National Pension System (NPS)

Retirement planning Tax benefits

Secure your golden years with NPS & enjoy yearly tax benefits

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National Pension System was introduced by the Central Government to help the individuals have income in the form of pension to take care of their retirement needs.

The Pension Fund Regulatory and Development Authority (PFRDA) regulates and administers NPS under the PFRDA Act, 2013.
NPS is a market-linked defined contribution scheme that helps you save for your retirement. The scheme is simple, voluntary, portable and flexible. It is one of the most efficient ways of boosting your retirement income and saving tax. It allows you to plan for a financially secure retirement with systematic savings in a planned way.

With flexible investment options, professional fund management, and tax benefits, NPS serves as a powerful tool for long-term retirement planning across diverse sectors of society.

Types of Accounts in NPS:

Tier I

Commonly known as the Individual pension account and provides tax benefits.
Withdrawals are limited and governed by specific terms and conditions.
Requires a minimum annual contribution of ₹1,000.

Tier II

Optional Account requires and active Tier – I Account
Offers flexibility for additional investments.
Allows subscribers to withdraw the full balance at any time and does not provide any tax benefits.
The account is automatically deactivated if no initial contribution is made.
Funds can be transferred from Tier II to Tier I, but not the other way around.

Bandhan Bank services include:

Registration of customer under NPS
Processing subscriber contribution
Handling service requests
Managing customer grievances

Flexible: Investors can choose or change fund managers and asset allocation (equity, bonds, government securities, etc.).
Cost-effective: One of the most cost-effective investment options available.
Portable: The account (PRAN) remains the same regardless of job or location changes.
Transferable: Superannuation funds can be transferred to NPS without tax implications (subject to approvals).
Regulated: Managed by PFRDA, ensuring transparency and compliance with government norms.
Voluntary: Open to all Indian citizens, allowing contributions at any time with flexible amounts.

For Self-Employed Individuals:

Eligible for deduction under Section 123 up to 20% of Gross Total Income under Old Tax Regime, subject to the overall ceiling of ₹1,50,000 under Section 123.
Eligible for additional deduction up to ₹50,000 under Section 124(3) under Old Tax Regime, over and above the limit of ₹1,50,000 under Section 123.

For Salaried Individuals:

Deduction under Section 123 up to 10% of salary (Basic + Dearness Allowance) under Old Tax Regime, within the overall limit of ₹1,50,000 under Section 123.
Additional deduction up to ₹50,000 under Section 124(3) under Old Tax Regime over and above the above limit.

Employer contribution eligible for deduction under Section 124(1) & 124(2):

Up to 10% of salary (Basic + DA) in case of private sector employees under Old Tax Regime
Up to 14% of salary (Basic + DA) in case of Central Government or the State Government employees or employees opting for New Tax Regime

Aggregate limit of ₹7,50,000 applies for employer contributions to:

NPS
Recognised Provident Fund
Approved Superannuation Fund

Tax Benefits on Withdrawal:

Partial Withdrawal

Amount withdrawn (up to 25% of employee’s own contributions) is exempt under Section 11, subject to conditions prescribed by PFRDA.

Lump Sum Withdrawal (at retirement)

Up to 60% of accumulated corpus is exempt under Section 11 on closure or opting out of NPS at the age of 60 or superannuation.

Annuity Purchase

Amount utilised for purchase of annuity is exempt under Section 124(9)
Pension/annuity income received thereafter is taxable as income under Section 124(11)

Tax Benefit to Employers:

Employer contribution to NPS (within the limits specified under Section 124(1) & 124(2) are allowed as business deduction under Section 29.

Tax benefits are subject to the provisions of the Income-tax Act, 2025 and amendments made thereto from time to time. Customers are advised to consult their tax advisors for applicability based on their individual tax profile.

Minimum age at entry: 18 years
Maximum age at entry: 85 years
Must be an Indian Citizen (resident or non-resident) or an Overseas Citizen of India (OCI)
Investors can apply with individual savings accounts. Joint accounts are not allowed
Hindu Undivided Families and Persons of Indian Origin are not eligible for subscribing to NPS
Must fulfill Know Your Customer (KYC) requirements as per the Subscriber Registration Form (SRF).
1. For Resident Individuals: One recent photograph, PAN Card, Proof of Address
2. For NRIs & OCIs: One Recent Photograph, PAN Card, Indian Passport, Proof of Bank Account (NRE/NRO), Proof of Address - Foreign Country, Proof of Address - India

Point of Presence (POP) service provider charges

Charge structure applicable from 01.01.2026 for Common Schemes (All Citizen) including NPS Vatsalya and NPS Lite
Particulars	The charges for NPS Common Schemes (All Citizen and Corporate Model) including NPS Vatsalya and NPS Lite
One Time Onboarding charge	Onboarding charge ₹200* per new account (equivalent of ₹50 on quarterly basis will be deducted through cancellation of units by CRA/s and payable to PoP in the month subsequent to the quarter in which on-boarding is completed).
Annual charges	0.20% p.a. of the AUM to be adjusted through NAV and payable to PoP on quarterly basis, in accounts other than dormant accounts. This shall be applicable to all existing NPS accounts as well.
Notes: GST or other taxes if applicable, shall be charged additionally. Dormant account will not be charged. Dormant account is defined as such account where subsequent to a contribution in a quarter, there is no contribution for four consecutive quarters as identified at the end of each quarter. *Where subscriber onboarding is undertaken through a fully digital and non-face-to-face mode, between the Point of Presence (PoP) and the subscriber, a reduced one-time onboarding charge of ₹100 may be applicable, as may be determined by the Authority at the time of registration of PoP and thereafter.