National Pension System
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Benefits of National Pension System (NPS)
Tax Benefits
Types of Contribution
Contribution by Individual/
Employee – Part 1
Contribution by Individual/
Employee- Part 2
Up to Rs.50,000
deductible under
section
80CCD (1B)
This benefit is over
and
above the limit of
80CCE.
Eligible for 10% of
Basic
salary under section
80CCD (1A) within
Rs.150,000 limit
under
section 80CCE.
Contribution By Employer
Opportunity to get up to
10% of basic as tax-free
salary u/s 80 CCD (2)
without any upper cap in
terms of absolute value
This benefit is over and
above the limit of 80CCE
and 80CCD (1B)
Tax Illustration
Head Particulars Without NPS With NPS
Salary Basic Salary (40% Gross) 20,00,000 20,00,000
House Rent Allowance (50% Basic) 10,00,000 10,00,000
Flexi/Professional Allowance 13,63,800 11,63,800
PF - Corporate Contribution 2,40,000 2,40,000
Gratuity - Corporate Contribution 96,200 96,200
Superannuation - Corporate Contribution 3,00,000 3,00,000
NPS - Corporate Contribution 0 2,00,000
Gross Salary 50,00,000 50,00,000
Deduction 80C 1,50,000 1,50,000
NPS - 80CCD(1B) 0 50,000
NPS- 80CCD(2) 0 2,00,000
PF - Corporate Contribution 2,40,000 2,40,000
Gratuity - Corporate Contribution 96,200 96,200
Superannuation - Corporate Contribution 1,50,000 1,50,000
Gross Deduction 6,36,200 8,86,200
Taxable Salary 43,63,800 41,13,800
Difference Taxable Salary 2,50,000
Tax Saved @30.9% 77,250
Note - Salary will be restructured & take home will be reduced to the extent of NPS contribution.
Types of Accounts
1
Employer contribution is through company payroll. Employee contribution is through self.
2
Accounts not meeting above criteria become dormant and need to be revived by paying penalty of Rs. 100 + Minimum
contribution of INR 500
Particulars Tier 1 Account Tier 2 Account
Type of Account Mandatory Voluntary
Contribution
1
Can be mix of
- employee & employer
- only employee
- only employer
Only employee
Withdrawal facility No Yes
Tax Benefits Yes No
Minimum contribution for a/c opening
1
INR 500 INR 1000
Minimum amount for subsequent contribution
2
INR 500 INR 250
Minimum contribution / account balance at the end of
year
2
INR 1000 INR 0
Minimum number of contribution
2
1 1
Frequency of contribution Unlimited Unlimited
Asset Classes & Investment
Choice
There are four Asset Classes -
Equity (Contribution is allowed to the extent of 75% only)
Corporate Bond (Contribution is allowed to the extent of 100%)
Government Bond (Contribution is allowed to the extent of 100%)
Alternative Infrastructure (Contribution is allowed to the extent of 5% only)
•
However, the total allocation across the specified asset classes must be equal to 100%
ACTIVE CHOICE : Individual Funds
•
In this type of investment choice, subscriber has the right to decide as to how his / her contribution is to
be invested, based on personal preference.
AUTO CHOICE : Life Cycle Funds
•
In this type of scheme preference, the Scheme Setup (scheme as well as allocation ratio) will be
determined by the system based upon the age of the Subscriber at the time of registration.
•
As age of the subscriber increases, the exposure to Equity and Corporate Debt tends to decrease.
Depending upon the risk appetite of subscriber
•
There are three different options available within ‘Auto Choice’ –
•
AGGRESSIVE – LC 75- Equity exposure up to 75%
•
MODERATE – LC 50- Equity exposure up to 50%
•
CONSERVATIVE – LC 25- Equity exposure up to 25%
Premature Withdrawal and Exit
EXIT-
-Can be done only after
10 years
-Only 20% can be
withdrawn
-Remaining 80% needs
to be used for
purchasing annuity
-Once Withdrawn, NPS
account will be closed.
No premature withdrawal
are available form the
employer contribution.
PREMATURE
WITHDRWARAL
•
Premature withdrawals are
allowed on completion of 3
rd
Year in NPS
•
Maximum of 25% of the total
amount invested in an individual
capacity can be withdrawn
•
Subject to conditions- Children
higher education/ marriage,
purchase /construction of house
or critical illness.
In case of Unfortunate death of
the subscriber, the nominee can
withdraw the 100% of corpus
In case of Unfortunate death of
the subscriber, the nominee can
withdraw the 100% of corpus
Allowed to withdraw only a maximum of
three times during the entire tenure of
subscription
Getting Money Out : Superannuation Age
Conditions
Conditions
for
for
Withdrawal
Withdrawal
Between 60 to 70 years
Between 60 to 70 years
Death during annuity phase
1) Can extend the investment up to age of 70
years.
2) Up to 60% of the total corpus can be withdrawn
as lump and minimum 40% has to be used for
buying annuities from an approved annuity
service provider. 40% of the total corpus which
is withdrawn will be tax free and remaining 20%
can be withdrawn in maximum 10 annual
instalments or can be used for purchasing
annuity to reduce the tax liability
3) At the age of 60 years, withdrawal up to 100% is
allowed subject to corpus is less than or equal to
Rs. 2 lakhs
Nominee / Legal heir would receive the
death proceeds as per the selected annuity
plan
Annuities
1. Annuity for life @ 9%
2.Annuity guaranteed for 5,10, 15 or 20 years and for life thereafter @ 8.5%
3. Annuity for life with return of purchase price on death @ 6.80%
4.Annuity for life increasing at a simple rate of 3% p.a. @ 7.25%
5.Annuity for life with a provision of 50% of the annuity payable to spouse of the
annuitant for life on death of the annuitant. @ 8.30%
6.Annuity for life with a provision of 100% of the annuity payable to spouse of
the annuitant for life on death of the annuitant. @ 7.75%
7.Annuity for life with a provision of 100% of the annuity payable to spouse of
the annuitant for life on death of the annuitant, with return of purchase price
on the death of the last survivor@ 6.75%
Annuity Service Provider & Pension Funds Manager
Annuity Service Providers Pension Fund Managers
Fund Performance
NPS Intermediaries
Current
Trustee Bank
is AXIS BANK
NSDL is the
Central Record
Keeping
Agency (CRA)
Pension Fund
Pension Fund
Regulatory
Regulatory
Development
Development
Authority -
Authority -
REGULATOR
REGULATOR
73
Registered
Point of
Presence
(POP)
PoP submits the
Contributions to
the Trustee Bank
Funds handed
Funds handed
over to 8
over to 8
Registered
Registered
Pension Fund
Pension Fund
Managers as per
Managers as per
the subscribers
the subscribers
choice
choice
Funds invested in the
portfolio are sent to the
custodian – Stock
Holding Corporation Of
India Limited
Invested
funds get
used to
purchase
Annuities
on 60
th
Year
PoP submits the
subscription
documents to the
CRA
Charges (Exclusive to Service Charges)
Intermediary Charge Head Service Charge Method Of Deduction
POP_HDFC
securities
Initial Subscriber Registration Rs. 200 To be collected upfront
Initial Contribution 0.25%
Min: Rs. 20 & Max: Rs, 25,000
All subsequent Contributions
Any Non- Financial Transaction Rs. 20
CRA_NSDL PRA Opening (One Time) Rs. 40 Through NAV cancellation/
deduction
PRA Maintenance (Per Annum) Rs. 95
Per Transaction (Financial / Non-
Financial)
Rs. 3.75
Custodian_SHCI Asset Servicing (Per Annum) 0.0032%
PFM Investment Management (Per
Annum)
Maximum Cap by PFRDA is
0.01% pa
NPS Trust For Managing Expenditure 0.01% of the fund value
HSL Duties as POP
PoP is the first point of interaction between Subscribers and the NPS
infrastructure.
HDFC Securities would be responsible for the following activities :
Existing and New Employee Subscriber Registration
Regular Contribution Uploading
Data validation of data in the files uploaded to CRA
Subscriber Servicing
Grievance Handling
Coordination with Trustee Bank, PFMs and other Intermediaries
Corporate Registration Documents List
•
Corporate Registration Form
•
Company Profile Sheet
•
Board Resolution
•
Supporting Letter for NPS Implementation
•
PAN, TAN, Incorporation certificate, GST certificate and Address proof of Corporate
•
MOA & AOA of Corporate
•
Bank Account Details of Corporate
Post receiving above documents by POP, Corporate Registration will be done by NSDL
CRA within 10 working days. Meanwhile, Employee Awareness Session are done to
educate employees about NPS & for enrolment of employees Help desk Activity is done
later
Corporate NPS- Joining Process for employees
Opening New NPS
Account
•
Submit New Subscriber Registration
(CSRF-1) form along with self-attested copy
of PAN card and Address Proof to Corporate
HR for authorization
•
Corporate HR authorizes the form and
submits to HDFC for PRAN generation i.e.,
NPS Account opening
•
Once PRAN is generated, Employee
receives the intimation via Email and SMS
•
Employee also gets PRAN kit from
NSDL CRA within 30 days of PRAN
generation
Mapping Existing NPS
Account to Corporate
•
Submit Inter sector shifting (ISS-1) form
along with self-attested copy of PAN card,
PRAN card and Address proof and cheque
of Rs. 23.60/- as service charge to
Corporate HR for authorization
•
Corporate HR authorizes the form and
submits to HDFC for tagging NPS account
to the company
•
Once PRAN is migrated, Employee receives
the intimation via Email from NSDL CRA
Contribution towards NPS Account
For routing NPS contribution
through Employer to avail tax
benefits u/s 80CCD (2)
•
Employees will define the contribution
amount (max upto 10% of basic salary) in the
HR payroll system or confirm through
consent letter to HR
•
HR will deduct the specified amount
from monthly salary of the employee and
send the same to HDFC along with an email in
a specified format
•
On successful contribution processing,
Employee receives Email and SMS alert
from NSDL CRA
For depositing own NPS
contribution up to Rs. 50k to avail
tax benefits u/s 80CCD (1B)
•
Employee can directly contribute by
visiting the ENPS portal
•
On successful contribution processing,
receipt is generated immediately which can
be submitted to HR for investment proof
purpose
•
Employee can also contribute through
service provider online through NEFT or by
submitting cheque along with NCIS form
DOCUMENTS Check List
DOCUMENTS
CORPORATE
SUBSCRIBER
ISS SHIFTING
Self attested Pan Card Copy
Self attested Adhaar Card
Copy
Correspondence Address
Proof
1 photo
Ẋ
1 Cancelled Cheque
Account Opening Cheque
Ẋ
Cheque amount
Ẋ
Rs. 23.60/-
Self attested PRAN Copy
Ẋ
MANDATORY
DOCUMENTS-
•
Self attested Adhaar
Card
•
Self attested Pan Card
•
Self attested
Correspondence address
proof
•
1 photo with plain
background
•
1 cancelled cheque
Points to Note
•
For Generic queries like-
•
Forms and Formats
•
Account status- Freeze/ Active etc.
•
Employee PRAN status and Monthly PRAN reporting
Dedicated Contact- Corporate Relationships- 022-30753495 corporaterelationships@hdfcsec.com
•
For Financial Queries like-
•
Contribution
•
FATCA Updation
•
Cheque status
Online Team- 022- 30753475 [email protected]
•
For Checking/ Following up for Rejections
•
NPS rejections team- 022- 67704155 npsrejection@hdfcsec.com
•
Entry Age- 18 to 65 Years
•
Maturity- 60
th
Year
•
Extension- + 10 years i.e. 70 years
