Founded in Mangalore, Karnataka in the year 1906, Canara Bank was eventually nationalised in 1969 and has since then been owned and managed by the Government of India. The bank provides its customers with all the banking facilities including investing in the NPS scheme. Here we will dive a little deeper into how the Canara Bank NPS or National Pension Scheme works.
Overview of the NPS Scheme
Launched by the Government of India in 2004, the National Pension Scheme (NPS) was all set to function as a retirement-oriented pension scheme. With the help of this scheme, investors make long-term deposits into the fund to help build a significant nest egg to help during one’s retirement.
The returns on the investments made by the investors produce market-linked results. These results and the retirement nest egg thus formed are in sync with the inflation. Once the NPS has reached maturity, a guaranteed pension is generated which can act as a source of income in the investor’s senior years.
How to Invest in Canara Bank NPS
Canara Bank provides its customers with two separate ways through which they can invest in the NPS; online and offline methods. Here is a look at both these methods in detail so that you can choose which one suits you the best:
If you want to open a Canara Bank NPS account offline, the very first thing you need to do is visit a designated bank branch. The PFRDA (Pension Fund Regulatory and Development Authority) has authorised Canara Bank to become a Point of Presence for the NPS account opening process, however, this applies to select branches, so it is important to visit the branch accordingly.
At the bank branch, you would need to fill out the application form to subscribe to the NPS scheme and submit it with your KYC documents. If you are not sure whether you will be able to come across the form at the branch you can even download it from the bank’s website. Apart from the form and the KYC documents, you will also need to submit your contribution amount required to open the account. If any bank charges need to be paid for the same, then you would need to be submitted as well. Once the bank has verified all the details you provided and the documents you submitted, you will receive your PRAN (Permanent Retirement Account Number) using which you can track your NPS account and monitor how your investments grow.
You can also invest in the Canara Bank National Pension Scheme easily through their website. The online option requires you to register yourself as an NPS subscriber by entering your first name, date of birth, mobile number, email ID and the captcha code. Post this, an OTP will be sent to the mobile number you used. You would need to enter the OTP that you get on this number to proceed further.
Once this registration process is completed, the bank will verify the details you have provided and open an NPS account for you.
Required Documents for NPS at Canara Bank
Certain documents are required to complete the KYC process to open the NPS account. Here is a list for you:
Identity proof: Voter’s ID Card, Aadhaar card, passport, PAN Card, etc.
Address proof: Voter’s ID Card, Passport, Aadhaar card, driving license, etc.
Age proof: Driving license, voter’s ID card, Birth certificate, Aadhaar card, etc.
Photographs
PAN Card or Aadhaar card
Cancelled cheque from your bank account
Key Features of Canara Bank NPS
To help you better understand the Canara Bank NPS, here is a list of some of its important features:
Active Choice Strategy: Allows you to control and manage your investments.
Auto Choice Strategy: Lets you choose your risk profile after which your investments are divided into different funds in a predefined manner.
Canara Bank also provides you with four types of investment funds; Asset Class A, C, E and G.
Both Indian residents and NRIs can invest in the NPS scheme
A minimum contribution of ₹500 is needed to open a Tier I Account while a contribution of ₹1000 is to open a Tier II Account
Investors can get tax benefits through NPS investments
Tax Advantages of Canara Bank NPS
Apart from the nest egg that the NPS scheme helps investors build, it also provides them with certain tax advantages. Here is a list:
Tier I Account investments enjoy a deduction under Section 80CCD (1) up to ₹1.5 lakhs, a limit that includes the deductions under Section 80C too.
Deductions on additional investments also get a deduction under Section 80CCD (1B) of a maximum of ₹50, 000. This deduction is over and the ₹1.5 lakhs under Section 80CCD (1).
In cases where an employer contributes to the NPS scheme on an employee’s behalf, of up to 10% of their basic salary that includes the dearness allowance, a deduction under Section 80CCD (2) is allowed.
When the NPS matures, investors can withdraw up to 60% of it as lumpsum without it being taxable.
