How to open an NPS account using the SBI Yono app

The National Pension Scheme (NPS) is a defined contribution pension system created by the Government of India as part of pension reforms with the aim of providing social security. The NPS offers an inexpensive way to save for retirement and live a financially secure retirement.

The Pension Funds Regulation and Development Authority (PFRDA) is responsible for administering and regulating the NPS.

Step 1: Open the SBI YONO app on your mobile phone and click on the “Investments” section.

Step 2: Now click on “NPS Account Registration”, then click on the box and click on the “I Agree” tab.

Step 3: Select Level I or Level I/Level II

Step 4: Check the box indicating that I do not have any pre-existing accounts under NPS.

Step 5: Enter your details such as DoB, PAN details, click Next tab

Step 6: Take a selfie or upload a passport size photo

Step 7: Enter the details that will be printed in PRAN and click Next

Step 8: Enter all required details in the next pages

Step 9: Upload your signature photo

Step 10: Confirm your bank details and make a payment


Characteristics of the NPS scheme

According to the website, these are the main features of the NPS diet

• Tier I – Retirement Account (A/C Mandatory – Tax Benefit Available)
• Tier II – Investment Account (A/C optional – No tax benefits but corpus is withdrawable at any time) Rs. 50,000/- in a financial year.
• The minimum contribution when opening the air conditioning is 500 rupees for level I
• The minimum contribution when opening the air conditioning is 1,000 rupees for level II
• Minimum total contribution in a year Rs.1,000 (Min. Amount per contribution Rs.500) for Tier I
• Minimum total contribution in an NA year (min. amount per contribution Rs.250) for Tier II
• A very low cost product with a fund management fee of 0.01%.
• Attractive market-linked returns
• One-time transfer to NPS – Existing corpus under Superannuation can be transferred to NPS once without any tax implications
• Continuation of the NPS scheme after retirement – Possibility of contributing until age 70 or deferring withdrawal until age 70.
• Full Withdrawal for Corpus below Rs 2 lakh – In case the accumulated total corpus is less than Rs 2 lakh at the age of 60 or above, the subscriber can withdraw the entire corpus.

Tax advantages available under the NPS

a) Employee contributions to NPS Tier-I are tax deductible under Section 80 CCD(1) of the Income Tax Act, up to a maximum of Rs. 1.50 lakh under Section 80 C of the Income Tax Act. From the financial year 2015-2016, in addition to the deduction provided under Section 80CCD(1) for contributions to NPS Level I accounts, the subscriber now enjoys a tax deduction of up to Rs. 50,000 under Section 80CCD 1. (B).

b) Under Section 80CCD(2) of the Income Tax Act, an employer’s payment to NPS Tier-I is tax deductible (14% of salary for central government employees and 10% for others). This refund is in addition to the limit set under Section 80C.

c) Interim/partial NPS Tier-I withdrawals of up to 25% of subscriber contributions are exempt from tax.

d) From 1.4.2019, NPS Tier-I lump-sum withdrawals up to 60% of total pension assets are tax-free upon retirement.

e) A minimum of 40% of the amount spent on an annuity purchased from an annuity service provider licensed and regulated by the Insurance Regulatory and Development Authority (IRDA) and licensed by the PFRDA is tax deductible .

Tax benefit available under Level I account

Employee Contribution: On a contribution of Rs.50,000, you can claim tax deduction under Section 80CCD(1B).

Investments (10% of Basic and DA) are tax deductible under Section 80CCE up to a ceiling of Rs. 1.50 lacs.

Tax deduction of the employer’s contribution up to 10% of the salary (base + DA) u/s 80CCD (2), without monetary limit.