State Autonomous Bodies
Central Autonomous Bodies
The Central Government had introduced the National Pension System (NPS) with effect from January 01, 2004
(except for armed forces). Subsequently, various State Governments & State Autonomous Bodies adopted this
architecture and implemented NPS with effect from different dates. Various State Governments have adopted
NPS architecture and implemented NPS with effect from different dates. All the State Governments except
West Bengal have enrolled their employees (new joinees) into the NPS system.
In the case of an NPS contribution for state government employees,
deductions are made from an individual's monthly salary, and the employer then contributes the same amount.
Together this amount is then submitted to the NPS account of employees.
Once submitted, these funds available under the NPS scheme for
state govt employees are then invested in various areas to generate maximum returns.
Moreover, dedicated fund managers are in charge of managing these funds.
As per the present guidelines of the Pension Fund Regulatory and Development Authority (PFRDA),
the State Government enforces these schemes through three Pension Fund Managers (PFMs) –
The proportion of the pension fund which is contributed to these three PFMs is finalised by
the respective state governments mentioned in the Statement of Transaction. The proportion is as follows.
In the NPS application form for state government employees, individuals need not mention any details of these schemes.
Nirmala Sitharaman, Finance Minister of India, in the Union budget for 2022 has brought equivalence between
the state and central government employees regarding their contribution of an employer to NPS.
Accordingly, the contribution towards NPS for state government employees has been raised from 10 % to 14%.
The state government will also contribute 14%, matching an employee's contribution to this account.
The contribution made by an employer for NPS Tier-1 is entitled to income
tax benefits under section 80CCCD (2) of the Income Tax Act, 1961.
Moreover, state government employees can also claim a tax deduction for up to 14% of their basic salary and DA.
The tax exemption limit has also been raised u/s 80CCCD (2).
The concept of the NPS scheme for state govt employees and individuals largely remains the same,
but there are a few differences.
The NPS contribution is received from both the employer and employee.
The state government's contribution has been hiked to 14% of salary and dearness allowance (DA).
The individual contribution, however, remains unchanged.
The registration form is routed via PoP for individuals.
Whereas, for government employees, it is completed through a nodal officer.
Process of contribution:
For government employees, this deduction is made through salary deduction.
Furthermore, the respective authorities remit these funds to the partner financial institutions.
Alternatively, individuals can initiate and complete this process by themselves.
PRAN is to be used by government employees for accessing their NPS accounts.
An individual has to follow the same procedure to get online access to NPS.
Choice of investments:
Even though the selection of asset class does not change for individuals and government employees,
their allocation needs to be specified under one PFM. For individual contributions,
account holders can shift their investments across fund managers.
However, government employees can only move the incremental flow to other fund managers.
Whereas the legacy contribution only follows the default model.
Tax Benefit on Contribution Amount:
For government employees, tax benefit u/s 80C is also offered on Tier -2 NPS contribution
within the upper capital limit of Rs.1,50,000 with a 3-year lock-in period.
Tax on partial withdrawal:
Partial withdrawal of up to 25% of the offerings done by the NPS Tier-1 account holder is tax-exempt.
Tax on Maturity Benefit:
Lump sum withdrawal up to 60% of total pension amount during superannuation is free from taxes.
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Directorate of Treasuries & Accounts (DTA): It play a supervisory role and its main
function is to
monitor the performances of the Nodal Offices under its jurisdiction.
District Treasury Office (DTO): They provide the subscriber’s details to CRA and remits the
Trustee Bank which in turn transfers the funds to Pension Fund Mangers (PFMs) for investment. Units are
allotted to the subscriber’s PRAN based on their contribution amount.
Drawing and Disbursement Officer (DDO): They act as an interface between the DTO and the
deducts the contribution from employee’s salaries and provides information to DTO about subscriber pension
Reference Number: No.
3/2003/Pt.II/1 of Finance (Budget) Deptt.
Some State Governments and Union territories have adopted NPS architecture with different
implemented NPS mandatorily through Gazette Notifications for their employees joining on or after date of
adoption of NPS opted by respective State government.
Registration of DTA
Registration of DTO ( after Registration of DTA )
Registration of DDO (after Registration of DTO )
Entities involved and their roles under NPS Contribution
What is Subscriber Contribution file?
Subscriber’s mandatory contribution amount- Amount may be provided in 2 decimals i.e: 500.50.
and subscriber contribution has to be equally contributed
** Contribution Type- In case of arrears,
year may be left blank.
C For Regular
A for Arrears
V for Voluntary
*** Remark- Remark is mandatory if
type is arrears
DTA’s / DTO’s bank transfers the total funds electronically to Trustee Bank
within 12 working days. Information to be provided while transferring the funds i.e. PAOFIN . For example,
Details Change and Request Form for Subscribers
Registration Form and Covering letter for Nodal Office
Grievance Form for Subscriber