National Pension Scheme
About NPS
The Government of India introduced the National Pension System, a retirement savings plan that allows you to freely invest your money on a monthly basis to accumulate retirement savings. NPS is an affordable investment option that provides a variety of tax advantages for corporations and individuals (under Sections 80CCD and 80C) as well as allowing you to invest across asset classes.
Features and Benefits of NPS
Corporate NPS
Businesses in the public and private sectors can access corporate net positive social contribution (NPS) in addition to provident funds, gratuities, superannuation, and other pension schemes.
Benefits of Corporate Subscriber Taxes:
Claim an employer contribution tax deduction over the 80C level (which is applicable to both the previous and current tax regimes) of up to Rs. 750,000 under section 80CCD(2).
For sums over the Rs. 100,000 threshold under section 80 CCE, an employer may deduct from taxable income up to 10% of salary (basic + dearness allowance) up to Rs. 750000 annually under section 80CCD (2).
Please be aware that if an employer makes contributions to an employee’s Provident Fund, NPS, and an approved Super Annuity totaling more than Seven Lakh and Fifty Thousand Rupees
Account Types and Charges
- Account Opening Charge: This varies between ₹200 and ₹400, depending on the Point of Presence (POP) you choose.
- Investment Management Fee (IMF): This is a percentage charged by the Pension Fund Manager (PFM) on your Asset Under Management (AUM). The rates are tiered, with lower fees for larger AUMs.
- Account Maintenance Charge: There’s a ₹30 charge for non-financial transactions like address changes.
- Persistency Fee: This annual fee applies to Tier-II accounts with low annual contributions (between ₹50 and ₹100) to encourage regular contributions. It’s deducted by canceling units in your account.