The National Pension System (NPS) is a government-sponsored retirement savings scheme aimed at ensuring a stable income after retirement. The scheme offers long-term investment opportunities and also offers tax benefits. NPS was launched in 2004 for government employees, which was later made available to all Indian citizens aged 18-60 years.
How to make NPS payment through a credit card?
Contributing to NPS through credit card is an easy and simple process. Follow these steps:
-First of all, log in to your NPS account.
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-Go to the Contribution section of your account.
-Now select the NPS Tier 1 Account option.
-Enter your credit card details correctly.
-Confirm the amount you wish to contribute.
-After verification, your NPS account will be credited within 2 business days (T+2).
Advantages and disadvantages of contributing to NPS through credit card
Advantages:
Continuous contribution despite cash flow issues: Regular contribution through credit card is possible even if you are cash-strapped.
Higher use of credit card: Contributing through credit card can increase your rewards and cashback benefits.
Tax benefits: You get tax relief when contributing to NPS.
Disadvantages:
Higher service charges: Payments through credit card attract higher service charges than debit card or net banking.
Higher interest rates: Borrowing on credit card can lead to higher interest rates, making it costlier.
Reward impact: Sometimes credit card rewards do not cover transaction charges, making it less beneficial for some users.
Also read: Can pensioners change spouse name or surname after retirement? Central govt issues fresh guidelines
Who is eligible?
If you have a valid NPS Tier 1 account and have a credit card, you can contribute to NPS through a credit card. However, it is important to ensure that your credit card complies with the rules set by the regulatory bodies of NPS.
Transaction charges on different payment modes:
Debit Card: 0.80% of the transaction amount + 18% GST
Credit Card: 0.90% of the transaction amount + 18% GST
Net Banking: Rs 0.60 per transaction + 18% GST
Tax Benefits for NPS Tier 1 Account
NPS Tier 1 account holders can avail tax-saving deductions on their contributions:
Under Section 80C: Deduction up to rs 1.5 lakh.
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