Skip to main content

NPS vs EPF Tax Benefits

 

NPS and EPF Difference

NPS and EPF are considered to be the best retirement saving options in India. However there are few difference in terms of returns, eligibility, premature withdrawal and other features. So here are the difference between NPS and EPF.

  • Launch Year: NPS was launched in the April 2009. Whereas EPF was launched in March 1952.
  • Eligibility: EPF is only for salaried employees whereas in case of NPS any individual can invest in it. However citizen can start investing in both from 18 years upto the age of 60 years.
  • Investment Cost: Investing in EPF doesn't cost anything. But in case of NPS, a small fund management fee is involved which varies for government employees (which is 0.0102%) and those who are employed in the private sector (0.25%).
  • Contribution: In EPF, employee's contribution is at least 12% and equal amount is contributed by the employer. So the total investment is 24% from the basic salary of the employee. But in case of national pension scheme, minimum investment should be INR 6000 in a year and there is no limit on maximum contribution. And minimum one contribution should be made in a financial year.
  • Lock-In Period: NPS has lock-in period till 60 years but for EPF there is no lock-in period.
  • Premature Withdrawal: NPS allows premature withdrawal but only under certain terms and conditions for tier-I & II accounts. Under tier-I, no withdrawals are allowed without foreclosures. In case of death of the account holder, nominee can withdraw all the money at once. When an individual's age is between 60 and 70 years, up to 60% can be withdrawn and remaining 40% should mandatorily used for buying annuity from approved life insurers. Whereas only 20% can be withdrawn and 80% should be used for buying annuity from approved life insurers, if investor wants to withdraw money before he/she reaches the age of 60 years Similarly EPF allows only in case of specific purpose such as children's marriage or education.
  • Returns: For the year 2012-2013, NPS offered higher returns (12%-13%) than EPF whereas EPF offered interest rate of 8.75%. However since the interest is variable in case of NPS, experts always consider EPF as a safe avenue even though it assures fixed returns.
  • Tax Benefit: Through NPS citizens can claim tax deductions under the section 80C, 80CCF and the newly introduced section 80CCD(2). But it is the duty of the employer to invest in the section 80CCD(2) which benefits employees in additional tax savings. Up to 10% of an employees salary can be invested in NPS which is tax deductible. EPF investments qualifies for deduction under section 80C.
  • Where is the money invested: Money collected through EPF is invested in government bonds or securities. Whereas NPS is allowed to invest 50% in equities.
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016 or Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

L&T Growth

Invest in Mutual Funds Online Download Mutual Fund Application Forms   L&T Growth Fund (LTGF) is open-ended diversified equity fund that invests predominantly in large caps. LTGF follows the growth style of investing and has been in existence for over 10 years now.   Type of scheme Open-ended Category Diversified equity Sub-category Large Cap Style Growth Launch date September 17, 2001 Risk-Return proposition High risk-Average return   Investment Objective and Proposition The fund's primary investment objective is "generate long term capital appreciation income through investments in equity and equity related instruments; the secondary objective is to generate some current income and distribute dividend. However, there is no assurance that the investment objective of the scheme will be achieved." Following large cap ...
Read more

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...
Read more

Nomination in Investment

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   Nomination in investment   As an investor, you spend most of your precious time in deciding on your investments, their tenure, and the returns that your invested money will fetch practically. Do you know who gets your investment money when you are "no more"? I am sure most of you must have come across the 'nominations' column, while filling any of your financial application form, be it that for a Mutual Fund, or a Demat Account, or simply a Bank Account. More often, people have a tendency to leave the nomination field blank, or fill the same uncertainly, without even understanding the big importance of this little detail. Here, let us try to put forth the significance of a nomination into our financial lives. What is nomination? A person to wh...
Read more

Gifts to relatives will not attract tax

Tax Saving Mutual Funds Online Current open Infra Bond Application form Gifts are always special to the recipient and it would be extra-special if there is no tax payable on these. The taxman believes so, too. In the provision introduced in Section 56 of the Income Tax Act, if any sum of money is received gratis by an individual or Hindu Undivided Family (HUF) during any year, it shall not be taxable if from a relative. The law has already defined the term 'relative' and HUF. However a case that came up before the Income Tax Tribunal shows that some clarifications were still needed. Background The law also exempts gifts during special occasions like marriage of an individual or under a will or by way of inheritance and even in contemplation of death of the payer. Money received as grants or loans from educational institutions/universities, charitable trusts or similar institutions is also exempt. The term relative has been defined in the law to include spo...
Read more

Mutual Fund Exit Load Changes

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 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...
Read more
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