Know about the National Pension System (NPS) - Section 80C

You all must have a retirement plan? After working for a substantial period, all of us need a break from all. Here's when the national pension scheme plays in. When a massive corpus is created for one's retirement phase, it plays an essential aspect in financial planning for the future. Not only it helps on fulfilling the expenditure requirements but also allow us to smoothly sail through the post-retirement life with least or no hassles at all. In a country like India, with growing senior citizen demography, it becomes impertinent to introduce such schemes. With such a motive in mind, The Indian government introduced schemes like the National Pension System or NPS. One can avail deductions under Section 80C which in return inculcates a financial discipline among individuals.

What is the National Pension Scheme?

The National Pension Scheme (NPS) is an initiative taken by the central government. It is a social security pension program that is open to employees from the public, private, and even the unorganized sectors except for the armed forces. In this policy, an individual can make regular contributions to the retirement-based corpus at regular intervals. After retirement, the subscribers take out a certain percentage of the corpus. The scheme allows tax benefits across jobs and locations with tax benefits under Section 80C of the income tax act.

How to Join the National Pension Scheme?

Subscribers who join the National Pension scheme can claim an additional deduction of up to Rs. 50,000 for contribution to NPS, which is above the tax deduction of Rs. 1,50,000 available to the assesses under Section 80C. Any citizen of India who is between the age of 18 to 60 years can become NPS subscribers.

• What is PRAN? It is a Permanent Retirement Account Number (PRAN) which is the foremost prerequisite for filling out NPS. The Forms for PRAN application can be procured from any point of presence service providers (POP-SP) under NPS or can be downloaded from the website https://www.npscra.nsdl.co.in/

• The Next step to join NPS is to fill out Details and submit some documents like Applicant details, bank details and scheme preference details, Photograph, address, and ID proof for KYC must also be attached with the application form.

· After filling out the application form, an individual has to fill and sign the form with documents Duly. These have to be then submitted at the POPSP office. Once the documents are verified and processed, PRAN is generated, which is then sent to the subscriber's correspondence address.

· The Last step is the contribution. After the submission of the form, a minimum amount of Rs.500 is taken as the first contribution to the POP-SP. After this, a contribution slip called as NCIS is then filled with the payment instrument particulars to accompany the payment.

Pros of investing in National Pension Scheme for retirement saving

National Pension System is undoubtedly an investment product to save for retirement. Isn't it? However, among millennials, not many people invest in this product due to the long lock-in period. Still, this pension scheme has everything an investor looks for in a retirement plan.

• National pension scheme account can be Opened with Ease and instantly with minimal KYC documentation.

• It allows us to Save Taxes under Section 80C. An individual gets an extra tax deduction of Rs.50,000 under Section 80 CCD(1B) from the taxable income. It allows to avail over and above the tax deductions under Section 80C. So, if you calculate properly, you can save taxes as much as Rs 15,600.

• It allows to Track the NPS Portfolio in Real-Time, so as to ensure that the portfolio is performing as per the expectations.

• NPS scheme also allows us to make a partial withdrawal. It gives the individuals access to partial accessibility to their funds which are saved over the years. It is very beneficial as it allows us to meet financial needs before retirement during emergencies as well.

• NPS also enables to Earn Market-linked Returns; it beats inflation and aids in accumulating a relatively larger corpus for retirement.

• An individual also enjoys several other benefits like rebalancing the portfolio. The national pension scheme portfolio gets rebalanced once every year wherein the allocations made in equity shares are shifted to debt as the individual age increases.

Sqrrl is an online platform that allows us to use the money wisely and invest in saving schemes. Be it mutual funds or getting a personal loan. Sqrrl is the most comfortable and most convenient way to do so. You can save your hard-earned money by investing through Sqrrl most easily. Also, as a bonus, you get deduction under Section 80C as well! Amazing, isn't it?