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NPS (NPS) is a dynamic government-promoted retirement planning scheme started by the government in 2004 and was subsequently opened for the general public in 2009. NPS is an effective tool for Retirement Planning and gives you additional benefits of Tax Planning under section 80CCD.

A NPS subscriber contributes regularly in the scheme in his or her working life. After retirement the subscriber can withdraw a part of the corpus in lump sum while he can invest the rest in annuity to get a regular income (pension) after retirement.

What are the features of NPS scheme?

1. It is a voluntary scheme available to citizens of age group 18-65 years working across sectors.
2. The Scheme offers a lot of flexibility to the investors via Tier 2 account and in terms of minimum investment amount and selection of the fund manager.
3. You can operate your NPS account across India via various PoPs (Point of Presence).
4. NPS ensures Financial Freedom for the citizens.
5. NPS is very safe as it is a government backed fund and regulated by PFRDA.
6. It is a low cost scheme.
7. Your account's asset allocation gets automatically shifted from Equity to Debt as you grow older.

What are The Tier 1 and Tier 2 Account offered by NPS?

1. Tier-1 Account is a must while opening Tier-2 account is optional.
2. PRAN is issued for Tier-1 Account and there are few restrictions on withdrawal of entire fund from your Tier-1 Account even after retirement.
3. Subscribers are free to withdraw money from there tier 2 accounts without restrictions which is akin to a savings account.
4. Tier-1 is a rigid retirement plan while Tier-2 offers you a lot of flexibility.
5. Tier-1 and Tier-2 come under E-E-T Tax regime means the entire withdrawn amount is taxable.
6. Contributions to Tier-1 Account are eligible for tax deductions under 80C while annuity received is taxable under IT act.
7. No Section 80 C benefits are available with Tier -1 Accounts while withdrawals are taxable as per IT law.

The Swaraj Wealth Advantage!

We help our customers understand the NPS product and help them buy one for effective retirement planning. Our experts will recommend you the best plan for retirement after understanding your financial needs & checking availibility of your corpus.

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