National Pension Scheme (NPS) is managed by Pension Fund Regulatory and Development Authority (PFRDA), this is one of the powerful retirement scheme in the country in 2023.
When it comes for savings and investment choices in India often rotate around tax schemes & short or medium- term financial targets for example, it can be for home purchase, children’s education, daughter marriage, insurance- health facilities.
In NPS, any Indian Citizen in the age group of 18 to 70 years can start an NPS account, it can be online or offline via a point of presence (POP) Centre.
After opening the Account the holder receives a 12- digit unique PRAN that is Permanent Retirement Account Number to utilize the account in an easy way.
The amount can be invested as per the Account owner choice they can select professionally- managed Pension Funds that are connected to markets and get the benefits of exclusive tax profits, good returns & fund security.
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Check the Benefits of this Scheme
1. Tax benefits on self- contribution –
The absolute tax benefits with NPS is exemption. The account owner gets double benefits on self- contribution, 1st his contribution and 2nd Corpus growth.
- Up to Rs 50,000 under section 80 CCD(1B)
- Up to Rs 1,50,000 under section 80 CCE,
(Thus, sum total rebate of Rs 2 lakh. An employee with highest income tax bracket saves Rs 15,000 in tax at the rate of 30 percent, aside from 4 percent education cess, by contributing Rs 50,000 every year).
2. Tax benefits on Employer’s contribution –
A person getting his salary is still eligible for benefits on contribution to NPS. They get tax deduction up to 10 percent of their salary.
3. Cost effective long term pension investment –
NPS management cost is less than mutual funds that varies up to 1.5% to 2%. The entry or withdrawal NPS expenses are covered at 0.125% of corpus, which is Rs 125 to Rs 500. The subscriber’s registration amount to Rs 200 to Rs 400 and subsequent contributions are charged at minimum amount of RS 30 or 0.50%.
4. Diversification and Flexibility –
Account holders gets many choices and enjoy Flexibility i.e. choice of Fund manager, asset allocation and movability – subscribers can select the Fund choices they are –
- SBI Pension Funds Pvt Ltd
- Birla Sun Life Pension management Ltd
- HDFC Pension Fund Ltd
- Kotak Mahindra Pension Fund Ltd
- ICICI Prudential Pension Funds Management Co Ltd
- UTI Retirement Solutions Ltd
- LIC Pension Fund Ltd.
5. Withdrawal – Entire investor can make 3 partial withdrawals with no tax liability during lifespan for up to 25% of self-contribution for marriage, education, buying home, medical treatment etc.
Conclusion
India is now shifting to become a pensioned society, it is important to take a good majors to improve country’s pension goals.
In 2023, NPS is India’s safest retirement bet so that citizens can save & invest sensibly.
