The Government of India established Pension Fund Regulatory and Development Authority (PFRDA) on 10th October 2003 to develop and regulate the Pension Funds under the New Pension Scheme. PFRDA has appointed National Securities Depository Limited (NSDL) as the Central Record Keeping Agency (CRA) to maintain the records of contribution and its deployment in various pension fund schemes for the employees, Bank of India as Trustee Bank, SBI, UTI and LIC as pension fund manager. It executed deed of New Pension System (NPS) Trust and now NPS Trust came in to existence on 27th February, 2008.Stock Holding Corporation is also engaged for taking care of investing pension amount.
Government of Chhattisgarh decided to adopt the scheme for its new joining employees with effect from 1-11-2004 and accordingly issued notification vide No. 977/C-761/F/R/IV dated 27th October 2004. DTAP is given the responsibility of accounting the monthly contributions made by employees and issue annual information on available fund in his/her account after duly incorporating Employer's contribution and interest calculated there upon.
As per the guidelines of PFRDA, C.G. government has adopted Contributory Pension Scheme with effect from 01-11-2004. Scheme has been implemented for pay from March 2006. As on 31-12-2017 total subscribers under scheme of CPS is 1,38,167. Under the scheme 10% of basic pay, dearness allowance and dearness pay is compulsorily deducted from salary of employee and same amount is also deposited by employer as employer's contribution.
At the beginning the maintenance of record under the scheme was done by Directorate of Treasury, Accounts and Pension, Chhattisgarh and fund was deposited in State public Account.
From 01-11-2004 to 30-06-2009, fund was maintained under state public account and PPAN (Permanent Pension Account Number) was allotted by DTAP to government employees till 31-03-2009. From 01-04-2009 PRAN has been allotted by NSDL CRA.
Under PFRDA guidelines, DTAP has entered into agreement with NSDL as its CRA as on 19-09-2008 and with NPS trust as on 20-02-2009, on behalf of state government.
Dual benefit of Low Cost & Power of Compounding: The pension wealth accumulates over a period of time till retirement; grows with a compounding effect and the account maintenance charges are also low.
Tax Benefits:
(i) On Employee’s contribution: Employee’s own contribution is eligible for tax deduction under sec 80 CCD (1) of Income Tax Act up to 10% of salary (Basic + DA).
This is within the overall ceiling of Rs. 1.50 Lacs under Sec. 80 CCE of the Income Tax Act.
(ii) On Employer’s contribution: Up to 10% of Basic & DA (no monetary ceiling) under 80CCD (2). This rebate is over and above 80 CCE limit of Rs 1.50 lacs.
(iii) From F.Y. 2015-16, subscriber is being allowed tax deduction in addition to the deduction allowed under Sec. 80CCD(1) for contribution in his NPS account subject to maximum of Rs. 50,000/- under Sec. 80CCD 1(B). At present, At the time of exit, the amount utilized for purchase of annuity is tax exempted. From 1st April, 2016, 40% of the total accumulated corpus under NPS has been made tax free. Further, from FY2017-18 onwards, partial withdrawals will be treated as tax free.
Safety: Regulated by the Pension Fund Regulatory & Development Authority (PFRDA) and introduced by the Government of India & respective states.
Transparency: Through online access to your pension account & disclosure of information by PFMs in their annual reports.
Portability: Across all geographical locations and employments across India, PRAN is portable across all the sectors by submitting Inter Sector Shifting form (ISS-1) it means same PRAN may be used with new employer or may be used in the individual capacity, if not employed.