Did you know NPS can Save More Income tax than you do…. additional Rs 50000 u/s 80C

Monthly Archives: February 2022

Did you know NPS can Save More Income tax than you do…. additional Rs 50000 u/s 80C

Did you know  ?  You can help your staff “age” with grace… give them safety of regular Pension in Private sector too.

You run a private sector company. + Your staff does not get any pension, after they retire…..

What if their kids don’t take care of them, when they get “Old age”.
How about giving them the net of pension safety ?


Did you know  ?  You  and they can Save More Income tax than you currently do ?  On the “additional Rs 50,000” u/s 80CCD(2).

Many Clients of MLG Associates and Finsys have already started this Innovative Scheme of Govt of India, and getting good tax benefits for self and other staff.

This is called NPS

One can save tax in three ways via NPS. First, NPS investments are eligible for deduction under Section 80C. ( LIC, School Fee, Housing Loan instalment etc)

If one has already exhausted the Rs 1.5 lakh ceiling under Section 80C, one can claim an additional deduction of up to Rs 50,000 under Section 80CCD(1b). Lastly, up to 10% of the basic salary put in the NPS can be claimed as deduction under Section 80CCD(2).

Even, those very close to retirement, can claim more tax benefits if their company offers the NPS benefit. Under Section 80CCD(2), up to 10% of the basic salary put in the NPS by the company on behalf of the employee is tax free.

Point to note: The entire amount withdrawn will not be tax free. Though there is no reference to this in the tax laws, one can reasonably assume that 60% of the withdrawn amount will be tax free while the balance 40% will be taxed at the normal rate.

This is actually an intelligent, simple and user friendly deferment of tax

So, instead of paying a big 30% tax now

you can deposit now, Save tax.

on the top of it, earn 5% p.a. to 20% p.a. cumulatively on that ….  based on your investment profile ( Shares vs Private Debt vs Govt Debt )

You may pay the tax (if any) when you retire

Of course , Old age income ke liye ke liye saving to karni hi Chahiye


Note : By that time the tax exemption limits might have reached Rs 20 lakh or maybe Rs 30 lakhs…. and all your NPS pension money might be tax free after all

NPS Scheme – NSDL Site


NPS Trust welcomes you to ‘eNPS’ ,which will facilitate:-

➤  Opening of Individual Pension Account under NPS (only Tier I / Tier I & Tier II) by All Indian Citizens (including NRIs) between 18 – 70 years

➤  Making initial and subsequent contribution to your Tier I as well as Tier II account

For Account opening, you need to:

✔  Have Mobile number, email ID and an active Bank account with net Banking facility enabled

✔  In case, an applicant selects to open the individual pension account with PAN, the activation of

the PRAN is subject to KYC verification by the empanelled POP (name and address should

match with POP record) selected by applicant during the registration process.

To view the list of empanelled POP, Click Here

✔  Fill up all the mandatory details online

✔  Click Here for guidelines on filling details if Applicant residence for tax purposes in jurisdiction (s)

outside India

✔  Scan and upload your photograph (optional for Aadhaar) and signature

✔  Make online payment (Minimum amount of ₹ 500)

✔  Subscriber will have an option to authenticate form through OTP Authentication or eSign process

Some Extracts from the Sites of some banks offering the same : ( MLG has no allegiance with any of them )

UBI Website link :



National Pension System (NPS)

  • This scheme has been introduced by Pension Fund Regulatory and Development Authority (PFRDA) to promote old age income security to all citizens of India including workers of the unorganized sector.
  • NPS is a voluntary, defined contributions retirement savings scheme & is administered / regulated by PFRDA. It is operated with the participation of Central Record Keeping Agency (CRA) – NSDL e-Governance Infrastructure Limited & KFin Technologies Private Limited.
  • Resident or Non- Resident Indian between age group of 18 to 70 years; salaried or self employed can join this scheme.
  • The people within age group 60-70 can also join/re-join NPS.
  • Account can be opened by Individual and Corporate.
  • Every individual subscriber will be issued a Permanent Retirement Account Number (PRAN) card having 12 digit unique numbers.
  • Under NPS account, two sub-accounts – Tier I & II are provided. Tier I account is mandatory and the subscriber has option to opt for Tier II account opening and operation. Tier II account can be opened only when Tier I account exists.
  • Account can be opened Online and Offline through authorized branches.
Apply online (New link by Kfintech)
Unique Selling Proposition (USP’s):

  • Flexible: The employer can have the option to select the investment choice for all its employees or may give the option to the employees. The employees have the option to choose from an assortment of asset classes (Equity, Corporate Debt, Government Securities and Alternate Investment Fund) and have the freedom to choose one of the registered Pension Fund.
  • Online Access– 24 X 7 X 365: Riding on a highly efficient technological platform NPS provides online access to accounts to the subscribers.
  • Regulated: The funds are managed by professional Pension Funds regulated and actively monitored by PFRDA, the Regulator set up through an Act of Parliament.
  • Portable: The NPS account (PRAN) can be operated from anywhere in the country even if one changes the job location or the job itself.
  • Tax Incentives: Tax benefits are available on both employee and employer contributions.
Salient features of these sub-accounts are mentioned below :

  • Tier-I account: A retirement and pension account which can be withdrawn only upon meeting the exit conditions prescribed under NPS. The applicant shall contribute his/her savings for retirement into this account. This is the retirement account and applicant can claim tax benefits against the contributions made subject to the Income Tax rules in force. Initial amount while opening NPS account is Rs. 500/- with Minimum Yearly Contribution is Rs. 1000/-. There is no upper limit for the maximum contribution.
  • Tier-II account: This is a voluntary investment facility. The applicants are free to withdraw his/her savings from this account whenever he/she wishes. This is not a retirement account and applicant can’t claim any tax benefits against contributions to this account. Minimum amount per contribution is Rs 250/- & no upper limit for the maximum contribution.
Funds will be invested in 4 different classes:Equity, Government Securities, Corporate Debts & Alternate Investment Fund (A). The investor has 2 Investment options for managing the fund: Auto and Active.
  • Active Choice: – Under this option, subscribers are free to allocate the investment across the asset class provided E/C/G/A. Subscriber decides allocation pattern amongst E, C, G and A as mentioned below.
Asset Class Cap on Investment
Equity (E) 75% (Upto age 50)
Corporate Bonds (C) 100%
Government Securities (G) 100%
Alternate Investment Fund (A) 5%
  • Active choice – This is the default option under NPS and wherein the management of investment of fund is done automatically based on the age profile of the subscriber.
Age (In Years) Asset Class (E) Asset Class (C) Asset Class (G)
Upto 35 50% 30% 20%
36 48% 29% 23%
37 46% 28% 26%
55 and Above 10% 10% 80%
Type of Auto Life Cycle Fund LC50/ LC25/ LC 75:

  • LC 75– It is the Life cycle fund where the Cap to Equity investments is 75% of the total asset (Aggressive)
  • LC 25– It is the Life cycle fund where the Cap to Equity investments is 25% of the total asset (Conservative)
  • LC 50– It is the Life cycle fund where the Cap to Equity investments is 50% of the total asset (Normal/ Moderate)


National Pension System (NPS) is a retirement benefit Scheme introduced by the Government of India to facilitate a regular income post retirement to all the subscribers. PFRDA (Pension Fund Regulatory and Development Authority) is the governing body for NPS.

Salient Features & Benefits

National Pension System (NPS) is based on unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber. In order to encourage savings, the Government of India has made the scheme reassuring from security point of view and has offered some attractive benefits for. NPS account holders.

An NPS Account offers the following benefits:

  • Regulated: NPS is regulated by PFRDA (Pension fund regulator under Ministry of Finance, Govt. of India.) which ensures transparent norms governing the activities. NPS Trust ensures adherence to the guidelines through regular monitoring.
  • Voluntary: It is a voluntary scheme for all citizens of India. You can invest any amount in your NPS account and at anytime.
  • Flexibility: You have the flexibility to select or change the POP (Point of Presence), investment pattern and fund manager. This ensures that you can optimize returns as per your comfort with various asset class (Equity, Corporate Bonds, Government Securities and Alternate Assets) and fund managers.
  • Economical : NPS is one of the lowest cost investment products available.
  • Portability: NPS account or PRAN will remain same irrespective of change in employment, city or state.
  • Superannuation Fund transfer: NPS account holders can transfer their Superannuation funds to their NPS account without any tax implication. (Post approval from relevant authorities)
  • Tax Benefits: NPS offers triple tax benefits which are as follows:
Tax benefits for Salaried Individual Tax Benefits for Self Employed Individual
You can claim tax exemption upto Rs. 50,000 under section 80CCD (1B). This benefit is over an above limit of Rs. 1,50,000 under section 80C. You can claim tax exemption upto Rs. 50,000 under section 80CCD (1B). This benefit is over an above limit of Rs. 1,50,000 under section 80C.
You may invest upto 10% of your basic salary + dearness allowance and claim tax exemption on the invested amount under section 80CCD(1). This tax exemption is subject to a limit of Rs. 1,50,000 under section 80C of Income Tax Act, 1961. You may invest upto 20% of your gross annual income and claim tax exemption on the invested amount under section 80CCD(1). This tax exemption is subject to a limit of Rs. 1,50,000 under section 80C of Income Tax Act, 1961.

    *Employer contribution benefit is capped upto 7.5 lakhs for NPS, PF & Superannuation


National Pension System (NPS) is a defined contribution pension system introduced by the Government of India as a part of Pension Sector reforms, with an objective to provide social security to all citizens of India. It is administered and regulated by PFRDA.


WordPress Image Lightbox