Market-linked, defined contribution retirement scheme regulated by PFRDA. It has two types of accounts:
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Tier-I Account: Mandatory, for retirement savings, with restricted withdrawals.
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Tier-II Account: Voluntary, more flexible withdrawals, but requires an active Tier-I account.
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Key Features:
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Government, Corporate, and All Citizens Models: Available to government employees, corporate employees, and all Indian citizens aged 18-65.
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At Retirement: 40% of corpus must be used to buy an annuity, the rest paid as a lump sum.
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Partial Withdrawals: Up to 25% of contributions allowed for specific reasons, after 10 years with a 5-year gap between withdrawals.
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Minimum Contribution: 1000 per annum.
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Tax Benefits:
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Employee Contributions: Tax deduction up to Rs. 1.5 lakh (Section 80C) + Rs. 50,000 (Section 80CCD(1B)).
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Employer Contributions: Tax deduction under Section 80CCD(2) (14% for central govt., 10% for others).
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Withdrawals: 25% of contributions and 60% of corpus at retirement are tax-exempt.
NPS is a flexible, tax-efficient retirement plan, ensuring long-term financial security with portability and online access.
NPS Vatsalya allows NPS subscribers to open a Tier-I account in the name of their child, helping accumulate funds for their future needs, such as education or marriage. Contributions made to the child's account grow with market-linked returns and are eligible for tax benefits, with withdrawals accessible when the child reaches adulthood or as per NPS rules.
NPS is a flexible, tax-efficient retirement savings tool with multiple models catering to various segments of society. It promotes long-term financial planning and ensures retirement security, backed by tax incentives and easy portability.

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