6 Robust Reasons to not to miss NPS in your tax planning

Income tax planning is the most important step when fulfilling your financial goals and knowing about the NPS can be greatly important for you. NPS stands for the national pension scheme that helps an investor to increase their wealth.

As per the experts - Planning your taxes and investments is essential in life. People generally invest in tax saving options but there are also other options such as NPS which should also a considered to get major benefits.

In this blog, we have explained the 6 strong reasons why you should start investing in NPS. So, grab a cup of tea and read on…

Your money gets tax-free by 100% - The money pooled in the national pension scheme is completely tax-free at maturity. As per the new tax rules, you are eligible to withdraw 60% of the collected corpus tax-free at maturity. For the rest of the 40% balance withdrawal, you need to buy an annuity; however, there is no tax levied while purchasing the annuity. Therefore, the complete withdrawal is tax-free.
Only the monthly annuity payments that you will be obtaining will be taxable. Even this income would qualify for the base tax exemption limit, which means that only a portion of it may end up getting taxed.

Multiple Fund management & asset allotment option - National pension schemes can be quite appealing for young investors as there are multiple fund managers and fund allocation options available to choose from. This facility provides flexibility to investors. However, it is also possible in NPS that you can wisely look at the performances of the past fund and decide on a suitable fund selection. In case you find any downfall in the currently owned fund, it is still feasible to switch from one fund to another mid-way.

Regarding the fund allocation, you are in charge to choose between the auto-asset and active allocation. You also can plan the equity allocation that can touch up to 75% if you are a well-versed investor. Being a passive investor, auto-allocation can be the better option to balance your asset allocation automatically.

Longer period lock - The long lock-in period is the best thing about NPS which makes it smart and convenient for the investor. Especially if you are young now yes it is difficult to even think about retirement but however, but it will be a good idea to think about investing in NPS as it can provide you with c collected corpus for future betterment.

Highly regulated investments in lower fund management fund fees - NPS fees of fund management other than the ELSS and ULIP is the lowest at 0.01% compared to 2%. This is a huge difference that can play a vital role in cost-saving and building your retirement portfolio over 30 years. Moreover, NPS is operated by the regulatory body PFRDA which ensures that your interest and rights are completely protected. This is a very essential thing considering the long-term goal as well as your financial goals.

The best alternative to EPF - NPS has been the best alternative to EPF with time because the returns are connected to the market. Apart from saving the taxes, you also get the enjoyment of your retirement. If you are in your 20s then investing in NPS can be very beneficial for you. Considering the long term, you can expect higher returns from the NPS scheme.

The flexibility of investing online in your comfort zone - Opening your NPS account is easy, quick and effortless and it can be opened from your comfort zone. You will later be provided with a PRAN (permanent retirement account number) which does not going to be changed even after you move from one city to another. NPS also provides you online access to the accounts, Everything will be on your fingers such as fund performance, download statements, updating your account, etc.

Summing up, NPS has all the great ticks that can be beneficial for a young investor. The national pension scheme put a lot of advantages to your retirement portfolio - tax saving, flexibility, transparency, and ease of investing.


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