National Pension System- A Govt of India Initiative

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National Pension System- A Govt of India Initiative
  • Additional Tax benefit of Rs 50000/- over and above 1.5 lacs u/s 80 C 
The Government of India (GOI) has rolled out the National Pension System (NPS) for all citizens of India from May 01, 2009.
National Pension System (NPS), regulated by Pension Fund Regulatory and Development Authority (PFRDA), is an important milestone in the development of a sustainable and efficient defined contribution pension system in India.
The NPS offers Two Approaches to invest in client's Account:
·         Active choice - Individual Funds {Equity (E), Corporate bonds (C) and Government Securities (G) Asset classes}
·         Auto choice - Life cycle Fund
There are 2 types of Accounts in NPS:
·         Tier-I pension account: You will contribute your savings for retirement into this non withdrawal account.
·         Tier-II savings account: This is an ad-on account, which is simply a voluntary savings facility.You are free to withdraw your savings from this account whenever you wish.
Tax Treatment
At present, the amount contributed is entitled for deduction fromgross total income up to Rs. 1.5 lac (along with other prescribed investments) as per section 80C and additional Rs.50000/- under section 80CCD (1B) (as per the provisions of the Income Tax Act, 1961 as amended from time to time).
At the time of Withdrawal:
On achieving 60years of age, client has an option to withdraw upto 60% of the corpus as lumpsum and invest remaining amount as annuity. Out of 60% withdrawable limit, 40% will be exempted from tax and balance 20% will be taxed as per prevailing income tax slab. The amount received as pension out of investment in annuity will be treated as income and will be taxed. Since employees would not be having other income (most of the cases), there will be hardly any tax or absolutely no tax on it, making NPS complete EEE.

Contribution To Tier I:
·         Minimum amount per contribution - Rs 500
·         Minimum contribution per year - Rs 6,000
·         Minimum number of contributions - One per year
Contribution To Tier II (Optional):
·         Minimum amount per contribution - Rs 250
·         Minimum contribution per year - Rs 2,000
·         Minimum number of contributions - One per year

NPS also allows client to choose from any one of the following entities to manage Pension Fund:
·         LIC Pension Fund Pvt. Ltd.
·         HDFC Pension Management Company Ltd.
·         ICICI Prudential Pension Funds Management Company Limited
·         Kotak Mahindra Pension Fund Limited
·         Reliance Capital Pension Fund Limited
·         SBI Pension Funds Private Limited
·         UTI Retirement Solutions Limited
Key Points to Remember:
1.     Subscriber must select the Fund Manager and Type of Account(Tier 1 or Tier I & II Both ) in the Application Form. In case of Tier I & II case, the subscriber has to inform the Amount to be allocated in respective Accounts.
2.     The investment allocation can be either chosen by client in the Active Choice or he/she can also select the Auto choice where the contribution will be invested in a set allocation based on the age band that client belong to. The equity allocation will continue to decrease with increase in age.
3.     In about 15 working days, client will receive Permanent Retirement Account Number (PRAN Card) in a welcome kit at his/her Address.
4.     Thereafter, regular contributions will be made through us. ECS option can also be availed by filling the ECS Form and submitting PAN CARD and Cancelled Cheque.
  1. Only multicity cheques / payable at par cheques are acceptable for contribution.
6.     At any point of time, the subscriber can switch contributions from one fund to the other or within the same fund, different allocations can be chosen. 
7.     Anybody in the age band of 18-60 years can open the NPS A/c. 

For any clarifications, you may contact Mr. Gaurav Kansal  at or  9313368533 .

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