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Mihir

Mihir Tanna  |942 Answers  |Ask -

Tax Expert - Answered on Aug 29, 2023

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Asked by Anonymous - Aug 28, 2023Hindi
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My wife is housewife, and has no other income. To secure her future, from my salary, if I contribute every year around 2Lac into NPS tier-1 account of my wife, will there be any tax implication to her or me, whenever she gets pension from NPS when she becomes 60 years old.

Ans: Upon maturity of the NPS account, you can only withdraw 60% of the amount, and this is entirely tax-free. The balance 40% is used to buy an annuity. However, the annuity income is taxable as per the investor’s income tax slab rate in the year of payout.



With reference to contributing to NPS account on behalf of spouse, amount transferred to spouse’s NPS A/c will not be subject to tax.



However, Income from asset (amount) transferred directly or indirectly to spouse without consideration is clubbed in the hands of the transferor. Accordingly, the tax implication would be on you (Husband) wherever your wife gets pension as annuity Income (balance 40%).
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Hardik

Hardik Parikh  |106 Answers  |Ask -

Tax, Mutual Fund Expert - Answered on Jul 27, 2023

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Hardik Sir, i am retiring from Govt services shortly, all the pension benefits which i get , i would like to give it to my wife, will there be any tax implication to her for this one time transaction. Whether it is advantageous or dis advantageous to transfer to wife as one time gift, i want her to take the responsibility of this amount of around 60 lakhs.
Ans: Dear Prasanna,

Firstly, congratulations on your upcoming retirement. It's a significant milestone, and I'm here to help you navigate the financial aspects of it.

Now, coming to your question about transferring your pension benefits to your wife. As per the Income Tax laws in India, any gift received from specified relatives, such as a spouse, is not treated as income. Therefore, it is fully exempt from income tax. So, if you decide to give your pension benefits to your wife as a one-time gift, there won't be any immediate tax implications for her.

However, there's an important aspect to consider. While the gift itself is tax-free, any income generated from this gift (for example, if your wife invests this amount and earns interest or dividends) would be clubbed with the income of the giver, i.e., you, and taxed accordingly. This is known as the clubbing of income.

In conclusion, gifting your pension benefits to your wife could be a good idea if the aim is to let her manage the funds. However, the income generated from the gifted amount would still be taxable in your hands.

I hope this clarifies your query.

Best,
Hardik

..Read more

Ramalingam

Ramalingam Kalirajan  |6266 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Asked by Anonymous - Jun 16, 2024Hindi
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Hello sir, My current epf is 10k monthly and 30k annually in ppf. Thus cealing my 80c to 1.5lakhs. I am thinking of starting an NPS of 10k as well for my retirement. Will this 10k of nps be taxable as as i have already capped my 80c i know i have 50k more deductable in 80ccd for nps. But since total will be 120k annually thus wanted to understand if these will be taxable? And will it effect my return after 30 years. As of now i am 30 years old
Ans: You contribute Rs 10,000 monthly to EPF and Rs 30,000 annually to PPF. This totals Rs 1.5 lakhs under Section 80C.

Considering NPS Contribution
You plan to start contributing Rs 10,000 monthly to NPS for retirement. This would amount to Rs 1.2 lakhs annually.

Tax Implications
Section 80C and 80CCD
Your contributions under Section 80C are already maxed out at Rs 1.5 lakhs. However, Section 80CCD(1B) allows an additional Rs 50,000 deduction specifically for NPS contributions.

Taxability of NPS Contribution
The Rs 1.2 lakhs NPS contribution is partly deductible. Rs 50,000 can be claimed under Section 80CCD(1B). The remaining Rs 70,000 will be taxable.

Effect on Return
Long-Term Growth Potential
NPS has a mix of equity and debt investments. This helps in balanced growth. Over 30 years, NPS can grow significantly due to compounding.

Withdrawal Rules
At retirement, 60% of NPS corpus is tax-free. The remaining 40% must be used to purchase an annuity. The annuity income is taxable.

Advantages of NPS
Additional Tax Benefits
NPS offers an extra Rs 50,000 deduction under Section 80CCD(1B). This is over and above the Rs 1.5 lakhs under Section 80C.

Long-Term Growth
NPS investments benefit from compounding. The mix of equity and debt can provide balanced returns.

Retirement Security
NPS provides a steady income post-retirement through annuities.

Disadvantages of NPS
Taxability of Annuity
The annuity income from NPS is taxable. This can reduce your net returns in retirement.

Withdrawal Restrictions
NPS has strict withdrawal rules. Partial withdrawals are allowed only for specific purposes before retirement.

Final Insights
Your current EPF and PPF contributions maximize Section 80C benefits. Starting an NPS contribution of Rs 10,000 monthly is a good idea. You get an additional Rs 50,000 deduction under Section 80CCD(1B). However, the remaining Rs 70,000 will be taxable. NPS has long-term growth potential but comes with some tax implications. Plan your investments considering both the benefits and restrictions of NPS.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6266 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 26, 2024

Asked by Anonymous - Jun 19, 2024Hindi
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My wife is of 31 years age and currently depositing around 25k monthly in nps as part of her central government job. She will retire at the age of 65 so, can we depend entirely on this nps investment for our retirement? How much return we can expect during our retirement ?
Ans: Your wife is 31 years old and contributes Rs. 25,000 monthly to her NPS. She will retire at 65. Let’s evaluate if NPS alone can support your retirement.

Understanding NPS
Benefits of NPS
Tax Benefits: NPS contributions provide tax deductions.
Market-Linked Returns: NPS invests in equity and debt.
Low Cost: NPS has low fund management charges.
Expected Returns
Equity Allocation: Equity in NPS can offer 10-12% returns.
Debt Allocation: Debt allocation may yield 6-8%.
Overall Returns: Expect 8-10% returns annually.
Projected NPS Corpus
Accumulation Phase
Regular Contributions: Rs. 25,000 monthly until retirement.
Compounded Growth: Funds grow due to compounding.
Estimation: Use conservative growth rate for projections.
Retirement Income
Annuity Purchase
Mandatory Annuity: 40% of NPS corpus goes into an annuity.
Regular Pension: Annuity provides a monthly pension.
Lump Sum Withdrawal
60% Withdrawal: The remaining 60% can be withdrawn.
Tax-Free: This withdrawal is tax-free.
Diversification Strategy
Beyond NPS
PPF: Continue contributions for safe returns.
EPF: Maintain EPF for steady growth.
Mutual Funds: Diversify with equity and debt funds.
Insurance: Ensure adequate health and life coverage.
Expected Retirement Needs
Income Requirements
Inflation Adjustment: Account for rising costs.
Healthcare: Allocate funds for medical expenses.
Lifestyle: Maintain a comfortable lifestyle post-retirement.
Calculating Retirement Corpus
Corpus Size
Monthly Needs: Rs. 50,000 per month post-retirement.
Inflation-Adjusted: Needs will increase with inflation.
Life Expectancy: Plan for 20-25 years post-retirement.
Income Sources
NPS Pension: Regular income from the annuity.
Lump Sum: Withdrawn amount can be invested.
Other Investments: Income from PPF, EPF, and mutual funds.
Final Insights
NPS Alone: NPS is good but not sufficient alone.
Diversify: Invest in PPF, EPF, and mutual funds.
Plan for Inflation: Ensure corpus adjusts for inflation.
Regular Review: Monitor and adjust investments.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Dr Dipankar

Dr Dipankar Dutta  |578 Answers  |Ask -

Tech Careers and Skill Development Expert - Answered on Sep 11, 2024

Asked by Anonymous - Sep 06, 2024Hindi
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A doctorate from IIT Bombay in Metallurgy and masters from NIT in Manufacturing with 5 years of experience including 2 years in academics and currently working from past 3 years in industry where I work mostly on finite element analyst of forging and bulk extrusion process and New product development as manager heading a team of 5 people. I have working knowledge of 3-4 FE software related to metal forming domain along with ANSYS STRUCTURAL. Despite that I am not getting any interview calls as I am currently looking for a job switch and have put up my profile both on NAUKRI AND LINKEDIN. Some calls are coming to me but that are all irrelevant profiles in which my expertise is not there. I have been trying for the past 6 months but have not got any positive response. Despite such a highly educated person from premier institute and not getting any response is highly depressing. Could you suggest how to apply and where to apply and any other website where I shall make my profile to get a positive response ? I am open to other roles such as metallurgy, product management, operations, vehicle dynamics based CAE etc but companies are just looking for relevant experience and they are rejecting my profile if relevant experience is not found. What to do ? Please advise
Ans: It's understandable that despite your strong qualifications, you're facing challenges in securing relevant interview calls.
Tailor Your Resume: Ensure that your resume is tailored for the specific job roles you are applying to.
Keywords Matter: Use industry-specific keywords on your resume and LinkedIn profile. Recruiters and companies often use Applicant Tracking Systems (ATS) to screen resumes, which rely heavily on keywords.
Take help of professional to restructure your resume suitably.
Beyond Naukri and LinkedIn, explore industry-specific job portals. For your domain, platforms such as EngineerJobs.com, iMetalHub, and MetallurgicalJobs.
Make a list of companies that operate in your domain, then apply of your own.
You can upgrade your skill by doing online courses.
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Milind

Milind Vadjikar  |95 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 10, 2024

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Hi, My name is Kunal, I am 38 years old and my wife is 30 years old. I will be retired at the age of 60. I have two kids, a boy(9 years) and a girl(3 years). My basic is 57000 and I get 3% annual increment on basic. My take home salary is 48000. I have PPF(12500/M), SSY(2000/M) and LIC(5850/M) and our monthly expenses around 20000. I want to buy a home, children's educational expenses and my retirement goals are 1 Cr. Can you give a valuable strategy, how and where to invest to get my all goals?
Ans: I presume you have endowment type life insurance policy from LIC, the returns from which are not up to the mark. If you can surrender it and take a term insurance plan then you can still save around 50K annually after factoring Term Plan premium of 20K pa, considering your current annual payment to LIC of ~70K. That translates to investible surplus of 4K + current monthly disposal income after expenses: 7K, So 11K SIP can be initiated. 4K SIP for 15 years will led to corpus of 22L+(13%return assumed) for daughter's education

If surrendering the LIC policy is not an option then you can still deploy the current balance of 7K + incremental disposable part of salary each year into a SIP for 22 years considering conservative return of 13% it can still build a retirement corpus of 1Cr+ as desired.

You can fund son's higher education through PPF but for daughter's education you need to hike investments in SSY also to 1.5L pa and for house you will need to find home loan(Use EPF partial withdrawal towards down payment)

Here it pertinent to note that you may need to increase your income in some way maybe either job change or spouse working so to have additional funds to invest for your goal fulfillment. Happy to help if you have any further queries.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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