National Pension Scheme (NPS) India is a voluntary and long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) and Central Government.
Q 1. Who can join NPS?
Ans: a) 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.
Q 2. Steps to Join NPS?
Ans: a) Procure your Permanent Retirement Account Number (PRAN) application form
b) Submit PRAN application form to your nearest Point Of Presence – Service Provider (POP-SP)
c) Track your PRAN application by entering the receipt number in the following link: https://cra-nsdl.com/CRA/pranCardStatusInput.do
d) Submit your first Contribution Slip (minimum of Rs 500) at the time of applying for registration to any POP-SP. For this, you will have to submit NCIS (Instruction Slip) mentioning the details of the payment made towards your PRAN account.
Q 3. Can NRI join NPS?
Ans: a) 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.
Q 4. Can I open multiple NPS accounts?
Ans: a) 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.
Q 5. Can I open an NPS account jointly with my spouse, child, relative, etc.?
Ans: No, NPS account can be opened only in individual capacity and cannot be opened or operated jointly or for and on behalf of HUF.
Q 6. Can I appoint nominees for the NPS Tier I and Tier II Account?
Ans: a) Yes, you need to appoint a nominee at the time of opening of a NPS account in the prescribed section of the registration form. You can appoint up to three nominees in your NPS Tier I and NPS Tier II account. In such a case you are required to specify the percentage of share, which should not be in decimals that you wish to allocate to each nominee. The share percentage across all nominees should collectively aggregate to 100%.
b) If you have not made the nomination to your NPS account at the time of registration, you can do the same after the allotment of PRAN. You will have to visit your PoP and place Service Request to update nominations details.
c) You can change the nominees in your NPS Tier I account at any time after you have received your PRAN.
Q 7. Tax Benefit under Income Tax Act, 1961?
Ans: a) 80CCD(1)covers the self-contribution, which is a part of Section 80C. The maximum deduction one can claim under 80CCD(1) is 10% of the salary, but no more than the said limit. For the self-employed taxpayer, this limit is 20% of the gross income.
b) 80CCD(2)covers the employer’s NPS contribution, which will not form a part of Section 80C. This benefit is not available for self-employed taxpayers. The maximum amount eligible for deduction will be lowest of the below: a. Actual NPS contribution by employer b. 10% of Basic + DA c. Gross total income
c) You can claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit.
Therefore, taking together Section 80CCD(1) and Section 80CCD(1B), one may invest a maximum of Rs. 2 Lacs in NPS. In addition, a salaried individual can save more tax if his or her employer contributes towards the employee’s NPS account.
Q 8. What is Tier I and Tier II of NPS?
|Particulars||Tier I||Tier II|
|Eligibility||Any Indian citizen between 18 & 65 years of age||Members of Tier I|
|Lock In||Till the age of 60 years||Nil|
|Minimum number of contributions in year||1||Nil, you can choose not to make any contribution in a year|
|Minimum contribution for account opening||Rs. 500||Rs. 1000|
|Minimum amount for subsequent contribution||Rs. 500||Rs. 250|
|Minimum number of annual contributions||1||Not Mandatory (in. 1 for NRIs)|
|Minimum amount of annual contribution for NRIs||Rs. 6000||Rs. 2000|
|Tax Benefit||Contribution to NPS Tier I qualify for tax deduction under Section 80C up to Rs 1.5 lakh.
Tax deduction is available under Section 80CCD (1B) up to Rs 50,000 in addition to Section 80C benefits.
|No tax benefit|
|Taxation on withdrawal||At the time of withdrawal, the entire corpus is tax-exempt||The entire corpus can be withdrawn, which is added to income and taxed as per the tax slab one falls in|
Q 9. Exit from NPS?
Ans: 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. 2 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 10 years.
If the total corpus is less than or equal to Rs. 1 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.
Q 10. Conditions for Partial withdrawal?
Ans: a) Subscriber should be in NPS atleast for 3 years and should maintain a minimum gap of 5 years between any 2 withdrawals. This gap can be reduced only during medical emergencies.
b) Withdrawal amount will not exceed 25% of the contributions made by the Subscriber
c) Withdrawal can happen maximum of three times during the entire tenure of subscription
d) Withdrawal is allowed only against the specified reasons, for example;
i) Higher education of children
ii) Marriage of children
iii) For the purchase/construction of residential house (in specified conditions)
iv) For treatment of Critical illnesses such as Cancer, Kidney failure, Primary Pulmonary Arterial Hypertension, Multiple Sclerosis, Major organ transplant, Coronary Artery Bypass Graft, Aorta Graft Surgery, Heart Valve Surgery, Stroke, Myocardial Infarction, Coma, Total Blindness, Paralysis and Accident of serious/life threatening nature
v) For meeting expenses of skill development/re-skilling or any other self-development activities
vi) For establishing his/her own venture or any start-up
Q 11. Taxation of Annuity Purchased?
Ans: a) After Subscriber attain the age of 60, up to 40 percent of the total corpus withdrawn in lump sum is exempt from tax and remaining 60% for annuity purchase, 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.
Q 12. In what way is the NPS Portable?
Ans: The following are the portability features associated with NPS:
a) NPS account can be operated from anywhere in the country irrespective of individual employment and location/geography.
b) Subscribers can shift from one sector to another like Private to Government or vice versa or Private to Corporate and vice versa. Hence a private citizen can move to Central Government, State Government etc with the same Account. Also subscriber can shift within sector like from one POP (Point of Presence) to another POP and from one POP-SP (Point of Presence Service Provider) to another POP-SP. Likewise, an employee who leaves the employment to become a self-employed, can continue with his individual contributions. If he enters re-employment he may continue to contribute and his employer may also contribute and so on.
c) The subscriber can contribute to NPS from any of the POP/ despite not being registered with them and from anywhere in India.
Q 13. Grievance Redressal Management System?
Ans: The subscriber can raise grievance through any of the modes mentioned below:
a) Call Centre/Interactive Voice Response System (IVR)
i) The Subscriber can contact the CRA call centre at toll free telephone number 1-800-222080 and register the grievance by using T-PIN.
ii) Dedicated Call centre executives.
b) Physical forms direct to CRA
i) The Subscriber may submit the grievance in a prescribed format to the POP – SP who would forward it to CRA Central Grievance Management System (CGMS).
ii) Subscriber can directly send form to CRA.
c) Web based interface
i) The Subscriber may register the grievance at the website www.npscra.nsdl.co.in with the use of the I-pin allotted at the time of opening a Permanent Retirement Account.