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Mihir

Mihir Tanna  |961 Answers  |Ask -

Tax Expert - Answered on Sep 22, 2022

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
Pranabananda Question by Pranabananda on Sep 22, 2022Hindi
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Sir, I would be grateful if you could provide some clarifications regarding NPS. I am a salaried person. I am getting full tax benefit under 80C for PF and VPF. I am also getting benefit of Rs 50,000 by investing in Tier-I account of NPS. My employer has contributed Rs 2,45,941.40 in my NPS account in 2021-22.

Should I get tax benefit on my employer's contribution of Rs 2,45,941.40. Please answer.

Ans: I understand that amount of PF and VPF is sufficient to claim deduction of Rs 1,50,000 u/s 80C and deduction of Rs 50,000 is taken under 80CCD (i.e. upper limit of deduction specified under both sections are taken); you will not be eligible for deduction for employers contribution.

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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Ramalingam

Ramalingam Kalirajan  |6986 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Asked by Anonymous - Jul 02, 2024Hindi
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Hi sir , I'm 26 years old , recently we were informed at Organisation that they be debiting NPS from My basic pay and special allowance say some 10% of the amount which they said be eligible for tax benefits however I opted for personal NPS only as I get good benefits in different sections. Please suggest me which one be good option. I opted for personal NPS based on my needs because company anyway deducts my basic and special allowance and credits that amount but I'm doing on own based on my personal needs. Please suggest be best option.
Ans: Let’s delve into your query about the National Pension System (NPS) and evaluate the best option for you, while keeping in mind the guidelines you’ve mentioned. I'll ensure the discussion is comprehensive and detailed, covering various aspects to help you make an informed decision.

Understanding NPS and Its Benefits
The National Pension System (NPS) is a government-backed retirement savings scheme. It encourages systematic savings for retirement. The scheme provides tax benefits under Section 80C and Section 80CCD of the Income Tax Act.

Tax Benefits of NPS
NPS offers dual tax benefits. Contributions up to Rs 1.5 lakh are eligible for deduction under Section 80C. An additional Rs 50,000 is available under Section 80CCD(1B). This makes NPS an attractive option for tax savings.

Employer Contribution to NPS
When your employer contributes to NPS, it’s deductible under Section 80CCD(2). This doesn’t form part of the Rs 1.5 lakh limit under Section 80C. This can be a significant tax-saving tool.

Personal NPS vs. Corporate NPS
Now, let's compare your personal NPS contributions versus the corporate NPS contributions.

Control Over Investments
With a personal NPS, you have control over the choice of fund managers. This allows you to tailor your investment strategy based on your risk appetite and financial goals. Corporate NPS contributions are managed by the employer’s chosen fund managers, limiting your control.

Flexibility in Contributions
A personal NPS allows flexibility in contributions. You can invest any amount at any time. Corporate NPS, on the other hand, typically involves fixed contributions deducted from your salary.

Evaluating the Options
Let’s assess which option might be more suitable for you.

Suitability Based on Investment Goals
If you prefer control over your investments and want flexibility, personal NPS could be a better fit. It allows you to choose fund managers and switch between equity and debt funds based on market conditions.

Tax Efficiency
Both personal and corporate NPS offer tax benefits. However, corporate NPS has an edge due to the employer’s contribution not forming part of the Rs 1.5 lakh limit. If your goal is maximum tax savings, consider leveraging both personal and corporate NPS.

Advantages of Personal NPS
Let’s explore the benefits of maintaining a personal NPS account.

Personalized Investment Strategy
You can select fund managers based on their performance. This helps in achieving higher returns compared to a corporate NPS, where you have limited choice.

Flexible Contributions
You can adjust your contributions based on your financial situation. This flexibility can be crucial in managing cash flows, especially during financial crunches.

Portability
Personal NPS accounts are portable. You can continue the same account even if you change jobs. This ensures continuity in your retirement planning.

Advantages of Corporate NPS
Now, let’s look at the benefits of corporate NPS.

Employer’s Contribution
The biggest advantage is the employer’s contribution, which provides additional tax benefits. This can significantly enhance your retirement corpus.

Lower Administrative Hassle
Corporate NPS involves less administrative hassle for employees. The employer manages the paperwork, making it convenient for you.

Supplementary Retirement Savings
Corporate NPS can be a supplementary savings tool. It adds to your overall retirement corpus without impacting your monthly budget significantly.

Balancing Both Options
A balanced approach might be the best strategy. You can leverage the benefits of both personal and corporate NPS.

Maximizing Tax Benefits
By contributing to both personal and corporate NPS, you can maximize your tax benefits under Section 80C and 80CCD. This can lead to substantial tax savings.

Diversified Retirement Portfolio
Having both personal and corporate NPS accounts allows for a diversified retirement portfolio. This diversification can help in mitigating risks and achieving better returns.

Professional Guidance and Monitoring
It’s crucial to monitor your NPS investments regularly. Consulting with a Certified Financial Planner (CFP) can help you make informed decisions and adjust your strategy based on market conditions.

Disadvantages of Direct Mutual Funds
Now, let’s discuss why direct funds might not be the best option for you.

Lack of Professional Guidance
Direct funds require you to make investment decisions without professional guidance. This can be risky if you lack the expertise in managing investments.

Time-Consuming
Managing direct funds is time-consuming. You need to constantly monitor the market and rebalance your portfolio, which can be challenging if you have a busy schedule.

Potential for Lower Returns
Without professional guidance, there is a higher risk of making suboptimal investment decisions. This can lead to lower returns compared to investing through regular funds with the help of a CFP.

Benefits of Regular Mutual Funds
Investing through regular funds with the assistance of a CFP has several advantages.

Expert Management
CFPs have the expertise to manage your investments effectively. They can help you choose the right funds and adjust your portfolio based on market conditions.

Comprehensive Financial Planning
CFPs offer comprehensive financial planning services. They can help you align your NPS investments with your overall financial goals and risk appetite.

Convenience
Investing through regular funds is convenient. Your CFP handles the administrative tasks, allowing you to focus on other important aspects of your life.

Final Insights
To summarize, both personal and corporate NPS have their advantages. Personal NPS offers control and flexibility, while corporate NPS provides additional tax benefits and lower administrative hassle.

A balanced approach, leveraging the benefits of both personal and corporate NPS, can be the most effective strategy. This way, you can maximize tax savings and build a diversified retirement corpus.

It’s also essential to seek professional guidance from a CFP to manage your investments effectively. Regular monitoring and adjusting your strategy based on market conditions can help you achieve your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Anu

Anu Krishna  |1281 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Nov 07, 2024

Asked by Anonymous - Oct 07, 2024
Anu

Anu Krishna  |1281 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Nov 07, 2024

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Help me!!! 1.I'm starting new "work" on my own(challenging for me) but my mind says quit it, be quite & do nothing. I myself don't know that wether the result of work will be +ive or uncompleted like alws. 2. My mind has become like order seeker type, when someone orders me, I do those things with dedicated(but sad from inside) manner. But when myself will try something different(which i fear, but necessary) then. "I QUITS IT" & sometimes I don't even start. 3. I'm like stuck no clue what/whom I want to do in life, I'm in cllg(1 yr) doing (CSE) ,. 4. I want to do/try (sports,talking girls,study,stocks,coding..) many things, but myself, my thoughts(overthinker), R like just be in the place where u are[confused,po*n,think about past/future(being billio..re,olympics..), girl (that u liked & never talked), abusive/beating self,.. sometimes feels like end life, but don't hv courage for that also.. 5. I tried self help books, spirituality, god, self affirmation, writing... & thay affected me(sometimes) but for only some time, then again that devil me comes up &these things never get completed. As no one in my family knows about all these, so that's Y ,I hv to fight/loose/try again, the battles with myself.
Ans: Dear Harsh,
If in the past you have had the urge to QUIT, how is this time going to be different? This is not to discourage you from taking up 'new work' but pointing out that there is some amount of work that you need to put to clear the mind out of blockages.
-What is limiting you?
- What is the reason for putting off things?
- What comes first to the mind when you start something new?
Also, focus on one thing at a time; study and go deep into it...what's this thing with work? I don't understand. When the mind is unsettled, take one thing/activity, pursue it and finish it. It could simply be studying for Year 1 of your college...just only do that...once your mind is trained in completing an activity, you can add another one the next year along with studying and then pursue both...it could be some sport and studying...then the next year, you could add a third activity. This is called 'training the mind in discipline'. Discipline will make sure that you start and finish things...So, go slow and do one thing at a time.

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

...Read more

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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