By S.S.S. Kumar and Aravind Sampath The date: 5 February 2034. In two days’ time, Krishnan Murthy retires after 30 years of service. He has liquidated the equity portion of his retirement savings in the New Pension Scheme (NPS). When he checks his bank balance, he is shocked to find that the amount credited is Rs 5 lakh less than what he had anticipated. Till last week, the equity portion of his NPS corpus was worth Rs 50 lakh. But only Rs 45 lakh is showing in his account. Murthy calls up his NPS fund manager to know what’s wrong. The manager explains that the market fell 6% over the past week due to a mix of the global oil crisis and local budgetary policies. Although the reasons for the decline are normal enough, Murthy bears the brunt of the market agony and loses Rs 5 lakh in the process. Can investors avert risk?Murthy’s story could be that of any investor because risk and expected returns are inseparable. The regulator is yet to wake up to this possibility. … [Read more...] about How safe are market-linked products like the NPS?
When Ajoy Ghosh opened an National Pension System (NPS) account last month, his basic objective was to save tax. Ghosh has opted for the NPS benefit offered by his company, under which Rs 5,200 is put in the scheme on his behalf every month. He has invested an additional Rs 50,000 under Section 80CCD(1b) of the Income-tax Act, 1961. The total investment of Rs 1.12 lakh in the scheme will reduce his annual tax by Rs 35,000. “I have exhausted all other tax-saving avenues. The only way I can save tax is by investing in NPS,” says the Kolkata based telecom engineer. In many ways, investors like Ghosh miss the wood for the trees. They are so focused on saving tax that they don’t consider other aspects of the investment. Ghosh did not assess the pension fund he has invested in. Nor did he consider the asset mix he should opt for. “I just went with what the investment adviser from the bank told me,” he says. NPS helps save tax in 3 ways: Sec 80CCE: Rs 1.5 … [Read more...] about Best performing NPS funds for different asset allocations at the start of FY 2018-19
Tax saving season is here and those who wait until the financial year-end to finalise their tax-saving investments to save taxes under Section 80C are looking for the best investment option. Well, if you are looking for a universal best investment, you are going to be disappointed. The best investment for you would be an option that matches your investment objective and risk profile. However, we will help you to reach that final decision. ETMutualFunds.com has compiled the features of these investment options - both the qualitative and quantitative data - that would help you to compare and find the best tax-saving option for you. We will begin with the return possibility or the likely return these schemes may offer you. We tried to find out how much a monthly investment of Rs 10,000 for 15 years had created at the end of the investment period. Let’s begin with PPF, which has a lock in of 15 years. An investor who had invested Rs 18 lakh in the last fifteen years (Rs 10,000 … [Read more...] about ELSS, PPF, NPS, ULIP: which is the best option to save taxes under Section 80C?
With your company's accounts department knocking on your door to submit your income-tax saving proofs, it's time now for you to gather all the relevant papers. Since April of last year, the department would have been computing taxes on your salary based on the proposed investment declaration submitted by you earlier. The taxes deducted at source (TDS) are covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries. You must keep in mind that for FY 2019-20 there is no tax payable if your taxable income does not exceed Rs 5 lakh. Therefore, if no tax has been deducted by your employer till now, on the basis of investment declaration, then it is more important to submit tax-saving proofs so that excess TDS is not cut. Once the actual proof is submitted, the accounts department will compute the taxes based on the proofs of the actual investments made by you. And for that you will have to furnish … [Read more...] about To avoid paying excess TDS submit tax saving proofs to your employer on time
At the start of the new financial year 2018-19, the accounts department of companies would have begun asking for the investment declaration from their salaried employees. In the absence of such a declaration, the employer will have to start deducting tax at source (TDS) on the employee's full estimated salary income without allowing for tax saving deductions. Archit Gupta, Founder & CEO ClearTax says why it is beneficial for the employee to share investment declaration at the start of the year, "So that the TDS is deducted considering the investment the employee wants to make, which will lead to deducting a lower amount of taxes, this will lead to higher salary in hand every month." TDS is covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries. The investment declaration being referred to here pertains to the tax saving investments which the employee proposes to make during the year. On … [Read more...] about Submit investment declaration to your employer on time to avoid excess TDS