National Pension Scheme : Introduction
- The Government of India (GOI) rolled out the NPS scheme for all citizens of India from May 1, 2009, and corporate sector from December 2011.
- The person (employee/citizen) who joins the NPS scheme is a “subscriber”. Under the NPS, each subscriber opens an account with the Central Recordkeeping Agency (CRA), which is identified through a unique Permanent Retirement Account Number (PRAN).
- Under the scheme, two types of NPS accounts are available to subscribers- Tier I & Tier II. The Tier I NPS account is meant for subscribers to contribute their savings for retirement into a non-withdrawable account. These savings can include an employer’s contribution to NPS, in case of the corporate sector
- The Tier II NPS account is a voluntary savings account from which subscribers are free to withdraw their savings whenever they wish. The facility of Tier II account was made available from December 1, 2009, to all citizens of India including government employees and corporate sector subscribers who are not mandatorily covered under the NPS. An active Tier I account is a pre-requisite for opening a Tier II NPS account.
- The National Pension System, commonly referred to as NPS, is a voluntary, contribution retirement savings scheme and that has been designed to enable systematic savings during the subscriber’s working life.
- Bank of Baroda is registered with PFRDA (Pension Fund Regulatory and Development Authority) as POP (Point of Presence) for NPS under All Citizen Scheme and as an aggregator for the purpose of processing NPS Accounts (Tier-I and Tier-II) as well as acceptance of contributions.
- Those who wish to register under the NPS scheme can visit our branch with identity proof, address proof and age proof and fill the required form. All branches of Bank of Baroda can facilitate the NPS account opening
National Pension Scheme : Benefits
Opening an NPS account offers several advantages to subscribers. Some of the benefits of the NPS account are mentioned below:
- NPS is voluntary – NPS scheme is open to every Indian citizen. As an NPS account subscriber, you can choose the amount of contribution to the NPS scheme every year.
- NPS is simple – NPS account opening is an easy process. You only need to open an account with our bank and get a PRAN for the NPS scheme.
- NPS is flexible – As a pension system, the NPS lets you choose your own NPS investment option and fund scheme. This NPS account feature helps you grow your money as per your financial goals.
- NPS is portable – You can operate your NPS account from anywhere in the country, even if you change your city, job or pension fund manager.
- NPS is regulated – The NPS scheme is regulated by the development authority PFRDA, with transparent investment norms, regular monitoring and a performance review of fund managers by the NPS Trust.
NPS Scheme Tax Benefits for Individuals
Any individual who is a subscriber of the NPS can claim a tax deduction up to 10% of the gross income under Section 80CCD (1) within the overall ceiling of Rs.1.5 lakh, under section 80CCE.
NPS Scheme Tax Benefits for Corporate Subscribers
An additional NPS tax benefit is available to subscribers from the corporate sector under section 80CCD (2) of Income Tax Act. The employer’s NPS contribution (towards the employee) up to 10% of salary (Basic + DA), without any monetary limit, is deductible from the taxable income.
Exclusive NPS Tax Benefits for subscribers u/s 80CCD(1B)
An additional deduction for the NPS investment up to Rs.50,000 (Tier I account) is exclusively available for the NPS scheme under subsection 80CCD (1B). This is over and above the deduction of Rs.1.5 lakhs available under section 80C of the Income Tax Act,1961.
National Pension Scheme
- Any Indian citizen, whether resident or non-resident/Overseas Citizen of India (OCI), can apply for an NPS account opening. However, those who apply to the NPS scheme must be between 18 to 70 years of age as on the submission date of his/her application to the bank’s branch.
- The maximum age up to which an NPS account can be continued is up to 75 years.
- Citizens can join the NPS scheme either as employee-employer group(s) (corporates) or individuals, subject to submission of all the required information and know your customer (KYC) documentation.