Savings Schemes
by 5paisa Research Team Last Updated: 2023-08-22T16:04:59+05:30

The full form of NPS is the National Pension Scheme. It is a pension scheme launched by the Government of India in 2004 and managed by the Pension Fund Regulatory and Development Authority (PFRDA) to provide long-term retirement benefits for citizens. 

It allows people to invest in various types of funds and instruments, depending on their financial goals and risk appetite. However, there are certain NPS charges associated with using this retirement scheme – these can include administrative fees, fund management fees, pension fund charges, etc. 

Understanding the various charges associated with NPS is essential for any investor who wishes to make informed decisions about their investments. 

In this article, we will take an in-depth look at the different National Pension Scheme Charges that may apply when investing in an NPS account.

What is National Pension Scheme?

The National Pension Scheme is designed to offer a steady source of retirement income to the citizens of India. It is a voluntary retirement savings plan that is regulated by the PFRDA (Pension Fund Regulatory and Development Authority), which all the citizens of India are eligible to hold, including self-employed Indians as well as NRIs. 

Two types of accounts are offered by the National Pension Scheme: Tier 1 and Tier 2. The Tier 1 account aims at providing long-term retirement savings and can’t be withdrawn. On the other hand Tier 2 account is flexible, and therefore, one can withdraw it at any time. Tier 2 account also serves as a voluntary savings account. 

The scheme comes with numerous investment options, including government securities, debt, and equity, among which the subscribers can select their asset allocation per their risk-taking ability. The scheme also comes with tax benefits, making it a feasible and attractive option for retirement planning. 

What are National Pension Scheme Charges?

National pension scheme charges involve all the expenses and fees deducted from a subscriber’s investment and contribution. The NPS charges can be partly categorised into several types, detailed in the following tables below.


National Pension Scheme Charges & Fees

NPS Point Of Presence (POP) Charges in India:

The various POP charges of NPS are given in the table mentioned below:

Point Of Preference Charges For NPS


Method Of Deduction Of Charges

Account Opening Charges

Rs. 400

Collection of the charge is done upfront

Processing Of Contribution

0.50%, which can range between a minimum amount of Rs. 30 and a max of Rs. 25,000

Collection of the charge is done upfront

Processing Of Non-financial Transactions

Rs. 30

Collection of this charge is done upfront

Persistency (for active retail customers having a tenure of more than 6 months with POP)

  • For a yearly contribution of Rs. 1000 to Rs. 2999, the charge is Rs. 50 per annum.
  • For a yearly contribution of Rs. 3000 to Rs. 6000, the charge is Rs. 75 per annum.
  • For a yearly contribution above 6000, the charge is Rs. 100 per annum.

Collection of this charge is done upfront.


NPS Central Recordkeeping Agency (CRA) Charges in India:


The various CRA charges of NPS are given in the table mentioned below:

Central Recordkeeping Agency Charges For NPS


Method Of Deduction Of Charges

PRA Opening Charges

Rs. 50

Unit cancellations

Per Account Maintainance Cost Of Annual PRA

Rs. 225

Unit cancellations

Per Registration Charges

Rs. 5

Unit cancellations

Other Intermediary Charges for NPS in India

Other intermediary NPS charges are discussed in the tables given below:




NPS Charges


Method Of Deduction

Transactions issues from RBI locations

Rs. 0

NAV deductions

Transactions issued from Non-RBI locations

Rs. 15

NAV deductions




NPS Charges


Method Of Deduction Of Charges

Fees for management of the investment

Pension Fund manages AUM slabs


  • 0.09% up to 10,000 Cr.
  • 0.06% from 10,001 upto 50,000 Cr.
  • 0.05% from 50,001 upto 1,50,000 Cr.
  • 0.03% above 1,50,000 Cr.

NAV deductions




NPS Charges


Method Of Deduction Of Charges

Asset Servicing Charges

  • 0.05% p.a. for the physical segment
  • 0.0075% p.a. For electronic segment

NAV deductions




NPS Charges


Expense Reimbursement

0.005% p.a.


Payment Gateway Service Charges for NPS in India


Mode Of Payment

Quotation Rate Per Transaction




Not applicable

Credit card

A percentage of the total transaction value


Internet Banking

Flat rate as per INR


Debit Card


Not applicable


Steps to Use an NPS Calculator:

Follow the given steps to get started with NPS calculation: 

●    Open any NPS calculator available online.
●    Enter the sum you intend to invest monthly in the scheme
●    Provide the details of your current age
●    Enter your expected rate of return
●    The results will instantly appear on your screen after correctly entering all the desired information. 

How to Make NPS Contribution?

To make an NPS contribution, one must subscribe to it. Once the subscription is completed, a permanent retirement account number will be allocated. With the help of this PRAN number, you can make monthly contributions to the pension scheme offline or online. 

Online NPS Contribution 

The first step to making an online NPS contribution is visiting the NPS official website. Then click on the contribution tab, which will direct you to the subscriber's service page, where you can put your PRAN number and other relevant information and make an online contribution hassle-free.

Minimum and Maximum NPS Tier 1 Contribution 

The minimum contribution for Tier 1 NPS required to keep the account active is Rs. 1000 per year. Contributions can be made as often as wished throughout the financial year. Also, there is no maximum limit for NPS Tier 1 contribution.

Minimum and Maximum NPS Tier 2 Contribution 

No minimum and maximum amount for NPS Tier 2 contribution has been specified for yearly contribution in the NPS scheme.   

NPS Contribution to NRIs 

As per the latest rules and regulations, NRIs must contribute a minimum amount of Rs. 500 for opening an NPS Tier 1 account. However, NRIs must contribute at least Rs to keep the account active. 6000 p.a. However, there exists no maximum limit of NPS contribution for NRIs.

NPS Contribution by Employer

As per the rules, employees working in government sectors are entitled to automatic contributions into their pension account by the government. Among employees working in the private sector, NPS contributions are less common, but they are allowed to make contributions. 

NPS Online Contribution Payment Gateway Charges

While making online NPS contributions, you must be aware of the various payment gateway charges that will be applicable. These are:

●    NPS contributions made through Internet banking are charged Rs.0.60 per transaction, excluding GST.
●    NPS contributions through the Deviot cards are charged 0.80% of the total transaction amount, excluding GST.
●    In the case of NPS contribution with a credit card, the charges are 0.90% of the total transaction amount excluding GST.

Additional NPS Online Contribution Charges 

Besides the payment gateway charges, some other charges are levied on NPS contributions. This is 0.10% of the total contribution amount ranging from a minimum of Rs. 10 to a maximum of Rs 10,000 for each contribution. This is charged apart from the payment gateway charges on using a credit or debit card for NPS online contribution. 

Offline NPS Contribution Charges 

For offline contributions through cash/cheque/demand draft through a POP-SP ( Point Of Presence Service Provider), 0.25% of the total amount is charged. Here the minimum charge is Rs. 20, and the maximum is Rs. 25,000. For instance, if the amount contributed is 1,00,000 through POP-SO, the charge will be Rs. 250 for the entire transaction. 

Age Limit for NPS Contributions 

The minimum age limit for starting an NPS contribution in the scheme is 18 years and can be done until 70. Although the maturation of the account happens at the age of 60 of the account holder, one can continue the contribution till the age of 70.

Tax Deduction on Contributions

If you have contributed to an NPS Tier 1 account, you are eligible for tax benefits, in which you can be benefited from tax deductions up to Rs. 1.5 Lakh under Section 80CCD(2) and Section 80CCD (1). Also, under Section 80CCD (1B), you are eligible for a tax deduction on an additional annual contribution of Rs. 50,000.


Example of How Tax Deduction Works with NPS

Suppose your annual gross income is Rs. 8 Lakhs, and you have contributed Rs. 2 Lakhs to NPS Tier 1. The entire amount will be eligible for a tax deduction, keeping your net income as Rs. 7 Lakhs.



To sum up, it is essential to understand the NPS charges meaning to safeguard your money and be aware of any extra inclusions or charges. However, you must also be knowledgeable about how to minimise NPS charges. While most of the charges are unavoidable, they can be reduced with due diligence. Conducting profound research and developing a smart plan would be beneficial. 

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Frequently Asked Questions

Some ways to avoid NPS service charges are as follows:

●    Select the right Pension Fund Manager
●    Try to minimise the transaction frequency
●    Opt for electronic statements
●    Select auto-debit option
●    Refrain from premature withdrawals

No, NPS is not entirely free of tax. It does offer some tax benefits under the Income Tax Act sections. A tax deduction claim of Rs. 2 Lakhs can be claimed per annum under section 80C of the Income Tax Act for Investment. However, such a deduction comes with a limit of 1.5 Laks, including other investments like the Public Provident Fund, life insurance, etc. Also, the withdrawal amount during the scheme’s maturity is not entirely tax-free. Only 60% of the corpus is tax-free, while the remaining 40% is taxable. 

If payment in the NPS account is stopped, the account will become dormant. Once it becomes dormant, you will not be able to make contributions. To restore your contributions, you must reactivate your account by paying some penalty charges and all the pending contributions. 

National Pension Scheme also offers SIP for Tier 1 account holders. The charges for SIP in NPS include a one-time registration fee for the facility. The transaction charge of each transaction is Rs. 1 per transaction for a contribution up to Rs. 10,000 and Rs. 0.25 per transaction for contributions above 10,000. Along with this, there is a fund management charge of 0.01% p.a. Of the total assets under management and an annual maintenance charge of Rs. 190. 

No, it is not necessary to pay NPS every month. However, it is advised to make a monthly contribution to secure the scheme's benefits over the long term.