Latest news with #Section80CCD
Time of India
16-06-2025
- Business
- Time of India
Mitra can save Rs 55,000 tax by opting for NPS, new tax regime
Academy Empower your mind, elevate your skills Madhulika Mitra is a consultant in a management consultancy firm in Gurugram. She earns well, but nearly 15% of her income goes in tax because she has invested in tax-inefficient instruments, doesn't claim all the deductions, and her salary structure is not has now decided to opt for the new tax regime because she will pay lower tax with this option. Even if her company rejigs the pay structure to include tax-friendly perks, tax savings will be lower for her in the old regime. The new regime offers very few deductions and exemptions, but the standard deduction is higher at Rs.75,000, tax slabs are wider and rates are ensure that she saves more tax in the new regime, she should opt for the NPS benefit offered by her company. Under Section 80CCD(2), up to 14% of the basic salary put in the NPS is tax-free. She can save Rs.52,416 if her employer rejigs her salary to reduce the taxable component and put it in the NPS instead. Mitra also pays Rs.2,683 as tax on income from bank deposits. If she switches to debt funds, instead of parking her money in the deposits, she will have to pay tax only at the time of the new tax regime, there is no deduction for health insurance premiums, but she should still consider buying it for her she decides to stay in the old regime, she can reduce her tax liability marginally by asking her employer to rejig her salary structure and offer more deductions. She could also consider reducing her investment in the ELSS funds and PPF to channelise it towards the NPS on her own under Section 80CCD(1b).Paying too much tax? Write to us at etwealth@ with 'Optimise my tax' as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments
Hans India
12-06-2025
- Business
- Hans India
Know How to Secure Your Child's Future With NPS Vatsalya
Every parent dreams of giving their child the best possible future — quality education, financial independence, and a secure life. But with rising costs and economic uncertainties, securing that dream feels overwhelming. What if there were a simple, affordable way to start building a solid financial foundation for your child's future today? Enter NPS Vatsalya, a child-focused retirement savings scheme designed to help parents create a disciplined investment habit with long-term benefits. If you're wondering what NPS Vatsalya is and how it can make a difference in your child's life, this article is your easy-to-understand guide. Let's dive in! What is NPS Vatsalya, and Why Should You Care? NPS Vatsalya is a government-backed pension scheme for children under 18. Think of it as a long-term savings plan, but with a twist: it's not just about saving money—it's about growing it smartly, with tax benefits. Here's the simple catch: you open an NPS Vatsalya account in your child's name, start investing small amounts regularly, and the money grows over time with the power of compounding. Once your child turns 18, the account can be converted into a regular NPS account for them to manage on their own. Why Now is the Best Time to Start? Did you know the cost of higher education in India has increased in the last five years? According to a recent report by the Indian Ministry of Education, expenses related to professional courses, international degrees, and even day-to-day schooling are rising steadily. Waiting to save until your child is older could mean you have to shell out a larger sum in a short time, which can strain family finances. Starting early with NPS Vatsalya helps you spread out the investment, reduces pressure, and gives the money enough runway to grow, helping you keep pace with inflation. Even investing as little as ₹500 a month consistently can accumulate a substantial corpus over 15-18 years. How NPS Vatsalya Works: The Simple Steps 1. Opening the Account A parent or legal guardian can open the account for a child aged between 1 month to 18 years. The process is straightforward, available online or at authorised points, and requires basic KYC documents. 2. Invest Regularly You can contribute a minimum of ₹1000 per contribution with no upper limit, with no upper limit, whenever convenient — monthly, quarterly, or yearly. 3. Investment Choices The funds are invested in a mix of government bonds, equities, and corporate debt, managed by professional fund managers under a low-risk, moderate-risk, or active risk profile chosen by the parent. 3. Tax Benefits Contributions to the NPS up to ₹1.5 lakh in a financial year qualify for deductions under Section 80C of the Income Tax Act. Additionally, contributions up to ₹50,000 per year are deductible under Section 80CCD(1B), separate from the ₹1.5 lakh limit under Section 80C, but this benefit is available only under the old tax regime. This allows you to save for your child while reducing your taxable income. 4. Maturity and Withdrawal Upon reaching 18 years, your child's account transitions to a standard National Pension System (NPS) account. At maturity (typically age 60), standard NPS withdrawal rules apply: up to 60% of the corpus can be withdrawn lump-sum tax-free, while at least 40% must be used to purchase an annuity for lifelong financial support. How to Open an NPS Vatsalya Account: A Step-by-Step Guide 1. Go Online Visit Protean eGov Technologies Website Click on 'NPS Vatsalya' and fill in your child's and your details. Use Aadhaar for quick verification, or upload documents if you prefer. Pay at least ₹1,000 to start. You can use net banking, debit card, or UPI—super easy! Add money whenever you can. You can even set up auto-debit so you never miss a payment. Check your account online anytime. When your child turns 18, they take over, and the account keeps growing for their retirement. Start Early, Start Small: Even small monthly contributions matter more than a big lump sum later. Even small monthly contributions matter more than a big lump sum later. Review Annually: Check your investment returns yearly and adjust the risk profile if necessary. Check your investment returns yearly and adjust the risk profile if necessary. Encourage Your Child: When your child turns 18, educate them on financial planning and how to manage their NPS account responsibly. When your child turns 18, educate them on financial planning and how to manage their NPS account responsibly. Combine with Other Savings: NPS Vatsalya is a part of a broader financial plan — complement it with fixed deposits, mutual funds, or insurance. 2. Complete KYC 3. Make Your First Contribution 4. Keep Contributing 5. Watch Your Child's Future Grow Quick Tips to Maximise Your NPS Vatsalya Investment Conclusion Securing your child's future is more than just a dream — it's a responsibility that begins today. NPS Vatsalya offers a practical, affordable, and tax-friendly way to build a financial cushion that grows with your child. With rising education costs and uncertain economic times, having a dedicated long-term savings plan is no longer optional — it's essential. Take the first step now. Open an NPS Vatsalya account, start small, stay consistent, and watch your child's dreams take flight — one smart investment at a time. FAQs 1. Is it good to invest in the NPS Vatsalya scheme? NPS Vatsalya is a great option for parents to save for their child's future with market-linked returns and compounding benefits. It encourages early financial planning but involves some market risk. 2. Can I open NPS for my child? Yes, parents or guardians can open an NPS Vatsalya account for their child under 18, who must be an Indian citizen. The account is managed by the guardian until the child turns 18. 3. Can NPS Vatsalya be withdrawn? Yes, up to 25% of contributions can be withdrawn after 3 years for specific needs like education or medical emergencies, with a maximum of three withdrawals before age 18. At 18, the child's NPS account becomes a standard NPS account. At exit (usually 60), up to 60% of the corpus can be withdrawn tax-free, at least 40% must buy an annuity, unless the corpus is below ₹2.5 lakh, which can be fully withdrawn. 4. Is NPS Vatsalya tax free? Contributions to NPS Vatsalya may offer tax deductions up to ₹50,000 under Section 80CCD(1B) from FY 2025-26, but annuity income is taxable. Confirm with a tax advisor for clarity. 5. How to open Vatsalya NPS? Visit the eNPS website or a Point of Presence (like banks or post offices), provide guardian and child details, submit KYC documents, and make a minimum ₹1,000 initial contribution to get a PRAN.
Time of India
19-05-2025
- Business
- Time of India
Pune-based Agarwal can save Rs 10.5 lakh tax in new tax regime via corporate NPS, debt funds
Pune-based Piyush Agarwal works at a senior position in a software company. He is paying a high tax even though his salary structure is fairly taxfriendly. Nearly 35% of his income goes in tax because of the 25% surcharge on incomes above Rs.2 crore. If he invests in tax-efficient instruments and claims all the deductions available to him, he can significantly reduce his tax outgo. Agarwal has opted for the new tax regime because he finds it less complicated and it allows him to invest as per his convenience and preference. Though there are no deductions under Section 80C in the new tax regime, there is an opportunity to save tax through NPS . If he reduces his special allowance by Rs.10,51,226 (14% of basic salary) and opts for the corporate NPS benefit from his company under Section 80CCD(2), his tax can reduce by Rs.8,75,919. The NPS benefit does not add to wage cost or paperwork for the company, but it lowers the tax outgo for employees. The tax savings are high because the deduction reduces the surcharge payable on the tax. Agarwal has invested Rs.65 lakh in fixed deposits and earns an interest of Rs.4.5 lakh on this. If he switches to debt funds or arbitrage schemes, he can save Rs.1.75 lakh in tax. Arbitrage funds are treated as equity schemes for tax purposes and long-term capital gains of Rs.1.25 lakh are tax-free in a year. To avoid tax on fixed deposits, Agarwal should also open a PPF account and start putting Rs.1.5 lakh a year in it to build a tax-free corpus. Live Events Agarwal and his family are covered by a group health plan from his employer. Under the new tax regime, there is no deduction for health insurance premiums, but he should still buy an independent health plan for himself and his family. WRITE TO US FOR HELP Paying too much tax? Write to us at etwealth@ with 'Optimise my tax' as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments.
Mint
07-05-2025
- Business
- Mint
I've started SIPs—what more should I do for long-term goals?
I am a 35-year-old working woman living in Pune with a 4-year-old daughter. I earn ₹ 1.2 lakh per month, and my husband is a freelance designer with a fluctuating income. We currently live in a rented apartment but plan to buy a house in 3-4 years. I want to ensure my daughter's higher education is secure, and I also wish to retire comfortably by 60. I've started investing in mutual funds via SIPs ( ₹ 15,000/month), have term insurance, and a ₹ 5 lakh emergency fund. But I'm unsure if I'm doing enough. How should I approach my long-term financial planning with these goals in mind? Also, any tips on how to balance tax savings and wealth creation? Swati, you're off to a solid start—with SIPs, term insurance, and an emergency fund, you've already laid the foundation for a secure financial future. Here's how to sharpen your plan: Since this is a medium-term goal, steer clear of equity-heavy options. Shift focus to low-risk instruments like short-duration debt funds or conservative hybrid funds. Calculate your approximate down payment target (say ₹ 15–20 lakh) and set up a monthly SIP tailored to reach that in your time frame. Also read: Are branded apartments worth the premium that you pay? This is where the power of compounding can work magic. Start a dedicated SIP in a child-specific mutual fund or a diversified equity fund. Even ₹ 5,000/month growing at ~12% can become ₹ 25+ lakh in 15 years. You can also explore PPF for partial allocation—it's safe, tax-free, and builds discipline. You're in a sweet spot to grow wealth aggressively. If not already done, increase your SIPs or consider starting a National Pension System (NPS) account. Contributions up to ₹ 50,000 under Section 80CCD(1B) offer additional tax benefits over the standard 80C limit. Since your husband's income varies, use your fixed salary to cover essentials. His income can help build a liquidity buffer or go into flexible options like gold ETFs or hybrid funds. Keep separate accounts for core and surplus income. Max out Section 80C (via ELSS, PPF, insurance premiums) Use NPS for added tax breaks Get comprehensive health insurance under Section 80D You're doing well, but your SIPs might need a top-up as your goals are substantial. As income grows, aim to invest at least 30% of your monthly income, split across different goals. And remember, money is a tool to build a life of choices—plan intentionally, and revisit your strategy every year.
Time of India
05-05-2025
- Business
- Time of India
Gahlaut can save Rs 1.8 lakh tax by switching to new tax regime
Hyderabad-based data scientist Raghav Gahlaut is paying a high tax because his salary structure is not tax-friendly and he doesn't claim all deductions available to him. #Pahalgam Terrorist Attack India much better equipped to target cross-border terror since Balakot India conducts maiden flight-trials of stratospheric airship platform Pakistan shuts ports for Indian ships after New Delhi bans imports from Islamabad Gahlaut has opted to stay in the old tax regime because he gets tax-free perks, has a big home loan, and puts money in tax-saving investments. 'I know I could have saved more tax by investing in the NPS , but there is no surplus after my big home loan EMI of Rs.83,000,' he says. Even without the NPS investment , he will pay a marginally lower tax if he switches to the new tax regime . His tax outgo will reduce by Rs.1,16,240. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like New Container Houses Algeria (Take A Look At The Prices) Container House Search Now Undo More tax can be saved if Gahlaut asks his employer to offer him the NPS benefit under Section 80CCD(2). NPS benefit does not add to wage cost or paperwork for the company, but it lowers the tax outgo for employees significantly. Live Events If the company puts 14% of the basic salary in the NPS, Gahlaut will save Rs.65,520 more under the new tax regime. Gahlaut and his family are covered by group health insurance from the company, but he has bought a cover on his own as well. He will not get tax deduction for the medical insurance premium under the new regime, but he should not stop it. If he wishes to stay in the old tax regime this year, he should reduce the special allowance component by Rs.2,10,000, stop ELSS SIPs, reduce contribution to the PPF to Rs.1,000 a year, and invest in the corporate NPS instead. He should also switch from fixed deposits to debt funds to lower the tax outgo. The old regime is marginally better for Gahlaut this year. However, the new tax regime is better for him from next year onwards as he stands to save Rs.1,81,740 under the new regime. WRITE TO US FOR HELP Paying too much tax? Write to us at etwealth@ with 'Optimise my tax' as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments .
