Benefits and everything you need to know about NPS

National Pension System (NPS) scheme is a retirement-oriented investment selection that delivers a regular allowance (in the structure of monthly pension) and a lump sum corpus on the accomplishment of the retirement period. The NPS system is one of the suitable pension and retirement scheming schemes functional in India for salaried, self-employed professionals and freelancers like advisers, doctors, chartered accountants, architects, entrepreneurs, and others who function in their capacity wherein no employer is affixed. Any Indian resident aged between 18 and 70 years can apply to this scheme. Addressing the NPS scheme, the Chairman, Pension Fund Regulatory Development Authority, Supratim Bandhopadhyay, explained that NPS possibly proposes an elevated degree of flexibility to subscribers like the selection of a pension fund manager and asset allotment. An investor with a bigger risk longing can invest up to 75 percent of its fund in equity. This scheme has a verified track of delivering one of the best returns in the market along with tax reduction advantages of ₹2 lakhs. It is a cost-efficient investment that eventually advantages the subscribers.

5 benefits of the National Pension Scheme

1] Flexibility with convenience: NPS empowers investors with a selection to contribute any amount anytime as per their comfort. There is no maximum limit on what proportion you’ll invest.

2] Husband-wife couples can enroll: Self-employed duos who operate their family company can open independent NPS accounts and use the tax advantages in their individual capacity. This will stimulate elevated corpus and pensions when they elect to stop working.

3]Entrepreneurs can protect their future even when a business ceases to exist: Any company is a dangerous proposition and full of anticipation. But one can protect one’s pension by participating in NPS which could be independent of the enterprise as NPS is an ‘individual pension account’.

4]Employees loyalty enhancer: NPS can be expanded by an employer to its workers to motivate loyalty for the industry they work with. Not only will it make sure the way forward for workers but the employer can claim for such NPS contributions as company expenses under Section 36 (1) (IVa) of the Income Tax Act.

5]Avail tax discounts advantage: NPS assistance made by self-employed professionals towards NPS can be acknowledged as reductions up to 20 percent of their total annual income for taxation. Salaried NPS subscribers can also acknowledge a tax reduction against the NPS contribution made by an employer (the company) under Section 80 CCD(2) and under Section 80CCD(1B) an exclusive tax discount of ₹50,00 is authorized for NPS investments.

What are the tax advantages under NPS?

Tax Advantage attainable to Individual:

  • Any person who is a Subscriber of NPS can claim/acknowledge tax benefit under Sec 80 CCD (1) within the all-around ceiling of Rs. 1.5 lac under Sec 80 CCE.
  • Tax Benefits under the company Industry: Extra tax break is functional to Subscribers under Corporate Industry, u/s 80CCD (2) of tax Act. Employer’s NPS contribution (for the help of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, with no financial margin.
  • Exquisite tax benefit to all or any or any NPS Subscribers u/s 80CCD (1B): a further deduction for investment up to Rs. 50,000 in NPS (Tier I account) is used completely to NPS subscribers under subsection 80CCD (1B). This is over and above the reduction of Rs. 1.5 lakh ready under section 80C of Income Tax Act. 1961.
  • Corporates: Employer’s Contribution towards NPS up to 10% of salary (Basic + DA) can be curtailed as ‘Business Expense’ from their Profit & Loss Account.

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