NPS 2026 — How to Open National Pension System Account Online & Save ₹2 Lakh Tax

Q: What is the additional ₹50,000 NPS tax benefit under 80CCD(1B)?

Section 80CCD(1B) of the Income Tax Act allows an extra deduction of up to ₹50,000 for self-contributions to NPS Tier I, over and above the ₹1.5 lakh limit of 80C. It is exclusive to NPS — no other instrument qualifies. To use it, ensure the contribution is to Tier I (not Tier II) and is from your own pocket (not through your employer). Available only under the old tax regime in 2026.

Q: Tier I or Tier II — which should I open first?

Always Tier I first. Tier I gives you the tax break (₹50,000 extra under 80CCD(1B), and 80C, and 80CCD(2)) — Tier II does not, except for central government employees with a 3-year lock. Open Tier II only after Tier I, and only if you want a flexible, low-cost long-term savings vehicle.

Q: What is the minimum amount to open and maintain NPS?

₹500 to open Tier I; you must contribute at least ₹1,000 in a financial year to keep Tier I active (otherwise it is frozen and reactivated for a small fee). Tier II minimum opening is ₹1,000 with each contribution at least ₹250; no annual minimum.

Q: Can NRIs open an NPS account?

Yes. NRIs and OCIs aged 18–85 can open NPS. Contributions must come from an NRE / NRO / FCNR account. The only restriction: at age 60, the corpus must be paid out in INR; the annuity is purchased from an Indian insurer.

Q: What happens to NPS if I change jobs?

Nothing — NPS is portable. Your PRAN stays the same across employers, locations, and fund managers. Just share your PRAN with your new employer's HR; they update the contribution flow. No new account, no new paperwork.

Q: Is NPS better than PPF or EPF?

Different jobs. EPF is automatic and fixed-rate (~8.25% in 2026), PPF is voluntary and fixed-rate (~7.1%), NPS is voluntary and market-linked (long-term equity-linked CAGR has been 10–12% for top fund managers). NPS also has the unique extra ₹50,000 deduction. Most balanced retirement plans use all three: EPF for stability, PPF for tax-free debt, NPS for equity exposure + the extra deduction.

Q: Is the NPS lump sum at age 60 tax-free?

Yes — 60% of the corpus withdrawn at maturity (age 60) is fully tax-free under Section 10(12A). The remaining 40% must compulsorily buy an annuity; the annuity income you receive thereafter is taxable as pension at your slab rate.

Q: Can I withdraw NPS money before age 60?

Limited withdrawals only. Partial withdrawal: after 3 years, up to 25% of your own contribution, only for specified purposes (housing, education, marriage, illness, etc.) and up to 3 times in the entire account life. Full premature exit: after 5 years, with 80% mandatorily annuitised. There is no general 'break and take' option as in mutual funds.

Q: Which is the best NPS fund manager in 2026?

HDFC Pension, ICICI Prudential Pension and SBI Pension have consistently delivered top-quartile returns over 5- and 10-year horizons across Equity, Corporate Debt and Government Securities schemes. The differences across managers are typically within 50–100 bps over a full cycle, so the bigger lever is staying invested and choosing the right asset allocation.

Q: Can I have both EPF and NPS?

Absolutely. They are independent. You will continue to get the 12% EPF deduction (mandatory if employed in a covered establishment) and you can additionally open NPS to use the extra ₹50,000 80CCD(1B) deduction. Many salaried individuals further request their employer to route 10% of basic into NPS to use 80CCD(2).

Quick summary. National Pension System (NPS) is a voluntary, market-linked retirement-savings scheme regulated by PFRDA. It offers two account tiers — Tier I (locked till 60, retirement-only, mandatory) and Tier II (no lock-in, optional, like a flexible savings wallet). Tax benefits: ₹1.5 lakh under 80C + extra ₹50,000 under 80CCD(1B) + employer contribution up to 10% of basic under 80CCD(2) — totalling deductions well above ₹2 lakh for salaried individuals. Open online in 15 minutes via enps.nsdl.com or enps.nps-proteantech.in using Aadhaar / PAN. Eligibility: any Indian citizen / NRI aged 18–85.

NPS is the central pillar of India’s modern retirement architecture. Designed by PFRDA in 2004 (initially for central government recruits, opened to all citizens in 2009), the scheme combines low costs, tax efficiency, equity-debt diversification and a regulated annuity at exit. Where EPF is automatic for the salaried, and PPF is fixed-rate, NPS is the only retirement vehicle in India that lets you build a market-linked corpus while taking the highest tax deduction available on any pension product — the additional ₹50,000 under Section 80CCD(1B) is exclusive to NPS.

The 2026 framework — under the new tax regime — has tilted further in NPS’s favour: Section 80CCD(2) employer-contribution deduction is now available even in the new regime (where 80C and 80CCD(1B) are not), making NPS effectively the only meaningful tax-saver left for new-regime salaried earners.

NPS at a glance

Detail	Information
Regulator	PFRDA (Pension Fund Regulatory and Development Authority)
Launched	2004 (central govt staff); 1 May 2009 (all citizens)
Account types	Tier I (mandatory, locked) + Tier II (optional, flexible)
Eligibility	Indian citizen / NRI / OCI, aged 18–85
Min contribution Tier I	₹500 per contribution; ₹1,000 per year
Min contribution Tier II	₹250 per contribution; no annual minimum
Asset classes	E (equity), C (corporate debt), G (govt securities), A (alternatives)
Tax benefit Section 80C	Up to ₹1,50,000 (combined with other 80C items)
Tax benefit Section 80CCD(1B)	Additional ₹50,000 (NPS-exclusive)
Tax benefit Section 80CCD(2)	Up to 10% of basic salary (14% for govt employees) — over and above 80C/80CCD(1B)
Exit age	60 (or after 3 years if premature)
Annuity required at exit	Minimum 40% of corpus must buy annuity
Apply mode	Online via eNPS portal or any PoP bank
Time to open	15 minutes (Aadhaar OTP route)

Who is eligible?

Educational Qualification

Not applicable

Age Limit (As on Date of registration)

18 to 85 Years

Other Requirements

Nationality: Indian citizen, NRI, or OCI
Must have a valid PAN — for KYC and contribution tracking
Aadhaar is required for the eNPS Aadhaar-OTP route (skipping it forces a wet-signature flow via PoP)
Bank account with internet banking — for online contributions, lump-sum and SIP-style monthly transfers
Cannot be a person of unsound mind or an undischarged insolvent (standard contracts disqualifier)
HUFs are NOT eligible — NPS is for individuals only

In simple terms. Any Indian adult (18–85) with PAN + bank account can open NPS in 15 minutes online. NRIs and OCIs are welcome — the only difference is that NRI contributions must come from an NRO/NRE/FCNR account.

Tier I vs Tier II — pick the right account

Feature	Tier I	Tier II
Mandatory?	Yes, the primary pension account	No, can be opened only after Tier I is active
Lock-in	Until age 60 (with limited partial withdrawals)	None — withdraw anytime
Min annual contribution	₹1,000	None
Tax deduction on contribution	Yes — 80C + 80CCD(1B) + 80CCD(2)	No (except for central govt staff with 3-yr lock-in under 80C)
Tax on withdrawal	60% lump-sum tax-free at exit; 40% goes to annuity (annuity income taxable)	Capital gains tax as per holding period and asset mix
Use case	Retirement corpus	Flexible long-term savings; substitute for mutual funds for cost-conscious investors

Strategy tip. Most individuals open Tier I first for the tax break, then add Tier II only if they want a low-cost, flexible savings vehicle alongside.

Tax benefits (the real reason to open NPS)

Old tax regime — full stack available

Section	Benefit	Who
80C	₹1,50,000 (shared with PF, PPF, ELSS, life insurance, etc.)	Self contribution to Tier I
80CCD(1B)	Additional ₹50,000 — NPS only	Self contribution to Tier I, over and above 80C
80CCD(2)	Up to 10% of basic + DA (14% for central govt)	Employer’s contribution to your NPS — in addition to 80C and 80CCD(1B)

A salaried person earning ₹15 lakh basic with employer contributing 10% can stack a deduction of: ₹1,50,000 (80C) + ₹50,000 (80CCD(1B)) + ₹1,50,000 (80CCD(2)) = ₹3,50,000 total.

New tax regime — only employer contribution

Under the default new regime in 2026, deductions under 80C and 80CCD(1B) are not available. 80CCD(2) is still allowed, making NPS one of the very few tax-efficient retirement levers left for new-regime salaried earners. If your employer doesn’t already contribute to NPS, ask HR to set it up under your CTC.

At maturity (age 60)

60% of the accumulated corpus can be withdrawn as a tax-free lump sum.
40% must be used to buy an annuity from a PFRDA-empanelled life insurer — annuity income is taxed at slab rates as pension.

Documents required

While filling online form

PAN card (mandatory)
Aadhaar card linked to active mobile number (for OTP-based KYC)
Bank account passbook / cancelled cheque (for SIP and exit credit)
Recent passport-size photograph (digital upload, JPEG, <50 KB)
Active mobile number + email ID

PRAN = Permanent Retirement Account Number, your 12-digit lifelong NPS ID. Issued instantly on the Aadhaar route; takes 7–10 days on the wet-signature route.

How to open an NPS account online

Option A — eNPS (Aadhaar OTP route) — recommended

Go to enps.nsdl.com (NSDL CRA) or enps.nps-proteantech.in (Protean CRA) — both serve the same purpose; pick one CRA and stay with it.
Click Registration → New Registration → Individual Subscriber → Aadhaar offline e-KYC or Aadhaar OTP.
Enter Aadhaar + virtual ID, receive OTP, verify.
Personal details, address, employment, bank account, nominee — all auto-populated from Aadhaar where possible.
Choose Tier I only (most users) or Tier I + Tier II.
Choose your fund manager (HDFC Pension, ICICI Prudential Pension, SBI Pension, UTI Retirement Solutions, LIC Pension, Aditya Birla Sun Life Pension, Kotak Mahindra Pension, Tata Pension, Max Life Pension, Axis Pension, DSP Pension).
Choose Asset allocation: Auto choice (lifecycle, age-based glide path) or Active choice (you set E/C/G/A weights, max 75% to E up to age 50).
Upload photo + signature (JPEG, under 50 KB each).
Make the first contribution (minimum ₹500). Pay via internet banking / UPI / card.
e-sign with Aadhaar OTP — your PRAN is issued instantly. PRAN card PDF is mailed.

Option B — Through a PoP (bank or financial institution)

If you prefer face-to-face, walk into any PoP-SP (most major banks: SBI, HDFC, ICICI, Axis, Kotak, BoB, Canara, PNB, etc.). Carry PAN + Aadhaar + cancelled cheque + photo. The branch official fills the form and submits to the CRA. PRAN comes by post in 10–14 days.

⏰ Last Date: Open (no last date — voluntary, lifelong)

Open NPS via eNPS

Clicking this button will take you to the official government portal.

Choosing fund manager and allocation — a sane default

If this is your first time, the simplest robust setup is:

CRA: pick whichever — NSDL and Protean charge near-identical fees.
Pension fund manager: HDFC Pension, ICICI Prudential or SBI Pension are consistently in the top quartile across 5- and 10-year returns. Past returns are not future returns; what matters more is staying invested.
Allocation: Auto choice — Aggressive Lifecycle (LC75). Equity exposure starts at 75% (up to age 35), tapers automatically as you age toward 60. You don’t need to rebalance manually.
Active choice: only if you actively track markets. Cap E at 75% (PFRDA limit till age 50, then steps down).

You can switch fund manager once a year, and switch allocation four times a year — both at zero cost and no tax impact.

Premature exit and partial withdrawal

Event	Rule
Partial withdrawal (Tier I)	After 3 years of subscription; max 25% of own contribution; only for housing, child education/marriage, critical illness, disability, skill upgrade, or starting a venture; up to 3 times in entire NPS life
Premature exit (Tier I) before 60	After 5 years; 80% goes to annuity, 20% lump-sum
Exit at superannuation (60+)	60% lump-sum tax-free; 40% annuity (mandatory)
Death of subscriber	100% of corpus paid to nominee tax-free; nominee can opt for annuity instead
Tier II withdrawal	Anytime, no restriction (capital gains apply)

Frequently asked questions

1. What is the additional ₹50,000 NPS tax benefit under 80CCD(1B)?

Section 80CCD(1B) of the Income Tax Act allows an extra deduction of up to ₹50,000 for self-contributions to NPS Tier I, over and above the ₹1.5 lakh limit of 80C. It is exclusive to NPS — no other instrument qualifies. To use it, ensure the contribution is to Tier I (not Tier II) and is from your own pocket (not through your employer). Available only under the old tax regime in 2026.

2. Tier I or Tier II — which should I open first?

Always Tier I first. Tier I gives you the tax break (₹50,000 extra under 80CCD(1B), and 80C, and 80CCD(2)) — Tier II does not, except for central government employees with a 3-year lock. Open Tier II only after Tier I, and only if you want a flexible, low-cost long-term savings vehicle.

3. What is the minimum amount to open and maintain NPS?

₹500 to open Tier I; you must contribute at least ₹1,000 in a financial year to keep Tier I active (otherwise it is frozen and reactivated for a small fee). Tier II minimum opening is ₹1,000 with each contribution at least ₹250; no annual minimum.

4. Can NRIs open an NPS account?

Yes. NRIs and OCIs aged 18–85 can open NPS. Contributions must come from an NRE / NRO / FCNR account. The only restriction: at age 60, the corpus must be paid out in INR; the annuity is purchased from an Indian insurer.

5. What happens to NPS if I change jobs?

Nothing — NPS is portable. Your PRAN stays the same across employers, locations, and fund managers. Just share your PRAN with your new employer's HR; they update the contribution flow. No new account, no new paperwork.

6. Is NPS better than PPF or EPF?

Different jobs. EPF is automatic and fixed-rate (~8.25% in 2026), PPF is voluntary and fixed-rate (~7.1%), NPS is voluntary and market-linked (long-term equity-linked CAGR has been 10–12% for top fund managers). NPS also has the unique extra ₹50,000 deduction. Most balanced retirement plans use all three: EPF for stability, PPF for tax-free debt, NPS for equity exposure + the extra deduction.

7. Is the NPS lump sum at age 60 tax-free?

Yes — 60% of the corpus withdrawn at maturity (age 60) is fully tax-free under Section 10(12A). The remaining 40% must compulsorily buy an annuity; the annuity income you receive thereafter is taxable as pension at your slab rate.

8. Can I withdraw NPS money before age 60?

Limited withdrawals only. Partial withdrawal: after 3 years, up to 25% of your own contribution, only for specified purposes (housing, education, marriage, illness, etc.) and up to 3 times in the entire account life. Full premature exit: after 5 years, with 80% mandatorily annuitised. There is no general 'break and take' option as in mutual funds.

9. Which is the best NPS fund manager in 2026?

HDFC Pension, ICICI Prudential Pension and SBI Pension have consistently delivered top-quartile returns over 5- and 10-year horizons across Equity, Corporate Debt and Government Securities schemes. The differences across managers are typically within 50–100 bps over a full cycle, so the bigger lever is staying invested and choosing the right asset allocation.

10. Can I have both EPF and NPS?

Absolutely. They are independent. You will continue to get the 12% EPF deduction (mandatory if employed in a covered establishment) and you can additionally open NPS to use the extra ₹50,000 80CCD(1B) deduction. Many salaried individuals further request their employer to route 10% of basic into NPS to use 80CCD(2).

Latest updates (2026)

80CCD(2) under new regime: From AY 2024-25 onwards, the employer-contribution deduction continues to be available under the new tax regime — 14% of basic for government employees, 10% for private sector. This makes NPS the most efficient remaining tax-saver for new-regime salaried individuals.
Systematic Lump-sum Withdrawal (SLW): Subscribers retiring at 60 can now phase the 60% lump-sum across up to 75 years of age (annual / quarterly / monthly tranches), keeping it invested in the meantime — extending tax-deferral benefits.
D-Remit / Direct contribution: Same-day investment value (NAV) is now applied if contributions hit the trustee bank by 9:30 AM on a working day, via the D-Remit virtual account.
Combined CSRF / Aadhaar e-KYC: A single unified registration form has replaced the older multi-page CSRF, cutting eNPS onboarding time to under 12 minutes for first-time users with Aadhaar.

Official links

Disclaimer. SarkariBaba is an independent information publisher and does not provide investment, tax or legal advice. NPS is a market-linked product; returns are not guaranteed. Tax provisions change with the Finance Act each year; verify current limits with your CA or at incometax.gov.in before filing. Always confirm fund-manager performance and exit rules at npstrust.org.in.

Article Information

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Published 7 May 2026

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Written by Priya Iyer

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Reviewed by SarkariBaba Editorial Team

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Source PFRDA, NPS Trust, Income Tax Department, Protean (formerly NSDL e-Gov), official Sections 80C/80CCD(1B)/80CCD(2) of the Income Tax Act

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Fact-Checked Tier I/II contribution limits, 80CCD(1B) ₹50,000 limit, 60/40 exit split, eligibility ages, eNPS flow verified against npstrust.org.in, pfrda.org.in and enps portals on 7 May 2026