NPS – Is it it really a good investment option

POSTED BY AT-1976 ON April 13, 2012 3:22 pm ONE COMMENT

Have started giving 10% of Basic to NPS. This is saving me 30% on my taxes in the yr of deduction, however the money being invested susbequently gets locked in till retirement (in my case 25 yrs or more) in Tier 1 account.

Is the money post retirement expected to be tax exempt totally (both the invested amount and the additions) and if yes what kind of returns can be expected on annuities that this money will get invested in post retirement? (Curious to know the kind of returns that are being offered to someone who retires say in a years time…understand a lot could change in 25 yrs)

If I want to stop this investment say due to some financial hardship can this be withdrawn as a taxable component?

One reply on this article “NPS – Is it it really a good investment option”

  1. Dear AT-1976, First of all for redemption – Yes the withdrawl is taxable in the year of prematurity redemption.

    FYI- as of now nobody can predict the possible annuity rate that you may earn from your corpus. It’s any body’s guess as on date. The only thing you can do – please create as big a corpus as you can & that not only from NPS, even your investments in MFs can do the trick too.

    Regarding Taxation of annuity down the line after 25Y, please wait for some clarity on the matter from the Govt. of India.



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