NPS Calculation: If you’re thinking about generating a regular income after retirement, this news could be very helpful. Everyone desires a regular income after retirement, so this government scheme can be very useful. If you invest regularly in this scheme, you can receive a regular income after retirement. For this, the NPS scheme could be a great fit. Let’s learn more about it.
NPS is a retirement scheme. It is regulated by the Public Financial Institutions (PFRDA). You can invest regularly in this scheme. At least 40% of the accumulated corpus is used to purchase an annuity, providing you with regular income. The remaining 60% can be withdrawn at once after retirement. Contributions made to NPS are invested according to your age and the chosen scheme. However, the return on investments made in this scheme is not fixed. Rather, it is market-linked.
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How to invest in NPS
Any citizen of the country can invest in this government scheme. After this, they can become financially capable. NPS is operated by PFRDN. Under NPS, you can open Tier 1 and Tier 2 accounts. After opening a Tier 1 account, you can open a Tier 2 account. Tier 1 is the primary pension account. Certain rules have been set for withdrawals from it. It is designed for retirement. Investing in it can qualify for exemption under Section 80C of the Income Tax Act.
What are the benefits of NPS?
You can get a deduction of Rs 1.5 lakh under Section 80C of the Income Tax Act. Additionally, you can also avail a deduction of Rs 50,000 under 80CCD(1B). Investing in NPS provides an annual income tax benefit of up to ₹2 lakh.
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Invest only this much
If you invest at the age of 18, you need to invest ₹5,000 monthly, after which you can earn a 14% return. You can invest 40% of this amount to purchase an annuity. The total investment will be ₹25.2 lakh, with a gain of ₹14.7 crore and a total maturity value of ₹14.95 crore. This could result in a pension of ₹3.29 lakh.
