National Pension Scheme is a voluntary and long-term investment plan for retirement under the purview of the PFRDA and central government.
The Indian tax system provides a number of tax-exempt revenue streams and investment opportunities. One of the most popular choices is the National Pension System (NPS), which is run by the National Pension System Trust. The NPS aims to help persons develop the habit of saving for their retirement. It is an effort to discover a long-term solution to the issue of giving each Indian person a sufficient retirement income. Since NPS is an individual pension account, a third party cannot open one on their behalf.
National Pension System Trust is a specialised subsidiary of the Ministry of Finance's Pension Fund Regulatory and Development Authority. The subscriber has the choice to specify their preferred allocation to several asset classes under this government-run investing programme.
The National Pension System (NPS) pools individual savings into a pension fund, which is then invested by PFRDA-regulated professional fund managers in accordance with approved investment guidelines in diversified portfolios that include shares, corporate debt obligations, government bonds, and bills.
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Who should invest in NPS?
NPS should be considered by anyone who wants to start planning for retirement early and has a low tolerance for risk. Having a steady pension(income) throughout your golden years will be a blessing, especially for private-sector employment. An investment like this can significantly impact your life after retirement.
In fact, salaried individuals who desire to maximise their 80C deductions can also take National Pension System plan into consideration.
National Pension Scheme provides many features and benefits for individuals. A portion of NPS goes to equities which may not offer guaranteed returns however, the returns are much higher than other traditional tax-saving investments like the PPF.
If you are unhappy with the performance of the fund, NPS also gives you the option of switching fund managers.
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NPS tax benefits:
For NPS, both your contribution and the employer's contribution are eligible for a deduction of up to Rs. 1.5 lakh. The self-contribution, which is a component of Section 80C, is covered by 80CCD(1).
10% of the salary is the maximum deduction that can be made under section 80CCD(1), but not more. This cap is 20% of the taxpayer's gross income if they are self-employed.
Any excess self-contribution (up to Rs 50,000) may be claimed as an NPS tax benefit under section 80CCD(1B). Therefore, the programme permits a total tax deduction of up to Rs 2 lakh.
You should keep investing until you are 60 years old as a pension plan. However, you may withdraw up to 25% for specific purposes if you have been investing for at least three years.
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Eligibility:
The person should be an Indian citizen (resident or non-resident) or an Overseas citizen of India (OCI) of age under 18-70 years. The individual should comply with KYC rules and be legally competent to execute a contract as per the Indian Contract Act.
Hindu Undivided Families (HUFs) and Persons of Indian Origin (PIOs) are ineligible to enrol to NPS.
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 "Tax Saving Investment: Who should invest in National Pension Scheme, know tax benefits, eligibility")
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