NPS scheme: National Pension System (NPS) is a retirement-oriented funding choice that gives a periodic annuity (within the type of month-to-month pension) and a lump sum corpus on the attainment of retirement age. NPS scheme is without doubt one of the ideally suited pension and retirement planning schemes out there in India for salaried, self-employed professionals and freelancers like legal professionals, docs, chartered accountants, entrepreneurs, architects and others who work of their particular person capability whereby no employer is hooked up. Any Indian citizen aged between 18 and 70 years can enroll on this scheme.
Speaking on NPS scheme; Supratim Bandhopadhyay, Chairman, PFRDA (Pension Fund Regulatory Development Authority) stated, “NPS perhaps offers a higher degree of flexibility to subscribers’ like choice of a pension fund manager and asset allocation. An investor with a greater risk appetite can invest up to 75 per cent of its fund in equity. This scheme has a proven track of providing one of the best returns in the market along with tax deduction benefits of ₹2 lakhs. It is a cost-efficient investment that ultimately benefits the subscribers.”
Asked concerning the prime 5 advantages of NPS account, the PFRDA Chairman listed out the next:
1] Flexibility with consolation: NPS supplies investor an choice to contribute any quantity anytime as per their comfort. There isn’t any higher restrict on how a lot one can make investments.
2] Husband-wife duo can enroll: Self-employed {couples} who run their household enterprise can open separate NPS accounts and avail the tax advantages of their particular person capability. This will facilitate larger corpus and pensions after they determine to cease working.
3] Employees loyalty booster: NPS could be prolonged by an employer to its staff to encourage loyalty for the enterprise they work with. Not solely it can safe the way forward for staff however the employer can declare for such NPS contribution as enterprise bills below Section 36 (1) (IVa) of the Income Tax Act.
4] Avail/Maximise tax deductions profit: NPS contributions made by self-employed professionals in direction of NPS could be claimed as deductions as much as 20 per cent of their gross annual earnings for the aim of taxation. Salaried NPS subscribers also can declare tax deduction towards the NPS contribution made by employer below Section 80 CCD(2) and below Section 80CCD(1B) an unique tax deduction of ₹50,00 is allowed for NPS investments.
5] Entrepreneurs can safe their future even when enterprise ceases to exist: Any enterprise is a dangerous proposition and filled with uncertainties. But one can safe one’s pension by contributing to NPS which might be separate from the enterprise as NPS is an ‘particular person pension account’.
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