Tax Saving Investments - 5 Income Tax Saving Schemes Other Than Sec 80C

Posted by Mehul Kothari | Published on 14 Jan 2020
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Tax Saving Investments - 5 Income Tax Saving Schemes Other Than Sec 80C

The taxpayers are always in search of ways through which they can save their taxes. The most popular section for saving taxes among the taxpayers is section 80C. You can claim deduction up to Rs. 1,50,000 under section 80C of the Income Tax Act, 1961 by investing in specified avenues listed by the government. However, there are many other sections under which you can save your taxes but due to lack of awareness, many people miss out on them. In this article, we will list down five income tax saving schemes other than section 80C.

Tax Saving Schemes Other Than 80C

  • National Pension System (NPS)

National Pension System (NPS) is one of the popular tax saving investment schemes. Here you can invest in the NPS and get an additional tax deduction up to Rs. 50,000. This scheme was launched by the government of India in 2009. This tax saving scheme makes you eligible for an additional tax deduction for investment up to Rs 50,000 under subsection 80CCD (1B) of the Income Tax Act, 1961. The main advantage of investing in NPS is that the tax benefits under this scheme are not clubbed with the tax benefits under section 80C which allows tax benefits on investments of up to Rs. 1,50,000 lakhs only. Investment in NPS can be done by employees of the public, private and unorganized sectors. Apart from saving tax, NPS is also a good investment scheme for the long term.

  • Health Insurance Premium

The health insurance premium is another good tax saving investment option. Paying health insurance premiums can help in saving your taxes. You can claim deduction under section 80D of the Income Tax Act, 1961. The maximum exemption limit under this section is up to Rs. 1,00,000. The exemption limit is up to Rs. 25,000 for health insurance premium paid for self, spouse or dependent children. However, when the premium is paid for the health insurance of senior citizen parents, the maximum deduction limit is Rs. 50,000. Therefore, when the health insurance premium is paid for policies for self, spouse and senior citizen parents, the total deduction that can be availed is Rs. 25,000 plus Rs 50,000 i.e. Rs 75,000.

A mediclaim policy is essential these days because if any of your family members fall sick or meets an accident, the cost of treatment can wipe out a large part of your savings. The deduction under this section can be claimed only when the premium is paid by any mode other than cash. Also, the central government or the Insurance Regulatory and Development Authority of India (IRDAI) must have approved the insurer.

  • Payment Of Interest On Education Loan

Education loans are one of the popular tax saving investments. The tax deduction is available to you on the interest paid on the education loan taken for self, spouse, children, or a student (whose legal guardian is you). The tax deduction on payment of interest on education loan is available under section 80E of the Income Tax Act, 1961. What makes it a good tax saving scheme is the fact that interest paid on education loan is eligible for deduction without any limit. However, to claim deduction under section 80E, you must make sure that the loan is taken for higher education i.e. for any course after the completion of the 12th standard. The deduction on interest is available for a period of eight years from the year in which the payment of interest started.

  • Savings Account Interest

Interest in the savings account is eligible for tax exemption. The tax exemption limit on the interest of the bank’s savings account is Rs. 10,000. Therefore, if the interest income from the bank’s savings account is more than Rs. 10,000 then you have to pay tax on it. However, you must remember that the interest on fixed deposits in the bank is not eligible for tax exemption.

  • Donations

Donations made to institutions or organisations that are notified by the Central Government of India are eligible for tax exemption. Such deduction is available under section 80G of the Income Tax Act, 1961. However, while availing this income tax saving scheme, the amount donated must not exceed 10 per cent of the adjusted gross total income. Under this tax saving scheme, the donation of more than Rs. 2,000 in cash in not eligible for a tax deduction. Some of the funds that are notified by the government include Swachh Bharat Kosh, Clean Ganga Fund, Prime Minister's Drought Relief Fund, Prime Minister's National Relief Fund, National Children Fund, National Defence Fund, Jawaharlal Nehru Memorial Fund, etc. In addition to the notified institutions, deduction under section 80G is also available on donations given to churches, temples and mosques for renovation purposes. Such churches, temples and mosques must be approved by the Central Government.

 

The above mentioned are some of the popular tax saving funds other than section 80C. It is always advisable to invest in multiple funds to avail the tax deductions. This is because there is a cap of Rs. 1,50,000 lakhs for tax deduction under section 80C. By investing in the other income tax savings schemes, you can avail the deduction of more than Rs. 1,50,000. By exploring other tax saving investment options, you can further reduce your tax liability. If you want to learn more about tax saving funds or need any financial advice, you can contact IndiaNivesh. We are one of the leading broking and financial advisory firm in India with highly qualified professionals who can help you in reducing your tax liability.




Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

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IPOs for 2020 - Top 20 IPOs to watch out for in 2020

Posted by Mehul Kothari | Published on 14 Jan 2020

The number of IPOs last year was relatively low but, fetched high returns for the investors. Attractive valuations, global liquidity and growth in the economy are few factors that will contribute to growth of capital markets and define the fate of some of the most anticipated IPOs in 2020. Here is a tentative list of 20 upcoming IPOs in this year which can fetch good returns for investors: 1. SBI Cards and PaymentsSBI Cards and Payment Services Limited, subsidiary of India’s largest commercial bank SBI, is expected to be one of the biggest upcoming IPOs of 2020.  With a market share of 18% in the Indian credit card market, it is the second-largest credit card issuer in the country. The size of the issue of the likely IPO is estimated to be around Rs 8500 crore to Rs 9500 crore. State Bank of India currently has a 74% stake in the company and will divest up to 4% through the IPO. The remaining 26% is owned by CA Rover Holdings of the Carlyle group. 2. UTI AMCUnit Trust of India AMC, India’s oldest mutual fund is looking at selling up to 8.25% of the stake through an IPO. The size of the issue is expected to be around Rs 3,800–4,800 crore. The IPO will consist of the sale of shares by its five stakeholders which include State Bank of India, Bank of Baroda, LIC, Punjab National Bank and T Rowe Price.3. Burger King(India) Limited The Indian arm of the QSR chain Burger King had filed for a proposed IPO in November last year. The IPO is expected to raise approximately Rs 400 crore through fresh issue of shares. The company currently operates 202 outlets in 47 cities and intends to increase the number of outlets to 325 by the end of the year. 4. Home First FinanceHome First Finance Company (HFFC), a Mumbai-based mortgage financier, is looking to raise Rs 1500 crores from an IPO this year. In November last year, the company had filed a draft red herring prospectus with SEBI for its proposed IPO. If launched, this IPO is expected to raise Rs 1,500 crore. It would comprise of a fresh issue of Rs 400 crore and an offer for sale by promoters and investors of Rs 1,100-crore.5. HDB Financial ServicesHDB Financial Services, the NBFC subsidiary of India’s largest private sector bank HDFC is currently valued over Rs 80,000 crore. It is ranked as the fourth most valuable non-banking lender in the country.  HDFC Bank which currently holds a 95.53% stake in HDB, is planning to offload a part of its holding through an initial public offer and raise around Rs 10,000 crore this year. So, if this IPO is launched this year, it would surely be one of the most anticipated IPOs of 2020.6. NSEAfter its IPO being delayed for nearly three years, India’s largest bourse NSE is likely to launch the most awaited IPO in 2020. The company aims to raise around Rs 10,000 crore from the IPO. Stakeholders are likely to offload 20%-25% of their holdings.7. Rossari BiotechRossari Biotech, a Mumbai-based speciality chemicals maker, founded by Edward Menezes and Sunil Chari in 1996, is looking at raising Rs 700 crore through an IPO. The company has an impressive clientele which includes brands like Vim, Lifebouy, IFB, Bosch, Panasonic to name a few.    8. Equitas Small Finance BankChennai-based Equitas Small Finance Bank is looking to raise fresh capital of Rs 550 crore through a fresh issue IPO and remaining via the OFS route. The total IPO size is estimated to be around Rs 1000 crore9. EaseMyTripEaseMyTrip, an online travel company has filed papers to float an IPO of Rs 510 crore in 2020 through the OFS route. The founders of the company, Nishant Pitti and Rikant Pitti would sell shares worth Rs 255 crore each in case the IPO is launched this year. 10. Energy Efficiency Services Ltd (EESL)State-run EESL, which is a part of India’s ambitious energy efficiency program, is looking to raise money through the capital markets to fund its energy efficiency plans.  The company is currently valued at around Rs 5,000 crore11. Computer Age Management Services(CAMS)CAMS, a registrar and transfer agent which is leading technology-driven service provider to the growing mutual fund industry is likely to come out with an IPO of Rs 1500 to Rs 1600 crore by the end of this year. The IPO is expected to be an OFS which will see investors offloading part of their stake holdings in the company.12. Integrated Renewable Energy Development Agency(IREDA)IREDA, a 100% government-owned entity, which is registered as a non-banking financial company, received approval from SEBI last year for an IPO. The government is looking at offloading a part of its stake worth Rs 700 crore. The company will also issue fresh shares worth Rs 13.90 crore.13. Mazgaon Dock ShipbuildersMazagon Dock Shipbuilders, the country’s leading shipyard company is likely to float an IPO this year after receiving approval from SEBI. The company is a fully owned subsidiary of the Government of India and the stake sale is a part of the divestment plan to offload 13% of government share in the company.14. SAMHI hotelsSAMHI Hotels Ltd, a Gururgram-based hotel company, owning the largest number of Marriot, IHG, and Hyatt hotels in the country, has received approval for an IPO. The company aims to raise Rs 1,100 crore of fresh capital through the IPO.15. Bajaj EnergyBajaj Energy, which is a fully owned by Bajaj Power has received capital Sebi’s approval for an IPO of Rs 5,450 crore and is expected to comprise a fresh issue of shares up to Rs 5,150 crore and an offer for sale of up to Rs 300 crore by Bajaj Power Ventures.16. Fincare Small Finance BankThe Bengaluru-based financial bank Fincare is planning an IPO of Rs 1200 crore by the mid of 2020. The IPO will be a combination of stake sale of existing shareholders and a fresh issue of shares. Incorporated in June 2017, the company is likely to come out with an IPO this year as per the new RBI guidelines which require small banks to list themselves within 3 years of commencement of operations.17. ESAF Small Finance BankThe Kerala-based ESAF Small Finance Bank has filed draft papers with SEBI for an IPO issue which would be a combination of fresh issue of Rs 800 crore and offer-for-sale of Rs 176.2 crore, after approval. The bank currently has a presence in 16 states and 1 union territory. 18. Route MobileRoute Mobile has recently received SEBI’s approval to raise capital through the IPO route and likely to raise Rs 600 crore through the IPO. The IPO will comprise a fresh issue of shares worth Rs 240 crore and the remaining Rs 360 crore through stake sale of promoters.19. Mukesh Trends Lifestyle LtdAhemdabad–based Mukesh Trends Lifestyle, in the fabric processing business, has filed draft papers with markets regulator SEBI for its proposed initial public offer. The size of the IPO is expected to be between Rs 70 crores to 90 crores, once launched.20. Angel  Broking LtdAngel Broking Ltd which received SEBI’s approval for an IPO in June last year will come out with the IPO this year. The size of the IPO is expected to be Rs 600 crore.CONCLUSION 2020 could be a rewarding year for investors with some of the big IPOs likely to come out this year which have the potential to give huge returns to the investors. Reach out to our experts at IndiaNivesh to help you with your IPO investments. Disclaimer: These are only the list of IPOs that would be coming in 2020. However, whether you should invest or not should be a decision one should take on the basis of the research reports. "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

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Tax Refund – Smart Ways to Use your Tax Refund

Posted by Mehul Kothari | Published on 14 Jan 2020

Usually, none of us likes to receive emails from the Income Tax Department. Because they are often regarding the errors in tax filing, deadline reminders, cash outflows and similar. Having said that, there are also times when you receive an email from the Income Tax Department notifying that you have received a refund against your tax filing. Getting a tax refund can be both exciting as well as stressful. It requires you to carefully think and decide what to do with the unexpected funds. However, before you decide anything, you must remember that this is not the extra cash that you have received from the department; it is your own money that you had overpaid to the government which department is returning you. Therefore, as a part of personal financial management, you need to assess your options for smartly using your tax refund. You may consider doing your money management by either choosing to save it or invest it or use it to pay off your existing debt. While some choices could improve your financial situation, others might push you backwards. Therefore, it is crucial to do good financial planning to make the most of your tax refund. Here are a few smart ways to use your tax refund. Ways to utilise your tax refund to improve your personal finance Pay-off existing debt If you are carrying any debt, including a loan or high credit card bill, you can use your income tax refund amount to pay off your existing liabilities. Your first priority should be paying off high-interest rate debts. This will, in turn, help you improve your credit rating. Besides, it will reduce your financial as well as psychological burden of debt. Build up an emergency fund Contingencies strike us when we least expect them. Even though we cannot prepare ourselves mentally but we can at least prepare ourselves financially. Building an emergency fund offers a safety net that protects you from unforeseen situations such as costly medical expenses, loss of a job, etc.  Typically, your emergency fund should help you cover living expenses for at least three to six months.   Invest in a retirement plan Another smart way of doing financial planning and using your refund is to invest in a good retirement plan. You can do this via monthly SIPs and build a huge corpus for the long run. This fund can help you meet your old age expenses. Fund your goals With good financial planning, you can fund your financial goals with the help of the tax refund amount. It can be a great source to build up your financial portfolio and help you move closer to your goals. This can be done by investing in equity-oriented mutual funds for long-term goals and debt-oriented mutual funds for short term goals.   Invest in your health One of the best uses of your tax refund could be to use it towards improving your health. You can use the amount for buying comprehensive annual health check-up or you can invest in a fitness device or take up a gym membership, depending on your interests and abilities.   Buy life insurance policy If you are the primary bread earner in the family and your parents, spouse and children are dependent on your income then it is worth investing in a good life insurance plan. With the refund amount, you can consider buying a term policy and pay for it while you need it.   Invest in stocks and mutual funds Your tax refund can be an excellent opportunity to begin investing in stocks and mutual funds. Both the investment avenues have great growth potential and are an ideal investment vehicle for a long-term horizon. However, before you invest in stocks and mutual funds, it is advisable to research well and access your risk tolerance, investment horizon and financial goals before taking any decision.   Start a goal-oriented savings account It is a good idea to open a savings account with your tax refund keeping a specific goal in mind. It can be buying a new car or home theatre, accumulating funds for your child’s higher education or marriage and similar such expenses. Dedicate the savings account for meeting the expenses related to the goal. Moreover, a dedicated account can help you keep track of your progress towards meeting your goal and prevent you from spending money on unnecessary things. Donate to charity You can use your tax refund for a good cause by donating it to charity. It is not only a noble cause but also helps you in your tax planning. You can claim a deduction in your tax return for the amount you donate as a charity. Just remember to save the donation receipts for documentation purposes.   Treat yourself Once you have covered all the above options, then you may consider spending on your leisure. You may use the refund to sponsor an exotic vacation or buy yourself a smart television or a smartphone you have been waiting to buy. Besides, you may also consider investing in yourself by taking up a skill development course or learning new experiences. Just ensure that you spend keeping your financial planning in the mind.   Conclusion Tax filing can be daunting, so a refund could make you feel rich and inspire you to spend on unnecessary things. You can counter this by using your tax refund amount in the above-mentioned ways and increase your financial security. You must consider your income tax refund as an opportunity to better plan your personal finance. So, next time you get a tax refund, consider doing money management by using the refund amount to your financial advantage.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

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  • TDS Refund Status – Know how to check TDS refund status
    Posted by Rushabh H. Mehta | Published on 06 Mar 2020

    After the end of each financial year, any income that you earn is subject to income tax. You have to club the income received from different sources and then pay a tax on such income at a prescribed rate. However, in some cases, tax is deducted from your income before it is credited to you. For instance, if you are a salaried employee, tax is deducted by your employer from your salary income, and then you get the net salary income in your bank account. Similarly, if you earn any interest income, rent, etc., tax might have been deducted on the income by the individual or the entity that is paying the income. This deduction of tax is called Tax Deducted at Source (TDS) because the tax is being deducted at the source from where the income is being generated. TDS is deducted by the deductor and submitted to the Government on your behalf. When you file your income tax return, you are required to record the actual income that you have earned, i.e. income before the deduction of tax. Thereafter, you have to calculate your gross taxable income and tax liability on the income. If your tax liability is lower than the TDS already deducted from your income, you are eligible for a TDS refund. What is TDS refund? A TDS refund is the process of getting a refund of the extra income tax that you have paid. TDS refund is applicable if the TDS deducted and deposited is higher than the tax liability that you incur. For instance, banks deduct a TDS of 10% from the interest that you earn from your fixed deposit account. However, if you are in a lower tax bracket of 5%, an extra 5% has been deducted from your interest income. This additional 5% can be, therefore, claimed by you as TDS refund. Claiming a TDS refund The process of claiming a TDS refund depends on the source of your income. The different instances of TDS refund and the process of claiming them are as follows – When a higher TDS is deducted from your salary income If the TDS deducted from your salary income is higher than the actual tax liability that you incur, you can file your income tax return and claim a refund of the excess TDS deducted. When filing your income tax return, mention the details of your bank account so that the TDS refund can be credited to your account at the earliest. Alternatively, if your taxable income falls below the threshold taxable limit, you can apply for a low or a Nil TDS Certificate and submit the certificate to your employer. The employer would then deduct TDS at a lower rate or not deduct it at all (if you have availed of a Nil TDS Certificate). The certificate can be applied with the Income Tax Officer of your jurisdiction in Form 13 as specified under Section 197 of the Income Tax Act. When you are eligible for TDS refund on your fixed deposit interest earnings If your income is below the taxable limit, you should submit Form 15G to the financial institution with which you maintain the fixed deposit account. The form should be submitted before the completion of the financial year. Once the form is submitted, TDS would not be deducted from your fixed deposit interest income. If, however, TDS is deducted even after the submission of the form, you can claim a TDS refund by filing an income tax return. If you are a senior citizen and want to claim TDS refund on your fixed deposits Section 80 TTB of the Income Tax Act, 1961 allows senior citizens to enjoy a deduction of up to INR 50,000 on the interest income earned from fixed deposit and post office deposit accounts. So, if your taxable income after claiming the deduction is below the threshold limit, you can submit Form 15H to the financial institution where the deposit account is maintained. The financial institution would, then, not deduct any TDS from your deposit interest income. However, if the TDS is deducted, you can claim a refund by filing an income tax return. Claiming a TDS refund online You can claim a refund of your TDS online by registering on the website of the Income Tax Department. After you are registered, download the refund form and fill it by providing the required information. You would have to submit your documents along with the form to verify the details entered. Once the form is submitted to the income tax department, an acknowledgement of the filed return and a number would be issued by the department. This number should be verified either through your digital signature or by generating an OTP on the number which is registered with your Aadhaar card. How to check TDS refund status? Once you submit the TDS refund form, the excess tax amount is refunded within 3 to 6 months depending on the time taken by the income tax department to verify your income tax returns. In the meanwhile, you can check TDS refund status to find out whether the TDS has been refunded or not. The different modes to check income tax TDS refund status are as follows – You can check online TDS refund status through the e-filing website of the income tax department. Visit https://www.incometaxindiaefiling.gov.in/home and log into your online account. Under 'My Account', you would find the option of 'Refund/Demand Status.' Click on the option, provide your PAN Card number and check online TDS refund status for the chosen assessment year The Government also sends you an email on your registered email ID stating the TDS refund status. You can, therefore, access your email for TDS refund status check. You can even call the helpline number of the Central Processing Centre of the income tax department at Bangalore for checking your TDS refund status. The number is 1800 4250 0025 Usually, the TDS refund is credited at the earliest. In case of a delay, however, the income tax department would be liable to pay interest on the delayed amount of refund @ 0.5% for every month (6% per annum) from the first day of April of the assessment year to the date on which the refund is granted as per the rules contained under Section 244A of the Income Tax Act, 1961. TDS is a mandatory deduction from your income but you can claim a refund if your tax liability is lower than the TDS already deducted. So, find out if you are eligible for a refund and file for it at the earliest. If you need some advice, you can always reach out to IndiaNivesh, and our team will help in understanding the applicable taxes as per your income and investments.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. 

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  • Section 80 Deductions - Income Tax Deductions under Section 80D
    Posted by Rushabh H. Mehta | Published on 06 Mar 2020

    Health is wealth goes a famous saying, and it is quite right. You cannot live a fulfilling life if you don't take of your health. In today's times, medical expenses have become quite unaffordable, and with medical inflation steadily on the rise, the costs are expected to increase. Meeting such high medical expenses might prove prohibitive for many, and that is why there are health insurance plans available in the market. Health insurance plans cover the medical expenses which are incurred in a health emergency. Besides providing financial assistance, health insurance plans also allow you tax benefits under Section 80D. Do you know how? Let’s understand – What is Section 80D deduction? The Income Tax Act, 1961, allows health insurance premiums to be claimed as a deduction under Section 80D. This deduction is contained under Chapter VI A of the Income Tax Act, 1961. Under Section 80D deduction, the premium paid for health insurance is allowed as a deduction from your taxable income. Eligibility for availing 80D deductions To avail deduction under Section 80D, the following parameters should be kept in mind – 80D deduction is available for individual taxpayers and Hindu Undivided Families (HUFs). The deduction is not allowed to any other type of taxpayer. Non-resident individuals can also claim deduction under Section 80D The deduction can be availed only if the premium is paid towards a health insurance coverage The coverage can be taken for self, spouse, dependent children and dependent parents The amount of deduction available under Section 80D depends on the age of the member being covered under the insurance policy The premium should not be paid in cash Section 80D deduction is available even if you have claimed deductions under Section 80C on eligible investments and expenses, Section 80CCC on life insurance pension plan premium and Section 80CCD towards investments in the National Pension Scheme Amount of deduction available under Section 80D There is a maximum limit up to which deduction under Section 80D can be claimed. This limit, as mentioned earlier, depends on the age of the insured member. The limit of deduction available for taxpayers who are below 60 years of age is INR 25,000, and for senior citizens, it is INR 50,000. Moreover, if the taxpayer buys an additional policy for his dependent parents, he/she can claim additional deduction under Section 80D. Let's understand the allowed 80D limit under different instances – Let’s understand the deductions with some examples –  Example 1 – Mr. Sharma, aged 45 years, buys a health insurance policy for himself and his family by paying a premium of INR 20,000. He also invests in a health plan for his senior citizen dependent parents, and the premium paid is INR 30,000. The deduction available to Mr. Sharma under Section 80D would be INR 50,000, i.e., INR 20,000 for the premiums of his family floater health plan and INR 30,000 for the premiums paid for senior citizen parents. Example 2 – Mr. Khurana, aged 30 years, buys a health plan for him and also covers his dependent senior citizen parents under the same plan. The premium paid is INR 32,000. In this case, the maximum deduction available to Mr. Khurana would be INR 32,000 since the plan also covers his senior citizen parents and so the limit of deduction becomes INR 50,000. Thus, the premium of INR 32,000 would be allowed as a deduction from Mr. Khurana’s income. Example 3 – Mr. Verma buys two health insurance plans. One covers him and his spouse aged 34 years and 32 years respectively and the other covers his dependent senior citizen parents. The premium paid for his policy is INR 26,000, and for his parents' policy is INR 30,000. The deduction available would be limited to INR 55,000, i.e. up to INR 25,000 on his policy and INR 30,000 on his parents' policy. Thus, Mr. Verma would not be able to avail a deduction of the extra INR 1000 which he paid on his health insurance policy since the premium exceeded the available deduction limit of INR 25,000. Deduction for preventive health check-ups Section 80D also allows you a deduction towards the expenses incurred on preventive health check-ups in a financial year. So, if you undertake preventive health check-ups, you can claim the expenses incurred as a deduction from your taxable income under Section 80D. The limit of deduction is INR 5000, which is included in the limit of INR 25,000 or INR 50,000 as the case may be. When you are planning your taxes, do remember the deduction is allowed by Section 80D, and if you have bought a health insurance policy or have invested towards preventive health check-ups, the expenses incurred would be allowed as a deduction, which would help in lowering your tax liability. For a hassle-free experience, IndiaNivesh experts can help you to choose the right products as per your goals and guide you on tax deductions as well.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. 

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  • NPS (National Pension Scheme) – Features, Benefits & How does it work
    Posted by Rushabh H. Mehta | Published on 02 Mar 2020

    Planning for retirement is an essential aspect of financial planning, and a growing number of investors today are realising the significance of making early investments to boost their retirement corpus. The National Pension Scheme is steadily gaining popularity among investors to meet their retirement needs. However, many investors still do not fully understand what an NPS is and what are the NPS benefits in retirement planning and are unsure if they should subscribe to an NPS. If you, too, are contemplating subscribing to NPS, then this simple guide will help you get an understanding of the NPS. What is NPS? National Pension System (NPS) is a defined contribution pension-cum-investment scheme sponsored by the government. NPS was launched in the year 2004 in January exclusively for government employees except for those in the armed forces, but later on, in 2009 became opened to all to encourage systematic investment savings among citizens so that they can have a regular income at old age.  National Pension System is a voluntary investment option that is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is one of the cheapest market-linked retirement plans with a minimum contribution of Rs 6000 per annum. The investment can either be made as a lump sum or through minimum instalments of Rs 500 each month.  Features of the National Pension System NPS is portable across locations. So, it can be opened and operated from anywhere in India It is open to all Indian citizens, and the minimum entry age is 18 years, and the maximum age is 65 years. NPS account can be opened offline at any Point of Presence (POP) center with your KYC documents or online at enps.nsdl.com by linking your PAN card and Aadhaar number to your account  In NPS, the savings of the investors are pooled together and invested in PFRDA-regulated funds managed by professional fund managers in various diversified portfolios. Investors can choose an asset mix of government bonds, equity instruments, corporate bonds, and alternative investments depending on their risk appetite. There are two phases in NPS-1. NPS Accumulation Phase: This phase, you invest periodically during your working years to build the retirement corpus in a mix of asset classes depending on your risk appetite.2. Retirement or NPS Annuity (Pension) Phase: This phase part of your corpus is used to provide you with a pension after your retirement in the form of annuity Investments in NPS can be managed in two ways-1. Active choice- If you want to manage your funds actively 2. Auto choice- If you feel you lack the knowledge and expertise and allow a life-cycle based approach for fund management. NPS offers tax benefits to investors at the time of making contributions and even at maturity. How does National Pension System work? Once you open your NPS account, you are provided with a unique Permanent Retirement Account Number (PRAN), which remains valid throughout your lifetime. There are 2 tiers in the structuring of NPS. Tier-I account- It is a permanent account. Thus, the accumulations made in this account are deposited and then invested according to the desired asset allocation as per the portfolio chosen by you. Withdrawals from NPS are not permitted. A total deduction of up to Rs. 2 lakhs can be claimed by investing in NPS under section 80C and 80CCD. Tier-II account- It is a voluntary account, but you need to have an active Tier I account. You can make withdrawals from this account as and when you need it to meet any expenses.    NPS benefits: 1. NPS is a low-cost planNPS has an initial registration cost of Rs 200 and another Rs 40 to be paid for opening the account. Apart from this, you pay an annual account maintenance cost, which ranges from Rs 60 to Rs 95, and the value of each transaction is Rs 3.75. There is a nominal Pension Fund Manager (PFM) charge of 0.01% of the total AUM and custodian charges of 0.0032%. 2. NPS investments are managed by professional fund managersOne of the most significant NPS benefits is that it is managed by professional fund managers who have adequate knowledge and market expertise about markets and money management.  3. NPS is a highly regulated NPS is regulated by the PFRDA (Pension Fund Regulatory and Development Authority) and all the investments are regularly monitored and reviewed by NPS trust. 4. Keeps the retirement corpus intact as it is difficult to exitEven though NPS is a voluntary investment, the structure of NPS does not allow you to withdraw your corpus till you attain the age of 60. As the lock-in period is very rigid for the scheme, your retirement corpus is intact to meet your post-retirement requirements.   5. NPS tax savings for taxpayers is very useful in lowering their tax liability and enhancing returns NPS tax savings make it very lucrative for the accumulation of retirement corpus. NPS entitles you to tax benefits at the time of investing, on the gains made during the tenure of your investment, and also at the time of withdrawal. In short, NPS offers EEE tax benefits. You can claim up to Rs 1.5 lakh in a financial year under Section 80C. Moreover, an additional deduction of Rs 50,000 can be claimed under Section 80CCD(1B).   CONCLUSION  The National Pension System is an ideal investment choice for your retirement planning as it will help you to make systematic investments and provide you with the desired income post-retirement. Get in touch with our experts at IndiaNivesh for more guidance and assistance for your NPS investments.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. 

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