0 hidden charges. 0 forex

How to Invest in National Pension System (NPS)?

Reviewed by
Created on
August 24, 2022


What’s Inside

Planning for retirement is crucial for financial management.

The National Pension System (NPS) offers a reliable and flexible investment avenue for building a substantial retirement corpus. The NPS is popular among investors with tax benefits, diverse investment options, and a regulated framework. To gain profits, learn how to invest in NPS and associated schemes.

Understanding the National Pension System

  • The NPS is a voluntary long-term retirement savings scheme initiated by the Indian government. Its primary objective is to provide financial security during retirement years.
  • The Pension Fund Regulatory and Development Authority (PFRDA) regulates the NPS and offers two types of accounts: Tier-I and Tier-II.
  • While Tier-I is a mandatory account with withdrawal restrictions and tax benefits, Tier-II is an optional account with more flexible withdrawal options. This scheme allows you to invest in it through online and offline modes.
  • However, knowing how to invest in NPS online will help you save time since it is a more convenient option.

How to Invest in National Pension Scheme

Investing in the NPS is a straightforward process. It is open to both Indian residents and non-resident Indians (NRIs) aged between 18 and 70. To get started, follow these steps:

1. Choose a Point of Presence (POP)

Choose a POP, a bank or a financial organisation that is an NPS distributor.

2. Fill Out the Application Form

The Common Subscriber Registration Form (CSRF) can be obtained from the preferred POP; fill it with the necessary details.

3. KYC Verification

Attach the required identity and address proof documents, such as PAN card, Aadhaar card, and passport-size photographs.

4. Contribution Payment

Make the first investment, which varies according to the POP selected.

5. How Much to Invest in NPS

Contributions to the NPS can be made periodically through systematic deductions from your salary or online transfers. The minimum annual contribution for this scheme is Rs. 500, making it a flexible option for investors across income ranges.

Investment Choices

The NPS gives you the freedom to choose your investment allocation among three asset classes:

  • Equity: With this, you can invest in equity-related instruments for potentially higher returns.
  • Corporate Bonds: This investment option is mainly designed to focus on fixed-income securities issued by companies.
  • Government Securities: This alternative allows you to invest in fixed-income instruments issued by the government.

Tax Benefits

The NPS provides enticing tax advantages under multiple sections of the Income Tax Act that are listed below:

  • You can claim a tax deduction of up to Rs. 1.5 Lakh under Section 80CCD(1) over and above the Rs. 1.5 Lakh limit of Section 80C.
  • Contributions to the NPS are eligible for an exclusive deduction of up to Rs. 50,000 under Section 80CCD(1B).
  • Partial withdrawals are also permitted for particular objectives such as schooling, marriage, and home purchase.


Investing in NPS is a smart choice for securing your retirement. It offers a flexible and tax-efficient way to build a substantial corpus for your golden years. Remember, the earlier you start, the more you can accumulate for a comfortable retirement.

Start Investing with Fi Money

As a money management platform, Fi offers several investment options. Short-term or Long-term — investing with a simple swipe of your phone's screen is easy. Fi also offers a Peer-to-Peer investment feature called Jump that helps beat inflation! Jump helps you earn up to 9% p.a on your investment. But if you want to save up for a short-term goal & earn interest on it, select our super-flexible Smart Deposit. If you're looking for higher/stable returns, opt for a Fixed Deposit.

Frequently Asked Questions

1. Is there a minimum contribution limit for NPS?

Yes, there is a fixed minimum annual contribution amount decided for NPS, which is Rs.500.

2. Can I switch between investment options?

Yes, you can modify your investing options twice a year with NPS. This adaptability guarantees that your investing plan is per your financial objectives.

3. Who can invest in NPS?

Any Indian citizen between 18 and 70, including NRIs, can join NPS.

4. What are the investment choices in NPS?

NPS provides a variety of asset types, including government securities, corporate bonds, and stocks. You may determine your asset allocation based on your risk tolerance.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
Share this article
Copied Link!
Personal Finance
How to Invest in National Pension System (NPS)?


View similar articles in
Personal Finance
Get the Fi app