People show more interest in NPS and EPF to create retirement funds. The aim of both is one, but there is a considerable difference in the way of working. The rules of both are also different. There is a lot of difference between the two in terms of tax rules. One thing is to keep in mind that only people working in private sectors in EPF can contribute, while self-ectroid people in NPAS can also contribute. This means that people working in the private sector can invest both EPF and NPS. Investing in EPF is mandatory for them, while investing in NPS depends on their desire.
The option to invest in NPS according to your choice
EPF There is a guaranteed return plan. Interest is available at a fixed rate on money deposited in EPF. On the other hand, NPS There is a market linked scheme. This is an investment plan, in which the investor has the option to select the investment plan and fund manager according to its choice. Investor can select an investment approach to egressive, moderates and costers. A person between 18 and 70 years of age can invest in NPS.
NPS Market Linked Investment Scheme
The return from NPS is between 8–12 percent. On the other hand, the government does the work of fixing the interest rate on the money deposited in the EPF. The biggest thing about EPF is that this EEE tax comes in the scheme with benefit. This means that there is no tax on contribution. There is no tax on interest and there is no tax on the maturity amount. Investments in EPF are deducted under Section 80C of the Income Tax Act, 1961. However, the thing to keep in mind is that this deduction is available only to taxpayers using the old regimen of income tax.
Tax benefits available in both schemes
Decision is available under section 80C in NPS. Also, an additional Rs 50,000 is also received tax benefits. It is found under section 80 CCD (1B). The money deposited in the EPF is found after the employee retires. On the other hand, annuity has to be purchased from 40 percent of the money deposited on retirement in NPS. The remaining 60 percent of the money gets lump sum. Experts say that both EPS and NPS are very important for later retirement expenses.
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Private employees can invest in both
Experts say that people working in the private sector can contribute together in both NPS and EPF. Due to this, they will not have to face any kind of problem for retirement expenses. 40 % of NPS funds are required to be used to buy annuity. With this, the person gets pension every month. Also, there is a lot of money from both EPF and NPS.