1) With tax saving season in full swing, people come across a dilemma whether or not to invest in NPS.
2) What is NPS? It is a pension product designed to give you a regular income post retirement. The investments give you tax benefits but maturity is restricted and not completely tax free.
3) Should you invest? NPS gives you tax exemption at the time of investment, maximum 30% of the amount invested ie, if you invest Rs 50k, you save only Rs 15k in tax.
4) Maturity is also not 100% tax free. A portion of maturity proceeds has to be compulsorily used for buying an annuity product, the receipts under which are taxable.
5) So NPS is not exactly a tax saving plan but a tax deferment plan. So you do not pay taxes today but later.
Now we leave the decision to you. Should you invest? You are the best judge of whether you need a pension product or not.
