How to Transfer Money to NPS Account: Contribution Process Explained

What are the Modes of Contribution to an NPS Account?

You can contribute to your NPS account through online and offline methods. The NSDL and CRA (Central Recordkeeping Agency) have simplified this process through secure digital platforms and authorised physical locations.

Steps for Making Online Contributions via eNPS

Here's how to easily contribute to your NPS account online through the eNPS portal and make your retirement planning process smooth and secure:

• Access the eNPS Portal: Navigate to the eNPS website.
• Select 'Contribution': Click on the 'Contribution' tab and choose 'Contribute Online'.
• Enter PRAN and Date of Birth: Provide your PRAN and date of birth for verification.
• Verify PRAN: Choose to receive an OTP via SMS or email, enter the captcha, and click 'Verify PRAN'.
• Enter Contribution Details: Select the account type, Tier 1 Account or Tier 2 Account, and input the contribution amount.
• Review Charges: The system will display applicable charges and the total amount payable.
• Make Payment: Choose your preferred payment gateway, accept the terms and conditions, and click 'Make Payment' to complete the transaction.

How to Contribute Using UPI

Unified Payments Interface (UPI) enables real-time transfers via mobile platforms. Here's how to contribute using UPI:

• Activate UPI: Download a UPI app, register your UPI ID, set your MPIN, and link your bank account.
• Initiate Payment: On the eNPS portal, select UPI as the payment option and enter your UPI ID.
• Authorise Transaction: You will receive a payment notification on your UPI app. Log in and complete the transaction by entering your MPIN.

How to Contribute via the NPS Mobile App

You can make contributions easily through the NPS Mobile App. Here's how:

• Download the App: Install the NPS mobile app from the Play Store or App Store.
• Initiate Contribution: You can perform the transaction without logging in.
• Enter Details: Provide your PRAN, date of birth, and captcha, then click 'Verify PRAN'.
• OTP Verification: Enter the OTP sent to your registered mobile number or email.
• Select Account and Amount: Choose the account type (Tier 1 or Tier 2) and enter the contribution amount.
• Review and Pay: The system will display applicable charges. Choose your payment method and complete the transaction.

How to Deposit Money in an NPS Account Offline

Contributing to your NPS offline is straightforward, allowing you to make payments physically. You can visit an authorised bank branch or an NPS Point of Presence (POP-SP) centre. Below are the steps for both:

This method involves depositing money at a bank branch or a POP-SP centre:

• Visit POP-SP or Bank Branch: Go to your nearest POP-SP centre or authorised bank branch. 
• Fill Out Contribution Slip: Obtain and complete the NPS Contribution Instruction Slip (NCIS) with the details like PRAN, name, date of birth, contribution amount, and payment mode.
• Submit Payment: Submit the filled form and your contribution via cheque, demand draft, or cash.
• Receive Acknowledgement: Collect the receipt as proof of your contribution.
• Processing Time: Your contribution will be credited to your NPS account within T+2 working days.

This process can be done at any authorised bank branch or POP-SP centre, giving you the flexibility to contribute to your NPS account.

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Tax Benefits for NPS Contributions

The Income Tax Act offers specific deductions for Jaya’s contributions to the National Pension Scheme (NPS), covered under Sections 80CCD(1), 80CCD(1B), and 80CCD(2).

1. Section 80CCD(1): Employer’s Own Contribution

   Eligibility:

   • Salaried employees
   • Self-employed individuals

   Deduction Limit:

   • Salaried individuals: Up to 10% of salary (Basic + Dearness Allowance)
   • Self-employed individuals: Up to 20% of gross total income
   • Subject to the overall ceiling of ₹1.5 lakh under Section 80CCD(1)

   Example:

   • Jaya’s Basic Salary + Dearness Allowance = ₹15,00,000 per year
   • 10% of ₹15,00,000 = ₹1,50,000
   • Jaya can claim ₹1,50,000 under Section 80CCD(1)
   • This ₹1.5 lakh is within the overall 80C limit, which includes LIC, PPF, ELSS, etc.

   Note: If Jaya has already exhausted her ₹1.5 lakh limit through other investments, she can’t claim this deduction unless she reduces those other contributions.

2. Section 80CCD(1B): Additional Deduction

   To encourage greater retirement savings, an additional deduction was introduced under Section 80CCD(1B).

   Eligibility:

    All NPS subscribers

   Deduction Limit:

   • Up to ₹50,000 per financial year
   • This is over and above the ₹1.5 lakh limit available under Section 80CCD(1)

   Example:

   • Jaya has already claimed ₹1.5 lakh under LIC, EPF, and PPF
   • She contributes an extra ₹50,000 to NPS
   • This ₹50,000 is eligible separately under Section 80CCD(1B)
   • So Jaya gets total deductions of ₹2 lakh

3. Section 80CCD(2): Employer’s Contribution

   This provision applies only to employees whose employers contribute to their NPS accounts.

   Deduction Limit:

   • Up to 10% of salary (Basic + DA) under the old tax regime
   • Up to 14% under the new tax regime for central and state government employees
   • This deduction is not part of the ₹1.5 lakh limit under Section 80CCD(1)

   Example:

   • Jaya’s Basic Salary + Dearness Allowance = ₹10,00,000
   • Her employer contributes ₹1,00,000 (10%) to NPS
   • Jaya can claim this full ₹1,00,000 under Section 80CCD(2) as a deduction 
   • This is a separate benefit and does not reduce the ₹2 lakh he can already claim under Sections 80CCD(1) and 80CCD(1B)

Conclusion

Transferring money to your NPS account is simple and secure through multiple online and offline methods, including the eNPS portal, mobile app, UPI, and POP-SP centres. NPS not only helps build a substantial retirement corpus but also is a good tax savings option. Regular contributions and smart planning can lead to a financially stable retirement.