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About National Pension System (NPS)

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Low Cost Product

Easily Portable

Choice Of Funds And Scheme Preferences

NPS Partial Withdrawal

Subscribers are allowed to make partial withdrawals from their Tier I NPS account under the updated PFRDA rules.

Tax Benefits Under Investment In NPS

Operating NPS Accounts

Investment in Annuity

Change Personal Details Of The Subscribers

Exit From NPS Account

Important Documents - Charges, FAQs & Guidelines

NPS Grievance Reporting Mechanism

Disclaimer: The customer can transfer the NPS account from one bank to another bank. However, the shifting from a bank to eNPS account is restricted as per PFRDA guidelines.

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Operating NPS Accounts

  • Tier I NPS Account

    • This is mandatory to open in order to join NPS.
    • Minimum contribution of INR 250 at the time of account opening.

  • Tier II NPS Account

    • This is optional for subscriber.
    • Minimum contribution of INR 250 at the time of account opening

Tax Benefits under Investment in NPS

  • Tier I – Tax Benefits

     

    1. Self‑Employed Individuals
     

    • Deduction under Section 80CCD(1):
      Up to 20% of Gross Annual Income, within the overall ₹1.5 lakh limit of Section 80C/80CCE.
    • Additional Deduction under Section 80CCD(1B):
      Extra ₹50,000 deduction over and above the ₹1.5 lakh limit.
       

    2. Salaried Individuals (Employee Contribution)


    Old Regime
     

    • Deduction under Section 80CCD(2):
      Up to 10% of Salary (Basic + DA) within the limit of 7.5 lakh under this section.
    • Additional Deduction under Section 80CCD(1B):
      Extra ₹50,000 allowed beyond the 80C limit.


    New Regime
     

    • Deduction under Section 80CCD(2):
      Up to 14% of Salary (Basic + DA) within the limit of 7.5 lakh under this section.

  • Tier II – Tax Benefits

     

    • No tax benefits available for Tier II contributions.

Investment in Funds

  • There are four funds under NPS:

    • Equities
    • Corporate bonds
    • Government securities
    • Alternate investment funds

  • There are two investment choices available to the subscriber

    • Active choice: The investor can choose the allocation of funds across the four asset classes. The investment towards equities and alternate investment fund is capped at 50% and 5% of the contribution respectively.
    • Auto choice: Here, the pension fund is invested in the three asset classes (E, C and G) in defined proportion basis the age of the subscriber and the life cycle chosen.

Withdrawal From NPS Account

    • Partial withdrawal is allowed after three years up to 25% of his own contributed amount (and not the Corpus) from the date of Tier I account opening / Last partial withdrawal date.
    • Partial withdrawal is allowed only for specific emergencies like child’s marriage, higher education, buying home, treatment of critical illness etc

Exit From NPS Account

  • Pre- Mature Exit: 

    Closure of NPS account before attaining the age 60 years
    1. Up to 20% of corpus can be withdrawn in lump sum
    2. Balance corpus mandatorily to be invested in annuity
    3. If the total corpus is less than or equal to INR 2.5 lakh, there is no mandate to invest in to annuity

  • Exit on Maturity: 

    Closure of NPS account on attainment of 60 years
    1. Up to 60% of corpus can be withdrawn in lump sum
    2. Balance corpus mandatorily to be invested in annuity
    3. If the total corpus is less than or equal to INR 5 lakh, there is no mandate to invest in to annuity

Tax Treatment At The Time Of Exit From NPS Tier I Account:

  • Tax Treatment on Lumpsum corpus withdrawal​:

    1. Partial Withdrawal: Corpus withdrawn is tax exempt
    2. Pre-Mature Exit: Corpus withdrawn in lump sum is tax exempt
    3. Exit on Maturity: 60% of Corpus withdrawn in lump sum is tax exempt.

  • Tax treatment on Annuity:

    Amount invested in Annuity is tax exempt Pension received out of investment in annuity is treated as Income and will be taxed appropriately, if subscriber is falling into any tax bracket


    The Union Cabinet in its Meeting on 6th December, 2018 has enhanced the Tax exemption limit for lump sum withdrawal 60% from 40% . With this, the entire withdrawal will now be exempt from income tax. This is expected to happen effective 1st April 2019 with appropriate change in tax rule.

Investment in Annuity

  • Choose Your Annuity Scheme at the Time of Exit

    At the time of retirement or exit from NPS, subscribers are required to select an Annuity Service Provider (ASP) and an appropriate annuity plan to receive monthly pension. Subscribers can compare annuity rates offered by the empanelled ASPs and choose from the following annuity options:

     

    These annuity options are offered by the PFRDA‑empanelled Annuity Service Providers, who are responsible for issuing and maintaining the annuity after exit from NPS. Subscribers must choose both the ASP and annuity scheme at the time of submitting their withdrawal request.

NPS Partial Withdrawal:

Partial Withdrawal

 

Subscribers are allowed to make partial withdrawals from their Tier I NPS account under the updated PFRDA rules. Key provisions are:

  • Eligible after completing 3 years from the date of opening the Tier I account.
  • Subscribers can withdraw up to 25% of their own contributions (excluding employer contribution).
  • Partial withdrawal can now be made up to four (4) times.
  • A minimum interval of 4 years is required between each withdrawal.
  • After age 60, subscribers may withdraw multiple times, with a minimum 3-year gap between each withdrawal.

 

Permitted Purposes for Partial Withdrawal

 

Withdrawals are allowed only for specific purposes approved by PFRDA, such as:

  • Higher education of children
  • Marriage of children
  • Purchase or construction of a residential house
  • Treatment of specified critical illnesses
  • Skill development, vocational courses, or self-development programmes
  • Expenses for meeting disability or incapacitation
  • Repayment of a loan taken by creating a lien on the NPS account, as permitted under the latest regulations.

Important Documents - Charges, FAQs & Guidelines

Change personal details of the subscribers

  • Subscriber can login to CRA app to change some of his personal details on his own such as
     

    • Mobile no
    • Email Id
    • Scheme preference
    • Tier 2 activation & withdrawal
    • One way switch

  • Customer can submit the Subscriber Modification form
    (download the form) to change below details
     

    • Signature
    • Nominee details
    • Bank details
    • Photograph

About National Pension System (NPS)

National Pension System (NPS) is a voluntary, long-term retirement savings initiative designed to help individuals build a secure financial future. It enables systematic investments during your working years, ensuring financial independence during retirement. The scheme is open to all citizens of India, including NRIs—both salaried and self‑employed.

AU Small Finance Bank Ltd., registered with the Pension Fund Regulatory and Development Authority (PFRDA) as a Point of Presence (POP) under Registration No. 45092018 (valid till 09 March 2028), is authorized to distribute and service NPS.

If you hold a Savings or Salary Account with AU Small Finance Bank, you can easily apply for NPS online through AU0101 (Mobile Banking or Internet Banking) or visit your nearest AU Bank branch for assisted onboarding.

 

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    NPS Multi Scheme Framework (MSF) – More Choice & Flexibility

    Under the PFRDA‑introduced Multi Scheme Framework, NPS subscribers can now invest in multiple Pension Fund Managers (PFMs) and multiple schemes simultaneously within Active Choice.
    This enables:

    • Diversification across asset classes and fund managers
    • Higher flexibility in portfolio construction
    • Allocation of up to 100% in Equity (E) as permitted under MSF
    • Tailored investment strategy based on risk appetite and return expectations
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    3 PRAN against 1 PAN

    As per the latest PFRDA framework, a subscriber (one PAN) may hold up to three PRANs—one with each CRA (Protean, KFintech, and CAMS). This effectively allows opening two additional NPS accounts with different CRAs, in addition to the existing one, against the same PAN.

Choice Of Funds And Scheme Preferences

There are four funds under NPS -
 

  • Equities (E),
  • Corporate Bonds (C),
  • Government Securities (G)


    There are two investment choices available to the subscriber

  • Active Choice: Depending on their risk appetite, subscribers can choose how to distribute their NPS contributions across the three asset classes- Equity (E), Corporate bonds (C), Government Securities (G). Under the Active Choice option, subscribers decide their own allocation, with Equity investment capped at a maximum of 75% as per regulatory guidelines.
  • Auto Choice: In Auto Choice, your pension funds are automatically allocated across the three asset classes—Equity (E), Corporate Bonds (C), and Government Securities (G)—in predefined proportions. These allocations change based on your age and the Life Cycle option you select, ensuring your investment becomes more conservative as you grow older.

Exit From NPS Account

When can a subscriber exit?

You may exit after completing the minimum subscription period of 15 years or at age 60 (superannuation). You may also defer exit/withdrawal up to age 85.

 

A) Normal Exit

  • Upto 80% of corpus as lump sum is allowed; minimum 20% must be used to buy annuity.

Corpus based payouts

  • If total corpus ≤ 8 lakh → 100% lump sum or upto 80% lumpsum & 20% annuity
  • If > 8 lakh – ≤ 12 lakh → up to ₹6 lakh as lump sum; balance via Systematic Unit Redemption (SUR)/structured withdrawal or upto 80% lumpsum & 20% annuity.
  • Corpus > 12 lakh → upto 80% lumpsum & 20% annuity

 

 

B) Premature Exit (before 60 years)

  • Upto 20% lump sum and minimum 80% to annuity.

Corpus based payouts

  • If total corpus ≤ 5 lakh, 100% lump sum is permitted or  20% lump sum and 80% annuity.
  • Corpus > 5 lakh → upto 20% lumpsum & 80% annuity

 

 

Tax Treatment at Exit (Tier I)

1) Lump‑sum withdrawal

  • Partial withdrawal (up to the permitted limit) is exempt
  • Premature exit (lump‑sum component as per rules): the lump‑sum portion is exempt.
  • Exit at 60/superannuation: Up to 60% of corpus taken as lump sum is tax‑exempt

 

2) Annuity

  • Amount used to purchase annuity is not taxed at the time of purchase.
  • Pension (annuity) received thereafter is taxable as income in the year of receipt as per the subscriber’s slab. 

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NPS Grievance Reporting Mechanism

1. Customer can call at – 1800 1200 1200

2. Customer can log the Grievance using NPS Application of CRA

a. Customer can log in to the application

b. Customer to click on Support

c. Select grievance category from the menu

d. Select Grievance sub-category and provide grievance description

e. Upload attachment if any and click on submit to submit the grievance

3. Customer can submit the grievance form at the AU Small Finance Bank branch (Download the form)

4. Customer can write to us – customercare@aubank.in

5. Customer can also connect with our Nodal Officers Click here for details
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