Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Mihir

Mihir Tanna  |966 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
Listen
Money

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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7209 Answers  |Ask -

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

Asked by Anonymous - Jul 02, 2024Hindi
Money
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

Latest Questions
Dr Anshuman

Dr Anshuman Manaswi  |6 Answers  |Ask -

Plastic-Aesthetic Surgeon, Emergency Care Consultant - Answered on Dec 05, 2024

Asked by Anonymous - Dec 05, 2024Hindi
Listen
Health
Dear Doctor, I work as a corporate lawyer in Delhi. I’ve been considering undergoing a cosmetic procedure for my skin for some time now, but I’m feeling a bit overwhelmed by the number of surgeons available. I want to ensure that I choose someone who is experienced, as this is a big decision for me. Could you advise what I should look for when selecting a plastic-aesthetic surgeon? Are there any specific red flags I should be aware of when researching potential surgeons? I want to make sure I’m in safe hands. I’m 40 years old.
Ans: This is a beautiful question.
Before I dwell on your question, there are a few points which are very important for the patient to know.
1. You should roughly know what result you wish to have.
2. Never think of a perfect result. There is no such result.
3. You must think in terms of improvement and if you are sble to achieve more than 90% approx, it can be considred good.
4. Dont compare your results with any celebrity's result. There body structure is different, they have probably taken better care till now and importantly, the result you see on a public platform is after make up and not the real result. Some times it may be a photoshopped image
5. Let your doctor know if you have any medical history and addictions.
6. Don't go with pre concieved notion (especially if you have researched a lot online). Discuss with the doctor, listen to his/ her views and raise your concerns if any
7. Try and see some results of the doctors work (Remember, too good a result may not be the true result). Realistic result is what you should want to look at and believe.
8. Don't fall for less budget! its obvious a meticulous job needs more surgical time. This means that the doctor may charge more. Seniority also adds to the cost.
What I mean, there is a price to be paid for a good job.(whether medical or anywhere).
Now coming to the Plastic surgeon's choice.
1. Research well, but dont fall prey to only advertisement. Small and big centers, both advertise,
2. Dont fall for glamour. You are going to a surgeon. A plastic surgeon's clinic is clean but not lavish generally. At least I believe that the person coming is not a client, but a patient. A patient - Doctor relationship is more pure than a client-Professional relationship.
3. Talk and discuss with the doctor. A too busy doctor may not always be the best doctor for you. Plastic surgery is about thinking, planning and execution. A doctor who thinks aloud about your problem ( especially if ut us face, nose, breast etc) is applying his/ her knowledge for your betterment, because every oerson is different.
4. Check the resilts? Look for genuinity.
5. Be wary of arrogant, loud and boisterous people. There is a difference between confidence and fambloyence.
6. Doctors who are attached to reputed hospitals are generally good in their work.
7. A doctor who can talk about probable complications is also a doctor worth trusting.
I hope I am able to do justice to this difficult question. All the best. You can write again if you need any other clarifications.
Dr. Anshuman Manaswi

...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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x