How to invest in NPS via Coin

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The National Pension System (NPS) is a government-sponsored, PFRDA-regulated defined-contribution pension scheme for Indian citizens aged 18 to 70 years. It provides long-term retirement savings with market-linked returns, portability across employers and locations, and significant tax benefits.

Zerodha Coin offers NPS account opening and contribution management through a partnership with the Central Recordkeeping Agencies (CRAs). Coin acts as a Point of Presence (PoP) under the PFRDA framework.

Prerequisites

  • Indian citizen aged 18 to 70 years with valid KYC documents.
  • Active Zerodha trading and demat account (for existing Zerodha users).
  • PAN card and Aadhaar card (for eKYC).
  • Bank account details for contribution and payout.
  • TOTP authenticator for Zerodha two-factor login.

NPS regulatory framework: PFRDA

NPS is governed by the Pension Fund Regulatory and Development Authority Act, 2013 (PFRDA Act) and associated PFRDA Regulations. Key regulatory features:

  • PFRDA is the independent statutory body regulating NPS, similar to SEBI for securities markets.
  • CRA (Central Recordkeeping Agency): NSDL e-Governance (CRA), KFintech, and Protean (formerly NSDL) maintain subscriber records and issue PRAN.
  • PFM (Pension Fund Manager): PFRDA-registered fund managers (LIC Pension Fund, SBI Pension Fund, HDFC Pension Management, ICICI Pru Pension, Kotak Mahindra Pension, Aditya Birla Sun Life Pension, UTI Retirement Solutions) manage the pooled corpus in separate asset class funds.
  • PoP (Point of Presence): Institutions like Zerodha (registered as PoP with PFRDA) facilitate account opening and contribution collection on behalf of subscribers.

NPS account types

Tier I (Mandatory for NPS enrollment):

  • The primary NPS pension account.
  • Minimum annual contribution: Rs 1,000 per year.
  • Minimum per-contribution amount: Rs 500.
  • Withdrawals are restricted; partial withdrawal (up to 25% of own contributions) is allowed after 3 years for specific purposes (child education, housing, medical).
  • At retirement (age 60), up to 60% of corpus can be withdrawn as a tax-free lump sum; minimum 40% must be annuitised.

Tier II (Optional):

  • A voluntary savings account linked to Tier I.
  • No minimum annual contribution requirement.
  • Freely withdrawable at any time with no restrictions.
  • No additional tax benefit except for government employees (under specific conditions).
  • Not available to subscribers without an active Tier I account.

Tax benefits of NPS

NPS offers the highest combined tax deduction available under Indian tax law for individual investors using the old tax regime:

  • Section 80C deduction: Contributions to Tier I NPS qualify under Section 80C (combined limit of Rs 1.5 lakh with EPF, PPF, ELSS, NSC, etc.).
  • Section 80CCD(1): The deduction for own NPS contribution is technically under this section (subset of Section 80C). Own contribution limit: 10% of salary (for salaried) or 20% of gross total income (for self-employed), capped at Rs 1.5 lakh combined with Section 80C.
  • Section 80CCD(1B) exclusive deduction: An additional deduction of up to Rs 50,000 exclusively for NPS Tier I contributions, over and above the Rs 1.5 lakh Section 80C limit. This is unique to NPS among Section 80C instruments.
  • Section 80CCD(2): Employer contributions to NPS (for salaried employees) are deductible up to 10% of basic salary + DA, without any upper rupee cap. This is available even under the new tax regime.

Total maximum deduction (old tax regime): Rs 1.5 lakh (80C) + Rs 50,000 (80CCD(1B)) + employer contribution (80CCD(2)) = Rs 2 lakh own deduction + unlimited employer contribution deduction.

Under the new tax regime (Section 115BAC), Sections 80C and 80CCD(1B) are not available; only Section 80CCD(2) (employer contribution) remains available.

Step-by-step procedure

Step 1: Log in to Coin

Navigate to coin.zerodha.com or open the Coin mobile app. Enter your Zerodha client ID, password, and TOTP.

Step 2: Navigate to the NPS section

On the Coin dashboard, look for the NPS tab or section (separate from the mutual fund section). Coin’s NPS offering is powered by its PFRDA PoP registration. If the NPS tab is not visible, check Coin’s mobile app or the support page for NPS availability.

See also: Zerodha Coin NPS for a detailed overview of Coin’s NPS product features.

Step 3: Open a new NPS account (if no PRAN exists)

If you do not have a PRAN (Permanent Retirement Account Number), you need to open an NPS account. On Coin’s NPS page:

  1. Click Open NPS Account or Start NPS.
  2. The eNPS flow begins. Enter your PAN. The system pulls your name and date of birth from the PAN database.
  3. Complete eKYC with Aadhaar (OTP-based Aadhaar e-KYC via UIDAI, or offline XML-based KYC). Aadhaar e-KYC verifies identity and address.
  4. Confirm your bank account details (for contribution debits and future withdrawal credits).
  5. Add nominee details: name, relationship, date of birth, and percentage of allocation.
  6. Upload a photograph (passport-size JPEG, typically under 2 MB) and signature image.
  7. Review and submit. Zerodha submits the account opening request to the CRA.

PRAN allotment typically takes 2 to 3 business days after successful submission.

Step 4: Select account type (Tier I or Tier II)

For the initial account opening, you must make a minimum Tier I contribution (Rs 500). Tier II account activation is optional and can be done later.

For subsequent contributions, select Tier I (for tax benefits and retirement savings) or Tier II (for flexible savings without lock-in).

Step 5: Choose the pension fund manager and asset allocation

NPS subscribers choose:

Pension Fund Manager (PFM): Select from the PFRDA-approved PFMs. Past returns data for each PFM’s scheme is published by PFRDA (pfrda.org.in). All PFMs manage separate funds for each asset class.

Asset class allocation:

  • E (Equity): Invested in equity market instruments. Maximum allocation: 75% (for subscribers under 50 years; reduces with age in Auto Choice).
  • C (Corporate Bonds): Investment-grade corporate bonds.
  • G (Government Securities): Central and state government bonds; lowest risk.
  • A (Alternative Investment Funds): REITs, InvITs, and other SEBI-approved alternatives. Maximum 5%.

Investment choice:

  • Active Choice: You manually set the E/C/G/A allocation percentages. Allowed if you are comfortable deciding allocation.
  • Auto Choice (Lifecycle Fund): Automatically adjusts allocation based on age. Starts equity-heavy and shifts to bonds and G-secs as you approach retirement. Three sub-options: Aggressive LC-75 (75% equity at 35 and below), Moderate LC-50 (50% equity), and Conservative LC-25 (25% equity).

Step 6: Enter contribution amount and complete payment

Enter the contribution amount (minimum Rs 500 for Tier I). Select UPI or net banking for payment.

Complete the payment. The contribution is credited to your NPS account and units are allotted based on the NAV of the selected fund on the date the contribution is processed.

Step 7: Receive PRAN and transaction confirmation

After account creation, you receive:

  • A PRAN (permanent 12-digit account number) by email and/or post.
  • A physical PRAN card mailed to your registered address (production may take a few weeks).
  • Transaction confirmation for each contribution, sent to your registered email.

The PRAN is unique to you and portable across employers and PoPs.

Step 8: Make subsequent contributions

Log in to Coin’s NPS section to make additional contributions at any time. There is no fixed frequency requirement for Tier I after the first year’s minimum contribution is met. Many investors make monthly contributions aligned with their salary cycle.

Partial withdrawal from Tier I

After 3 years from PRAN opening, partial withdrawals of up to 25% of own contributions (not including returns) are permitted from Tier I for specific purposes:

  • Higher education or marriage of children
  • Construction or purchase of residential property
  • Treatment of specified critical illnesses
  • Skill development or start-up investment

A subscriber may make a maximum of 3 partial withdrawals over their NPS tenure. The partial withdrawal is processed through the CRA portal or via the PoP (Coin).

Exit from NPS at retirement (age 60)

At age 60 or on retirement:

  • Up to 60% of the NPS corpus can be withdrawn as a tax-free lump sum (per Section 10(12A) of the Income Tax Act).
  • A minimum of 40% must be used to purchase a life annuity from a PFRDA-empanelled insurer. Annuity income is taxable at slab rates.
  • If the total corpus is Rs 5 lakh or less, the subscriber may withdraw the entire corpus without mandatorily purchasing an annuity.

What can go wrong

PRAN already exists: If you previously opened an NPS account (through an employer, eNPS, or another PoP), you already have a PRAN. You can add Coin as an additional PoP or contribute via Coin using your existing PRAN. Do not open a second PRAN; PFRDA regulations prohibit multiple PRANs per individual.

Aadhaar e-KYC failure: If Aadhaar e-KYC fails (e.g., mobile not linked to Aadhaar), use offline KYC (Aadhaar XML download) or visit a physical PoP with documents.

New tax regime opted: Sections 80C and 80CCD(1B) are not available under the new tax regime. Only the employer contribution deduction under 80CCD(2) is available.

Investment choice reset: If you change your PFM or asset allocation, the change applies to new contributions and not to existing corpus (the rebalancing of existing corpus requires a separate fund switch, which is permitted but may incur transaction costs).

References

  1. PFRDA Act, 2013 – Establishment and powers of PFRDA.
  2. PFRDA (National Pension System) Regulations, 2015 and subsequent amendments.
  3. Income Tax Act, 1961 – Sections 80CCD(1), 80CCD(1B), 80CCD(2), 10(12A).
  4. PFRDA Circular dated 28 February 2019 – Revised partial withdrawal rules.
  5. PFRDA Circular on eligibility for NPS (age 18–70 years, effective 2021).
  6. Finance Act 2023 – NPS-related amendments.
  7. Zerodha Coin NPS documentation (support.zerodha.com).
  8. PFRDA Subscriber Registration and Contribution Guide (pfrda.org.in).

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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