In this article, I will discuss everything about How to open NPS Tier II account in Online and Offline
What is NPS Tier 2 account?
Tier 2 in NPS is a pension scheme similar to Tier 1 but with greater flexibility in terms of withdrawal. Tier 2 is a voluntary account without any lock-in period. This allows the account holder to withdraw their money anytime without any penalty. But one must have an active Tier 1 account to open a Tier 2 NPS account.
Investment options in NPS Tier 2 account
Account holders can choose between Government Securities, Fixed Income Instruments and Equity Funds. But only 50% of your amount can be invested in Equity investment. There is also an option for Auto investment, where the fund automatically select the category based on your income and age. Mandatory minimum amount for opening an NPS Tier II is 1,000 INR.
NPS tier 2 Taxation rules
Unlike Tier 1, investments in NPS Tier 2 account don’t qualify for any tax deductions. The main reason for this is Tier 2 Account does not have any locking period which Tier 1 account has.
Withdrawals from Tier 2 NPS account within a year attracts a short-term capital tax for the account holders while withdrawals after a year attract long-term capital tax.
The debt plans of Tier II NPS scheme are attractive with lower costs and better returns. But due to the new Long-Term Capital Gains (LTCG) regime tax, the attractiveness of NPS Tier-II account will be reduced.
How to open NPS Tier 2 account online?
- Visit eNPS official website and click the “Tier II activation” option
- Next screen, add your details like PRAN, Date of Birth, PAN and click on “Verify PRAN” button.
- Once your PRAN verification done, Tier 2 account will be activated immediately.
How to open NPS Tier 2 account offline
One must approach POP-SP (Points of Presence) to Tier 2 account.
You can get the details of nearest POP-SP from the below link:
Account holder must fill and submit the Annexure I form. You need to provide your PAN, PRAN details along with Bank A/C number, Bank name, MICR, IFSC code, address etc. In the same form, you need to select the NPS scheme, option and allocation for Tier II. The properly filled form must be submitted to the POP-SP for activation.
One can also open both NPS Tier 1 & 2 at the same time by filling composite NPS application form.
If you think your friends and family would find this useful, please share it with them – I’d really appreciate it.