educratsweb logo


There are many options available to accumulate retirement corpus, but NPS and EPF are compulsory for government and private sector employees respectively, while PPF is most popular voluntary scheme.

retirement corpus, pension, National Pension System, NPS, New Pension Scheme, Employees’ Provident Fund, EPF, Public Provident Fund, EPF, income tax, 80C benefit, 80CCD benefits, tax-free return, CAGRGenerally, the length of retired life of as person is equal to his/her working life.

Generally, the length of retired life of as person is equal to his/her working life. So, ensuring a decent and steady flow of income after retirement is as crucial as getting a good salary package during the working life.

There are many options available to accumulate retirement corpus, but NPS and EPF are compulsory for government and private sector employees respectively, while PPF is most popular voluntary scheme.

NPS

The National Pension System or NPS (earlier New Pension Scheme) was launched to replace the conventional pension system for government employees, who joined on or after January 1, 2004. Such government employees compulsorily contribute 10 per cent of their basic salary to NPS fund, while the government also make matching contribution. A proposal is there to increase the employees’ contribution as well as the government’s matching contribution to 14 per cent each.

From May 2009, NPS was made available for common public between 18 to 60 years of age.

There are two types of NPS accounts — Tier-I and Tier-II. While Tier-I account is for retirement purpose and matures when the contributor retires at the age of 60, there is no such restrictions or withdrawals in Tier-II accounts. However, in the recent changes in NPS rules, proposal has been made to extend 80C benefits to government employees on deposits made in Tier-II accounts from April, 2019, provided that the money is deposited for at least three years. Moreover, voluntary contributions to Tier-I accounts entails a contributor tax deductions u/s 80CCD up to Rs 50,000 in a financial year, which is over an above the Rs 1,50,000 investment limit u/s 80C.

Apart from choice of accounts, there are three investment choices are also available to corporate or individual contributors. The choices are – Asset Class E, in which investments are made predominantly in equity market instrument; Asset Class C, in which investments are made predominantly in fixed income instruments other than Government Securities and Asset Class G, in which investments are made predominantly in Government Securities.

The NPS rules make it compulsory for the investors to Tier I account to invest at least 40 per cent of the retirement corpus in a pension plan of any IRDAI governed insurance company, while the remaining 60 per cent may be commuted at the time of retirement or after attaining the age of 60 years. The entire commutation part, that is 60 per cent of the retirement corpus, is tax free.

The contributions made to NPS are manged by designated Pension Fund Managers (PFMs) and are invested in company stocks, government bonds and money market instruments. So, the value of retirement corpus would depend upon the returns that the investments generate over the investment period.

Following tables show the periodic compound annual growth rate (CAGR) generated by PFMs under various options. Birla Sun Life Pension Management Ltd (BSLPM) is not included in the tables as the PFM is yet to complete two years of operations.

Periodic CAGR

Assuming average CAGR of 10 per cent and average investment of Rs 1 lakh in the beginning of each year, the value of retirement corpus in 30 years of service would be Rs 1,80,94,342.

EPF

The Employees’ Provident Fund (EPF) is aimed at providing retirement benefits to the private sector employees, which is compulsory in organisations having 20 or more employees having monthly basic salary of Rs 15,000 (the figure is revised periodically) or less, and optional for employees earning more.

As the part of the scheme, 12 per cent of the basic salary (including basic wages, retaining allowance and dearness allowance (DA), including the cash value of any food concession) is deducted every month as PF contribution from the salary. While the employer makes a matching contribution of 12 per cent, the Central government also contributes 1.16 per cent of eligible basic salary.

Entire employee’s contribution is eligible tax benefits u/s 80C, even if it is more than 12 per cent of basic salary, while employer’s contribution up to 12 per cent of the basic salary or Rs 15,000 per month, whichever is less, is tax free.

The PF amount is tax free, if withdrawn after 5 continuous years of contribution.

The interest rates on EPF are decided by the EPFO and is currently fixed at 8.65 per cent per annum.

Assuming that the current interest rate will remain constant and average investment of Rs 1 lakh in the beginning of each year in PF, the value of retirement corpus in 30 years of service would be Rs 1,38,76,251.

PPF

Any earning individual may open a Public Provident Fund (PPF) account for self and/or his/her minor child and can make total contribution (taking together all the accounts) of Rs 1,50,000 in a financial year, which is revised by the government from time to time. The minimum contribution in a financial year is Rs 500. Maximum number of contributions allowed in a financial year is 12.

The tenure of PPF account in 15 years, which may be extended in a block of 5 years any number of times. Partial withdrawals are allowed after 7 years from opening an account.

The contributions made in PPF account are eligible for 80C benefits and the interest earned and maturity amount are also tax free.

The government fixes the interest rate on PPF, which is currently 8 per cent per annum.

Assuming that the current interest rate will remain constant and average investment of Rs 1 lakh in the beginning of each year, the value of retirement corpus in 30 years of service would be Rs 1,22,34,587.

 

Contents from https://www.financialexpress.com/money/nps-tax-benefit-vs-epf-vs-ppf-example-on-how-it-plays-out-for-your-retirement-corpus/1508348/

educratsweb.com

Posted by: educratsweb.com

I am owner of this website and bharatpages.in . I Love blogging and Enjoy to listening old song. ....
Enjoy this Author Blog/Website visit http://twitter.com/bharatpages
View Related Video Visit https://www.youtube.com/results?search_query=NPS TAX BENEFIT VS EPF VS PPF: EXAMPLE ON HOW IT PLAYS OUT FOR YOUR RETIREMENT CORPUS #EDUCRATSWEB educratsweb.com Business 2019-09-13

if you have any information regarding Job, Study Material or any other information related to career. you can Post your article on our website. Click here to Register & Share your contents.
For Advertisment or any query email us at educratsweb@gmail.com

RELATED POST
1. Is JAMstack the future of the Web?
JAMstack and static sites appear to be the future of the web. JAMstack means JavaScript, API, and Markup. Its approach is useful to improve the security posture of your application. Another benefit is the large number of functionalities that were traditionally processed in the back-end, now it is carried out in the user's browser. And the fact that the Stack is based on JavaScript is a huge plus for web developers. Imagine a CMS-based solution. For each vis
2. Sovereign Gold Bond Scheme 2020-21
The Government of India, in consultation withthe Reserve Bank of India, has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued in six tranches from October 2020 to March 2021as per the calendar specified below: S. No.
3. The importance of translation services for companies
Is your business strong in the country and you want to expand it globally? Global exposure is only possible if you prepare for it. Business communication with multiple countries requires expertise and precision. Whether you are in the public or private sector, you need professional translation services for more than one language. What are the advantages of using translation agencies? Better communication with customers: If your company needs to communicate
4. Some of the best translation agencies in the US
There are many types of business translations services. These include all type of corporations, from small businesses to large organizations, as its clients. They also include different type of documents related to document processes, such as conference presentations, contract negotiations, marketing material and client meetings, among many others. As a result of the current economic climate, a business translation takes on special relevance for companies looki
5. FDI IN DEFENCE SECTOR
In May, 2001, the Defence Industry sector, which was hitherto reserved for the public sector, was opened up to 100% for Indian private sector participation, with Foreign Direct Investment (FDI) up to 26% both subject to licensing. Further,  Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry vide Press Note No. 5 (2016 Series), allowed FDI under automatic route upto 49% and above 49% through government route wherever it was likely to result in access to moder
6. Measures to promote growth, investment and create new employment opportunities through amendments in the Income Tax Act 1961
In September 2019, the Government announced several measures to promote growth, investment and create new employment opportunities through the amendments in the Income-tax Act, 1961 and the Finance Act (No. 2), 2019. This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in response to a question asked in the Lok Sabha today. Shri Thakur enumerated the measures taken by Ministry of Finance, which are as follows: reduction in the corp
7. 63 AMRUT Projects worth Rs 693 Crore completed; 73 Projects worth Rs 1,875 Crore under implementation in Haryana
Shri Durga Shanker Mishra, Secretary, Ministry of Housing and Urban Affairs (MoHUA) was informed that out of 136 projects taken up by the State of Haryana, 63 projects costing Rs. 693 crore have been completed and 73 projects worth Rs 1,875 crore are under implementation. The total approved State Annual Action Plan (SAAP) was Rs 2,566 crore for the state of Haryana. During an online review meeting with the senior officials of the states of Punjab, Haryana and UT of Chandigarh, Secretary MoHUA appreciated
8. Khadi opens Outlet in SPG Complex to Accelerate Swadeshi push
Khadi and Village Industries Commission (KVIC) has taken another step towards promoting “Swadeshi”; and this time by roping in the Special Protection Group (SPG) with the drive. Today, KVIC inaugurated a new Khadi India Sales Outlet within the premises of SPG Residential Complex at Dwarka in Delhi. This outlet will benefit nearly 4000 families of SPG officers and staff residing in two adjacent residential complexes in the area. SPG is the agency responsible for security of the Indian Prime Mi
9. Ease of Doing Business
The Department for Promotion of Industry and Internal Trade (DPIIT) in coordination with Governments of States and Union Territories (UTs), is working on improving business regulatory environment in States and UTs. The exercise involves identifying reforms which bring Ease of Doing Business (EoDB), in consultation with the States and UTs. Once identified, these reforms are compiled into an Action Plan and shared with States and UTs for its imple
10. Impact of Covid-19 on E-commerce
Various restrictions were imposed to ensure social-distancing during lock down under guidelines released by Ministry of Home Affairs (MHA), from time to time. During this period delivery of essential goods, including food, pharmaceuticals, medical equipment were encouraged through e-commerce. Since, the pandemic is still ongoing, it is too early to make an assessment of the impact of the pandemic on the e-commerce sector.   E-commerce operators are liable to be registered irrespe
11. MPs Shri Arun Singh & Meenakashi Lekhi launch KVIC Innovative Project DigniTEA in Delhi
To celebrate Sewa Diwas, which marks the birthday of the Prime Minister Shri Narendra Modi, Khadi and Village Industries Commission (KVIC) distributed 6 innovative cycle-mounted Tea/Coffee Selling units under Project DigniTEA in New Delhi on Thursday. The cycle-mounted tea/coffee selling units have been distributed to 6 unemployed local youths by Member of Parliament (Rajya Sabha) Shri Arun Singh, and MP from New Delhi, Smt Meenakashi Lekhi in presence of KVIC Chairman Shri Vinai Kumar Saxena. These unit
12. Remarkable translation agencies in the United States
Whenever you need translation services in the United States, you are conscious that there are thousands option all over the country. You must be careful, because although there are many awesome ones, there are a lot of low-quality ones. One the most remarkable agencies is Pangeanic. This agency headquarters is actually located abroad, in the city of Valencia, in Spain. In the United States, it has two offices, in San Francisco and in Boston. It also has offices
13. What should you look for while choosing a Tax Agent?
Choosing a tax agent is a very wise decision. If you miss even by a bit here, it will become a nightmare for you. Because if there is a mistake, it is enough to disturb you. You should always keep in mind that you are hiring a tax agent to make your life easy. Take a look at the list of things that you should find in a Tax Agen
14. Hire Best SEO Company in India for more traffic, increased sales and guaranteed ROI
Millions of websites are created every day. But having a website and a sales team is not enough. What is the purpose of a website if there are no leads, neither any awareness about your brand, product or services. You may have invested a lot of money in creating a dynamic and user friendly website, but what purpose will it serve, if there is no traffic on it and your site is virtually invisible on major search engines. The objectives of all the websites is to offer complete information about th
15. 5 New ideas to make Favor Boxes more valuable in 2020
Favor Boxes have been a pretty stylish packaging type that is used for the packaging of different items for various events. These packages are mostly manufactured using cardboard stock or Kraft paper. They have a small size, but it is customizable as well. Businesses can get them manufact
16. Build a Strong Brand Image Through Social Media Optimization Services
The last decade has witnessed the mushrooming of numerous social networking and social bookmarking websites for example Facebook, Google+, Twitter, Digg, Delicious and Stumble Upon. In order to improve your rank on search engines and to create awareness about your valuable brand and services, you need a strong presence on these social media platforms. All these social media platforms offer a wonderful stage to the businesses to understand the opinion and mood of their loyal and potential customers. They
17. METRO Cash & Carry opens its 28th METRO Wholesale store in India at Tumakuru, Karnataka
METRO Cash & Carry opens its 28th METRO Wholesale store in India at Tumakuru, Karnataka METRO Cash & Carry opens its 28th METRO Wholesale store in India at Tumakuru, Karnataka ·         Being ‘Vocal for Local’, 99% products METRO sel
18. Ministry of MSME re-activates the micro-industrialization process in Rural India
A few days ago, Ministry of Micro Small and Medium Enterprises (MSME), had announced expanding and doubling the support to Artisans who might be interested in making Agarbatti. Taking these efforts further, the Ministry has now come out with new guidelines for two more schemes which include ‘Pottery Activity’ and ‘Beekeeping Activity'. These new initiatives of the Ministry with beneficiary oriented Self-Employment schemes, are aimed at rejuvenating the grass root econ
19. India Post launches Five Star Villages Scheme to ensure 100% rural coverage of postal schemes
The Department of Posts has launched a scheme called Five Star Villages, to ensure universal coverage of flagship postal schemes in rural areas of the country. The scheme seeks to bridge the gaps in public awareness and reach of postal products and services, especially in interior villages. All postal products and services will be made available and marketed and publicized at village level, under the Five Star Villages scheme. Branch offices will function as one-stop shop to cater all post office - relat
20. ₹ 95,480 croregross GST revenue collected in September
The gross GST revenue collected in the month of September, 2020 is ₹ 95,480 crore of which CGST is ₹ 17,741 crore, SGST is ₹ 23,131 crore, IGST is ₹ 47,484 crore (including ₹ 22,442 crore collected on import of goods) and Cess is ₹7,124 crore (including ₹ 788 crore collected on import of goods). The government has settled ₹ 21,260 crore to CGST and ₹ 16,997 crore to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments a
21. Boosting The Growth of Industries
Promotion of industries is a continuous and ongoing effort of the Government. Government has taken a number of steps, in addition to the ongoing schemes, to boost the growth of industries. The measures taken in a few important areas are highlighted below:   Atmanirbhar Package to boost Industrial growth has been announced by the Government for Rs. 20.97 lakh crore with bold reforms in a number of sectors.  The Emergency Credit Line Guarantee Scheme (
22. Best Business Services in India
Best Institution in India Best Institution in Nellore, ANDHRA PRADESH
23. Are you looking for Japanese translation services?
Outside of Japan and the Okinawa islands, Japan is spoken as the first language by approximately two million people: immigrants who settled in Brazil (800,000 descendants of Japanese, the number of people whose mother tongue is Japanese is unknown), other countries from South America, Hawaii (180,000) and other parts of the United States. Another 800,000 people who speak Japanese as their native language reside outside of Japan due to a temporary change of residence for business or educational
24. Turn Up the Brand Awareness Level with Bulk SMS Service
Summary: Bulk SMS can be treated as a wise lesson that when used in the proper quantified and qualitative form it empowers sales, recognition of the brand, making it more impactful by knowing the likes and dislikes of your customers well in advance. Brand recognition plays an important part in the money-making process; that is what smart businesses do. And to support this concept there are substantial marketing tools available that make this dream come true in a matter of some
25. Japanese companies invited to invest in Indian Pharmaceutical and Medical Devices industry
A webinar on ‘Medical Devices and API sector: Challenges & Emerging Opportunities’ was held on 22nd May, 2020 at 11.30 am for business and trade collaboration between India and Japan in the post COVID-19 scenario. The webinar was organized by the Embassy of India, Tokyo in partnership with the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Govt. of India.​ Mr. Sanjay Kumar Verma, Ambassador of India to Japan shared his valuable thoughts on the golden opp
26 Lucknow University Faculty Vacancy Recruitment 2020 #Uttar Pradesh 0 Days Remaining for Apply
Online Applications in the prescribed format from Indian Citizens are invited for the recruitment of various Faculty Government Job posts of Professors, Associate Professors, and Assistant Professors in various Self Financing Programs of the Lucknow University (Uttar Pradesh). (Advertisement No. R/03/2020) Lucknow University Faculty Vacancy Recruitment 2020 ...
27 Canara Bank Specialist Officer Vacancy Recruitment 2020 #Bank 14 Days Remaining for Apply
anara Bank, a leading listed Public Sector Bank having headquartered in Bengaluru (syndicate Bank is merged with Canara Bank), invites Online applications in the prescribed format for recruitment to the various government job vacancy posts in the Specialized category in JMG Scale-I and MMG Scale-II in the Specialist Officer cadre in various specialist disciplines (Advertisement No. CB/RP/2/2020). ...
28 ADMISSIONS OPEN FOR SESSION 2021 - 2022 CLASSES V & IX (BOYS & GIRLS) CLASSES VI & VII (GIRLS ONLY) IN Acharyakulam #Admission 19 Days Remaining for Apply
ADMISSIONS OPEN FOR SESSION 2021 - 2022 CLASSES V & IX (BOYS & GIRLS) CLASSES VI & VII (GIRLS ONLY) IN AcharyakulamUnder the spiritual and divine guidance of Param Pujya Yogrishii Swami Ramdev Ji and Param Shraddhey acharya Balkrishna ji, Acharyakulam nurtures its students in the divine and spiritual vic ...
We would love to hear your thoughts, concerns or problems with anything so we can improve our website educratsweb.com ! visit https://forms.gle/jDz4fFqXuvSfQmUC9 and submit your valuable feedback.
Save this page as PDF | Recommend to your Friends

http://educratsweb(dot)com http://www.educratsweb.com/content.php?id=822 http://educratsweb.com educratsweb.com educratsweb