Now after the PFRDA has allowed Paytm Money to act as a POP or point of presence agent for NPS, here we look at the pros and cons of investing in the retirement product NPS via Paytm Money.
Also, there are other mutual fund entities that have forayed into selling of NPS on their platforms and after the rules have been promulgated with regard to NPS through the online channels, these have become the online PoPs for NPS.
NPS should widely be considered as an apt retirement planning tool for two reasons:
1. It helps in an additional tax saving of Rs. 50,000 i.e. over and above the limit of Rs. 1.5 lakh allowed as part of Section 80C of the Income Tax Act.
2. Through the product, an investor in the scheme can take exposure in any of the instruments including equity, corporate bond and government debt products. Also, at the time of maturity, 40% of the proceeds are to be mandatorily put to buying an annuity and the remaining 40% can be withdrawn tax-free.
Charges through online subscription to NPS via offline and online PoPs
Banks as well as newly emerged online platforms have been allowed to act as PoPs for NPS and unlike the direct CRA or central record agency channel, these are allowed to charge a premium on the initial subscription and contribution.
There is also an option wherein after the initial subscription through PoP, an individual investor making contribution in NPS can make the payment via eNPS, the platform used by Karvy, NSDL and other CRAs. And in doing so, an investor has to shell out a lower commission of 0.1%.
So, if you invest directly in NPS through the e-NPS channel on offer by Karvy and two of the other CRAs, you will be able to avoid the extra layer of charges levied on an investor. Also, you can invest via such online platforms and go for other service request and subsequent contributions through CRAs.
Primarily POPs in the case of NPS are tasked with the initiation of initial subscription and at later stage also provide solutions to customer queries and enable them to withdraw their NPS proceeds.