Electronic income

Income Tax: Why You Can’t Miss Nps When Tax Planning. Top 5 Reasons

Income tax calculator: The beginning of a financial year comes with many tasks related to money. Income tax planning is such an important task that needs to be done in advance. It helps an investor to maximize the value of his wealth. According to experts, taxation and investment should be planned together because a penny saved is a penny earned. They said that when developing an investment plan, people invest heavily in tax-saving options under Section 80C. However, there are other options that should be considered. The NPS or National Pension System is one such investment option, which is a mixture of debt and equity investment.

Regarding the tax advantages for NPS account holders, Vinit Khandare, CEO and Founder of MyFunBazaar, said, “Having gained popularity among tax planners and investors, an investment in NPS qualifies for an additional tax deduction of 50,000, an “additional investment” in the investor’s retirement fund. Tax savings significantly improve take-home pay, allowing the investor to invest in additional tax-saving options.”

Vinit Khandare added that the NPS investor can choose from a variety of fund managers and fund allocation options. When it comes to selecting a fund manager, they can quickly look at each fund’s past performance to help the investor make a decision. Once an investment has been made, it is simple to trade funds online in the middle if one anticipates a drop in performance.

Here we list the top 5 reasons why you shouldn’t miss the NPS when planning for income tax:

1]Tax savings up to Investment of 2,000,000: A taxpayer may claim an exemption from income tax up to Investment of 2 lakh in the NPS account in a single financial year.

“Any individual who is a subscriber to the NPS can claim a tax benefit within the aggregate cap of Rs. 1.5 lac under Section 80C. .50,000 in NPS under Subsection 80CCD(1B),” said Sujit Bangar, founder of Taxbuddy.com.

2]Good alternative to ETH: With the NPS, you not only save taxes, but you also benefit from the second leg of your life: retirement. The NPS is a good alternative to the EPF, especially because the returns are linked to the market. If you are between 20 and 30 years old, the NPS can be a very good investment option for planning your retirement. In the long term, one can expect a higher return than the EPF of the NPS regime.

3]Due date excluding taxes: “As an NPS investor, one can take 60% of the corpus tax-free at maturity, in accordance with applicable tax laws. The investor must purchase an annuity for the remaining 40%; however, he does not There is no tax due at the time of purchase. As a result, the withdrawal is tax-free in its entirety,” said Vinit Khandare of MyFundBazaar.

4]Flexibility in investment model: “One can have the flexibility to select or change the investment model and fund manager. This ensures that you can optimize returns to your comfort with different asset classes (equities, corporate bonds, state and alternative assets) and fund managers,” said Sujit Bangar of Taxbuddy.com.

5]Long Blocking Period: As a young investor, it can be hard to envision or think about retirement, but this attitude can jeopardize the retirement age and corpus – hence the long lock-in period that turns the NPS into a smart retirement investment.

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