09 February 2021
National Pension System (NPS) is available to All Citizens of India. Pension Fund Regulatory and Development Authority (PFRDA), the regulatory body for NPS, has appointed NSDL as Central Record keeping Agency (CRA) for National Pension System. CRA shall issue a Permanent Retirement Account Number (PRAN) to each subscriber and maintain data base of each Permanent Retirement account along with recording transactions relating to each PRAN.
Broad objectives of NPS: Provide old age income Reasonable market based returns over the long term Extending old age security coverage to all citizens
The benefits of NPS are: 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. It is simple - Subscriber is required to open an account with any one of the POPs (Point of Presence) or through eNPS It is flexible - Subscribers can choose their own investment options and pension fund and see their money grow. It is portable - Subscribers can operate their account from anywhere, even if they change the city and/or employment.
Tax Benefits: 1) Any individual can claim tax benefit under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE. 2) 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.
NPS offers you two approaches to invest in your account: Active choice 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.
09 February 2021
Respected Madam Thank you very much for valuable information shared by you. Further, could you please guide regarding from where should I Subscribe for NPS investment to get addtional deduction from taxable income upto Rs.50,000/= under Section 80CCD (1 B)
CAclubindia
