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Tax Benefits under NPS: The last date of this financial year is about 10 days away. You can claim deduction only on investments made till March 31. If you have not yet invested for tax-saving, you can do so till March 31. Moneycontrol is telling you about National Pension System (NPS). By investing in this, you can manage your post-retirement expenses along with tax savings. Experts say that NPS should be in one's investment portfolio. If you have invested up to Rs 1.5 lakh under Section 80C, you can still avail a deduction of additional Rs 50,000 by investing in NPS. This deduction is available under section 80CCD(1B).
Know these things before investing
It is important for you to know some important things about NPS. First, like other tax-saving investments, it also has a lock-in period. You will be able to use the money deposited in NPS only when you turn 60 years of age. However, some withdrawals are allowed after three years of account opening. After turning 60, you will be able to withdraw 60 percent of the money deposited in NPS in lump sum. No tax will have to be paid on this money. You will have to use the remaining 40 percent money to buy annuity. With this, you will continue to get regular income in the form of pension every month.
You can open NPS account online. A person between 18 to 70 years of age can invest in NPS. To open an online account, you have to visit the website of NPS Trust. There you have to select one of the three portals of the Central Record-Keeping Agency (CRA). You can also open an online account through DigiLocker.
MoneyControl walks you through each step of opening an online account:
You can open Tier-1 (Retirement) account through Protege (formerly NSDL) CRA portal. If you want, you can also open Tier-2 or investment account. But, it is not mandatory.
1. Keep all the necessary documents ready
After visiting the Proteus portal, you will have to register yourself to open an eNPS account. (https://enps.nsdl.com/eNPS/NationalPensionSystem.html > National Pension System > Registration).
Now you have to click on 'Register Now' under the Individual Subscribers tab. You can open a Primary Tier 1 account. it's mandatory. You can also open an Investment Tier 2 account. This is not mandatory. You need to keep your PAN, Aadhaar number and a copy of the canceled check ready. Apart from this, you will have to keep your mobile number, email ID, bank account with net banking facility, scanned photograph ready.
2. Generate Acknowledgment Number
Along with PAN, you will also have to enter your other personal information like mobile number, email ID and date of birth. You will have to provide the same mobile number which will be linked to Aadhaar. OTP will come on this number. With its help you will have to confirm your personal information. After this you will have to upload the soft copy of your signature. Before generating the acknowledgment number, please double check all the details. The acknowledgment number will come to you via SMS or email. After this the website will tell you how to complete all the remaining steps.
3. Choose your pension fund manager
There are a total of 11 pension fund managers to manage your retirement investments. You have to select from these. You can invest in NPS funds as per your choice. NPS funds include Scheme E (Equity), Scheme G (Government Securities), Scheme C (Corporate Debt) and Scheme A (Alternative Assets). You have the flexibility to select a total of three fund managers for different asset classes. Maximum investment of 75 percent in equity is allowed.
4. Enroll correctly
You have to appoint a nominee. If there is more than one nominee, you can decide the ratio of their share in the money. In the event of your demise, they will get the money in the same proportion. Before proceeding for payment, you need to upload the scanned copy of PAN, copy of canceled check and signature.
5. Make your first contribution and generate ePRAN
Initially you have to contribute at least Rs 500 to the Tier 1 account. If you want to get your ePRAN card and welcome kit through digital mode then you will have to pay a charge of Rs 18. You will have to spend a little more money if you order it through physical mode.