NPS for Traders and Self-Employed Persons

Who Can Join the NPS Traders and Self-Employed Persons Scheme?

The individuals eligible for the NPS-Traders scheme are retail traders, shopkeepers, and self-employed persons such as:

• Laghu Vyaparis
• Shop owners
• Rice mill and oil mill owners
• Workshop owners
• Commission agents
• Real estate brokers
• Owners of small hotels and restaurants
• Such other Laghu Vyaparis

Eligibility Criteria:

• Age must be between 18 and 40 years at the time of joining.
• Annual turnover should not exceed ₹1.5 crore.
• Applicants must not be engaged in the organised sector or be members of EPFO, NPS, or ESIC.
• Beneficiaries of the Pradhan Mantri Shram Yogi Maandhan (PM-SYM) scheme are not eligible.
• Must not be an income taxpayer
• An Aadhaar card and a savings bank or Jan Dhan account with IFSC are mandatory. 

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Benefits of NPS for Traders and Self-Employed Persons

The National Pension Scheme (NPS) for traders and self-employed individuals offers several key benefits:

• Assured Pension: Upon reaching 60, members are entitled to a minimum monthly pension of Rs. 3,000.
• Family Pension: In the event of the subscriber's death, the spouse is eligible to receive 50% of the pension amount as a family pension.
• Government Contribution: The Central Government contributes equally to the subscriber’s contribution, doubling the pension fund accumulation.
• Affordable Contribution: Monthly contributions vary from Rs. 55 to Rs. 200, based on the subscriber’s age when joining the scheme.
• Convenient Payment Facility: Contributions are automatically deducted from the subscriber’s linked bank or Jan Dhan account through an easy auto-debit mechanism.

Enrollment Process for NPS Traders

Eligible individuals can enrol in the NPS-Traders scheme by following these steps:

1. Visit the Nearest CSC: 

   Go to the closest Common Service Centre (CSC) to begin enrollment.

2. Provide Required Documents: 

   Submit your Aadhaar card, bank account details, and IFSC code to the Village Level Entrepreneur (VLE).

3. Make Initial Contribution: 

   Pay the first contribution in cash. Subsequent payments will be deducted automatically.

4. Authentication: 

   The VLE will authenticate your identity by entering your Aadhaar number, name, and date of birth, which are exactly printed on the Aadhaar card.

5. Complete Registration Form: 

   Fill in additional information such as bank details, contact information, spouse details, annual turnover, and nominee.

6. Contribution Calculation: 

   The system will automatically calculate your monthly contribution amount based on your age at joining.

7. Sign Auto-Debit Mandate: 

   Review and sign the enrollment and auto-debit mandate form. The VLE will scan and upload this form to the system.

8. Receive a Unique Account Number and Card: 

   A unique Vyapari Pension Account Number (VPAN) will be generated, and your Vyapari card will be printed and handed to you.

Exit and Withdrawal Provisions of NPS Traders

The key rules apply when a beneficiary exits or withdraws from the scheme, based on the contribution period and age.

Tax Benefits for Traders and Self-Employed Under NPS

If you're self-employed or a trader, contributing to NPS can help you reduce your taxable income under these sections of the Income Tax Act:

1. Section 80CCD(1): Contribution from Your Own Income

   • Applies to: Self-employed individuals and salaried employees
   • What you can claim: Up to 20% for self-employed
   • Limit: Part of the total ₹1.5 lakh limit under Section 80CCD(1)
   • Example:
     • Raghav is self-employed and reports an annual income of ₹5,00,000.
     • 20% of ₹5,00,000 = ₹1,00,000
     • So, Raghav can claim ₹1,00,000 as a tax deduction under this section.
     • However, this is part of the overall ₹1.5 lakh limit under Section 80CCD(1), which includes other investments like PPF, LIC, ELSS, etc.

2. Section 80CCD(1B): Extra Deduction for NPS

   • Applies to: All NPS subscribers
   • What you can claim: Up to ₹50,000
   • Limit: This is in addition to the ₹1.5 lakh limit under Section 80CCD(1)
   • Example:
     • Raghav has already claimed ₹1.5 lakh in deductions from EPF, LIC, and PPF.
     • He now invests another ₹50,000 in NPS.
     • This ₹50,000 can be claimed under Section 80CCD(1B).
     • This benefit is claimed separately and does not fall under the ₹1.5 lakh limit
     • Result: He increases his tax-saving limit from ₹1.5 lakh to ₹2 lakh with this extra ₹50,000.

Conclusion

The NPS-Traders and Self-Employed Pension Scheme is an essential safety net for those outside the formal employment structure. Providing affordable contributions, government matching funds, and assured pension benefits is an effective tool for retirement planning. NPS-Traders supports individual financial independence and ensures family security through its comprehensive provisions for withdrawal, disability, and survivor benefits.