NPS Account: How to open NPS account using SBI Yono app

The National Pension Scheme (NPS) is a defined contribution pension system created by the Indian government as part of pension reforms with the goal of providing social security. The NPS offers a low-cost way to save for retirement and live a financially secure retirement.

Pension Fund Regulatory and Development Authority (PFRDA) is in charge of administering and regulating NPS.

Step 1: Open the SBI YONO app on your mobile phone and Click on the ‘Investments’ section.

Step 2: Now click on ‘NPS Account Opening‘ and click the box and click on ‘I Agree’ tab

Step 3: Select Tier I or Tier I/Tier II

Step 4: Tick mark the box, stating that I do not hold any pre-existing account under NPS.

Step 5: Enter your details such as DoB, PAN details, Click on Next tab

Step 6: Take a Selfie or upload passport size photo

Step 7: Enter details which will be printed in PRAN and click on Next

Step 8: Enter all the details required in the next few pages

Step 9: Upload your Signature picture

Step 10: Confirm your bank details and make a payment

Features of NPS scheme

According to website, these are the main features of NPS scheme

  • Tier I – Pension account (Mandatory A/C – Tax benefit available)
  • Tier II – Investment account (Optional A/C – No tax benefit but corpus is withdrawable anytime) Rs. 50,000/- in a Financial Year.
  • Minimum Contribution during A/C opening is Rs.500 for Tier I
  • Minimum Contribution during A/C opening is Rs.1,000 for Tier II
  • Minimum total contribution in a year Rs.1,000 (Min. amount per contribution Rs.500) for Tier I
  • Minimum total contribution in a year N.A. (Min. amount per contribution Rs.250) for Tier II
  • A very low-cost product with Fund Management Charges of 0.01%.
  • Attractive market-linked returns
  • One-time shift to NPS- Existing corpus under Superannuation can one-time be transferred to NPS without any Tax Incidence
  • Continuation in NPS scheme post-retirement – Provision to contribute till 70 years or to defer withdrawal up to the age of 70 years.
  • Complete withdrawal for corpus less than Rs 2 lakh- In case total accumulated corpus is less than Rs 2 lakh on attaining the age of 60 or later, subscriber may withdraw entire corpus.

Tax Benefits available under NPS

a) Employee contributions to NPS Tier-I are tax deductible under section 80 CCD (1) of the Income Tax Act, up to a maximum of Rs. 1.50 lakh under section 80 C of the Income Tax Act. From FY 2015-16, in addition to the deduction provided under section 80CCD(1) for contributions to NPS Tier I accounts, the subscriber is now given a tax deduction of up to Rs. 50,000 under section 80CCD 1. (B ).

b) Under Section 80CCD (2) of the Income Tax Act, an employer’s payment to NPS Tier-I is tax deductible (14 percent of salary for central government employees and 10 percent for others). This reimbursement is in addition to the limit set under Section 80C.

c) Interim/partial withdrawals from NPS Tier-I of up to 25% of the subscriber’s contributions are tax-free.

d) Starting on 1.4.2019, lump sum withdrawals from NPS Tier-I of up to 60% of total pension asset are tax-free at the time of superannuation.

e) A minimum of 40% of the amount spent on an annuity purchased from an Annuity Service Provider licenced and regulated by the Insurance Regulatory and Development Authority (IRDA) and empanelled by PFRDA is tax deductible.

Tax Benefit available under Tier I Account

Employee Contribution: On a contribution of Rs.50,000, you can claim a tax deduction under section 80CCD (1B).

Investments (10 percent of Basic and DA) are tax deductible under section 80CCE up to a ceiling of Rs. 1.50 lacs.

Employer contribution tax deduction of up to 10% of pay (basic + DA) u/s 80CCD (2), with no monetary limit.

Source link