Build Your Retirement Plan with NPS
Open a paperless NPS account in under 20 minutes. Government-backed, market-linked, and loaded with India's best tax benefits at every stage of your retirement journey.
What is National Pension Scheme?
NPS (National Pension Scheme) is a voluntary, long-term retirement savings scheme regulated by PFRDA. Open to all Indian citizens aged 18–70, it lets you systematically save for retirement while enjoying significant tax advantages at every stage — contribution, investment, and withdrawal.
Research-backed investing reduces emotional decisions and improves outcomes. NPS gives you the same quality of asset management used by institutional investors — covering when to contribute, how to allocate, and what returns to target.
NPS for Individuals — Build a tax-efficient retirement corpus over your working years. Enjoy the exclusive ₹50,000 deduction under 80CCD(1B) that no other instrument offers.
NPS for Corporate — Organisations can contribute up to 10% of Basic + DA on behalf of employees. Employer contributions are deductible under Section 80CCD(2) with no upper rupee cap.
NPS Key Features & Benefits
Six reasons NPS stands apart as India's most comprehensive retirement-planning instrument.
Tax-Efficient (Up to ₹2L)
Deductions under 80CCD(1), 80CCD(1B), and 80CCD(2) — the highest combined tax saving available in any retirement instrument.
Market-Linked Returns
Invested in equity, corporate bonds, and government securities. Equity class has historically delivered 10–14% p.a. over long horizons.
PFRDA Regulated
Fully regulated by PFRDA under the Ministry of Finance. Your corpus is held in a trust, completely separate from the fund manager.
Flexible Fund Choice
Choose from multiple PFRDA-approved Pension Fund Managers. Switch once a year across fund managers or asset allocation — at zero cost.
Lowest Cost Structure
Fund management charges at just 0.09% p.a. — the lowest among all retirement products in India. More of your money stays invested.
Portable PRAN
One permanent PRAN number follows you across jobs, cities, and employers. No need to transfer or close accounts when you switch jobs.
Types of NPS Accounts
NPS operates through two account types designed for different financial needs — mandatory pension savings and flexible voluntary savings.
Tier 1 Account
The primary NPS pension account. Contributions are tax-deductible. Locked until age 60 — purpose-built for retirement. Minimum: ₹500/year.
Tier 2 Account
A voluntary, fully liquid savings account linked to Tier 1. No tax benefit (except for government employees). Minimum: ₹250/year — withdraw anytime.
How to Open Your NPS Account
Four steps from registration to your first contribution — fully digital and paperless.
Choose PRAN Account Type
Select Tier 1 (pension) or Tier 1 + Tier 2 (pension + savings). Choose your Pension Fund Manager — HDFC, SBI, Kotak, and more.
Submit KYC & Documents
Complete Aadhaar-based e-KYC on the Shriram platform. Submit PAN, address proof, and nominee details digitally.
Choose Asset Allocation
Select Active Choice (you control E/C/G split) or Auto Choice (age-based rebalancing) — conservative, moderate, or aggressive lifecycle fund.
Start Contributing
Make your first contribution (min ₹500 Tier 1, ₹250 Tier 2). Set up auto-debit for regular contributions and track corpus in real time.
Eligibility for NPS Account
NPS is one of the broadest retirement schemes in India — open to citizens, NRIs, salaried employees, and the self-employed.
Indian Citizens (Resident)
Any Indian citizen aged 18–70 years can open an individual NPS account online or through a registered Point of Presence (PoP).
NRIs
Non-Resident Indians (NRIs) are eligible for NPS. Contributions can be made through NRE/NRO accounts. Account closes on loss of citizenship.
Corporate Employees
Employees whose organisations are registered under Corporate NPS can contribute through payroll deductions with employer matching.
Government Employees
Central government employees joining after 2004 are mandatorily covered under NPS. State government employees under respective state rules.
Age range: Minimum entry age is 18 years; maximum entry age is 70 years. NPS account can be continued until age 75 with deferred withdrawal.
Documents Required for NPS Account
Keep these documents ready to open your NPS account digitally through Shriram Financial Services in under 20 minutes.
PAN Card
Mandatory for all NPS subscribers. Used for tax deduction reporting and KYC verification with PFRDA.
Aadhaar Card
Required for e-KYC (paperless). Your Aadhaar-linked mobile receives the OTP to verify identity instantly.
Bank Account Details
Cancelled cheque or bank statement showing your account number and IFSC code for contribution and withdrawal.
Photograph
Recent passport-size photograph in digital format (JPEG/PNG). Typically under 2 MB for online submission.
Nominee Details
Name, date of birth, and relationship of your nominee(s). Multiple nominees can be added with split percentages.
Signature
Scanned or digital signature required for account registration and future correspondence with PFRDA.
NPS Calculators & Tools
An NPS Calculator helps you estimate the retirement corpus and monthly pension you may receive based on your age, contribution amount, expected returns, and retirement age.
NPS Contribution Limits & Rules 2026
Maximise your NPS tax benefits by understanding the three deduction sections available under the Income Tax Act.
| Section | Annual Limit | Eligible For | Key Note |
|---|---|---|---|
| 80CCD(1) | Up to ₹1,50,000 | Employee / Self-employed | Within the overall ₹1.5L 80C limit |
| 80CCD(1B) | ₹50,000 additional | All NPS subscribers | Exclusive to NPS — over and above 80C |
| 80CCD(2) | 10% of Basic + DA | Salaried (employer contribution) | No upper rupee cap — deductible in full |
Maximum total NPS deduction: ₹2,00,000/year (₹1.5L under 80CCD(1) + ₹50,000 under 80CCD(1B)) — more than any other retirement instrument in India.
Tax Benefits of NPS
NPS is one of India's most tax-efficient retirement products — with deductions at the contribution stage, tax-free accumulation, and partial exemption at withdrawal. Benefits differ for individuals and corporates.
Individual
| Section | Limit | Note |
|---|---|---|
| 80CCD(1) | ₹1,50,000 | Part of overall 80C limit |
| 80CCD(1B) | ₹50,000 (extra) | Exclusive to NPS; above 80C |
| 80CCD(2) | 10% of Basic + DA | Employer contribution; no cap |
Corporate
| Section | Limit | Note |
|---|---|---|
| 80CCD(2) | 10% Basic+DA (pvt) / 14% (Govt) | Employer's contribution; deductible |
| Sec 36(1)(iv-a) | Up to 10% of Basic + DA | Additional corporate deduction |
NPS Returns & Performance
NPS is a market-linked product. Returns depend on asset class and fund manager. Here are indicative historical returns across asset classes.
| Asset Class | 5-Year CAGR | 10-Year CAGR | Risk Level |
|---|---|---|---|
| Class E — Equity | 12–15% p.a. | 10–13% p.a. | High |
| Class C — Corporate Bonds | 7–9% p.a. | 7–8.5% p.a. | Moderate |
| Class G — Government Securities | 6.5–8% p.a. | 6–7.5% p.a. | Low |
| Class A — Alternatives (capped 5%) | 8–11% p.a. | N/A (recent) | Moderate-High |
* Past returns are indicative only. NPS returns are not guaranteed. Source: PFRDA performance data, 2024.
Asset Allocation Options — Active vs Auto Choice
Unlike rigid instruments, NPS lets you decide how your savings are invested through two flexible allocation methods.
Active Choice
Complete control over your portfolio allocation. Decide how much to invest in Equity (E), Corporate Bonds (C), Government Securities (G), and Alternative Assets (A) based on your risk appetite.
- →Max 75% in equity (reduces after age 50)
- →Max 5% in alternative assets
- →Best for experienced investors seeking higher returns
Auto Choice
Investment allocation is managed automatically using an age-based lifecycle strategy. Higher equity exposure at younger ages, gradually reducing as you approach retirement.
- →Three lifecycle options: Conservative, Moderate, Aggressive
- →Auto-rebalances annually based on age
- →Ideal for hands-off investors who prefer simplicity
Class E — Equity
Equity and equity-related instruments. Up to 75% allocation (tapers after age 50). Highest growth potential, highest volatility.
Class C — Corporate Bonds
High-rated corporate debt (AA and above). Moderate risk with stable, predictable returns — good for portfolio stability.
Class G — Government Securities
Central and state government bonds — the lowest-risk NPS asset class. Best for conservative investors nearing retirement.
Class A — Alternatives
REITs, InvITs, and alternative assets. Capped at 5% allocation — adds diversification beyond traditional debt and equity.
NPS Withdrawal & Exit Rules
NPS locks your corpus until retirement, but PFRDA permits partial withdrawals in specific situations before age 60.
Minimum Tenure
Must have been a subscriber for at least 3 years before any partial withdrawal is permitted.
Max of Own Contributions
Only your own contributions are counted — not employer contributions or investment returns.
Lifetime Withdrawals
Maximum of 3 partial withdrawals allowed over the entire lifetime of the PRAN account.
Eligible Reasons
- →Child's education or marriage
- →Home purchase or construction
- →Critical illness or disability
- →Starting a business
Taxation of NPS (At Withdrawal)
At retirement, NPS follows a structured withdrawal: 60% lump sum (tax-free) and 40% mandatory annuity for a monthly pension.
| Withdrawal Stage | Tax Treatment | Note |
|---|---|---|
| Lump Sum (60%) | Fully exempt | No tax on up to 60% corpus withdrawal at age 60 |
| Annuity Purchased (40%) | Tax-free at purchase | Annuity purchase itself is not taxed |
| Annuity Income (monthly) | Taxable as per income slab | Monthly pension taxed like salary income |
| Premature Exit (<60) | 20% tax-free; 80% buy annuity | Partial exit is taxable; annuity purchase exempt |
60% of corpus
Fully tax-free withdrawal at age 60 — no tax liability on this portion of the retirement corpus.
40% mandatory annuity
Must purchase a PFRDA-registered annuity. Monthly pension is paid; annuity income is taxable per slab.
Deferred exit
Defer the entire withdrawal until age 75 if you wish to continue growing the retirement corpus.
Lump sum below ₹5L
If total corpus is below ₹5 lakh at maturity, the entire amount can be withdrawn as a lump sum.
Annuity providers: PFRDA maintains a list of empanelled life insurers (LIC, SBI Life, HDFC Life, and others). Multiple payout options available — life annuity, joint life with spouse, guaranteed period, and more.
NPS Fees & Charges Explained
NPS has one of the lowest fee structures of any retirement instrument in India — here's a complete breakdown.
PRAN Card Issuance
For physical PRAN card; ePRAN is free
CRA Annual Maintenance
CRA record-keeping fee charged by CRA
Fund Management Charge
Charged on AUM — lowest in the industry
Contribution Processing (PoP)
Per contribution via Point of Presence
eNPS Digital Contribution
Payment gateway charges (UPI/Net Banking)
Exit / Withdrawal Charge
On premature exit; no charge at age 60 maturity
Compare NPS vs Mutual Funds vs Equity
How NPS stacks up against the two most popular market-linked investment alternatives across returns, tax, liquidity, and risk.
| Feature | NPS | Mutual Funds | Equity (Direct) |
|---|---|---|---|
| Purpose | Government-backed retirement savings | Wealth creation (any goal) | High-growth long-term capital appreciation |
| Returns | 8–14% historically (asset-class linked) | 10–15% equity funds (market-linked) | 12–18% long-term (high volatility) |
| Lock-in | Until age 60 | ELSS: 3 yrs; others: none | No lock-in |
| Tax Deduction | Up to ₹2 lakh (80CCD(1)+(1B)+(2)) | ELSS only — ₹1.5L under 80C | None |
| Tax on Gains | 60% corpus tax-free; annuity income taxed | LTCG 12.5% above ₹1.25L (equity funds) | LTCG 12.5% above ₹1.25L |
| Liquidity | Limited — partial withdrawal after 3 yrs | High — redeem anytime (except ELSS lock-in) | High — sell anytime during market hours |
| Regulator | PFRDA | SEBI | SEBI |
How We Verify NPS Information
Every fact, limit, and rule on this page is verified against official PFRDA guidelines and the Income Tax Act before publishing.
PFRDA Source Data
All contribution limits, tax deduction sections, withdrawal rules, and fund performance data are sourced from official PFRDA circulars and the Income Tax Act.
Last Updated June 2026
This page reflects NPS rules as of the current financial year, including FY2026 contribution limits and tax treatment under both old and new tax regimes.
Reviewed by RM Team
Our Relationship Managers review product page accuracy quarterly. For complex NPS tax scenarios, we recommend consulting a qualified tax advisor.
No Guaranteed Returns
NPS is a market-linked product. Historical return figures are indicative only. Past performance does not guarantee future results.
Frequently Asked Questions
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Can I withdraw from NPS before retirement?
Yes — after 3 years, you can withdraw up to 25% of your own contributions for specific reasons: child's education/marriage, home purchase, critical illness, or business setup. Maximum 3 withdrawals over the lifetime of the PRAN.
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What happens to NPS at age 60?
At 60, withdraw up to 60% of the corpus tax-free. The remaining 40% must purchase a PFRDA-registered annuity for a monthly pension. You can defer the entire withdrawal until age 75.
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Is NPS better than PPF for tax saving?
NPS allows up to ₹2 lakh deduction (80C + 80CCD(1B)), vs PPF's ₹1.5 lakh under 80C. PPF maturity is fully tax-free; NPS annuity income is taxable. Most advisors recommend both for maximum efficiency.
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What is the minimum annual contribution?
Tier 1: ₹500 per contribution, ₹1,000 per year minimum. Tier 2: ₹250 per contribution, no annual minimum. Missing Tier 1's annual minimum makes your PRAN inactive with a ₹100/year penalty.
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Can self-employed individuals invest in NPS?
Yes. All Indian citizens aged 18–70 can open NPS. Self-employed subscribers claim 80CCD(1) up to 20% of gross income (within ₹1.5 lakh 80C limit), plus the exclusive ₹50,000 under 80CCD(1B).
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Who regulates NPS?
NPS is regulated by PFRDA (Pension Fund Regulatory and Development Authority), a statutory body under the Ministry of Finance. All Pension Fund Managers (PFMs) are PFRDA-registered.
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Can I change my Pension Fund Manager (PFM)?
Yes. You can switch your PFM or investment scheme once per year at no cost. Active Choice allows you to rebalance your E/C/G/A allocation at any time.
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What happens to NPS if I die before 60?
The entire accumulated corpus is paid to the nominee (or legal heir) as a lump sum — no mandatory annuity. The nominee is exempt from the 40% annuity rule that applies to the subscriber.
Still got questions?
Our NPS experts will help you choose the right allocation, PFM, and tax strategy for your retirement goals.
Secure Your Retirement with NPS Today
Open your NPS PRAN account with Shriram Financial Services. Save up to ₹2 lakh in tax, grow wealth, and ensure a guaranteed monthly pension.