National Pension System: The National Pension System launched by the Central Government provides retirement benefits. Apart from giving a substantial amount to the investor after retirement, it also gives monthly money. However, in this you will have to invest a few years in advance, on which you will be given interest. It is a long term investment option.
NPS scheme does not allow pension shortage in old age. However, there are some charges, which you should be aware of. Let us know what are the charges you will have to pay for NPS service.
On registering for the first time, you will have to pay a charge of Rs 200 to Rs 400. 0.50% of the contribution for initial contribution and final contribution, subject to a minimum of Rs. 30 and max. Rs. 25,000 with 0.20% contribution for e-NPS continuous contribution, minimum Rs.15 and maximum Rs.10000 is applicable for all NPS accounts. Persistence fee of Rs 30 is charged for all non-financial transactions
For annual contribution between Rs 1000 to Rs 2999, a continuation fee of Rs 50 is charged every year and the mode of deduction will be cancellation of units. Rs 75 will be charged for amount between Rs 3000 to Rs 6000 and Rs 100 for more than Rs 6000. The processing fee for withdrawal and exit will be 0.125% of the fund or a minimum of Rs 125 and a maximum of Rs 500.
What are the types of NPS accounts
There are two types of accounts in NPS, Tier I and Tier II. Tier I is an Individual Pension Account, which is a default pension account and offers tax free benefits. While Tier II is an optional investment account, you must have a Tier 1 account before investing in it. There is no Tier 2 pension plan. You can invest as much money as you want in this.
Tax Rules under NPS
NPS contribution is exempt under section 80CCD deduction. Whereas, a deduction of Rs 50,000 can be made under 80CCD 1(b). This deduction can be made under NPS Tier 1 account.
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