What Is the Full Form of CPS in Income Tax?
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The CPS full form in income tax is Contributory Pension Scheme. Often referred to as the National Pension System (NPS), this scheme was established by the Government to offer a reliable and standardized method for retirement savings. Launched in 2004 under the Pension Fund Regulatory and Development Authority (PFRDA), it initially targeted new government employees. However, by 2009, the scheme was extended to include all Indian citizens. Under CPS, a portion of an employee’s salary is deducted for their pension, with an equal contribution from the employer. Each participant is assigned a unique 16-digit Permanent Retirement Account Number (PRAN), which helps track their pension and allows portability if they change jobs or locations.
Who Can Join CPS?
The CPS is available to central government employees who were hired after January 1, 2004, excluding those in the armed forces. This means that even individuals who were self-employed or worked informally can join the scheme. For a Tier I account, new members must save a specific portion of their salary, which is primarily intended for retirement and cannot be withdrawn until retirement.
Fund Management and Investment Choices
CPS funds are managed by authorized Pension Fund Managers (PFMs) under the oversight of the PFRDA. Members of the scheme can select from a range of investment options based on their risk tolerance, including stocks, government securities, and fixed-income instruments. The performance of these investments is monitored regularly, and updates are provided to the investors.
In conclusion, the CPS full form in income tax, Contributory Pension Scheme, represents a significant step towards providing a structured and secure way for individuals to save for retirement. By offering diverse investment choices and ensuring professional management, CPS aims to support its members in achieving financial stability in their post-retirement years.
The CPS full form in income tax is Contributory Pension Scheme. Often referred to as the National Pension System (NPS), this scheme was established by the Government to offer a reliable and standardized method for retirement savings. Launched in 2004 under the Pension Fund Regulatory and Development Authority (PFRDA), it initially targeted new government employees.…