How to Register Online under National Pension Scheme and Save Tax
What is the NPS?
An initiative undertaken by the Government of India, the National Pension System or the NPS seeks to provide retirement benefits to all citizens of India. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act 2013. It is a defined, voluntary contribution scheme that is market-linked and managed by professional fund managers.
How does the NPS work?
- Under NPS, an investor can open two accounts:-
- Tier I account and
- Tier II account.
- Tier I account is a non-withdrawable permanent retirement account whereas Tier II is a voluntary withdrawable account.
- Tier II account can be opened only when you have an active Tier I account.
- An investor in NPS has two choices to invest in, namely Auto choice and Active choice.
- In Auto choice, allocation amongst assets is done as per a predetermined formula based on the age of the investor.
- Under Active choice, the choice of allocation lies with the investor.
- On retirement, exit or superannuation, at least 40% of the contribution is utilised for the procurement of lifetime pension via the purchase of an annuity. The remaining funds are paid to the subscriber in a lump sum.
What are the benefits of investing under NPS?
- Regulated – NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS Trust.
- 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
- Flexibility – Subscribers can choose their own investment options (Auto choice or Active choice) thus providing the flexibility of choice.
- Low Deposit – An individual can open an account with initial contribution (minimum of Rs. 500 for Tier I and a minimum of Rs. 1000 for Tier II) at the time of registration. Subsequent minimum contributions as given below are also nominal under this scheme:-
- Tier I: Minimum amount per contribution – Rs. 500 & Minimum contribution per FY – Rs. 1,000
- Tier II: Minimum amount per contribution – Rs. 250
- Option to make partial withdrawal – The NPS fund gives individuals partial accessibility to their funds saved over the years, thus allowing them to meet financial needs before retirement during emergencies.
- Income tax deductions – Own contribution of a subscriber towards Tier I investments tax deductible within the total ceiling of Rs.1.5 lakh u/s 80C. In addition to deductions under section 80CCD (1), subscribers are allowed up to Rs.50,000 as deductions towards Tier I contributions. Contribution of an employer towards Tier I investments is eligible for deduction up to 14% for central government contributions and up to 10% for others. This deduction is over and above the deduction limit applicable u/s 80C.
How can one register under NPS?
Registration for the scheme can be done in the following steps.
Step 1 – Go to the eNPS portal available at the official website of the National Pension System https://enps.nsdl.com/eNPS/OnlineSubscriberRegistration
Step 2 – Choose your subscriber type from the available options ‘Individual Subscriber’ and ‘Corporate Subscriber’.
Step 3 – Choose your suitable residential status. The options include ‘Citizen of India’ and ‘NRI’.
Step 4 – Opt for either Tier I account type or both accounts as a choice of the former is mandatory for long-term savings.
Step 5 – Any individual can open a Pension account under NPS through eNPS using one of the following options:-
- Option 1 – Registration using Aadhaar Offline e-KYC
- You must have an Aadhaar Registered Mobile Number
- You are requested to upload Aadhaar Paperless Offline e-KYC ZIP file
- Enter the Share code of 4-characters created at UIDAI website
- Demographic details (Name, Gender, Date of Birth, Mobile no., Address and Photo) will be fetched from Aadhaar Offline e-KYC Zip after Successful authentication and other mandatory details are needed to be filled up online.
- You need to upload scanned copy of PAN card and Cancelled Cheque in *.jpeg/ *.jpg/ *.png /*.pdf (unsigned) format having file size between 4KB – 2MB
- You need to upload your scanned Signature in *.jpeg/ *.jpg/ *.png format having file size between 4KB – 5MB
- You will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking
- Subscriber will have an option to eSign or Print and Courier the registration form to CRA.
- Contributions are credited in PRANs on T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)
- Option 2 – Registration using PAN (KYC verification by Bank/Non Bank POP)
- You must have a ‘Permanent Account Number’ (PAN)
- KYC verification will be done by the Bank/Non-Bank POP selected by you during the registration process. Name and address provided during registration should match with POP records for KYC verification. If the details don’t match, the request is liable for rejection. In case of rejection of KYC by the selected POP, the applicant is requested to contact the POP
- You need to fill up all the mandatory details online
- You need to upload scanned copy of PAN card and Cancelled Cheque in *.jpeg/ *.jpg/ *.png format having file size between 4KB – 2MB
- You need to upload your scanned Photograph and Signature in *.jpeg/ *.jpg/ *.png format having file size between 4KB – 5MB
- You will be routed to a payment gateway for making the payment towards your NPS account from Internet Banking
- Subscriber will have an option to eSign or Print and Courier the registration form to CRA.
- Contributions are credited in PRANs on T+2 basis (subject to receipt of clear funds from Payment Gateway Service Provider)
- In addition, NRI subscribers should,
- Select the Bank Account Status i.e., Non-Repatriable account or Repatriable account
- Provide the NRE/NRO bank account details and upload scanned copy of passport
- Select the preferred address for communication i.e., Overseas Address or Permanent Address (communication at overseas address would entail extra charges)
Press Release by the Ministry of Finance on 17th July, 2020
The Press Information Bureau submitted the following information pertaining to the 1st quarter of 2020-21 with regards to the NPS
Subscription Summary
- The National Pension System (NPS) released its subscription numbers for the first quarter of 2020-21.
- The scheme’s subscriber base has registered a growth of 30% whereby 1.03 lakh individual subscribers from the private sector and 206 corporates were enrolled during the 1st quarter
- This resulted in a total of 10.13 lakh corporate subscribers in the age group of 18 to 65 years.
- Among the 1,02,975 subscribers registered, 43,000 have routed their subscription through their employer/ corporate while the rest have voluntarily enrolled in the scheme.
NPS in the Backdrop of COVID 19
- After the onset of COVID-19, employers have adopted or are willing to adopt deeper measures to ensure adequate support to employees in terms of their financial well-being.
- As per a recent survey of Willis Towers Watson, over 20% of employers in the private sector aim to educate employees on retirement adequacy and available savings options, while some companies are focusing on employees approaching retirement by providing independent, unbiased financial advice.
- About 30% of employers are looking to address the impact of the pandemic on employees’ financial and emotional well-being due to stress and concerns related to economic conditions and job security.
- The pandemic has brought financial planning to the forefront, creating awareness for financial security at such testing times.
- During this pandemic, a growing realisation for both corporates and individuals has emerged that retirement planning is not a mere saving or tax benefit choice.
In its initiative to educate the citizens and to spread awareness about pensions and National Pension System, PFRDA has been organising webinars in association with industry body Federation of Indian Chambers of Commerce and Industry (FICCI). All citizens of India meeting the eligibility criteria can voluntarily opt for enrolment and contribute to the NPS pension scheme towards their retirement security. The NPS has certainly provided a boost to the savings of individuals emerging as an effective option for retirement security.
