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NPS Contributions- NPS Tier 2 Contributions Using Credit Card Not Allowed
The National Pension System (NPS) is a voluntary, defined contribution retirement savings plan designed to help members make the best decisions for their future by allowing them to save consistently throughout their working lives. The NPS is intended to assist people in developing the habit of saving for retirement. A subscriber may withdraw a lump sum payment equal to 40% of their investment at maturity without paying taxes on it. Anything over 40% will be taxed, with a lump sum withdrawal limit of 60%.
The National Pension System Trust is a specialised division of the Pension Fund Regulatory and Development Authority (PFRDA), which reports to the Ministry of Finance of the Indian government. In India, the National Pension System is a voluntary defined contribution pension scheme. The Pension Fund Regulatory and Development Authority (PFRDA) recently stopped accepting credit card payments for Tier-II contributions to the National Pension System (NPS).
According to the regulator, it decided to prohibit credit card use in NPS Tier-II accounts as part of its authority under Section 14 of the Pension Fund Regulatory and Development Authority Act 2013 (PFRDA Act), which states that it has the authority "to protect subscribers' interests and to regulate, promote, and ensure orderly growth of the national Pension System and pension schemes to which the Act applies."
What is NPS tier II
Only those who already have a Tier I account are eligible to open a voluntary NPS Tier II account. When you open an NPS Tier II account, you must contribute at least Rs 1,000. Contributions to Tier II NPS accounts are only required to be made in multiples of Rs 250, with no upper limit.
A Tier II NPS account provides greater withdrawal flexibility, and there is no exit load charged when you withdraw funds from your Tier II NPS account. NPS Tier II investments, on the other hand, are not tax-free."
Who is eligible for Tier 2 NPS accounts?
The NPS was first offered to government employees in January 2004, and it was later expanded to include all sections in 2009. The contributor must make a minimum payment of Rs 500 to open a tier-1 account. The account holder may also be eligible for tax breaks under Income Tax Act of 1961 Section 80CCD (1B).
A tier-2 NPS account is entirely voluntary, and it can only be opened by those who already have a tier-1 NPS account. The minimum contribution for this account is Rs 1,000, with no maximum. Contributions must be made in multiples of Rs 250. Tier-2 NPS account holders are not eligible for income tax breaks on their contributions to these accounts. Tier-2 NPS accounts, on the other hand, offer greater withdrawal and exit flexibility than tier-1 accounts.
How to Make NPS Tier II Payments
NPS subscribers can make payments online at https://enps.nsdl.com/eNPS or through the NPS mobile app, using a debit card or net banking. Subscribers can also donate through any POP-SP or affiliated Nodal Office.
