Tag: NPS scheme

NPS subscribers can declare this earnings tax profit even after opting new regime

Income tax calculator: In the Union Budget 2020, Finance Minister Nirmala Sitharaman launched a brand new earnings tax regime, giving taxpayers an choice to decide on a tax slab that had decrease charges to pay. However, after opting this new earnings tax slab, the taxpayer needed to lose all earnings tax advantages like Section 80C, Section 80 CCD (1) and lots of extra deductions and exemptions which are round 70 in numbers. But, for these staff, whose employer is contributing to its National Pension System or NPS account, earnings tax deduction below Section 80 CCD (2) is out there even once they have chosen new earnings tax regime.

Speaking on earnings tax profit accessible for NPS scheme beneficiaries in new earnings tax regime; Pankaj Mathpal, Founder & CEO at Optima Money Managers stated, “Income tax deduction available for NPS subscribers under Section 80 CCD (2) of the income tax act, is on the employer’s contribution to one’s NPS account. Since, it is not a part of one’s annual income, NPS scheme beneficiaries can claim income tax deduction on its employer’s contribution to its NPS account, even after opting for the new income tax regime.” He stated that every one these staff whose employer has applied NPS scheme can declare this deduction even after selecting the brand new earnings tax regime.

On how a lot earnings tax deduction NPS subscriber can declare after selecting new earnings tax regime; Amit Gupta, Managing Director at SAG Infotech stated, “The new income tax regime allows a deduction under section 80 CCD (2) of the Income-tax Act, 1961, which is available if an employer contributes to an employee’s NPS account. The maximum deduction an employee can claim is 10 per cent of annual salary, where annual salary means basic plus dearness allowance (DA).”

The Managing Director of SEBI registered earnings tax resolution supplier firm went on so as to add that in new earnings tax regime, a taxpayer is allowed to assert earnings tax exemption on the conveyance allowance obtained to fulfill the conveyance expenditure incurred as a part of the employment as nicely.

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August 2, 2021
How NPS subscribers will profit from pension funds’ IPO funding

NPS scheme: To make National Pension System (NPS) extra profitable for the NPS account holders, the Pension Fund Regulatory and Development Authority (PFRDA) had given varied modification proposals within the Pension Amendment Bill. Out of these PFRDA proposals, the Government of India (GoI) has accepted elevating the FDI restrict in pension funds from 49 per cent to 74 per cent and permitting pension funds to spend money on IPOs (Initial Public Offerings).

In truth, the GoI has applied these PFRDA proposals in regard to the NPS scheme as properly. The PFRDA Chairman Supratim Bandyopadhyay knowledgeable concerning the authorities’s nod in an unique dialog. He mentioned that the nod to boost FDI restrict in pension funds and permitting pension funds to spend money on IPOs will trickle right down to the NPS subscribers’ return within the long-term.

Speaking on the PFRDA proposals which were accepted by the GoI; Supratim Bandyopadhyay, Chairman at PFRDA mentioned, “The GoI has accepted our proposal to raise FDI limit in pension funds from 49 per cent to 74 per cent and has also agreed to allow pension funds to invest in IPOs. Benefit of this GoI nod will trickle down to the NPS account holders’ return in the long-term.”

Supratim Bandyopadhyay of PFRDA went on so as to add that earlier pension funds have been allowed to spend money on these shares that had ₹5000 crore market capital and on the identical time it had presence within the Future & Option or F&O section. In the modified state of affairs, a pension fund will be capable of spend money on prime 200 firms of the Indian bourses.

Speaking on how pension fund funding in IPO will result in rise in NPS subscribers’ revenue; SEBI registered tax and funding professional Jitendra Solanki mentioned, “Raising the FDI limit in pension funds from 49 per cent to 74 per cent will lead to rise in sustainability of the pension funds as they will have more capital for investment. Having being allowed to invest in IPOs, pension funds will have an option to create a new avenue for revenue as a company with strong financials and better business model and outlook is expected to beat the benchmark return in long-term by at least one per cent. This will definitely trickle down to the NPs subscribers in the form of NPS return.”

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August 1, 2021
NPS scheme: 5 errors to keep away from whereas selecting fund manger

NPS scheme: The National Pension System or NPS scheme is a low-cost retirement oriented funding plan. It offers publicity to NPS subscribers in each fairness and debt funds by means of single funding. Over the time frame, it offers a lump sum quantity on the time of retirement and common month-to-month pension profit. However, whereas opening NPS account, it has been discovered that subscribers commit some widespread errors that hit their month-to-month pension and the withdrawal quantity on the time of retirement. According to tax and funding consultants, it will be important for the NPS subscribers to know the significance of being energetic or an auto investor within the pension scheme. They stated that if the investor has chosen greater than 50 per cent publicity in fairness then one ought to choose energetic choice after which there’s want for her or him to keep away from some widespread errors whereas selecting one’s fund supervisor.

NPS account: Active vs auto mode

Speaking on the 2 choice being given to subscriber on the time of NPS account opening; Manikaran Singhal, Founder at goodmoneying.com stated, “At the time of NPS account opening, a subscriber is given option to choose active or auto mode. If the investor is an aggressive investor and has chosen equity exposure more than 50 per cent, then he or she is advised to choose active mode instead of auto mode. This is the first precaution that an NPS subscriber is advised to take while opening an NPS account.”

How to decide on fund supervisor throughout NPS account opening

Advising NPS account holders to decide on fund managers rigorously; SEBI registered tax and funding professional Jitendra Solanki stated, “After choosing active or auto mode, the investor should be careful while choosing its fund manager as well. If the investor has chosen higher equity exposure, then he or she is advised to choose fund manager, who has better performance in equity funds. However, if the investor has higher debt exposure, then it is better to choose a fund manager, who has given better performance in debt funds.”

Evaluating fund manger of 1’s NPS account

On tips on how to consider a fund supervisor’s efficiency; Solanki stated, “One can check a fund manager’s performance by evaluating them on the basis of its sharp ratio and rolling returns. The sharp ration will give an idea about the return against the risk taken by the investor while rolling return will give clear picture about the return given by the fund manager at regular time intervals.”

If want, train choice to decide on fund supervisor

Manikaran Singhal of goodmoneying.com went on so as to add that NPS subscribers could commit mistake after being cautious on the time of NPS account opening. He suggested NPS scheme subscribers want to control the fund supervisor’s efficiency as one can change one’s fund supervisor as soon as in a yr and that is open for each energetic and auto mode NPS subscribers.

So, briefly, NPS subscribers are suggested to stay vigilant about these 5 widespread errors whereas subscribing to NPS scheme:

1] Choose energetic or auto mode on the idea of fairness/debt publicity;

2] Choose fairness/debt fund supervisor on the idea of fairness/debt publicity;

3] Check ‘sharp ratio’ of the fund managed by the fund supervisor you wish to select;

4] Check concerning the ‘rolling return’ of the fund managed by the fund supervisor you wish to choose; and

5] Evaluate the efficiency of your chosen fund supervisor and if not happy with the return it has given, change your fund supervisor as NPS subscribers are allowed to vary its fund supervisor as soon as in a yr.

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July 28, 2021
NPS scheme: 5 advantages of National Pension System that you need to know

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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July 24, 2021
These NPS schemes ship over 20% return in final six months

The National Pension System (NPS) Scheme has delivered 21.78 per cent within the final six months. This might change into potential after the stellar efficiency by its distinguished schemes like LIC Pension Fund, UTI Retirement Solution Fund, ICICI Pension Fund, Kotak Pension Fund and HDFC Pension Fund. According to the NPS Trust knowledge accessible at its official web site — npstrust.org.in, these NPS schemes have delivered greater than 20 per cent returns within the final six month.

LIC Pension Fund

As per the return chart of particular person NPS schemes as on thirty first May 2021, LIC Pension Fund has delivered 23.03 per cent in Scheme E Tier-1 whereas in Scheme E Tier-2, the NPS scheme has delivered sturdy 22.82 per cent return within the final six months.

HDFC Pension Fund

In the final six months, HDFC Pension Fund has given 21.35 per cent return in Scheme E Tier-1 and in Scheme E Tier-2, it delivered 21.23 per cent.

UTI Retirement Solution Fund

The UTI Retirement Solution Fund underneath the NPS Scheme has delivered 21.97 per cent in Scheme E Tier-1 whereas in Scheme E Tier-2, the UTI scheme has yielded 23.07 per cent.

ICICI Pension Fund

In the final six months until May 2021, ICICI Pension Fund has delivered sturdy 21.44 per cent in Scheme E Tier-1 whereas in Scheme E Tier-23, the NPS Scheme has given 21.34 per cent.

Kotak Pension Fund

One of the distinguished NPS schemes, Kotak Pension Fund yielded 20.79 per cent in Scheme E Tier-1 whereas within the Scheme E Tier-2, it delivered 20.50 per cent within the final six months.

SBI Pension Fund missed the elite membership by a whisker because it yielded 19.78 per cent in Scheme E Tier-1 whereas its return in Scheme E Tier-2 is 21.75 per cent within the final six months.

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June 17, 2021
NPS withdrawal eased however facility obtainable for restricted interval. Details right here

The Pension Fund Regulatory and Development Authority (PFRDA) has eased National Pension System (NPS) withdrawal or exit norms. In view of the Covid-19 pandemic, the pension fund regulator has allowed Point of Presence (PoPs) with the particular dispensation to just accept the scanned and self-certified pictures of exit paperwork via digital means to course of the withdrawal requests of the subscribers. The NPS withdrawal leisure is permitted until thirtieth June 2021 by which period the ‘on-line paperless exit course of’ primarily based on OTP/ e-sign is anticipated to be rolled out by CRA for the good thing about NPS subscribers.

PFRDA issued a round on this regard and stated, “PoPs are now permitted to process the exit /withdrawal applications based on the soft copies after ensuring that the regulations on processing exits as mentioned in Chapter III 15 (2c) of POP Regulations are complied with. The beneficiary bank details have to be necessarily verified and matched as part of additional due diligence, before authorizing the request of withdrawal based on soft copies. Further all such records have to be simultaneously and compulsorily transmitted to CRA through soft copy. It may also be noted that the POPs would be solely responsible should any dispute arise out of such transactions at a later date.”

On purpose for alleviating the NPS withdrawal or exit course of the PFRDA stated, “Covid induced hardships continue unabated and in order to alleviate the difficulties being faced by the Subscribers in submitting physical applications for exit/withdrawal and the logistical challenges faced by POPs in collecting those applications to process and dispatch the same to CRA, it has been decided to relax the process of handling withdrawal applications by POPs in in the interest of Subscribers.”

The PFRDA went on so as to add that additionally it is noticed, that in a number of instances no data have been forwarded by POPs to CRA in respect of exit/withdrawals instances executed for Subscribers by way of circulars talked about in round dated twenty first July 2020. In all such instances, it’s urged that the exhausting or tender copies, because the case could also be, must be shared by POPs with the respective CRA by thirtieth June 2021 with out fail for document preserving and management objective.

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June 3, 2021
PPF vs NPS: Key information to know whereas investing ₹3000 per 30 days

PPF vs NPS: Public Provident Fund (PPF) and National Pension System (NPS) are long-term funding choices. While NPS scheme is totally retirement-oriented scheme PPF is usually a retirement possibility if the PPF account holder holds it for long-term by extending it after 15 years maturity interval. However, PPF is 100 per cent debt instrument whereas NPS is mixture of each debt and fairness. In NPS, the investor has an possibility to decide on fairness publicity as much as 75 per cent. According to specialists, if an investor, who has barely larger threat urge for food, chooses 50:50 debt and fairness publicity within the NPS account, then it could get round 10 per cent return in long-term, which is round 2.9 per cent larger than the present PPF rate of interest of seven.1 per cent.

Speaking on PPF vs NPS Kartik Jhaveri, Director — Wealth Management at Transcend Consultants stated, “PPF account is 100 per cent debt fund backed by Government of India while NPS is a retirement-oriented fund where the investor has to invest at least 25 per cent in debt and buy annuity of at least 40 per cent of the maturity amount. If an investor has some risk appetite, then I would advise him or her to choose 50 per cent in active mode and 50 per cent in auto mode means 50 per cent in equity and 50 per cent in equity. In the long-term say after 30 years, the annual NPS interest rate that will accrue in one’s NPS account will be around 10 per cent as equity will deliver around 12 per cent and debt will deliver 8 per cent. 50:50 debt equity exposure will split in 6 + 4 means 10 per cent net return.”

On his tackle PPF vs NPS Amit Gupta, MD at SAG Infotech stated, “Both PPF and NPS gives income tax exemption to the investor on its investment up to ₹1.5 lakh in single financial year. But, in NPS there is no maturity period while in PPF, there is 15 year maturity period. So, if a person wants to go long in PPF, he or she will have to submit PPF extension form at bank or post office (whichever applicable) in the last year of the maturity period of the PPF account. One can extend PPF account in blocks of 5 years for infinite number of times. Hence, if a person opens PPF account at 30 years, he or she can continue investing in PPF for near 30 years too.” Gupta suggested to decide on PPF extension with funding as it’ll assist investor get advantage of compounding curiosity.

Now, if an investor invests ₹3,000 per 30 days in PPF for 30 years assuming present PPF rate of interest of seven.1 % as web return, then as per the PPF calculator, one would get ₹37,08,219 PPF maturity quantity.

View Full PictureSource: SBI PPF Calculator Groww

Similarly, if an investor invests ₹3000 in NPS account holding 50:50 publicity in fairness and debt devoting 40 per cent of the online maturity quantity for buying annuity, NPS calculator says that the maturity quantity that the investor would get after 30 years will likely be ₹41,02,786 and she or he would get ₹13,676 month-to-month pension too.

View Full PictureSource: NPS Calculator NPS belief

So, if an investor has some threat urge for food, then NPS will yield larger compared to PPF as it’ll give larger maturity quantity together with month-to-month pension.

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May 14, 2021
NPS Calculator: Key issues to learn about your ₹6000 month-to-month funding

NPS Calculator: The National Pension System (NPS) is a market-linked retirement-oriented funding instrument. In NPS scheme, the investor is given option to open two accounts — fairness mode and debt mode — in single NPS account. According to the tax and funding consultants, even when somebody has excessive danger urge for food, she or he ought to have fund allocation in NPS as diversification of the portfolio is important. They mentioned that an NPS account permits fairness publicity as much as 75 per cent and one can select that whereas opening the NPS account. They have been of the opinion that 75 per cent fairness publicity will assist NPS scheme beneficiary to get round 11 per cent NPS rate of interest within the long-term.

Speaking on the fairness publicity accessible for the NPS traders Manikaran Singhal, Founder at goodmoneying.com mentioned, “If someone has high risk appetite, then he or she can choose the highest 75 per cent equity exposure of the pension scheme. By doing that, one would be able to get 25 per cent debt exposure, which is the least debt exposure one can opt while opening the NPS account.” Singhal mentioned that in NPS scheme, the investor has revenue tax exemption on funding as much as ₹1.5 lakh in a specific monetary yr below Section 80C whereas a further ₹50,000 below Section 80CCD (1B) of the Income Tax Act.

Highlighting upon the revenue tax rule in NPS funding Amit Gupta, MD at SAG Infotech mentioned, ” ₹1.5 lakh income exemption under Section 80C includes all investments falling under the list of Section 80C like EPF or PF, PPF, ELSS Mutual Fund, etc.” However, the Chartered Accountant (CA) skilled went on so as to add that ₹50,000 extra revenue tax leisure given below Section 80CCD (1B) is past Section 80C profit. So, if an investor has exhausted ₹1.5 lakh funding restrict below Section 80C, she or he can spend money on NPS to get a further revenue tax profit on ₹50,000 revenue. Gupta went on so as to add that Goods and Services Tax (GST) of 1.8 per cent is levied on the annuity shopping for however in case of NPS scheme, there is no such thing as a GST levied on annuity shopping for. He mentioned that one can anticipate 6-7 per cent annual return on annuity.

Suggesting traders to speculate for greater returns as an alternative of saving revenue tax outgo Kartik Jhaveri, Direcxtor — Wealth Management at Transcend Consultants mentioned, “It’s better to get higher returns and pay income tax than to get lesser returns and avoid paying any income tax. One shouldn’t invest in NPS only because one’s Section 80C limit has been exhausted. One must note that if an investor has higher risk appetite, then it’s better to choose NPS ahead of Public Provident Fund (PPF), post office savings account or any other small saving scheme.”

On how 75:25 equity-debt ratio will replicate in NPS return Jhaveri mentioned that one can anticipate a minimum of 12 per cent return in fairness in long-term time interval whereas in debt instrument, a mean 8 per cent return may be anticipated. Since the ratio is 75:25, 12 per cent fairness will translate into 9 per cent (12 x 0.75) whereas 8 per cent debt return will translate into 2 per cent (8 x 0.25). So, the NPS investor can anticipate round 11 per cent return on one’s cash if the fairness debt publicity is 75:25.

So, assuming 11 per cent NPS curiosity, if an incomes particular person begins investing in NPS account on the age of 30, she or he could be investing in NPS for subsequent 30 years. In that case the NPS calculator means that if the investor has chosen 60 per cent withdrawal on the time of maturity, the NPS withdrawal quantity will likely be ₹1,01,88,821 or ₹1.01 crore whereas one will get month-to-month pension of ₹33,963.

The NPS calculator makes it clear that month-to-month pension of ₹33,963 comes from the ₹67,92,547 that will likely be used for annuity shopping for.

View Full PictureSource: NPS Trust calculator

However, in case the NPS investor has low danger urge for food, in that case she or he can anticipate to get round 8 per cent NPS curiosity and in that case the NPS calculator means that the web NPS withdrawal quantity will likely be ₹54,01,063 whereas the month-to-month pension will likely be ₹18,004.

View Full PictureSource: NPS Trust Calculator

The NPS calculator additional says that ₹36,00,709 would be the maturity quantity used for annuity shopping for.

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April 18, 2021
PPF vs NPS: Key issues to know if you wish to make investments ₹8,000 per thirty days

PPF vs NPS: In PPF account, heart pronounces PPF rate of interest on quarterly foundation whereas in NPS scheme, one’s cash will get publicity of each debt and fairness

April 14, 2021