NPS or National Pension Scheme is a government-backed pension plan. The purpose of this scheme is to secure the future of investors by investing a small amount every month and receive a maturity amount and fixed monthly payments after maturity. Fund management and asset allocation are important parts of NPS.
How to Open an NPS Account with Aadhaar Online
There are two ways of opening an NPS account with an Aadhaar card. The first is completely online while the other is partially offline. Customers can visit the PFRDA website and follow these steps to open the NPS account online:
- Click on the ‘Registration’ and select 'register with Aadhaar' Option.
- Enter the Aadhaar Number and click on "Generate OTP" option.
- The OTP will be sent to your registered mobile number.
- Enter the OTP along with your personal details, nomination details, and bank details.
- Once the application is successfully submitted, your Permanente Retirement Allotment Number (PRAN) will be allotted.
- Your photograph will be the same as in the 'Photograph and Signature' tab.
- Click on the 'e-signature' option. Once again the OTP will be generated and sent to your mobile number.
- Enter the OTP to verify your signature and make payment.
Steps to Open an NPS Account with Aadhaar
The process for opening an NPS account was perhaps a bit complicated in the past. Applicants had to request for and then send a duly filled NPS form to the office of the Pension Fund Regulatory and Development Authority (PFRDA). But after the introduction of eNPS, the process has become far easier.
- The NPS form can be downloaded and submitted through PFRDA’s portal of Central Recordkeeping Agency (CRA)
- Applicants providing Aadhaar number and then authenticating it with e-Signature do not need to submit a hard copy
- A circular regarding this facility was issued on 15th December 2016
- E-signatures are verified by a One-Time Password (OTP) sent on the Aadhaar registered mobile numbers of applicants
- This process saves a lot of time, money, effort, and certainly paperwork on both sides
- Applicants can take help from a Point of Presence (POP) for any assistance in filling the online NPS form
- Almost every bank integrated with NPS acts as a POP and is required to help people regarding the form filling and other related enquiries
- All POPs are allowed to charge a minimal fee for providing the E-signature service.
- The charges cannot exceed a maximum of ₹ 5 + GST
Salient features of NPS
- 40% of the corpus in NPS does not attract any taxes at maturity whereas the remaining 60% is taxable.
- At least 40% of the corpus must be utilised for purchasing an annuity.
- The amount utilised for purchasing annuity is exempted from tax.
- Any amount withdrawn as a lump sum is taxable on withdrawal.
- If you choose to withdraw 40% and purchase an annuity with the remaining 60%, your corpus will be tax-free.
- The pension earned from annuity is taxable as per the slab of the account holder.
- The total tax exemption in NPS was Rs. 1.5 lakh per year which has been raised to Rs. 2 lakh per year under Section 80CCD (1b).
- In terms of tax-savings, NPS is considered as the second-best option after Equity Linked Savings Schemes (ELSS).