Skip to main content

How Companies can Take NPS to Help Staff Save Tax?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

Top Indian companies and banks have found a smart way of putting more money in their employees' pockets without loosening their purse strings at a time the economy is witnessing a slowdown.


Some of India's largest companies are giving employees a choice to buy pension products offered under the National Pension System (NPS) to help them get higher tax breaks while building a bigger retirement nest. These include Reliance Industries, Reliance ADA Group, ICICI, State Bank of India, Wipro, Cognizant, ACC, Capgemini, Grasim Industries, Nalco and Konkan Railway Corporation, according to Yogesh Aggarwal, chairman of the Pension Fund Regulatory and Development Authority of India (PFRDA).


NPS, a defined benefit scheme, is mandatory for government employees who joined service from January 1, 2004, and voluntary for others. A customised version of the scheme was launched for corporates in late 2011, but the initial response was tepid.


Even now, most companies park the retirement savings of their employees with the Employees' Provident Fund Organisation (
EPFO). However, EPFO is mandatory only for those who earn up to . 6,500 a month; beyond this it is voluntary. So, companies are now giving an option to their employees to opt for NPS. "An easy way for employers is to restructure salary packages of their employees without incurring any extra cost. Companies will save on expenses on self-administration of pension functions such as setting up a trust, record-keeping and fund management and so on," says Aggarwal.


An employee who joins NPS on his own can enjoy tax exemption on contributions to the scheme for up to 10% of his salary, with a ceiling of Rs 1 lakh a year. The exemption in this case is part of the widely used 80C ceiling under which Rs 1 lakh is reduced from income for calculating tax.


But a new provision introduced in a recent budget allowed additional tax saving for employers contributing 10% of their basic salary to NPS. Therefore, an employee with a basic salary of Rs 10 lakh can deduct a further Rs 1 lakh from his salary — over and above the 80C deduction — for the purpose of calculating tax, reducing the tax burden by an additional Rs 30,000 (30% of 1 lakh). The only catch is that a corporate has to be part of NPS for its employees to benefit.


This extra tax benefit is not available on, say, pension products sold by insurance companies. An employer can also claim tax break on the amount — subject to a ceiling of 10% of salary — contributed towards pension of employees as business expense.


Around 340 corporates have joined NPS, with over 1 lakh subscribers. Some companies have offered NPS as an extra social security cover over and above EPFO. The total assets under management (AUM) of NPS stood at Rs 24,687 crore in December 2012. Of this, the share of corporates is just around Rs 805 crore, or 3% of the total AUM. The numbers will go up dramatically if there is greater awareness at the senior management level. After all, it is for the company or institution to take a call on giving employees the choice to opt for NPS, given that it is a sound vehicle to accumulate a retirement corpus, offering superior returns than the EPFO. PFRDA, which oversees NPS, is now eyeing business from corporates contributing to employees' superannuation funds. A superannuation fund is a voluntary pension plan offered by an employer to provide an extra pillar of social security. It is managed by insurers such as LIC that provide annuities. At present, the amount received at superannuation is exempt from tax only when it is paid on death or on retirement.


At the meeting of the Financial Stability and Development Council (
FSDC), chaired by Finance Minister P Chidambaram last week, the pension regulator made out a case for tax exemption on balances transferred from the superannuation fund to NPS.


The other major item on the budget wish-list is to make NPS tax-free at all stages — at the stage of contribution, during the accumulation phase, and at the time of maturity. These tax breaks, Aggarwal reckons, would draw more investors to NPS that competes with other pension plans. But Bharadwaj reckons that the tax treatment is not really the show stopper, and advocates better incentives for distributors at this stage. Last year, the regulator upped incentives for distributors. However, the total cost, including the management fee charged to pension fund managers, would not exceed 0.5% a year, making the cost-adjusted returns of NPS extremely attractive, says Aggarwal. The average returns of NPS outperformed the market at the end of September last year and stood at 14.52% for equities, 14.17% for corporate debt and 10.82% on government debt.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage

HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO will be open for subscription from 16th May 2014 to 30th May 2014. The key features of the scheme are as mentioned below:   Type of Scheme A Close Ended Capital Protection Oriented Income Scheme Benchmark Crisil MIP Blended Index Fund Manager Mr. Anil Bamboli , Mr. Vinay R Kulkarni & Mr. Rakesh Vyas New Fund Offer (NFO) Period 16 th May 2014 to 30 th May 2014. Minimum Application Amount Rs. 5000 and in multiples of Rs.10 thereafter Plans/ Options Offered Growth and Dividend Payout Facility Liquidity To be listed For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

SBI Magnum Taxgain

Grown 37 times in 23 years- SBI Magnum Taxgain Scheme   Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGet Rich on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com OR Call us on 94 8300 8300  

How to PPF Account extension after maturity

A PPF account can be retained after maturity without making any further deposits. The balance will continue to earn interest till it is closed. Public provident fund or PPF remains one of the most popular savings options for the long term despite a gradual decline in interest rates over the years. PPF accounts have a maturity period of 15 years and they can be extended. If there is no fund requirement, financial planners say, PPF account holders should extend the account beyond 15 years. In terms of income tax implications, PPF accounts enjoy the benefit of EEE (exempt-exempt-exempt) status . Under Section 80C, contribution up to Rs 1.5 lakh in a financial year qualifies for income tax deduction. The interest earned and maturity proceeds are also tax free. What are your options when a PPF account matures? 1) A PPF account can be closed after the expiry of 15 financial years from the end of the year in which the account was opened. 2) The subscriber can retain his
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now