SIP facility for NPS likely before Dussehra – all you need to know

The Pension Fund Regulatory Development Authority (PFRDA) is likely to announce a systematic investment plan (SIP) facility for National Pension Scheme (NPS) subscribers before Dussehra, which falls on October 25, 2020.

The regulator is in the final stages of testing the system and will launch it “very soon,” Amit Sinha, executive vice president, NSDL e-Governance told LiveMint.

The move comes as the Centre looks to improve the NPS, and is part of a slew of new facilities such as paperless nomination change, and gradual shift of the entire system to digital by end-2020.

Here is all you need to know about the facility and how it will work:

> SIP in NPS will work similarly to SIP in mutual funds.

> Subscribers will be allowed to set up automated bank payments at regulated intervals toward their investment plan, similar to automated utility bill payments.

> Tax benefit available under NPS: Any individual who is a subscriber of NPS can claim tax benefit under Section 80 CCD (1) within the overall ceiling of Rs 1.5 lakh under Section 80 CCE.

> Tax benefit available under NPS: An additional deduction for investment up to Rs 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under sub-section 80 CCD (1B). This is over and above the deduction of Rs 1.5 lakh available under Section 80C of the Income Tax Act.