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Time of India
20-05-2025
- Business
- Time of India
Can you change your monthly pension contribution from Rs. 2000 to Rs. 5000 in Atal Pension Yojana?
Understanding details of Atal Pension Yojana (APY) Live Events Can you increase your pension amount from Rs 2,000 to Rs 5,000? Important FAQs on Atal Pension Yojana The Atal Pension Yojana (APY) is a government-backed pension scheme launched by the government to provide financial security to citizens, especially those in the unorganised sector, the poor, and the underprivileged. It guarantees a minimum monthly pension ranging from Rs 1,000 to Rs 5,000, starting at the age of 60 years, depending on the subscriber's contributions. But what if you initially opted for a monthly contribution of Rs 2,000 pension and now want to upgrade to Rs 5,000? Is that possible?APY is a voluntary pension scheme open to all Indian citizens, particularly targeting workers in the unorganised sector who often lack access to formal retirement benefits . Under this scheme, subscribers contribute a fixed amount monthly, quarterly, or half-yearly, based on their chosen pension amount and their age at the time of joining. The monthly pension contribution options are:Rs 1,000 per month, Rs 2,000 per month, Rs 3,000 per month, Rs 4,000 per month and Rs 5,000 per monthThe amount you contribute depends on your age and the pension amount you earlier you join (ideally between 18 and 40 years of age), the lower your contributions will be, as the scheme works on the principle of long-term you can change your pension amount under APY. The scheme allows subscribers to increase or decrease their pension amount once per financial year during the accumulation phase (i.e., the period before you turn 60 and start receiving the pension). This flexibility ensures that subscribers can adjust their retirement goals based on their financial periodical information regarding the activation of PRAN, balance in the account, contribution credits etc. are provided to APY subscribers by SMS alerts on the registered mobile number or the same can also be accessed through APY Mobile app launched by CRA. The subscriber will also be receiving physical statement of transactions once in a financial year at their registered case of inadequate balance in the saving account of the subscriber till the last date of the month / last date of the first month in a quarter / last day of the first month in a half year, as the case may be, it will be treated as a default and contribution will have to be paid in the subsequent month along with overdue interest for delayed contributions. More than one monthly / quarterly / half yearly contribution can be recovered subject to the availability of the APY account never gets closed due to non-payment of contributions by the subscriber. Further, the subscriber can regularize his/ her account at any point of time by paying contributions for the overdue period along with the overdue interest. However, the deductions would continue to be made in the subscriber's APY account for account maintenance charges and other related charges on a periodic basis till it becomes contributions under APY are invested as per the investment guidelines prescribed by PFRDA for APY. The contributions thus collected are invested and the funds are managed by the Pension Funds namely SBI Pension Fund Pvt. Ltd, LIC Pension Fund Ltd and UTI Retirement Solution Ltd.
Mint
05-05-2025
- Business
- Mint
This Pune resident saved ₹10 lakh in tax by transferring his pension fund to NPS
Pune resident Amit Upadhyay (46) had a large sum of money in a superannuation fund. Contributing to it was compulsory after achieving a certain level of seniority at his previous employer, where he worked for 20 years. "The contributions were a tax-free component of my salary and interest too was not taxable, so I happily went ahead with it," he said. When he moved on to a new job, the second employer had no provision for a superannuation fund, so Upadhyay left his investment as it was. By 2017 it contained ₹ 33 lakh. Had he withdrawn it, it would have become his taxable income for the year. Being in the 30% tax bracket, he would have had to pay nearly ₹ 10 lakh (30% of ₹ 33 lakh) excluding cess and surcharge. If he waited until he turned 60, he would have received a third of it tax-free while the rest would have to be used to buy an annuity. "I did not want to pay such a huge amount of tax by withdrawing it prematurely," he said. Also read: Worried about volatility? Here's where to put your money in uncertain times. Preeti Sharma, partner, global employer services, tax & regulatory services, BDO India, said, 'There are very few approved funds that allow 100% commutation/lump sum withdrawal at the time of retirement. In such a situation, a third of the amount is tax-exempt and the balance is fully taxable. "However, if the balance is invested in an annuity, the employee is not required to pay any tax on it, though the pension from the annuity will be taxed… Any withdrawal before the age of retirement, other than in the event of death, is fully taxable." Union Budget 2017 delivered good news for Upadhyay, as then finance minister, the late Arun Jaitley, announced that a recognised provident fund/superannuation fund could be transferred one-time to the National Pension System (NPS) without any tax liability. "I got hold of the PFRDA (Pension Fund Regulatory and Development Authority) circular. Now I had to reach out to my first employer to start the process," Upadhyay said. The process was simple but time-consuming. "My employer was collecting individual requests from different employees so it could take them up with LIC, which manages the superannuation fund, in one go," he said. Private employees had to follow following steps for the one-time transfer. The very first requirement was an active NPS tier-1 account, which Upadhyay had. They then had to reach out to the superannuation fund manager (LIC in this case) via the employer, requesting it to transfer the funds to the NPS account. The superannuation fund manager would then issue a cheque or draft in the name of the point of presence (PoP) associated with the employer, with the Permanent Retirement Account Number (PRAN) of the employee mentioned. POPs are PFRDA-appointed entities that provide NPS services to subscribers. PRAN is a 12-digit number assigned to individuals enrolled in NPS. Also read | Schengen, US visas: How to crack the application process, plan a smooth holiday It would also issue a letter to the employer or PoP, mentioning that the amount was being transferred from the superannuation fund to the NPS tier-1 account. Finally, the PoP would collect the amount and transfer it to the NPS account. The PFRDA circular read, 'As per provisions of the Income Tax Act, 1961, the amount so transferred from recognised provident fund/superannuation fund to NPS is not treated as income of the current year and hence not taxable. Further, the transferred recognised provident fund/superannuation fund will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make income tax claim of contribution for this transferred amount." However, since Upadhyay had moved on to a new job, two POPs were involved. "My first employer only knew how to proceed with the POP associated with it. The second employer had a different POP. Both of my employers supported me and the cheque finally arrived in the name of the POP of my second employer. They deposited it in my NPS account," he said. Though money had been transferred, Upadhyay still cannot access it. "Now, NPS rules will apply to my funds. If I withdraw it now, 20% will be tax-free while the rest will be converted into an annuity. But if I hold it to retirement, 60% of the funds can be withdrawn tax-free. That was not the case with the superannuation fund. Moreover, I presume returns will be better with NPS than with the superannuation fund," he said. Sumit Shukla, managing director and CEO, Axis Pension Fund, said, 'Moving a superannuation fund to NPS is a win-win for employees and employers as the latter won't have to manage a separate trust and incur administration costs, while the former will get investment choices under NPS with better returns and features." To be sure, the 2017 budget announcement for one-time transfers applies to the Employee Provident Fund (EPF), too, but unlike PFRDA, the EPFO is yet to define a process for it. Also read: Not many claim mental healthcare insurance. Here's why
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Business Standard
28-04-2025
- Business
- Business Standard
Missed your NPS contribution? Unfreeze your account with these steps
Raj Mehta, a 34-year-old IT professional in Pune, had been investing in the National Pension System (NPS) for over five years. Like many working professionals, Raj saw NPS as a tax-saving tool and a way to build a solid retirement corpus. Every year, he would make his minimum annual contribution of Rs 1,000 to keep the account active. However, last year was different. Between changing jobs, a busy wedding season, and moving to a new city, Raj forgot to contribute to his NPS account before the March 31 deadline. When he logged in to check his statement a few weeks later, he was shocked to find his account had been frozen. What happened? Raj's account was classified as "inactive" because he missed making the minimum annual contribution of Rs 1,000 in his Tier I account. As per NPS rules, this automatically freezes the account, making it impossible to make further contributions or access funds until it's reactivated. "If you don't contribute at least Rs 1,000 in a financial year, your NPS account is marked as inactive or frozen. What does that mean? You lose access to the most basic features - no new contributions, no changes to your fund manager or investment plan, no nominee updates and no withdrawals. It's your retirement money, but it's out of your hands until you reactivate it," explains Aakar Rastogi of Value Research. Why Is an NPS Account Frozen? Also Read An NPS account can become inactive or frozen for several reasons: Minimum Contribution Lapse: If you fail to contribute the required minimum amount—₹1,000 annually for Tier I accounts—the account will be frozen. Incomplete KYC Verification: Missing or incorrect Know Your Customer (KYC) documents can lead to account freezing. Non-Submission of Enrollment Form: Not submitting the necessary forms to the Central Recordkeeping Agency (CRA) can result in a frozen account. Inactivity: Prolonged periods without contributions or transactions can cause the account to become dormant. Suspicious Transactions: Any unauthorized or suspicious activity may lead to a freeze for security purposes. The good news? You can fix it in minutes. How to unfreeze it Raj quickly logged in to the CRA portal using his PRAN, such as Protean. Under the 'Contribute Online' tab, he found the 'Unfreeze Account' option. All it took was a small contribution - Rs 1000 - and a reactivation fee of Rs 100. He paid it via UPI, and the account was live again the very next day. Step 1: Logged into the eNPS Portal Raj visited and logged in using his PRAN (Permanent Retirement Account Number). He made an online payment of Rs 1000 as the current year's contribution and an additional Rs 100 as the penalty for missing the previous year. The portal provided a payment receipt instantly. Step 3: Account Reactivated Within five working days, Raj received a confirmation email stating his account had been reactivated. He could now continue investing and claim tax benefits under Section 80CCD(1B). What Raj Learned—and What You Should Know Minimum Contribution is Key: Always contribute at least Rs 1,000 a year to keep your NPS account active. Track Deadlines: Setting up calendar reminders or auto-debits from your bank can save you from freezing issues. Frozen Accounts Can Still Be Fixed Easily: Whether online or offline, reactivation is simple—you just need to make the required payments. No Contributions = No Tax Benefits: Raj missed out on the Rs 50,000 additional tax deduction under 80CCD(1B) for the previous financial year because his account was inactive at the time of filing. Rastogi explains this in detail: People now often assume that under the new tax regime, the NPS had little to offer, since the additional Rs 50,000 deduction under Section 80CCD(1B) was no longer available. What many do not realise is that a key tax-saving provision under NPS still applies, regardless of the regime. Under Section 80CCD(2), if your employer contributes to your NPS account, you can claim a tax deduction of up to 14 per cent of your basic salary. To understand the benefit, consider this: If your basic salary is Rs 12 lakh per year, an annual employer contribution of up to Rs 1.68 lakh (14 per cent of Rs 12 lakh) can be made to your NPS account and claimed as a tax deduction. This employer contribution is often part of your CTC (cost to company), and in many cases, can be adjusted within the overall salary structure. However, it requires active coordination with your employer. "With the financial year just beginning, this is a good time to check with your HR or payroll team to see if this benefit can be included or activated as part of your compensation," Rastogi added. Raj has now set up an auto-debit of Rs 1,000 every quarter just to ensure he never misses the minimum requirement again—even if he plans to invest lump sums later in the year.
India.com
24-04-2025
- Business
- India.com
NPS New Rule 2025: PFRDA Notification To Close NPS Account For THESE Subscribers
photoDetails english 2890481 Updated:Apr 24, 2025, 02:21 PM IST National Pension System New Rule 2025 1 / 7 The Pension Fund Regulatory and Development Authority (PFRDA) has issued new guidelines for subscribers of the National Pension System (NPS) who have renounced their Indian citizenship and do not possess an Overseas Citizen of India (OCI) card. PFRDA circular on NPS 2 / 7 According to a PFRDA circular, such subscribers will have to inform the NPS Trust of their change in status, and their PRAN/NPS account will be closed. The entire accumulated pension wealth of the subscriber will be transferred to the NRO account. PRAN/NPS account of subscriber shall be closed 3 / 7 A PFRDA circular issued on April 21, 2025, states, 'in respect of such subscribers who have validly renounced their Indian citizenship and do not hold an OCI card, the said subscriber is required to forthwith intimate National Pension System Trust (NPS Trust) of the change in status along-with proof thereof and PRAN/NPS account held by the subscriber shall be closed and the entire accumulated pension wealth may be transferred to Non-Resident Ordinary (NRO) account only.' NPS subscribers must take these steps 4 / 7 NPS subscriber who have given up their Indian citizenship and do not possess an OCI card must take the following steps: Inform NPS trust 5 / 7 When a subscriber's citizenship status changes, they must inform the NPS Trust and submit the necessary documentation. Closure of account 6 / 7 The PRAN/NPS account held by the subscriber will be closed. The entire accumulated pension amount of the subscriber will be transferred to their NRO account, following FEMA guidelines. How to close these NPS accounts? 7 / 7 The subscriber must submit an application for NPS account closure along with the following documents to NPS trust: - A signed undertaking confirming that they have renounced Indian citizenship and do not hold an OCI card. - A certificate of renunciation of Indian citizenship, a surrender certificate, or a cancelled Indian passport issued by a competent authority. - After verification, NPS Trust and Central Recordkeeping Agencies (CRAs) will process the closure and transfer the funds to the NRO account of the subscriber.
