National Pension System or NPS, a government-run investment scheme, provides the subscriber the option to set the preferred allocation to different asset classes.
National Pension System or NPS, a government-run investment scheme, provides the subscriber the option to set the preferred allocation to different asset classes. Two kinds of NPS accounts are available -- Tier 1 and Tier 2 -- for instruments including government bonds, equity market and corporate debt.
While Tier 1 NPS account is strictly a pension account, the Tier 2 account — known as investment account — is a voluntary saving account associated with the PRAN. The Tier II account offers greater flexibility in terms of withdrawal, as it enables the subscriber to withdraw funds any time without any restrictions.
The subscriber can either apply for an NPS account by visiting a Point of Presence (PoP), or do it online through the e-NPS website. Subscribers with Tier I account can only open the Tier II account.
To open an NPS individual account online one should have the mobile number, email id, an active bank account with internet banking facility, Aadhaar number with a mobile number registered with it, scan copy of photograph and cancelled cheque.
Here are the steps to open NPS Tier II account online, according to ClearTax:
Visit the electronic National Pension system (eNPS). Click on “Tier II activation” tab
Step 2: After clicking on Tier II activation, a window opens which asks for details like Permanent Retirement Account Number (PRAN), Date of Birth and PAN.
Step 3: Now, click on 'Verify PRAN' to receive OTP
Step 4: Enter OTP and proceed
Step 5: Fill up bank details and click on 'Validate Aadhaar'
Step 6: Click on 'continue'. An acknowledgement number will be generated along with the name and a time stamp
Step 7: Now, choose a pension fund manager and investment option auto or active choice
Step 8: Enter personal details, verify it and click on "Save & Proceed".
Step 9: Update nominee details, upload a cancelled cheque of account, photograph and specimen signature
Step 10: Finally, make the first contribution towards NPS subject to a minimum investment of Rs 1,000
Step 11: Now, esign the application using Aadhaar number
Step 12: Download the application, put signature on the downloaded form and send it to the head office of NSDL
Tax benefits for individuals
Any individual who is subscriber of NPS can claim tax deduction up to 10 percent of gross income with in the overall ceiling of Rs 1.5 lakh. An additional deduction for investment up to Rs 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B).
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
First Published: IST