|Author: Mahesh 09 Jun 2016 Member Level: Gold Points : 4 (Rs 4) Voting Score: 0|
Here are answers to your questions.
1. Tax deduction is as per the slab you're into. So if at the age of 60, you are in 20% slab then the taxes will be according to that.
2. You are allowed to claim tax benefit in addition to 1.5L that you use. So basically due to NPS you can have 2L of tax free investment.
3. After maturity, your deduction will be partial and in some short amounts upto 60% at a time.
4. You can assign nominee any time of your lifetime. And that should decide how your money goes.
5. NPS has it's own rule on when you're allowed to have deduction. So you have to read those rules before you withdraw.
|Author: Manoj Chaurasia 11 Jun 2016 Member Level: Gold Points : 5 (Rs 5) Voting Score: 0|
Coming straight to your questions one by one:
1. You had fixed the maturity at 25 years but the maturity of NPS is at your retirement i.e. 60 years of age and not the period you fix. So it can be assumed that you are 35 year old and will begin investment from now till 60 years which will make up 25 years. In most cases people retiring at 60 fall under tax bracket of 30% hence it can be easily assumed that at the time of retirement the corpus/lump sum fund received will be taxed @30%.
2. You can claim tax benefit u/s 80CCD subject to maximum of Rs.50,000 p.a. as the ceiling limit u/s 80C to 80CCC is fixed at Rs. 1,50,000 and 80CCD combined will be maximum Rs.2,00,000. One more thing to note is that amount that you can invest in NPS is subject to condition that you can invest maximum of 10% of your gross basic income/salary. For e.g. if you invest Rs.70,000 in NPS in a year but your total basic income is Rs.4,00,000 then only 10% of Rs.4,00,000 i.e. Rs. 40,000 will be eligible for deduction u/s 80CCD and not Rs. 72,000 invested by you. So plan accordingly to get maximum benefit of tax benefits and investment.
3. NPS as the name suggests that it is a pension plan, hence you will be eligible for a lump sum only to a fixed percentage of the total sum invested and not the complete money invested. You will get a monthly pension which will vary as per the plan you choose now for investment. You can easily find online calculators on google which you can use to calculate how much monthly pension you want and how much lump sum money you will receive at the time of retirement. Make use of these freely available calculators for knowing better.
4. In case anything untoward happens to you then the pension shall start to the nominee as nominated by you. No more investment will have to be made and your nominee will start to receive the pension overriding all other conditions like retirement age and investment, etc.
5. This is the disadvantage of this scheme that if you choose for this scheme then you will have to continue with it till the age of retirement or else all the benefits in form of deductions claimed u/s 80CCD will have to returned to the Government in form of tax and also the pension will not be disbursed to you.
Although there is another option which lets you to invest for a smaller period and withdraw at any time you wish but it does not have the benefit of 80CCD deduction. So in short it only becomes an investment with no guaranteed return or pension and also no benefit under tax laws. So invest as per your preference.
Hope that all your queries are answered.