrawal form (601-PW) along with documents to POP, based on which POP can initiate online request.. However, POP is required to ‘Authorize’ the Withdrawal request in CRA system.

12. How does the Subscriber/Claimant receive the Withdrawal proceeds?

The Withdrawal proceeds are credited in Subscriber/Claimant bank account (as per the bank details provided at the time of initiating online Withdrawal request) through electronic mode only.

13. How Subscriber can check the status of Withdrawal request?

Subscriber can check Withdrawal status as per below mentioned option:

1.   Subscriber can check through the ‘Limited Access View’ (Pre Login) functionality which is available at home page of CRA website (www.cra-nsdl.com).

2.   Subscriber can also check the status under the menu ‘Exit Withdrawal Request’>>'Withdrawal Request Status View’ through their NPS account log-in.

14. What is Annuity?

In the context of NPS, Annuity refers to the monthly sum received by the Subscriber from the Annuity Service Provider (ASP). A percentage of the pension wealth as decided by the Subscribers (minimum 40% & 80% in case of Superannuation & Pre-mature Exit respectively) is utilized for purchase of Annuity from the empanelled Annuity Service Providers.

15. Who are the Annuity Service Providers?

Annuity Service Providers (ASPs) are responsible for providing a regular monthly pension to the Subscriber after exit from the NPS. These ASPs are basically Insurance Regulatory and Development Authority (IRDA) regulated Insurance companies which are empanelled by PFRDA to provide Annuity services to the NPS Subscribers. For more details about ASPs, please visit "Annuity Service Provider" section on this website (link given at home page under "Important Links").

16. In case of pre-mature exit, when shall the pension starts?

In case of pre-mature exit, pension starts immediately, if Subscriber fulfils the Age and Corpus criteria for purchasing Annuity (depending upon choice of ASP and Annuity scheme of the respective Annuity Service Provider).

17. What are Annuity Schemes available under NPS?

Following schemes are available with ASPs under NPS:

1.   Annuity for life– On death of the annuitant, payment of Annuity ceases.

2.   Annuity for life with return of purchase price on death– On death of the annuitant, payment of Annuity ceases and the purchase price is returned to the nominee

3.   Annuity payable for life with 100% Annuity payable to spouse on death of annuitant– On death of the annuitant, Annuity is paid to the spouse during life time. If the spouse predeceases the annuitant, payment of Annuity will cease after the death of the annuitant.

4.   Annuity payable for life with 100% Annuity payable to spouse on death of annuitant with return on purchase of Annuity– On death of the annuitant, Annuity is paid to the spouse during life time and purchase price is returned to the nominee after the death of the spouse.

28. From where shall I get the tentative pension amount offered by ASPs.

The pension amount can be calculated based on indicative annuity rates (subject to change from time to time) provided by ASPs. However, the actual annuity amount will depend on the prevailing rates at the time of purchase of annuity. You may visit "Annuity Service Provider (ASP)" page on our website to get the tentative pension amount. Alternatively, you may also visit the respective ASP's website to the tentative pension amount.

19. Can Subscriber change Annuity Service Provider or Annuity type after buying the Annuity?

Once an Annuity is purchased, the option of cancellation or reinvestment with another Annuity Service Provider or in other Annuity scheme shall not be allowed unless the same is within the time limit specified (free look period as provided in terms of the Annuity contract or specifically provided by the IRDA) by the Annuity Service Provider.

20. Can a Subscriber withdraw lump sum amount in phased manner?

Facility of phased Withdrawal is available for NPS Subscribers. Subscriber can opt for withdrawal of lump-sum amount in a phased manner (up to 10 instalments) over the period from 60 years (or any other retirement age as prescribed by the employer) to 75 years. However, Subscriber has to buy Annuity prior to Phased Withdrawal.

21. Can a Subscriber exercise deferment option after opting for continuation of NPS account?

No, Subscriber can't exercise the option of deferment (lump-sum and Annuity) after obtaining the continuation option.

22. Can Subscriber continue tier-II account, in case of continuation of Tier-1 account?

Yes, Subscriber can continue Tier-2 account till the time Tier-1 account is active.

23. What will happen to my Tier II contribution, in case closure of Tier I account?

Your Tier II account will also close once you request for closure of Tier I account. Units under Tier II account will be redeemed and amount will be transferred to your given bank account.

24. What are the Tax implications for withdrawal executed from Tier-1 account?

For queries related to tax benefits under NPS, please refer questions on "Tax Benefit under NPS" of this FAQs section.

Features & Benefits of NPS

1. What are the benefits of NPS?

The benefits of NPS are

a.   It is voluntary - A Subscriber can contribute at any point of time in a Financial Year and also change the amount he wants to set aside and save every year.

b.   It is simple - Subscriber is required to open an account with any one of the POPs (Point of Presence) or through eNPS (https://enps.nsdl.com/eNPS/).

c.   It is flexible - Subscribers can choose their own investment options and pension fund and see their money grow.

d.   It is portable - Subscribers can operate their account from anywhere, even if they change the city and/or employment.

e.   It is regulated - NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.

2. Who will invest my money in NPS?

Pension Funds are responsible for investing contributions, accumulating them and managing pension corpus through various schemes under National Pension System in accordance with the provisions of the PFRDA Act.

3. What are the investment choices available in NPS?

NPS offers you two approaches to invest in your account:

a.   Active choice

b.   Auto choice

In Active choice, Subscriber selects the allocation percentage in assets classes,however, in Auto choice, funds are automatically allocated amongst asset classes in a pre-defined matrix, based on the age of the subscriber. After selection of pension fund manager, Subscriber also has to exercise the choice of investment.

4. What is Active / Auto choice in NPS?

Active choice: Unlike traditional investment products, NPS offers you with the flexibility to design your own portfolio. Depending on your risk appetite, you can design your portfolio by allocating Funds amongst available four asset classes. This is called Active Choice. Following are the four asset classes are available under Active choice:

a.   Equity or E

b.   Corporate Debt or C

c.   Government Securities or G

d.   Alternative Investment Funds or AIF

Auto Choice: At times designing your portfolio can be a little delicate and time consuming. NPS gives you the flexibility to opt for a dynamic and automatic allocation of your portfolio in case you do not want to exercise an Active choice. This option is called the Auto choice.

In Auto choice, your money will be invested in asset classes - E, C and G - in defined proportions based on your age. As individual’s age increases, exposure to Equity and Corporate Debt is gradually reduced and that in Government Securities is increased. Depending upon the risk appetite of subscriber, there are three different options available within Auto Choice-Aggressive, Moderate and Conservative.

a.   Aggressive (LC-75) – Maximum Equity exposure is 75% up to the age of 35

b.   Moderate (LC-50) - Maximum Equity exposure is 50% up to the age of 35

c.   Conservative (LC - 25) – Maximum Equity exposure is 25% up to the age of 35

5. Where (in which asset classes) my money will get invested in NPS?

Following are the assets classes are available for investment under NPS:

a.   Equity or E- A 'high return-high risk' fund that invests predominantly in equity market instruments

b.   Corporate Debt or C - A 'medium return-medium risk' fund that invests predominantly in fixed income bearing instruments

c.   Government Securities or G - A 'low return-low risk' fund that invests purely in Government Securities

d.   Alternative Investment Funds or A –In this asset class, investments are being made in instruments like CMBS, MBS, REITS, AIFs, Invlts etc.

If you are a conservative investor, you can choose to invest your entire pension wealth in C or G asset class. However, if you want to have exposure to equity, you can allocate maximum 50% of your money to asset class 'E' or up to 5% in Alternative Investment Funds.

6. What is meant by Scheme preference change?

Scheme preference change is the option given to the Non-Government subscriber to design / redesign their own portfolio. It comprises change of Pension Fund Manager (PFMs), switching between Active choice and Auto choice and in case of Active choice to decide percentage of allocation in different asset classes.

A subscriber of Non-Government sector can change their Scheme Preference through their associated POP-SP. It can also be done online through their log-in credentials of CRA.

In NPS, there are multiple PFMs, Investment Options (Auto or Active) and four Asset Classes – Equity, Debt, Government Securities and Alternate Investment Funds. Subscriber has been given the flexibility to choose any one out of available Pension Fund Managers (PFMs) and investment options separately for Tier I and Tier II account.

7. How do I select the PFM?

Selection of Pension Fund Manager is mandatory while filling up the registration form. All the PFMs under NPS are registered and regulated by PFRDA. They are mandated to invest Subscriber's contribution as per prescribed guidelines and regulations by PFRDA.

You can find the performance of respective PFMs on NPS Trust website at http://www.npstrust.org.in/return-of-nps-scheme. Returns of different schemes under NPS may help you while selecting the PFM. In NPS, you are allowed to change PFM once in a financial year.

8. What is Tier II account?

NPS provides you two types of accounts: Tier I and Tier II. Tier I is mandatory retirement account, whereas Tier II is a voluntary saving Account associated with your PRAN. Tier II offers greater flexibility in terms of withdrawal, unlike Tier I account, you can withdraw from your Tier II account at any point of time.

9. What are the benefits of Tier II account?

Below are few significant benefits of Tier II NPS Account:

a.   No additional annual maintenance Charge

b.   Saving for your day to day need (withdrawal at any point of time)

c.   Transfer fund to pension account ( Tier I) any time

d.   No minimum balance required

e.   No levy of exit load

f.     Separate Nomination facility available

g.   Option to select different Investment pattern from Tier I

10. Who can open a Tier II Account?

Subscriber who has an active Tier I account can activate a Tier II account

a.   It is open for any resident Indian, NRI can’t activate Tier II account.

b.   It can also be opened along with Tier I account.

c.   All Government Subscribers who are mandatorily covered under NPS and have active Tier I account, can activate Tier II account.

11. How are the returns calculated in Tier I and Tier II account? Is there an assured return / div / bonus?

The contribution remitted in Subscriber's account is passed on to the PFMs as selected by the Subscriber at the time of registration (or changed subsequently). The PFMs invest the money and declare Net Asset Value (NAV) at the end of each business day. Accordingly, based on the NAV, units are credited in the Subscriber's account. The present value of the investment is arrived at by multiplying the units held with the NAV.

The return under NPS is market driven. Hence, there is no guaranteed/defined amount of return. The returns generated through investments are accumulated for the pension corpus and is not distributed by way of dividend or bonus.

12. What is Net Asset Value (NAV)?

Net Asset Value is also known as NAV. This is the price of one unit of a fund. NAV is calculated at the end of every working day. It is calculated by adding up the value of all the securities and cash in the fund's portfolio (its assets), subtracting the fund's liabilities, and dividing that number by the number of units that the fund has issued.

The NAV increases (or decreases) when the value of the fund's holdings increase (or decrease). NAV of schemes of different PFMs may differ. Even the different schemes under the same PFM will have different NAV.

13. Do I need to re-open NPS account when I change my Job or location?

No, there is no need to re-open NPS account when you change your Job or location. Portability is one of the key features of NPS, it can be operated from anywhere in the country irrespective of individual employment and location/geography.This implies that you can shift your PRAN from one sector to another, e.g. Central Government to Corporate sector, State Government to Central Government etc. and vice versa.Further, if you are relocated because of any reason, you can also change POP-SP within the same POP or you can change to POP of your choice available to the location.

Contribution

1. How can a Subscriber contribute to NPS?

To contribute in Tier I and Tier II account, the Subscriber needs to deposit the contribution amount along with duly filled NCIS (NPS Contribution Instruction Slip) to any POP-SP or alternatively can visit eNPS website to make contribution in NPS. Following are the three ways to contribute in NPS:

a.   Fill contribution slip and submit it to any POP-SP To find the nearest POP-SP, you may visit "Find your nearest POP-SP"under "Important Links" section available on Home page of this website.

b.   Visit eNPS website (https://enps.nsdl.com) Submit your PRAN & DOB to get OTP on your Mobile to contribute online by Net banking / Debit Card / Credit Card.

c.   Download NPS Mobile App and contribute anytime and anywhere on the go For Android and IOS users

2. What is the minimum contribution criteria under NPS?

A Subscriber is required to make initial contribution (minimum of Rs. 500 for Tier I and a minimum of Rs. 1000 for Tier II) at the time of registration. Subsequently, a Subscriber can make contribution subject to the following conditions:

Tier I:

a.   Minimum amount per contribution - Rs. 500

b.   Minimum contribution per Financial Year - Rs. 1,000

c.   Minimum number of contributions in a Financial Year – one

Over and above the mandated limit of a minimum of one contribution in Tier I, a Subscriber may decide on the frequency of the contributions across the year as per his / her convenience.

Tier II:

a.   Minimum amount per contribution - Rs. 250

b.   No minimum balance required

3. When will the units be credited to my NPS account?

Units will be credited to the subscriber’s account on the day contribution is invested by the PFM (Pension Fund Manager). It takes T+2 days to get unit credited in subscriber account, wherein T being the date of fund receipt at Trustee bank. This activity is called settlement in CRA system wherein, contribution is transferred from POP to PFM for investment in predefined scheme of subscriber and accordingly, the PFM declares NAV of the day and Units are allotted to the subscriber.

We can understand this with an example as follow: POP who as an interface for the subscriber in NPS, collects NPS contribution from subscriber and uploads the contribution details in the CRA system and at the same time deposits the contribution to Trustee Bank (Bank designated for collection of NPS contribution from NPS intermediaries such as POP). The Trustee Bank, on receipt of contribution, uploads the contribution receipt details on CRA system. On receipt of these two information (contribution details from POP and contribution receipt information from Trustee Bank), the settlement process is initiated in the CRA system.

4. Can a Subscriber make contributions in his / her NPS account before receipt of the PRAN Card?

Yes. To contribute in NPS, only Permanent Retirement Account Number is required. Once PRAN is allotted to a Subscriber, contribution can be made irrespective of whether PRAN card is received or not.

Tax Benefits under NPS

1. What are the tax benefits under NPS?

Tax Benefit available to Individual: Any individual who is Subscriber of NPS can claim tax benefit under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE.

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 Income Tax Act. 1961.

Tax Benefits under the Corporate Sector:

a.   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 14% of salary (Basic + DA), is deductible from taxable income, without any monetary limit.

b.   Corporates Employer’s Contribution towards NPS up to 14% of salary (Basic + DA) can be deducted as ‘Business Expense’ from their Profit & Loss Account.

How to make the Investment to avail the Tax Benefit: If you are an existing Subscriber, you can approach any POP-SP or alternatively you can visit eNPS website (https://enps.nsdl.com) for making additional contribution in your Tier I account. Please note: Tax benefits are applicable for investments in Tier I account only.

2. What will be the investment proof to avail the tax benefit under NPS?

The Subscriber can submit the Transaction Statement as an investment proof. Alternatively, Subscriber from "All Citizens of India" can also download the receipt of voluntary contribution made in Tier I account for the required financial year from NPS account log-in. It can be downloaded from the sub menu "Statement of Voluntary Contribution under National Pension System (NPS)" available under main menu "View" in NPS account log-in.

3. What are other tax benefits under NPS apart from available u/s 80CCD?

Apart from tax benefits available under 80CCD, below are the other tax benefits available under NPS:

a.   Tax benefits on partial withdrawal: Subscriber can partially withdraw from NPS tier I account before the age of 60 for specified purposes. According to Budget 2017, amount withdrawn up to 25 per cent of Subscriber contribution is exempt from tax.

b.   Tax benefit on Annuity purchase: Amount invested in purchase of Annuity, is fully exempt from tax. However, annuity income that you receive in the subsequent years will be subject to income tax.

c.   Tax benefit on lump sum withdrawal: After Subscriber attain the age of 60, up to 40 percent of the total corpus withdrawn in lump sum is exempt from tax. For example: If total corpus at the age of 60 is 10 lakhs, then 40% of the total corpus ie 4 lakhs, you can withdraw without paying any tax. So, if you use 40% of NPS corpus for lump sum withdrawal and remaining 60% for annuity purchase at the time of retirement, you do not pay any tax at that time. Only the annuity income that you receive in the subsequent years will be subject to income tax.

4. What are the tax benefits on investments under Tier II account?

There is no tax benefit on investment towards Tier II NPS Account.

Who is Ombudsman under NPS?

Ombudsman is a person appointed by Pension Fund Regulatory and Development Authority (PFRDA). PFRDA may appoint one or more Ombudsmen for different territorial jurisdiction.

What is the role of Ombudsman?

Ombudsman’s important role is to receive, consider and facilitate resolution of complaints or grievances which fall within the ambit of PFRDA (Redressal of Subscriber Grievance) Regulations, 2015 (hereinafter referred as ‘the regulations’).