NPS New Rules: This is the Diwali gift of Modi government. Through NPS, after 60 years till the age of 75 years, there will be a benefit of approximately Rs 10,000 every month. On the other hand, the deposited capital also increased to Rs 2.5 crore.
The Pension Fund Regulatory and Development Authority (PFRDA) has made important changes in some rules related to the National Pension Scheme (NPS). Now up to 60 percent of the deposited amount can be withdrawn monthly/quarterly/half yearly or annually. Earlier it could be withdrawn annually or in lump sum. The reason behind this change is that NPS should better meet the monthly needs of people after retirement.
Who will benefit from this and how
Personal finance advisor CA Manish Garg explains it this way with an example. He told, “Suppose a person aged 60 did not have the option of pension. On retirement, his total fund became Rs 1.5 crore. In view of this, someone gave him money in the Senior Citizen Savings Scheme (up to Rs 30 lakh). Advised him to invest, from where he would get around 8% interest.
That is, he would get Rs 240,000 per year. He would get 7.4% to 7.5% interest on the balance amount of Rs 1.20 crore deposited in Post Office MIS/Bank FD etc. That is, he would have got interest of around Rs 9 lakh from here. Overall, he would have got Rs 1140000 as interest annually and it is taxable.
That means he would have to pay tax of around Rs 65500 on this in the new tax regime and the net income from interest would be around Rs 1074500. That is, he would have got only around Rs 89,541 for his monthly expenses. Moreover, even after 15 years, his principal amount i.e. Rs 1,50,00,000 would have remained the same.”
How the new rule of NPS will provide benefits: CA Manish Garg says that now suppose the same person accumulates a fund of Rs 1.50 crore through NPS by the age of 60 years. If he withdraws 60 percent of this i.e. Rs 90 lakh systematically as per the new rules till the age of 75 years, then he will get around Rs 1183000 (with 10 percent interest) for his monthly needs.
This is a completely tax free amount. This means that you will receive around Rs 1 lakh per month for 15 years. On the other hand, if 40 percent annuity continues to increase by 10 percent annually, it will become Rs 25063489 in 15 years.
Double benefit from NPS:
Garg said this is Modi government’s Diwali gift. Through NPS, after 60 years till the age of 75 years, there will be a benefit of approximately Rs 10,000 every month. Because there is no tax here. On the other hand, our deposited capital will also become around Rs 2.50 crore instead of Rs 1.5 crore.
