While investing in the NPS, a unique Permanent Retirement Account Number (PRAN) is given to the account holder. PRAN acts like the golden key; only after getting the PRAN can investors open the sub accounts, i.e., Tier I and Tier II accounts. In fact, all the decisions such as Investment amount, fund management, etc. can be modified via PRAN only.

There are two accounts in the NPS, i.e., Tier I and Tier II. A Tier II account is an optional account, and you cannot open a Tier-II account directly without opening a Tier I account. Let’s look at the comparison below:

An NPS calculator can be understood as a mathematical utility tool to calculate the accumulated amount for your NPS investment. Calculating the maturity amount for your NPS investment option using a traditional mathematical calculator is hectic. That's where Pocketful’s online NPS calculator comes to your rescue. Our online NPS calculator offers a user-friendly and free to use interface that even a 5-year-old can use it.

Like all the other investment return calculators, the NPS calculator works on the compounding interest calculator formula.

The formula is given below:

A=P(1+R/N)^NT

Pocketful’s online NPS calculator is user-friendly and free to use. The following are the steps to use the calculator:

Step 1:

Enter the monthly amount that you are currently putting into an NPS scheme or planning to.

Step 2:

Enter the expected interest rate on your National Pension System investment option.

Step 3:

Select the time or the investment tenure for your NPS scheme. Voila! You’re done.

• Voluntary:

  The NPS scheme is a voluntary scheme, which means it is up to the choice of depositors, whether they want to invest in NPS or not. The depositor can start an NPS account anytime they want in the financial year

• Convenient:

  It is very convenient to open a NPS account as the whole process is now paperless. For registration, you can visit your nearest PoP-SP (Point Of Presence – Service Provider). The online system is the quickest way to join NPS.

• Flexible:

  NPS is a flexible investment option as you choose the investment amount and tenure period depending upon your convenience. Flexibility is a significant factor to consider while making investment decisions as it helps you to make the most out of your money and minimize your overall risk.

• Tax Benefits:

  NPS account comes with numerous tax benefits. Investors can get a deduction of up to INR 2 lakhs by investing in the NPS. We have discussed the tax benefits in the next section.

• Regulated:

  NPS is a safe investment option as the central government itself launched it. Further, NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance reviews of the fund managers.

People who contribute to the NPS are entitled to receive certain tax deductions, which are mentioned below:

1. Under Section 80CCD(1), subject to a maximum of INR 1.5 lakhs, the employee can avail of a Tax deduction of up to 10% of their pay (Basic + DA).

2. Tax deduction of up to INR 50,000 under Section 80CCD(1B) for employees; this deduction is over and above the INR 1.5 lakhs deduction under Section 80CCD(1).

3. Under Section 80CCD(2), the Employer's contribution towards the Tier -1 NPS account of an employee is eligible for a tax deduction of up to 10% of pay (Basic + DA) or 14% of salary if such a contribution is made by the Central Government.

4. Self-employed people can claim a tax deduction of up to 20% of gross income under Section 80CCD(1), subject to a total limit of INR 1.5 lakhs under Section 80CCE.