National Pension Scheme is an all-round retirement planning scheme that ensures a fixed income after retirement while also retaining various tax benefits thus killing two birds with one stone. The pool of contributions from subscribers of the National Pension Scheme is invested into various market linked instruments like equities and debts. The amount of your pension is decided on the basis of the performance of your NPS funds. When you enter retirement stage, you can purchase an annuity [monthly pension] using your accumulated corpus. National Pension Scheme is regulated by the Pension Fund Regulatory and Development Authority [PFRDA].
Moneyfront has partnered with Religare Broking Limited to offer the National Pension Scheme (NPS). With a smooth and fast web and mobile platform, investing in NPS now becomes a hassle free process using Moneyfront as your online investment advisor. You can constantly track and review the performance of your NPS contributions.
Moneyfront tracks and recommends funds based on the best fund managers, thus helping increase your national pension scheme returns.
It is a great investment opportunity to secure post retirement income.
Since it is linked to the market, returns are reasonably flattering.
The national pension scheme tax benefits outweigh the high returns from some of the other investment options. One can claim a tax deduction of up to 10% of gross income with an overall ceiling of INR 1.5 lakhs. An additional deduction for investment up to INR 50,000 is also available for NPS subscribers. Tax deduction up to 10% of salary is allowed in case of contribution by the employer.[MOU1]
|NPS Account||Tax Benefit||Tax Treatment|
|Tier I||Salaried IndividualInvestment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961|
Self Employed ProfessionalsInvestment up to 10% of Salary (Basic + Dearness Allowance) is deductible from taxable income u/s 80CCD (1) of Income Tax Act, 1961 subject to 1.5 lakhs limit of section 80C Additionally, investment up to Rs.50,000 is deductible from taxable income u/s 80CCD (1B) of Income Tax Act, 1961
|Up to 40% of Corpus withdrawn in lump sum is exempt from tax Balance amount invested in Annuity is also fully exempt from tax.|
Pension received out of investment in Annuity is treated as income and will be taxed appropriately
|Tier II||There is no tax benefit on investment towards Tier II NPS Account||Indexation benefit can be|