India Post-NPS Account: How To Open, Tax Saved, Charges Levied, Other Details

Any citizen, whether resident or non-resident, between the ages of 18 years and 60 years can join the NPS or National Pension System

Your Money | | Updated: March 21, 2018 20:33 IST
India Post-NPS Account: How To Open, Tax Saved, Charges Levied, Other Details

Under NPS account, two sub-accounts - Tier I and II are provided

As the deadline of March 31 approaches for the taxpayers to make last minute investments for the purpose of claiming income tax (I-T) benefits, it is imperative to learn about the investment options. While National Pension System or NPS is an effective retirement savings scheme, it offers additional benefits relating to the income tax exemption, advise financial planners. India Post, which offers nine small savings schemes such as Post Office Savings Account and 5-Year Post Office Recurring Deposit Account (RD) and Senior Citizen Savings Scheme (SCSS), also allows you to open an NPS or National Pension System account. NPS or National Pension System is governed by the PFRDA or Pension Fund Regulatory and Development Authority.

India Post has mentioned few limits applicable to an NPS account (All Citizens Model):
Finance Cap : 
​Minimum Initial Contribution with Registration Rs. 500 (excluding taxes).
Minimum Subsequent Contribution    Rs. 500 (excluding taxes).
Maximum Contributions     No limit.
Minimum Contributions in a Financial Year    Rs.1,000 in Tier I.
Minimum transactions in a Financial YearOne.

Here are 10 other things to know about the India Post's NPS account or National Pension System account to know before the March 31, 2018 deadline:

1. Along with tax benefits (up to Rs. 2 lakh invested per year in NPS qualifies for tax exemption), better return profile and choice of funds have given an edge to NPS compared to other tax saving instruments, say analysts.

2. Any citizen, whether resident or non-resident, between the ages of 18 years and 60 years can join the NPS or National Pension System (All Citizens Model), according to India Post's website - indiapost.gov.in.

3. Under NPS account, two sub-accounts - Tier I and II are provided. While the Tier I account is mandatory, the subscriber has an option to opt for the Tier II account.

4. In order to open a tier-1 account, one has to make a minimum contribution of Rs 500. The minimum contribution at the time of opening Tier II account is Rs. 1,000.

5. Tier II is a savings account and optional. Government Servants appointed on or after 01.01.2004 can open only Tier II Account since Tier I is maintained by their DDOs.

6. In NPS, individual subscribers are issued a Permanent Retirement Account Number or PRAN card, which has a 12-digit unique identification number. In case of the card being lost or stolen, the same can be reprinted with additional charges.

7. Investment in NPS is independent of your contribution to any provident fund or any other pension fund, according to the pension regulator PFRDA.

8. Transactional charges: India Post charges a registration charge of Rs 200 (excluding taxes) for NPS. Besides the registration charges, India Post also charges contribution charges, and service charges as transactional charges.

9. The transactional charges can be paid in cash or through a cheque or demand draft, according to India Post.

10. For making contributions, 0.25 per cent of the contribution amount subject to a minimum of Rs 20 (excluding taxes) and maximum of Rs.25,000 (excluding taxes) is applicable, according to India Post.

Besides, the National Pension System Trust provides an online facility. Called eNPS, this online facility by the National Pension System Trust allows opening of individual pension accounts under NPS and making initial and subsequent contribution to Tier I and Tier II accounts.