Types of Accounts

The NPS offers the following two types of accounts to subscribers: Tier I Account: This account is mandatory for opening the NPS account. It is generally a non-withdrawal account except when allowed under PFRDA Act. Subscribers contribute their savings in this account and can claim tax exemption on their contributions under Section 80C of Income Tax Act. The minimum contribution is Rs 500 for initial and subsequent contributions. So, the minimum contribution in a year is Rs 6,000. Tier II Account: This is a voluntary savings facility but not a retirement account. An account under Tier II cannot be opened unless the subscriber is already having a Tier I account. Under this account, facilities for withdrawals are available during the subscription period. However, no tax benefits can be claimed on such contributions. Further, the minimum contribution per year is pegged at Rs 2,000 under this model. There has to be a minimum of one contribution in each year. Initial contribution at the time of opening this account is Rs 1,000 and subsequent contributions have to be a minimum of Rs 250.