National Pension System: If you work in private sector and want pension after retirement, then National Pension System (NPS) is a superhit scheme for you. Apart from saving income tax from this scheme investment, the amount received on maturity is also tax free.
At the same time, after retirement, pension is guaranteed every month. Two types of accounts are opened under NPS Tier-1 and Tier-2. Tier-1 is a retirement account, while Tier-2 is a voluntary account, in which any salaried person can start investing on his own behalf. Tier-2 account opens only after Tier-1 account is opened.
A minimum contribution of Rs 500 has to be made for opening an NPS Tier-1 account and a minimum contribution of Rs 1000 for a Tier-2 account. Earlier the limit was Rs 6,000, which was reduced to Rs 1,000. If the minimum annual investment is not made, the account is frozen and deactivated.
If you are 28 years old. If you invest Rs 4,200 every month in NPS and aim to invest till the age of 60, then you will get investment time for 32 years. Your total investment in 32 years will be Rs 16,12,800, while the total corpus will be Rs 1,49,10,428. You can withdraw 60% of the amount in lump sum from the total corpus. That is, you will get 90 lakh rupees in lump sum. It will be tax free.
It is necessary to buy 40% annuity on NPS investment. The insurance company gives pension for life only from the amount of annuity. It depends on the returns earned by the fund from investments in equity and debt. Higher the annuity higher will be the amount of pension. The amount of 40% annuity in Rs 1.49 crore will be Rs 59,64,171. You will get a pension of Rs 30,000 every month at 6% annuity rate.
Extra tax benefit is available in NPS. Under NPS, under Section 80CCD (1B) of the Income Tax Act, the benefit of extra tax exemption is available on investment up to Rs 50,000. If you have met the limit of up to Rs 1,50,000 lakh under section 80C, then NPS can also help you in additional tax savings.
