National Pension Scheme or NPS, a government-run investment scheme, gives the subscriber the choice to set the favored portion to different asset classes. The subscriber can either apply for an NPS account by visiting a Point of Presence (PoP) or do it online through the e-NPS site. It was initially launched for government employees in 2004 and extended out to the general public in 2009.
NPS offers two types of accounts— Tier 1 and Tier 2 — for instruments including government bonds, equity market, and corporate debt. While the Tier 1 NPS account is carefully a pension account, the Tier 2 record — known as an investment account — is a deliberate bank account related to the Pension Regulatory Authority of India (PRAN).
Benefits of Investing in National Pension Scheme
Given below are the benefits of Investing in a National Pension Scheme:
Permits Voluntary Contributions
In NPS, a subscriber can contribute any time of time in a monetary year and furthermore change the sum he/she needs to set aside and save every year.
Subscribers can pick their own investment options and pension fund and see their money grow.
Subscribers can operate their NPS account from anyplace, regardless of whether they change the city or employment.
Regulated by PFRDA
NPS is directed by PFRDA, with transparent investment norms and ordinary checking and execution audit of asset directors by NPS Trust.
Income Tax Benefits
Investment in the Tier 1 account of NPS offers income tax benefits. Any person who is a subscriber of NPS can guarantee tax deduction up to 10 percent of gross income within the overall ceiling of Rs 1.5 lakh, under Section 80C of the Income Tax (I-T) Act.
An extra deduction for speculation up to Rs 50,000 in NPS (Tier I account) is available only to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs 1.5 lakh.
For more information, visit the website of All India ITR.