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Published 18:20 IST, February 4th 2025

NPS Gives Rs 50,000 Tax Benefit: How To Open Account, See Maintenance Charges

Budget 2025 offers a Rs 50,000 tax deduction for NPS Vatsalya contributions, matching regular NPS benefits.

Reported by: Business Desk
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NPS Key Updates You Need to Know
NPS Key Updates You Need to Know | Image: ANI

NPS tax benefit: In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced a new tax benefit for taxpayers contributing to NPS Vatsalya accounts, offering an additional Rs 50,000 tax deduction under Section 80CCD(1B), aligning it with the tax benefits available for regular NPS accounts.

But how much do you need to pay for maintaining NPS accounts?

The Pension Fund Regulatory and Development Authority (PFRDA) introduced updated charges for National Pension System (NPS) accounts, which came into effect on January 31, 2025. These revisions apply to NPS All Citizen, NPS-Lite, and NPS Vatsalya accounts, with a notable alignment between the NPS Vatsalya and NPS All Citizen models in terms of charges.

New charges for NPS account registrations

For individuals opening an NPS account, there is an initial charge of up to Rs 400 for subscriber registration. Additionally, the initial contribution will incur a fee of up to 0.50% of the amount contributed, with a cap of Rs 25,000. Any subsequent contributions made to the account will also be subject to charges.

Non-financial transactions and persistency charges

Non-financial transactions, including changes to personal details or nomination updates, will attract a fee of up to Rs 30. Persistency charges, however, will apply only to NPS All Citizen accounts and will be based on annual contributions.

For contributions between Rs 1,000 and Rs 2,999, an annual fee of Rs 50 will be levied. For contributions between Rs 3,000 and Rs 6,000, the charge will rise to Rs 75, while contributions exceeding Rs 6,000 will incur a charge of Rs 100 per year.

e-NPS and D-Remit Contribution Charges

For e-NPS transactions, such as subsequent contributions made online, there will be a fee of 0.20% of the contribution amount, with a maximum cap of Rs 10,000. This fee will be charged upfront for NPS All Citizen and Tier-II accounts. Additionally, for D-Remit contributions, a trail commission of 0.20% of the contribution will apply, also capped at Rs 10,000.

Exit and withdrawal processing fees

When withdrawing or exiting from the NPS scheme, a processing charge of 0.125% of the total corpus, with a maximum fee of Rs 500, will be applicable. This fee will be collected upfront.

As per the latest guidelines, the charges may also be subject to Goods and Services Tax (GST) and other applicable taxes. Subscribers will continue to have the option to negotiate charges with their Point of Presence (PoP), within the maximum limits set by PFRDA.

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Updated 18:20 IST, February 4th 2025