What are the types of NPS accounts and their features, differences, tax benefits, and withdrawal rules?

NPS (National Pension System) offers two types of accounts: Tier I and Tier II. 

Tier I Account:

• Features: Mandatory retirement account with tax benefits.
• Tax Benefits: Offers tax deductions.
• Withdrawal Rules: Restricted until retirement, with specific conditions for partial withdrawals.
• Minimum Contribution: ₹500 annually.

Tier II Account:

• Features: Voluntary savings account with no withdrawal restrictions.
• Tax Benefits: Does not offer tax deductions.
• Withdrawal Rules: Flexible withdrawals at any time.
• Minimum Contribution: ₹250 for each transaction.

Key Differences:

• Tax Benefits:Tier I has tax benefits, Tier II does not.
• Flexibility: Tier I has restrictions on withdrawals; Tier II allows flexible withdrawals.

You can hold both Tier I and Tier II accounts simultaneously. To switch between accounts, maintain contributions in Tier I and use Tier II for additional savings.