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National Pension System (NPS) is a retirement cum pension scheme. By investing in NPS, the investors get the dual benefit of tax-saving and retirement planning. We have covered the following in this article:
National Pension System (NPS) is a government offered retirement planning scheme. It is one of the many investment schemes covered under Section 80C of the Income Tax Act, 1961. By investing in NPS, investors can secure their retirement and at the same time save on taxes of up to Rs 1,50,000 a year. Both private and government employees can opt to invest in this retirement planning scheme. NPS accounts come in different forms. NPS Tier 1 accounts are the most basic form of NPS. NPS Tier 1 accounts come in different forms; NPS (State Government) NPS (Central Government), NPS (Corporate), and NPS (All Citizens). The rules applicable to these accounts vary, but some general rules apply to all.
The eligibility criteria for NPS is very similar to that of most other government offered schemes. The following are the eligibility criteria to invest in NPS:
The following are the features of NPS Tier 1 accounts:
Applicants can open NPS accounts both online and offline. To open an NPS account offline, one must do the following:
To open an NPS account online, one must do the following:
Unlike other government-backed schemes such as Public Provident Fund (PPF), the returns on NPS are not fixed. The returns on NPS varies as the individuals will have to choose their preferred fund house. Therefore, the returns vary across the fund houses. There are eight fund houses that the investors can choose from and they are: SBI Pension Fund, UTI Retirement Solutions Pension Fund, DSP Blackrock Pension Fund, ICICI Prudential Pension Fund, Reliance Capital Pension Fund, LIC Pension Fund, HDFC Pension Management Company, and Kotak Mahindra Pension Fund. If the applicant does not choose the fund house, then the SBI Pension Fund will be chosen as default.
Subscribers are allowed to make premature withdrawals on the following conditions:
NPS is an excellent retirement cum pension scheme. Investors will get the dual benefit of tax deductions and retirement planning. NPS is an excellent means to set aside a nominal sum periodically to secure one’s retired life.