Debuting in 2004, the National Pension Scheme (NPS) was initially a government-only scheme, offering a secure retirement to government servants. But in 2009, NPS opened its doors to everyone, inviting all Indians to take charge of their golden years.
The NPS is managed by both the government and the Pension Fund Regulatory and Development Authority (PFRDA). It’s a choice-based, long-term investment plan created for retirement purposes.
National Pension System – All Citizen Model
The NPS is a voluntary, long-term retirement savings scheme aimed to provide retirement income security to all citizens and cultivate a habit of saving for the future.
It is an attempt towards a sustainable solution to the problem of providing adequate retirement income to every citizen of India.
Who Can Open A NPS Account Under All Citizen Model?
A citizen of India, whether resident or non-resident, subject to the following conditions:
Applicants should be between 18 – 70 years of age as on the date of submission of their application and should comply with KYC norms prescribed.
Benefits of NPS Account
NPS is a powerful tool for building a secure financial future. It offers tax benefits, market-linked returns, and a guaranteed pension, making it a valuable retirement planning option.
The account can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment.
When subscribers reach retirement age and exit the NPS normally, they can choose to convert a portion of their accumulated pension wealth into a regular income stream by purchasing a life annuity from a PFRDA-approved life insurance company. They can also withdraw the remaining amount as a lump sum if they wish.
Tax benefit to employee:-
Employed individuals contributing to NPS get double the tax advantage! They can claim deductions for both their own contributions and those made by their employer;
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 lakhs under Sec 80 CCE.
Employer’s contribution: The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by the employer under Sec 80 CCD(2) over and above the limit of Rs. 1.50 lakhs 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) within the overall ceiling of Rs. 1.50 lakhs 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).
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