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National Pension Scheme – Eligibility, Contribution, Tax Benefit

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National Pension Scheme – Eligibility, Contribution, Tax Benefit. Everything you want to know about National Pension Scheme. Here we are providing complete details for National Pension Scheme. Find full details for National Pension Scheme like About this Scheme, Eligibility Minimum contribution, etc. After Providing Complete details for Sukanya Samridhi Yojana now we provide National Pension Scheme – Complete Guide

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Complete Guide for National Pension Scheme

National Pension Scheme

Honourable Finance minister of India Mr Arun Jaitley has recently announced a benefit of an additional tax deduction of Rs 50,000 for those investing in the National Pension Scheme under Sec 80CCD (1B) of income tax act in his Budget speech. This statement has grabbed the attention of millions of taxpayers to consider investing in the government-sponsored scheme that was opened to public investors. Even though this scheme has been in existence since six years , but had not managed to prompt the potential taxpayers in investing in this scheme.

Though the Budget did not introduce any additional feature regarding the National Pension Scheme, the additional deduction is a considerable incentive to investors.

For example : If Mr X is earning an amount of total 15,00,000 taxable income per annum. That means he is in the 30% slab.If he opts to invest in this then he can save upto 50,000*30% cess on that I.e 15,450 rupees of tax amount.

As the National Pension scheme is not that much attractive in earlier days ,it was not much popular among the above middle class salaried employees. Due to the changes that have been brought by the finance Bill by Arun jaitely it’s gaining popularity among these kind of taxpayers especially. Because no other scheme give you a chance of saving 50,000 rupees from attracting income tax. So this scheme is really appreciative in nature.

Eligibility For National Pension Scheme

It is open to anyone from 18 years to 60 years of age. Even NRI s also can open the account in this scheme.

Characteristic Features of NPS :

1.Regulations :

Investment norms are very transparent and regular monitoring and performance review of Fund Managers by the NPS Trust.

2.Feasibility to choose among the following fund managers :

Among these fund managers the investors should select at least one to manage their investment.

  • 1. UTI Retirement Solutions Limited.
  • 2. DSP Blackrock Pension Fund. Managers Private Limited.
  • 3. HDFC Pension Management Company Limited.
  • 4. ICICI Prudential Life Insurance Company Limited.
  • 5. IDFC Asset Management Asset Management Company Limited.
  • 6. Kotak Mahindra Asset Management Company Limited.
  • 7. Reliance Capital Asset Management Company Limited.
  • 8. SBI Pension Funds Limited.

3.Minimum contribution :

The minimum contribution is Rs. 6,000 per year. There is no limit on maximum contribution.But whatever amount you invest in the scheme ,only 50000 is maximum allowed to deduction under this section.

4.Choice of selecting the way of distribution of their contribution:

An investor should choose between ACTIVE – CHOICE and AUTO – CHOICE for distribution of his contribution. If they select active choice then subscriber must indicate the percentage distribution between corporate gilt and equity. However the maximum investment allowed in equity is 50%.

What income tax reliefs are available to the individuals contributing to NPS?

Tax benefit to employee:

Individuals who are employed and contributing to NPS would enjoy tax benefits on their own contributions as well as their employer’s contribution as under: –

(a) Employee’s own contribution – Eligible for tax deduction up to 10% of Salary (Basic + DA) under Section 80 CCD(1) within the overall ceiling of Rs. 1 lac under Sec 80 CCE.

(b) Employer’s contribution – The employee is eligible for tax deduction up to 10% of Salary (Basic + DA) contributed by employer under Sec 80 CCC(2) over and above the limit of Rs. 1 lac provided under Sec 80 CCE.

Tax benefit for self-employed:

Eligible for tax deduction up to 10 % of gross income under Sec 80 CCD (1) with in the overall ceiling of Rs. 1 lac under Sec 80 CCE.

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One comment

  1. Thanks. What is the interest rate?

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