NPS - National Pension Scheme _{Last Updated : 26 May 2020}

News About NPS

• Subscribers can now contribute up to Rs.50,000 to NPS online

  ‘'Lite’' subscribers to National Pension System (NPS) can now use the e-NPS Lite facility to make payments online which will be charged at Rs.3.75 per transaction. This will be paid to NSDL-CRA with charges for the payment gateway. Only Lite subscribers with valid and registered mobile numbers can avail this facility. Those who have not yet registered their mobile numbers to their account can request for it to be done at the Point of Presence (PoP) and then start making online payments to their account. To open an NPS Lite account, eligibilty is being a citizen of India between the ages of 18 and 60. NPS Lite, also called Swavalamban, a contribution of Rs.1,000 per year was made by the government of India for five years to each Lite-Swavalamban account that was opened in 2010-2011, 2011-2012, and 2012-2013.

  

  02 March 2020

• NPS Tax benefits under Section 80CCD (2) can still be claimed under new tax rates

  In case individuals switch to the new tax regime that has been proposed in Budget 2020, they will forego most of the tax exemptions that are allowed under Section 80C of the Income Tax Act.

  However, in case of any contributions made towards the NPS account, individuals can still claim tax benefits under Section 80CCD (2) of the Income Tax Act. According to the Finance Bill, deductions under sub-section (2) of Section 80CCD and Section 80JJAA can still be claimed. If the employer is contributing towards the NPS scheme, tax benefits of up to 10% of the basic salary and dearness allowance can be claimed under Section 80CCD (2). In the case of Central Government employees, the limit is 14% of the employee’s salary. Employees can restructure their salary and opt for the tax deduction in case the employer allows it. Under the new tax regime, seven tax slabs have been introduced. In case you opt for the new tax regime, tax benefits of up to Rs.50,000 cannot be claimed under Section 80CCD (1B) of the Income Tax Act for any contributions made towards the Tier-I account. However, a proposal has been made where the employer cannot contribute more than Rs.7.5 lakh towards the NPS, EPF, and superannuation account. The employee will be taxed in case the contributions exceed that amount.

  

  19 Feb 2020

• New NPS benefits proposed in Union Budget 2019-20

  Tax exemption on NPS withdrawal has been increased from 40% to 60%, therefore, the entire lump sum withdrawal is tax-free for all NPS subscribers. There is an amendment to Section 80CCD(2) of the I-T Act which allows tax exemption of the employer's contribution of up to 14% of the salary of the central government employees.

  As per the changes proposed in the Budget, contributions made to the Tier-II account in NPS by central government employees may become eligible for tax deductions under Section 80C if the amount is not withdrawn or left untouched for a lock-in period of 3 years.

  

  22 July 2019

• New NPS benefits proposed in Union Budget 2019-20

  Tax exemption on NPS withdrawal has been increased from 40% to 60%, therefore, the entire lump sum withdrawal is tax-free for all NPS subscribers. There is an amendment to Section 80CCD(2) of the I-T Act which allows tax exemption of the employer's contribution of up to 14% of the salary of the central government employees.
  As per the changes proposed in the Budget, contributions made to the Tier-II account in NPS by central government employees may become eligible for tax deductions under Section 80C if the amount is not withdrawn or left untouched for a lock-in period of 3 years.

  

  22 July 2019

• Overseas cardholders now eligible to subscribe to NPS

  The government of India's National Pension System (NPS) has now been extended to Overseas Citizen of India (OCI) cardholders. The scheme already included NRIs. The OCI cards are issued to overseas citizens who are of Indian origin. The card allows such citizens to visit India any time by offering a multipurpose, multiple entry and lifelong visa.

  Following the move, the Reserve Bank of India will amend article 20(R) of Foreign Exchange Management Act (FEMA). The NPS was launched on January 1, 2004. It was created with the aim to provide retirement income to all the citizens of India. In 2015, the scheme was extended to NRIs.

  The Pension Fund Regulatory and Development Authority (PFRDA) has asked RBI to amend article 20(R) at the earliest to launch the scheme for OCI cardholders.

  

  2 April 2019

• Government employees and pensioners get a 3% hike in DA

  In a decision that will benefit about 1.60 lakh pensioners and 4.50 lakh State Government employees, the State Administration Council (SAC) has sanctioned a 3% hike on Dearness Allowance (DA) on the basic pay with effect from 1 January 2019.

  The total amount that has been accumulated will be paid by cash after 1 April 2019. As per the approval, employees are now entitled 12% DA on the basic pay with effect from 1 January 2019. The impact on the finance ministry due to the increase in Dearness Allowance is Rs.600 crore.

  

  1 March 2019

• Minimum Assured Return Option can be Chosen by NPS Subscribers

  There is super great news for the existing investors or soon-to-be investors of the National Pension System or NPS. The pension fund regulator has been working to establish a scheme that will essentially give the subscribers the option to choose the fund option that gives out minimum assured returns on a regular basis. National Pension System is the Indian Government’s flagship social security programme and it has been benefitting millions of Indians for over a decade now.

  It has been learnt that the Pension Fund Regulatory and Development Authority of India has gotten in touch with actuarial firms and has invited an Expression of Interest (EoI) from them to develop and design and in turn recommend a minimum assured return scheme or MARS that can in turn be implemented under the infrastructure of the National Pension System in India. This potentially beneficial structure will include the exit load component and exit the penalty recommendation with regards to MARS. Once MARS has been implemented, it will ensure that the NPS subscribers are receiving a minimum assured return over a certain period of time. If there is a lag in the programme, the amount will then be compensated by the sponsor of the scheme.

  There are talks of implementation of a guarantee reset period that can be set according to the subscriber’s interest as well as the pension funds. The reset period can be set either annually, half-yearly, or quarterly.

  

  26 February 2019

• NPS subscribers might get to choose funds with minimum assured return

  National Pension System (NPS) subscribers might get the freedom to select the fund option coming with a minimum assured return soon. An Expression of Interest has been invited by the Pension Fund Regulatory and Development Authority (PFRDA) from top Actuarial companies to design and develop a Minimum Assured Return Scheme (MARS) for the subscribers of NPS. PFRDA have asked them to create and develop a minimum assured return scheme which can be executed under the NPS infrastructure. As a matter of fact, the NPS returns are presently connected to the performance of the underlying instruments like debt, equity or both. NPS which was started as a contributory pension scheme might get changed after the implementation of MARS and it might not give fixed returns anymore. Instead, it might give minimum return over a certain period. However, it is expected that there might be a guarantee reset period like quarterly, half yearly, annual, or any other recommended time period to balance the interest of the subscriber and the Pension Funds offering such products.

  

  19 February 2019

• Union Government Proposed New Pension Scheme for Unorganised Sector

  The Union Government led by the Prime Minister of India, Narendra Modi, has recently proposed a new pension scheme for employees working in the unorganised sector. During the Budget speech on 1 February 2019, the Finance Minister - Piyush Goyal – stated that the government intends to introduce a mega pension scheme for the unorganised sector employees who earn up to Rs.15,000 per month. Named as Pradhan Mantri Shram-Yogi Maandhan, this pension scheme will offer them an assured monthly pension of Rs.3,000 after attaining the age of 60 years. Individuals can enrol for this plan by contributing a small affordable amount on a monthly basis during the years of their employment.

  The Finance Minister further mentioned that a worker from the unorganised sector joining this pension scheme at the age of 29 years will have to contribute only Rs.100 per month till he/she is 60 years old. On the other hand, a monthly contribution of Rs.55 only will be required for an employee joining the pension scheme at 18 years of age. Apart from the employees’ contribution, the government will deposit an equal amount in the employee’s pension account each month. Approximately 10 crore labourers and workers who are working in the unorganised sector are expected to be able to benefit from the Pradhan Mantri Shram-Yogi Maandhan in the next 5 years.

  

  18 February 2019

• Rs.10,000 crore to be released by government for NPS

  As their share, the government will soon release arrears of Rs.10,000 crore for the National Pension System (NPS) for state employees according to Uttar Pradesh Chief Minister Yogi Adityanath. The chief minister further added that the government’s share towards NPS has increased from 10% to 14%.

  NPS was introduced by the government in 2004 for its employees, but in 2009 became available for all Indian citizens. On retirement, subscribers can withdraw a portion of the amount as a lump sum and the rest must be used to buy annuity that can used for income after retirement. Tier-I and Tier-II are the two types of NPS accounts available.

  

  15 February 2019

• Minimum Wages of Labours records a growth of 42% over the last 5 years

  The minimum wages of labourers from all the classes have registered an increase of 42%. This increase is the highest amount of increase ever recorded. The formalisation of the economy and the high amount of growth recorded has resulted in the improvement of employment opportunities as we can see from the EPFO membership. The increase is by around 2 crores in as many years, showing the formalisation that has happened with the economy. The New Pension Scheme has been liberalised and the recommendations of the 7th Pay Commission were also implemented. The contribution from the government to the New Pension Scheme has also been increased to 14% from the 10% that was in place previously. Gratuity payment limit has also been increased to Rs.20 lakh. This is an increase of Rs.10 lakh from the previous limit. The eligibility cover limit of ESIC has also been increased from the existing Rs.15,000 to Rs.21,000 for one month. A minimum pension of Rs.1,000 has been fixed for all labours. In case the labour meets with an unfortunate incident resulting in death, the contribution to EPFO will increase to Rs.6 lakh from the existing Rs.2.5 lakh. Payment for labours under the Asha scheme and Anganwadi scheme has increase by close to 50%.

  

  5 February 2019

• NPS subscribers and government officials to resubmit partial withdrawal forms by January 31

  Subscribers have been asked to resubmit completed partial withdrawal form and documents in physical form by the National Pension Scheme (NPS) trust. This is applicable for those who have requested for online partial withdrawal till 30 November 2018.

  Applications will be treated as withdrawn if hard copy and documents are not submitted to the nodal office by 31 January 2019. NPS subscribers will need to submit the documents and partial withdrawal form to the nearest Point of Presence (POP), while the nodal office for government sector subscribers will be the Drawing and Disbursing Office, Pay & Accounts Office, or the District Treasury Office. POP will be the nodal office for all others.

  

  9 January 2019

• Cabinet approves raising Government Contribution to NPS to 14%

  The Cabinet has recently raised the contribution of the government towards the National Pension Scheme (NPS) to 14% of the basic salary from the present rate of 10%. However, the minimum employee contribution will remain 10%.

  The Cabinet has also approved tax incentives for employees’ contribution to the extent of 10% under Section 80C of the Income Tax Act. At present, the contribution made by the government and the employee towards the NPS is 10% of the basic salary each. While the minimum contribution remains at 10% for the employees, the government contribution has been raised to 14% from 10%. The Cabinet, led by Prime Minister Narendra Modi, has also allowed the government employees to commute 60% of the fund collected at the time of retirement, up from 40% at present. Sources have also revealed that the employees will now have the option to invest in either fixed income instruments or equities. The government is yet to decide the date of notification of the new scheme. Sources are of the opinion, that the new scheme will come into effect in the next financial year.

  

  13 December 2018