The NPS is a great way to save tax if you don’t mind locking in your money till you retire.

Till last year, the taxability of the NPS was a big issue. But last year’s Budget changed the rules and made 40% of the corpus tax free.

The PFRDA wants that the balance 60% to be exempt from tax as well. “The emphasis is on increasing pension coverage. So, allowing EEE status (to NPS) is our major demand (in the Budget),” says PFRDA Chairman Hemant Contractor. NPS is especially useful for investors who may have exhausted the Rs 1.5 lakh investment limit under Section 80C but want to save more.

How NPS funds have done

A balanced mix of all three funds would have generated good returns for investors

Returns are average of all pension fund managers; 3- and 5-year returns are annualised. Data as on 4 Jan 2017. Source: Value Research

Another way the NPS can cut tax is by rejigging the salary. If a company deposits up to 10% of the basic salary of an employee in the NPS under Section 80CCD(2d), the amount will be tax free. Click here to see how much tax this can save. However, the take-home pay of the employee will come down.

Smart tip : For a higher allocation to stocks, go for the aggressive life cycle fund. Equity exposure will progressively reduce as you age.

We have mobilized asset under various mutual funds over six crores+. We are well equipped with internet to address your problems and render investment & income tax related services.

So, join mutual fund investment or tax saving schemes under our guidance at earliest to grow your investment along with peace of mind. The earliest you start investing, more compounding growth you will have in future.