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Is Nps The Right Option For Retirement?

Aug 07, 2021 Alankit

National Pension Scheme (NPS) is a discretionary investment scheme or plan, and one can open an NPS account all alone without any assistance from anyone at all. The minimum subscription for NPS is set at Rs 500 in Tier I and Rs 1000 when subscribers open NPS Tier-II accounts. Though, there is no maximum venture limit set for NPS accounts. This pension scheme propounds investors to browse 3 choices of venture which are equity, corporate debt, and government bonds. Thus, with NPS investors have higher openness to equities, which can bring more significant returns.

An investor can make partial withdrawals made up to 25 percent from his/her NPS savings, but solely after the third year of membership or subscription. Moreover, after an investor arrives at the age of 60, he/she can pull out a singular amount from their NPS corpus of up to 60 percent. Having said that, one of the primary highlights of these pension plans is that after withdrawal it is necessary for a person to contribute 40% of his/her balance in an annuity plan.

Despite the fact that NPS is viewed as an optimal alternative for retirement, lower commission on the product sale has become the sole reason for the low ubiquity of NPS scheme online registration. Be that as it may, specialists say when contrasted with different assets in the retirement class, NPS nearly stands apart for certain worthwhile features.

For retirees, NPS is a tax exemption heaven since the subscribers enjoy full tax exemption of up to the limit of Rs. 1.5 lakh (under Section 80C). Furthermore, as a retiree with an NPS scheme subscription, you also get a tax exemption of up to Rs. 50,000 under the Section 80CCD (1B).

Why Is NPS Scheme The Right Option For Retirement?

Over the long-term, proceeding in market-linked NPS in order to make it an ultimate or ideal retirement product will create a significant retirement corpus by beating inflation. It is imperative to have the knowledge of the know-how of investing in NPS such as knowing the tax benefits while keeping the flexibility intact. The reason why NPS is a lucrative option, the credit to its low popularity among the populace goes to the fact that it offers lower commission on the sale of the product. Therefore, it is always to open NPS account online to have a secured and financially sound post-retirement life.

According to the National Pension Scheme (NPS), the amount you get at the time of retirement as your pension is subject to the performance of your investments. As an investor, you have a whole gamut of options to choose from such as corporate bonds with equities, government bonds, and equities capped at 75% of the corpus. Under the Income Tax Act of 1961, Section 80C, the investor or retiree is eligible for a tax deduction of up to Rs. 1.5 lakh and another tax exemption of up to Rs. 50,000 under Section 80CCD(1). Nevertheless, the product still falls short of the Exempt-Exempt-Exempt or EEE Treatment which the Public Provident Fund and Employees/ Provident Fund enjoy.

It is important to know that 40% of the accumulated corpus needs to be used to purchase an annuity or fixed pension that is taxable since we get tax exemption on the rest 60% of the total retirement fund.

Now that you know how beneficial NPS is going to be for your post-retirement life, why not invest in it? Alankit can help you build a retirement corpus and allows tax benefits. All you need to do is to go online and fill the NPS applications that can be filled through the official website of Alankit. Follow the detailed form step-wise that simplifies your steps mentioned there and enjoy a hassle-free happy life.

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