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The scheme allows subscribers to contribute regularly in a pension account during their working life.

After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement.

Earlier, the NPS scheme covered only the Central Government employees.

Now, however, the PFRDA has made it open to all Indian citizens on a voluntary basis.

NPS scheme holds immense value for anyone who works in the private sector and requires a regular pension after retirement. The scheme is portable across jobs and locations, with tax benefits under Section80C and Section 80CCD

How do I join NPS?

You should open an NPS account with entities known as Point of Presence (POP). Most banks, both private and public sector, are enrolled as POPs.

Several financial institutions also act as POPs. The authorized branches of a POP, called point of presence service providers (POP-SPs), act as the collection points.

What is a Permanent Retirement Account Number (PRAN)?

Every NPS subscriber is issued a card with 12-digit unique number called Permanent Retirement Account Number or PRAN.

What is Tier-I and Tier-II accounts?

NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary.

The big difference between the two is on withdrawal of money invested in them. You cannot withdraw the entire money from Tier-I account till your retirement.
Even on retirement, there are restrictions on withdrawal on the Tier-I account. The subscriber is free to withdraw the entire money from the Tier-II account.

Can I have more than one NPS account?

No, you cannot open multiple NPS accounts. In fact, there is no need to open a second account as NPS is portable across sectors and locations.

Who can join NPS?

Any Indian citizen between 18 and 60 years can join NPS. The only condition is that the person must comply with know your customer (KYC) norms.

Can a Non-Resident Indian (NRI) join NPS?

Yes, an NRI can join NPS. However, the account will be closed if there is a change in the citizenship status of the NRI.

What are the documents needed for opening an NPS account?

You should fill the subscriber registration form and submit it along with proof of identity, address, and date of birth.

What is the minimum contribution in NPS?

You have to contribute a minimum of Rs 6,000 in your Tier-I account in a financial year.

What will happen if I dont make the minimum contribution?

If you do not contribute the minimum amount, your account will be frozen.

You can unfreeze the account by visiting the POP and pay the minimum required amount and a penalty of Rs 100.

What are the tax benefits available for NPS?

An employees own contribution is eligible for a tax deduction --up to 10 per cent of the salary (basic plus DA) – under Section 80CCD (1) of the Income Tax Act within the overall ceiling of Rs 1.5 lakh allowed under Section 80C and Section 80CCE.

The employers contribution to NPS is exempted under Section 80CCD (2).

Moreover, individuals can claim an additional deduction of up to Rs 50,000 under Section 80CCD (1B), which is in addition to Rs 1.5 lakh permitted under Section 80C.

A self-employed person can also contribute 10 per cent of his gross income under Section 80CCD (1) in NPS.

When can I withdraw money from NPS?

NPS is a pension product. So, you are expected to stay invested until your retirement. At 60, you must use at least 40 per cent of the corpus to buy an annuity income from a PFRDA-listed insurance company.

You have the option to withdraw 40 per cent of the corpus tax-free.You can withdraw the remaining 20 per cent of the corpus (it will be taxed as per the income tax slab applicable to you) or use it to buy annuity.

What are the documents to be submitted along with withdrawal forms?

You have to submit the following documents along with the withdrawal forms:
1. PRAN card (original)
2. Attested copy of proof of identity
3. Attested copy of proof of address
4. A cancelled cheque

How is the annuity income taxed?

The annuity income will be added to your income and taxed as per the income tax slab applicable to you