Opening an NPS account – online and offline: Here's a step-by-step guide

In recent years, the National Pension Scheme (NPS) has experienced substantial popularity, driven by its appealing tax advantages, especially in response to recent amendments in Indian income tax regulations. Taxpayers commonly highlight several reasons for choosing to invest in the NPS:

• The scheme provides substantial tax deductions under Sections 80CCD(1) and 80CCD(1B) of the Income Tax Act, 1961. Individuals are eligible to claim deductions for an amount of up to 10% of their salary (basic + DA) or Rs. 1.5 lakh, whichever is lower, under Section 80CCD(1). Additionally, an additional deduction of up to Rs. 50,000 is available under Section 80CCD(1B). This effectively allows individuals to reduce their taxable income by a maximum of ₹2 lakh through NPS investments.
• Employers have the option to contribute a maximum of 10% of an employee's salary to their NPS account. These contributions not only qualify for tax deductions for the employer but are also exempt from inclusion in the employee's taxable income, providing an added advantage compared to other tax-saving alternatives.
• In contrast to conventional pension plans, NPS provides flexibility regarding the frequency and amount of contributions. Individuals can opt to contribute on a monthly, quarterly, or annual basis, aligning with their financial circumstances.
• Another noteworthy feature is the portability of NPS accounts, allowing individuals to transition between jobs or employers without any disruption to their investments.
• The NPS allocates funds across a diverse range of assets, encompassing equities and debt instruments. This strategy not only offers the possibility of long-term wealth accumulation but also caters to varying risk preferences. Furthermore, upon retiring, a portion of the accumulated corpus can be withdrawn as a lump sum, while the remainder is utilised to furnish a steady monthly pension.

Yet, a considerable number of individuals lack awareness about the process of initiating an NPS account, whether through online or offline means.

Opening an NPS account online: A step-by-step guide

To initiate the online opening of an NPS account, you must visit the website of one of the Central Recordkeeping Agencies (CRAs). These agencies oversee the NPS database and streamline the processes of account opening and maintenance. Here is the procedure for opening a new NPS account:

Step 1: Access the registration link provided by one of the CRAs.

• Computer Age Management Services 
• KFin Technologies 
• Protean eGov Technologies 

Step 2: Input your mobile number, Permanent Account Number (PAN), and email ID.

Step 3: Authenticate the OTP sent to your mobile number.

Step 4: Proceed to follow and fulfill the pertinent instructions displayed on the screen.

Step 5: Upon completing the required formalities, you will receive your Permanent Retirement Account Number (PRAN), which serves as your login credential for accessing your NPS account.

Opening an NPS account offline: A step-by-step guide

To initiate the offline opening of your NPS account, you need to visit the nearest Point of Presence (PoP). The PoPs play a crucial role in registering your NPS application and are physical locations authorised to assist in NPS account opening. These include banks, post offices, and certain government offices. You can access a list of PoPs on the websites of the CRAs such as NSDL e-Gov or KFin Tech, or through the Pension Fund Regulatory and Development Authority (PFRDA) website.

Step 1: Identify the nearest PoP.

Step 2: Go to the PoP and complete the application form.

Step 3: Satisfy the KYC requirements by submitting all the necessary documents.

Step 4: Make a minimum payment of ₹500 for a Tier I account.

Step 5: Submit the completed application form along with self-attested copies of the required documents.

Head post offices throughout India also function as PoPs for initiating the NPS accounts. This enhances accessibility to this valuable investment and retirement planning tool, especially for individuals in rural areas or smaller towns.

Whether online or offline, upon obtaining your PRAN, you can activate your NPS account through the chosen CRA’s website and commence contributing to your retirement fund.