This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at firstname.lastname@example.org
Last minute tax savers have only 4 days left to finalise their tax saving investments. If my previous post on NPS could help you take a decision to invest in it or not, then it is the time for you to act now. If you have finally decided to invest in NPS, then going for it in an offline manner won’t help you meet the March 31 deadline. But, you can still make it if you already have Aadhaar number with you and you can make online payment for it through internet banking or credit/debit card.
As most of you are aware by now, NPS provides you an exclusive tax benefit under section 80CCD (1B) which no other investment is allowed to do for you. You get a tax exemption of Rs. 50,000 under this section, which is over and above Rs. 1,50,000 exemption under Section 80C. So, if you fall in the 30% tax bracket, your investment of Rs. 50,000 in NPS saves you an additional Rs. 15,450 in taxes.
Where to go to make the NPS investment to Save Tax?
Many investors are still confused where to go or whom to contact in order to make this NPS investment. Although many banks/intermediaries/brokers have been providing such services, they all are advising their own procedures to follow to complete the registration. This is leaving many people more confused and the NPS registration process more complicated.
But, with eNPS, you will be provided all the support you require at the click of a mouse and you need not worry about which bank or intermediary to approach to and what procedures to follow in order to save your tax.
eNPS – How to go about it?
As you must be aware, as per SEBI guidelines, one is required to go through the KYC process to make any kind of market-linked investment. NPS also requires you to get it done before your account gets activated. You need to visit any of the NSDL appointed Point of Services (PoS) i.e. any of designated bank branches authorised to sell NPS or any of the intermediaries such as CAMS, Karvy, ICICI Securities, HDFC Securities or FundsIndia, and submit your PAN card, address proof, photograph and bank details along with the duly filled application form in order to get your KYC verification.
These banks/intermediaries would then forward your application and other documents to the Central Recordkeeping Agency (CRA), which would allot you a Permanent Retirement Account Number (PRAN) and open an NPS account in your name. This whole process usually takes 15-20 days as your PRAN gets generated and allotted to you.
However, with the introduction of eNPS, you are not required to visit any of the banks or intermediaries to submit your application form and other necessary KYC documents. As per the official website for eNPS, you have two options to register yourself online and I would like to explain you both the options here.
Option I – Registration on www.enps.nsdl.com using Aadhaar
If you have your Aadhaar number and your mobile number is linked to it, you need to register yourself online on https://enps.nsdl.com and make the payment through netbanking or credit/debit card. Your PRAN gets generated as soon as you register and make the payment.
For registration, you will be required to fill up the application form online and upload your signature in *.jpeg/*.jpg format. For authentication, a one-time password will be sent to your registered mobile number. The KYC process will be done using your demographic details and photo from the Aadhaar database. If desired so, you can replace your photo as well.
Option II – Registration using PAN (KYC Verification by Banks)
As many as 40 banks, including State Bank of India (SBI), Kotak Mahindra Bank, IndusInd Bank, Yes Bank, Canara Bank and IDBI Bank etc., are also providing such online services for KYC verification and PRAN generation. You can get the complete list all these 40 banks on the eNPS website.
If you have your bank account with any of these 40 banks, you have already got your PAN number or Aadhaar number linked to your bank account and you can make online payment using the bank’s internet banking facility or credit/debit card, then you can invest in NPS online using your bank’s services.
You just need to fill up your details online, upload your scanned photograph and signature in *.jpeg/*.jpg format and make the payment. As soon as you make the investment, a PRAN will be allotted to you.
Please note that these banks and intermediaries do get paid certain transaction charges or service charges for all these services they provide you through their own platforms. However, you can save these charges by routing your transactions through eNPS.
90 Days to Dispatch KYC Documents – This is the only thing you need to do in an offline manner. Central Recordkeeping Agency (CRA) gives you 90 days’ time to send your duly attested KYC documents to reach them for further authentication. You need to take a printout of the application form, paste your photograph, sign it in the block provided and post it to the CRA within 90 days from the date of PRAN allotment.
The PRAN Kit containing a PRAN Card, Internet Password (IPIN), Telephone Password (TPIN), Subscriber Master Report, Scheme Information Booklet along with a Welcome Letter will be sent to your registered address post that.
Credit Card Payment – Every year in March, I come across many of my clients/friends who face some kind of cash crunch, either due to an abnormally high tax deduction from their salaries or due to their last minute investments/payments to save tax. If you are one of them, then this is a good news for you. As mentioned above as well, eNPS allows you to make your investment through a credit card also. So, you can effectively defer your cash outflow by a few days or weeks using a credit card and still enjoy the tax benefit for the current financial year.
eNPS for Old Subscribers – Existing subscribers can also make their NPS contributions using the eNPS platform. You just need to visit the eNPS website and make the contribution authenticating your PRAN using the OTP sent to your registered mobile number. Again, you can opt for either internet banking or credit/debit card to make the contribution.
I hope the above information helps you do your tax saving investment in NPS, even if you have decided late to go for it. If you have any further queries or need more information regarding eNPS, you may contact Central Recordkeeping Agency (CRA) or NSDL e-Governance Infrastructure Limited at 1800 22 2080 or 022 – 40904242 or eNPS@nsdl.co.in
Your general views, queries and suggestions are always welcome here on this OneMint forum.