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Different Types of NPS Accounts Explained

Types of NPS Accounts

Comparison Between the Two Types of NPS Accounts

From the following table, one can clearly understand the purpose of both NPS accounts and which one is appropriate for a pensioner’s needs.

NPS Tier-I

NPS Tier-II

Tier-I NPS accounts help you to reduce tax outgo as well as accumulate funds for retirement purposes.

Similar to a bank account, a Tier-II account meets your requirements in totality.

This account helps in the accumulation of funds for retirement saving purposes.

Tier-II accounts help in saving funds for various needs.

If a pensioner is focused on a retirement savings plan only, he should open this account.

Individuals looking for an additional source of funds that offer high liquidity should consider opening this account.

There are some restrictions related to the withdrawal of funds from this account.

One can withdraw any amount at any point in time from this type of account.

Pensioners can enjoy tax deductions at the rate of ₹2 lakhs per annum.

Only government employees are exempted from paying tax at the rate of ₹1.5 lakhs.

One needs to make a minimum contribution of ₹500 or ₹1000 to keep a Tier-I account.

The minimum amount to keep this account is ₹250.

No maximum requirement.

No maximum requirement.

 

Therefore, knowing about the types of NPS accounts from the above section will help an individual to understand the scheme better and enjoy benefits to the fullest.

Frequently Asked Questions