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National Pension System (NPS)- Corporate Perspective
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National Pension System (NPS)- Corporate Perspective
  1. NPS is a voluntary defined contribution pension system in India which is a market linked pension/annuity product.
  2. NPS is open for all the citizens of India from age 18 to 65 who comply with KYC norms.
  3. Corporate NPS is the customized version of NPS for the corporates according to their suitability.
  4. On individual contributions, an additional tax benefit of Rs. 50,000 is provided under NPS (Tier I) which is over the exemption limit of Rs. 1.5 lakhs.
  5. Tax benefits under the corporate sectors -:
    1. Corporate Subscriber – The employer’s contribution to corporate NPS is up to 10% of Salary (Basic + DA) and is deductible from the taxable income without any monetary limit.
    2. Corporate - The employer’s contribution to NPS is up to 10% of Salary (Basic + DA) and can be deducted as business expense from their profit and loss account.
  6. Self-employed person can avail deduction of 20% of the gross-income on income tax.
  7. NPS is administered by Pension Fund Regulatory and Development Authority(PFRDA).
  8. NPS subscribers have to choose one Pension Fund Manager (PFM) from the available PFMs-:
    1. Birla Sunlife Pension Management Limited.
    2. HDFC Pension Management Company Limited.
    3. ICICI Prudential Pension Funds Management Company Limited.
    4. Kotak Mahindra Pension Fund Limited.
    5. LIC Pension Fund Limited.
    6. Reliance Capital Pension Fund Limited.
    7. SBI Pension Funds Private Limited.
    8. UTI Retirement Solutions Limited.
  9. NPS subscribers have two investment options to choose-:
    1. Active Choice – Subscriber has right to decide the contributions to be invested in fund. An individual will decide the percentage of contribution to be invested in different asset classes – Equity and related instruments(E),
      Corporate debts and related instruments(C),
      Government bonds and related instruments (G) and
      Alternative Investments Funds(A).
      There are limits on maximum allocation to each asset class like upto 50 years of age; there is maximum limit of 75% on allocation in Asset Class (E). Write to us at support@atmoz.in for further details on maximum limit.
    2. Auto Choice – If an individual does not have required knowledge to manage NPS investments. She/he can optfor auto choice in which investments is done on the basis of Lifecycle Fund (allocation percentage change according to age). Write to us at support@atmoz.in for further details on Lifecycle Fund.
  10. It is an EEE (Exempt-Exempt-Exempt) instrument in which 60% of withdrawal from NPS is tax free and the remaining 40% is used to buy a compulsory annuity which is also tax free.
  11. Premature withdrawal from NPS (Tier I)is permitted to the extent of 25% subject to special conditions.
  12. NPS returns for 2020 year for different asset classes and PFMs. For latest returns you may refer the NSDL website.

  13. Cost: NPS is the cheapest available equity based investment scheme in the world.

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