NPS Account Benefits, Returns, Tax Exemption, National Pension Scheme Types

What is NPS account, How National Pension Scheme calculated, Check Benefits of NPS, Why it is considered as good investment for pension of post retirement, Is it worth to invest in NPS of India, How to get NPS account online and find the new customer care number to contact NPS nodal authority…

During the period of 90’s, India has brought into action some amazing schemes and among them is the India’s favourite National Pension Scheme which was favoured by the Central Government of India from the beginning.

This NPS Account initiative has been on uproar since the beginning and the reason is simply because pension scheme is the most secure form of deposits and return scheme in Indian for all the salaried employees and One of the classic calling is that employees form all sectors can create their account and be an active pension scheme holder as well.

The logic behind the National pension scheme is very simple and quite similar to Employee Provident Fund act of India, In this scheme, the government will deduct a certain percentage of money from their basic salary which will start accumulating as the years go on and once the employee retires, and they will become eligible to receive all their aggregated money from the government which by the time of retirement will be a huge sum of money.

One of the recent changes has been done that sometime back the scheme was only in the favour of central government employees, but now the scheme has lifted the restriction, So, citizens of India are all eligible to take part in this scheme.

In this article you will find all the information regarding the Indian National Pension Scheme from eligibility to registration and then up to the point of receiving the pension from the Indian Government.

Benefits of NPS & National Pension Scheme Eligibility

It is very true that Indian National Pension Scheme has been running along for a long time now and it is one of the most trusted form of income sources for lakhs of people in India, and In this way, every citizen of India can dream of getting a varied pension after their retirement and their family as well.

But there’s a catch to this scheme which is the eligibility criteria with much benefits, so you should be looking up top this all the benefits and conditions before starting your NPS account and making pension deposits.

  • Age Restriction: Any Indian citizen who is in the age window of 18 to 65 years can open their national pension scheme account via e-NPS or nodal office or online website directly.
  • Interest: The benefit of NPS is that, this does not goes similar to PPF Interest Rate but making investment in equity, So, most of the times the interest rate that the citizens get is large when compared to other schemes in India, and sometimes the interest rates have gone up to 8% to 10% for all the employees.
  • Risk: There is risk in this scheme which varies by every year, but it does not mean that your money will not reach back to you, but the risk is there can be very less interest rate on the deposited amount by the end of your tenure.
  • Tax Benefits: There is surely a good benefit when it comes to the Tax inclusion and a total of 2 lakhs tax exemption is allowed in this NPS scheme.
  • Equity Allocation: You should already know that this scheme is all about investment and you can allow the government to invest your deposited money to equity in some sector or company as well, and the maximum equity you can allow is 50% of your total investment which is to safeguard your total investment in times of risk.

National Pension Scheme Returns, Contribution and Type of Account

In this National Pension Scheme, you will find two types of account which are called as NPS Tier-I and NPS Tier-II account, and there is a major difference between the two accounts and you will be asked to select and register for your preferred type of account when opening your account on NPS.

We have created a table here which has the very information you need to open your account, and every account has a different criterion for contribution, tax exemption, withdrawals and also the status.

Item NPS Tier 1 Account NPS Tier 2 Account
Status of the account Primary and default Voluntary and upon selection
Withdrawal Limit Not permitted Permitted
Tax Exemption Up to Rupees 2 lakhs per annum Government Employees: 1.5 Lakhs Other Employees: 0
Minimum NPS Contribution Rupees 500 to 1000 per annum Rupees 250
Maximum NPS Contribution No limit No limit

Since NPS was mandatory for the Central Government Employees from the start of the scheme so they have to make at least 10% contribution from their monthly basic salary. But this does not apply to other state employee or private sector employee which is great for them.

Talking about the returns is not always even and we can consider that up on your total employment tenure completion you can get 8% to 10% returns on the investments you have made, but we advise you to do not invest everything under equity and have most under deposit for low risk.