What is National Pension System – NPS

The National Pension System (NPS) is a voluntary defined contribution pension system administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), created by an Act of the Parliament of India. The NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2004. While the scheme was initially designed for government employees only, it was opened up for all citizens of India in 2009. NPS is an attempt by the government to create a pensioned society in India. In its overall structure NPS is closer to 401(k) plans of the United States.

Unlike traditional financial products where all the functions (sales, operations, service, fund management, depository) are done by one company, NPS follows an unbundled architecture where each step of the value chain has been made disjointed from the other. This unbundling not only allows the customer to mix and match his providers of service through the value chain, picking the best-suited option, but it also curbs the incidence of misselling.

NPS architecture consists of the NPS Trust, which is entrusted with safeguarding subscribers’ interests, Central Recordkeeping Agencies (CRAs) which maintains the data and records, Point of Presence (POP) as collection, distribution and servicing arms, pension fund managers (PFM) for managing the investments of subscribers, a custodian to take care of the assets purchased by the fund managers, and a trustee bank to manage the banking operations. At age 60 the customer can choose to purchase pension Annuity Service Providers (ASP). NPS investors can’t opt for two pension fund managers, neither can switch to another pension fund before a year. The number of pension fund managers (PFM) has increased to 8 in NPS:

  • SBI Pension Funds
  • LIC Pension Fund
  • UTI Retirement Solutions
  • HDFC Pension Fund
  • ICICI Prudential Pension Fund
  • Kotak Pension Fund
  • Reliance capital Pension Fund

SBI Pension Funds is the largest pension fund manager (PFM) in India and its current assets under management(AUM) level is Rs 61,000 crore. At Present, Central government employees have no say in the matter of choice of fund manager or investment allocation in NPS, as both are decided by the government. All the NPS contributions of Central government employees are being distributed evenly across three public sector fund managers :LIC Pension Fund, SBI Pension Fund and UTI Retirement Solutions.

The current CRAs are the National Security Depository Limited (NCRA) and Karvy Computer Shares Pvt Ltd (KCRA). All the major commercial banks, brokers and Stock Holding Corporation Ltd perform the role of PoP. The subscriber can choose any one of them. There are seven fund managers and eight annuity service providers for subscribers to choose from. The subscriber can choose to invest either, wholly or in combination, in four types of investment schemes offered by the pension fund managers. These are:

  • Scheme E (equity) which allows up to 75% equity participation, this is invested in stocks.
  • Scheme C (corporate debt) which invests only in high-quality corporate bonds.
  • Scheme G (government/Gilt bonds) which invests only in government bonds.
  • Scheme A (Alternative Investment)which allows up to 5% (Newly added asset class only for private sector subscriber with active choice)

Alternatively, the subscriber can opt for the default scheme, whereas per the time left to retirement his portfolio is rebalanced each year for the proportion of equity, corporate bonds, and government bonds.

NPS offers two types of accounts to its subscribers:

  • Tier I :The primary account, which is a pension account which has restrictions on withdrawals and utilization of accumulated corpus. All the tax breaks that NPS offers are applicable only to Tier I accounts.
  • Tier II: In order to introduce some liquidity to the scheme, the PFRDA allows for a Tier II account where subscribers with pre-existing Tier I accounts can deposit and withdrawn monies as and when they want. NPS Tier II is an investment account, similar to a mutual fund in characteristics.

The contribution to voluntary savings account (also called Tier-II account) can only be made by the subscriber and not by any third party.

PFRDA has introduced new features to NPS in 2016, including more choices to lifecycle funds:

  • Aggressive Life Cycle Fund (LC-75) which allows subscribers equity exposure of up to 75% till 35 years of age. This is more suitable to a 20s investor.
  • Conservative lifecycle fund with a 25% starting equity exposure, may be suited to older investors.
  • Automatically Lifecycle Fund.

The regulator add a new asset class Alternative Investment Funds (AIF) to the existing menu of equities, government securities and corporate bonds, available on NPS.

Who can join NPS?

A citizen of India, whether resident or non-resident can join NPS, subject to the following conditions:

  • The subscriber should be between 18 and 60 years old as of the date of submission of his/her application to the Point of Presence (POP) / Point of Presence–Service Provider-Authorized branches of POP for NPS (POP-SP).
  • The subscribers should comply with the Know Your Customer (KYC) norms as detailed in the subscriber registration form.
  • Un-discharged insolvent and individuals of unsound mind ucannot join NPS.


Premature withdrawal in NPS before age of 60 years required parking 80% of the sum in an annuity. One can withdraw 20 per cent of the corpus before 60 years but he/she must buy annuity with 80 per cent of the corpus. In 2016, the NPS allowed withdrawal of up to 25% of contributions for specified reasons, if the scheme is atleast 10 years old with certain conditions. You can withdraw the complete amount if the pension collected is less than INR 2,00,000.

Stay tuned for new updates regarding NPS and follow us. Thanks.


How to reduce tax to zero if you have income within 10 lakhs

No one likes paying taxes. Even though the Government has allowed various exemptions and made provisions for tax-saving investments, parting with your hard-earned money on taxes always pinches your pockets. Is there a way to reduce tax liability?

Actually, there is! There are various tax exempt investments which reduce your taxable income and consequently, your tax liability. In fact, if your income is within Rs.10 lakhs, the various tax-saving investment avenues can reduce your tax to zero! We assume that your CTC is Rs 9.5 lakhs per annum. Let us find out how you can reduce your tax to zero.
Investments under Section 80C

Section 80C is a savior in reducing taxes as it allows the maximum number of instruments to avail a total tax exemption of Rs.1.5 lakhs in a year. Some popular investments which qualify for Section 80C exemption are as follows:

Premiums, which you pay for a health insurance policy also qualify for tax exemption under Section 80D. The limit on exemption for premiums paid towards self and family is Rs.25,000, which increases to Rs.30, 000 if you are a senior citizen. Moreover, if you also pay premiums for a health insurance policy for your dependent parents, you can claim an additional exemption of Rs.25, 000 which increases to Rs.30, 000 if your parents are senior citizens. Thus, you can claim a total exemption of Rs.60, 000 if you and your parents are senior citizens and you pay premiums for two separate policies for yourself and your parents.
NPS investment under Section 80CCD (1B)

The Government has allowed an additional tax exemption if one invests in the National Pension Scheme of the Government. Exemption up to Rs.50, 000 can be claimed for NPS investment which is over and above the Rs.1.5 lakh exemption allowed under Section 80C.

Exemptions for interest paid on home loan

If you have availed of a home loan for buying a residential property, the interest paid on the home loan is allowed as exemption under Section 24. The home should be used as a residential property for you and your family and the construction should be completed within 3 years. The maximum amount of exemption is Rs.2 lakhs. Moreover, if you have bought the house property for the first time, you can claim an additional exemption of Rs.50, 000 on the home loan interest paid under Section 80EE. Thus, you can avail a maximum of Rs.2.5 lakhs of deduction for interest paid on a home loan.

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Now, considering all these exemptions, let us see the tax liability on income of Rs.9.5 lakhs:

As against the liability of Rs.1.15,000, your tax liability reduces to Rs.19,000 through various exemptions. If you want to further reduce your tax liability to zero, you can make donations to various charitable institutions which qualify for tax exemption under Section 80G and reduce your tax liability to zero. So, if you donate Rs.1.4 lakhs, your taxable income becomes Rs.3 lakhs and the tax liability becomes Rs.2500. You can claim a tax rebate of Rs.2500 on incomes up to Rs.3 lakhs thus bringing your tax liability to zero.

So, if you have an income within Rs.10 lakhs, there are ways to reduce your tax liability to zero.

How to apply for PAN Card online

PAN is a 10 digit alpha numeric number, unique to a specific person, allotted by the Income Tax Department on an application made by the person. 1 person has only 1 PAN Card number, and if a person holds more than Permanent Account Number, it is illegal and attracts a fine upto Rs 10,000.

PAN stands for Permanent Account Number. India has a population of millions and in this population we identify a person by his/her name however the entire country may have thousands of people called Nisha, Aakash, etc and at times its possible that 2 or more women named Nisha share the same surname eg. Nisha Sharma. So in order to avoid confusions and facilitate the process of tracking the transactions done by a particular person, the concept of PAN was introduced.

How to apply for a New PAN Card Online?
PAN card application can be made by filling out Form 49B and can be made online as well as manually in any of the TIN-Facilitation Centres. Also it has to be made in accordance with Rule 114 of Income Tax Rules. The online application can be made on this website https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html by filling the required information in the form provided.

Once you fill out all the details and submit the form, a statement of acknowledgement with a 15 digit acknowledgement number would be generated which would state that your application has been accepted. You need to save and take a print out of this statement of acknowledgement.

Once you have a printed copy of the acknowledgment, you need to do the following –
i. Affix 2 recent passport size photographs on the form. Do not staple it or try to affix it in any way other than sticking it. Further, self attest your photograph i.e. cross sign the photo on the left side in such a way that half of your sign is on the form and other half on the photo.
ii. Sign the form
iii. In case the applicant is an authorized signatory he will be required to sign the form as well as put the seal and stamp.
iv. Read the detailed instructions on the application form.

Once this is done, this statement of acknowledgement accompanied with the supporting documents and Demand Draft, if any, has to either reach NSDL (within 15days from the date of online application) at the address mentioned below:

‘Income Tax PAN Services Unit, NSDL e-Governance Infrastructure Limited, 5th Floor, Mantri Sterling, Plot No. 341, Survey No. 997/8, Model Colony, Near Deep Bungalow Chowk, Pune 411016.’

You also need to write “Application for PAN” along with your acknowledgement number eg. ‘Application for PAN- 098425696782676’ on the envelope in which you’re sending the acknowledgement.

The PAN Card fees for applicants residing in India is ₹105 plus bank charges and can be paid via DD/ Cheque (drawn in f/o “NSDLPAN” and deposited in any branch of HDFC Bank)/ Credit or Debit card/ net banking and fees for applicants residing outside India is ₹971 payable only through a Demand Draft (in f/o “NSDL-PAN” payable at Mumbai.)

Supporting Documents –
i. 1 Identity proof
ii. 1 Address proof

To see the status of the application, the applicant can log onto the NSDL website or click on this link https://tin.tin.nsdl.com/tan/StatusTrack.html, after 3 days of making the application and by entering his acknowledgment number, or date of birth, he would see the status of his application.

The status can also be checked via SMS you just have to type – “NSDLPAN- your 15 digit Acknowledgement number” and send it on 57575.

If you have to modify or correct any information filled in the form you can make an application to correct the error by filling in the necessary details on the correction form given along with fees. Procedure and fees for correction form is same as the fees and procedure for new form.pan-card-big-size-300x190

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The #IndianNavy (IN; IAST: Bhāratīya Nau Senā) is the naval branch of the #Indian Armed Forces. The #President of India serves as Supreme Commander of the Indian Navy.The Chief of Naval Staff, usually a four-star officer in the rank of Admiral, commands the navy. The Indian Navy is the fifth largest in the world. It played an important role in #India’s #victory in the 1971 #Indo-Pakistani #War.

All you want to know about GST – Watch the Parliament session


A gong sound at midnight in Parliament’s central hall will mark the switchover to Goods and Services Tax (GST).

Here’s all that you wanted to know about GST, independent India’s biggest reform initiative.

It will kick in from July 1, ending more than 11 years of hectic confabulations among the Centre and the states shepherded by several Union and state finance ministers, and withstanding testy relations often marked by political brinkmanship.

What is it?

– GST is India’s most ambitious indirect tax reform plan

– It aims to stitch together a common market by dismantling fiscal barriers between states.

– It is a single national uniform tax levied across the country on all goods and services.

– It will be implemented from July 1, 2017

What’s on now?

– The Centre and states levy multiple taxes such as excise duty, octroi, central sales tax (CST), value added tax (VAT), octroi, entry tax among others.

The Framework

– GST will subsume all local and central indirect taxes (except customs duty).

– Under current laws only the Centre can impose a tax on services.

– GST will empower states to collect service taxes

The  Working

– The states and the Centre will collect identical rates of taxes on goods and services

– If 18 percent is the GST rate on a good across the country, the states and the Centre will get 9 percent each called the CGST and SGST rates.

Tax Rates

– All goods and services have been placed under four slab rates – 5, 12, 18 and 28 percent – along with a cess on luxury and demerit goods such as tobacco, pan masala and aerated drinks. Most services, except those in the negative list of essential services such as healthcare and education, will come under GST.

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