Government Scheme – Arranging money for retirement is a part of planning. If you want to secure a pension for old age, there are many excellent plans available. You can earn a good income in old age by joining good schemes. You must have heard a lot about PPF and NPS. PF is a great scheme.
It provides security and guaranteed returns. You can earn good returns by investing only a small amount annually. To get good benefits in the future, learn some important updates below, which will clear all the confusion.
Key points about PPF
PPF is considered a government-backed savings scheme. It offers bumper returns. Investing up to Rs 1.5 lakh per financial year will yield good benefits. This means that under the old tax system, this amount is eligible for deduction under Section 80C. The special feature of PPF is that its investment, interest, and maturity amount are tax-free.
Meanwhile, Mumbai-based investment expert Balwant Jain informed that the maturity amount is also fully exempt under income tax laws. The interest exemption applies both during the original 15-year term and any extension period. Furthermore, even if the account is not extended, interest is earned on the remaining balance. The interest earned is also tax-free.
NPS Benefits
Did you know that NPS is also a great option for individuals? It is a market-linked retirement plan that offers investments in equities and is ideal for long-term investors. It is designed to help you accumulate a retirement fund with tax benefits under the old tax regime. At the same time, NPS offers better returns over the long term. It also involves some risk as it depends on market performance.
How NPS Works
Did you know that up to Rs 1.5 lakh is eligible for deduction under Section 80C? This includes an additional deduction of ₹50,000 under Section 80CCD(1B) – for NPS investors only. Additionally, under Section 80CCD(2), salaried employees whose employers are enrolled in the NPS can claim this deduction, which was limited to 10% of their basic salary under the old tax regime.