January 21 2019
Why NPS
National Pension Scheme,launched in January 2004, is a good investment option to avail additional tax benefit of Rs. 50,000/- under section 80CCD (1B) over and above the limit of Rs. 1.5 Lakh available under section 80CCE of the Income Tax Act.
What has changed in NPS
Now, at the time of maturity, 60% of the total accumulated corpus can be withdrawn tax free while remaining 40% of the corpus has to be mandatorily utilised for purchase of annuity from PFRDA-listed Insurance Companies. Earlier, only 40% of the withdrawn amount was tax free, while the remaining 20% withdrawalwastaxable.
The tax free withdrawal option makes NPS one of the very few equity linked products that provides EEE (Exempt-Exempt-Exempt) benefit to the investors. EEE means tax benefit at the time of investment, during accumulation phase and lastly at the time of withdrawal.
Who should invest in NPS
For Investors who are into 20 or 30% tax bracket, investment in aggressive option of NPS is a good choice for availing additional tax benefit. In the aggressive option of NPS the investment in equities is upto 50% which makes them a good alternative for generating inflation beating returns with low volatility.
We recommend you to discuss your investment plans with your financial advisor or consult your Personal Investguru Advisor@9910423232 before making an investment decision.
Happy Investing!
Tulika Agarwal
Co-Founder, Investguru