National Pension Scheme 2024, Eligibility Criteria, Benefits (NPS) National Pension Scheme has been started through the Government of India, whose main objective is to provide retirement facilities to all the citizens of India. The main objective of NPS is to inculcate the habit of saving for retirement among the citizens. Today in this post we will provide you information about the main objectives of NPS, parts of NPS accounts, interest rates and benefits. Before that, we will tell you in detail about the National Pension Scheme.
The scheme is market-linked and managed by professional fund managers. Through NPS, individual savings are accumulated into pension funds which are invested in a portfolio comprising government bonds, bills, corporate debentures and shares through PFRDA-regulated professional fund managers. The contributions made by individual subscribers to the National Pension Scheme through the system are accumulated till retirement, and the corpus continues to grow through market-linked returns. Subscribers also have the option to exit the scheme before retirement or choose superannuation. However, the scheme ensures that a portion of the savings is used to provide retirement benefits to the subscriber. Thus, on retirement, exit and superannuation, a minimum of 40% of the contribution is used to purchase a lifetime pension by purchasing an annuity.
Objectives of National Pension System 2024
- Generating adequate wealth for one’s retirement phase is an important aspect to take into account during financial planning.
- It not only allows individuals to meet their expenditure needs but also allows them to live their post-retirement life with minimum hassles.
- To address this concern of the growing senior citizen demography in the country, the Government of India introduced schemes like the National Pension System or NPS.
- This scheme allows systematic savings during one’s working years, thus inculcating financial discipline in individuals to save for the future.
National Pension Scheme Features 2024
- Tier I – Pension Account (Mandatory Account – Tax benefits available).
- Tier II – Investment Account (Optional Account – No tax benefits, but corpus can be withdrawn anytime).
- Minimum contribution at the time of account opening for Tier I is Rs.500.
- Minimum contribution at the time of account opening for Tier II is Rs.1,000.
- Minimum total contribution in a year for Tier I is Rs.1,000 (minimum amount per contribution is Rs.500).
- Minimum total contribution in a year for Tier II is N.A. (minimum amount per contribution is Rs.250).
- A very low cost product with fund management free of charge of 0.03-0.09%.
- Attractive market linked returns.
- Flexibility in investment.
- Portable across jobs and geographies.
- 24 x 7 x 365 accessible through web and mobile apps of Central Recordkeeping Agency (CRA).
- One time switch to NPS – Existing corpus through superannuation can be switched to NPS in one go without any tax incidence.
National Pension Scheme Eligibility Criteria 2024
- The age limit for National Pension Scheme should be between 18 and 70 years.
- To avail the benefits of National Pension Scheme, it is mandatory to be an Indian citizen.
- KYC norms must be complied with.
National Pension Scheme Benefits 2024
Employee Tax Benefits For Self-Contribution-
- Tax deduction up to 10% of salary (basic + DA) under section 80CCD(1) subject to a maximum of Rs 1.5 lakh under section 80CCE.
- Tax deduction up to Rs 50,000 under section 80CCD(1B) plus total limit of Rs 1.5 lakh under section 80CCE.
Employee Tax Benefits On Employer Contributions-
Employer’s contribution to an employee’s NPS is eligible for tax deduction at the rate of 10% of the salary, i.e. basic salary and DA, or 14% of the salary if such contribution is made through Central Government under Section 80CCD(2), over and above the limit of Rs 1.5 lakh provided through Section 80CCE.
Self-Employed People Tax Benefits 2024
- Tax deduction of 20% of gross income under section 80CCD(1), subject to an overall limit of Rs 1.5 lakh under section 80CCE.
- Tax deduction of up to Rs 50,000 under section 80CCD(1B), subject to an overall limit of Rs 1.5 lakh under section 80CCE.
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