How to Invest in NPS (National Pension Scheme) Online in Few Steps?

If you're making plans for retirement and looking forward to building a retirement portfolio, the National Pension System can be a really effective financial tool to achieve this. The National Pension System is a government-provided retirement-cum-pension scheme. An investor receives the double NPS investment tax benefits of tax-saving and retirement planning by making an investment in NPS. A contribution toward an NPS account offers a benefit to individuals through a deduction under Sections of the Income Tax Act.

The organisation in charge of overseeing the NPS is the Pension Fund Regulatory and Development Authority of India (PFRDA). If you fall within the 18 to 70 age criteria, you can invest in NPS. NPS guidelines have been changed in the past few years to make them more friendly to investors. Continue reading to learn how to invest in NPS and accumulate a sizable retirement fund.

Not only does it secure your retirement plans, but it also saves taxes of as much as Rs 1,50,000 a year. The best part is that each private and government employee can contribute to this NPS scheme investment.

Document Required to Invest in NPS

Now that you know about the two kinds of NPS accounts, the benefits, and who is eligible to have an NPS investment, let’s know how to invest in the NPS scheme. It’s pretty easy—you could do it either online or offline. Before you proceed to open an NPS account online, keep these documents handy:

Aadhaar Card
Netbanking info
Passport-size photos
A scanned photo of your signature
PAN Card

Click documents required for NPS to learn more.

How to Invest in the National Pension Scheme

Steps To Invest in NPS Online through the Kotak Mobile Banking App

Secure your retirement by investing in the National Pension System (NPS) easily through Kotak’s Mobile Banking app. NPS is a government-backed retirement scheme that lets you build your retirement fund with investments as low as Rs. 500 a month.

Login to Kotak Mobile App and select 'NPS' from the 'Invest' section
Click on 'Invest Now', select the payment frequency, investment amount, pension fund manager, and investment preference
Enter your personal details, nominee details, and upload all relevant documents
After verifying the details, agree to the terms and conditions
Click on 'Invest' and complete the OTP authentication

Steps To Invest in NPS Offline

Here are the steps to invest in NPS offline:

Locate a Point of Presence (PoP), a bank or other registered entity with the PFRDA to begin offline.
Obtain a subscriber form from your nearest PoP and complete it.
Submit the form along with the necessary KYC documents. You can skip this step if you're already KYC-compliant with that bank.
After making the initial investment (which should be at least Rs. 500 for tier-1 account or Rs. 250 Tier-2 as subsequent contribution respectively, or Rs. 1,000 annually for Tier-1 account), the PoP will provide you with a Permanent Retirement Account Number (PRAN).

Your sealed welcome kit will include this PRAN and a password, allowing you to access and manage your NPS account. Note that this process has a one-time registration fee of Rs. 400.

Types of NPS Accounts to Invest In

Before investing within the NPS, you must know the types of NPS accounts you can invest in—Tier I and Tier II.

Tier I NPS Account

Tier I is the retirement account. It’s this account through which you invest and build a corpus for the golden years of your life. A permanent retirement account (PRAN) quantity is assigned to you upon opening a Tier I account. This is a 12-digit number. The minimum contribution you need to make when opening a Tier I account is Rs 500.

However, there's no cap on the maximum amount you can invest in a Tier I account. The cash that you put into a Tier I account is locked until you turn 60. Once you are 60, you can withdraw 60% of the amassed corpus as a lump sum. Under the Income Tax Act of 1961 Section 80CCD, your investment in a Tier I account is exempt from taxes.

Tier II NPS Account

Tier II accounts can only be opened if you have a Tier I account. It’s a voluntary account you could open by paying a minimum deposit of Rs 1,000. After that, you can deposit the amount that you desire. One thing to keep in mind is that there is no tax exemption for investments made in Tier II accounts. Put differently, no benefits are associated with deposits made into a Tier II account.

NPS investment Tax Benefits

A subscriber to the National Pension Scheme can profit from the following by making an investment:

It is a voluntary scheme open to all Indian residents falling within the age range of 18 to 70 years.
The scheme comes with the flexibility of picking a suitable investment option.
You can access your NPS account from any location in India.
The plan entails transparent investment norms.
It assists you in making retirement plans and guarantees that you will receive guaranteed returns when you retire.
You can get NPS tax benefits on the contribution made to this scheme under Section 80C of the Indian Income Tax Act.

Who is Eligible to Invest in NPS?

All citizens and state/central government employees falling between the age brackets of 18 to 70 are eligible to make a National Pension Scheme investment.

Conclusion

If you want, you could change your pension fund manager twice a year. You can also swap between auto and active preferences twice in a financial year. If you start investing in NPS at a young age, you could build a sizable retirement fund for yourself that would help you spend your golden years stress-free. Invest in NPS through Kotak NPS to ensure a secure and structured approach to retirement planning.