I want to open NPS account online on NSDL portal and make contribution at the time of opening. Will it be considered in current FY 2021-2022 for tax deduction u/s 80CCD(1B)? Or will it go into next FY as google shows it may take 15-20 days for account opening?
You will be eligible to show contribution for tax deduction only if the amount is credited to your NPS account before 31.03.2022. For this you will have to open an account. Why dont you approach one of the service providers like banks who assist in opening NPS account. They could expedite the process. Not sure how fast online account opening is
Is NPS really a good instrument, considering the lock in time period and underlying assets is equity?
Please let me know apart from 50k Tax savings per annum.
If there is data points will be great!!
These are my personal views which meet my strategy so please take it with a kilo of salt
- The total tax saving is 2 lacks in case you dont have any 80 c deductions like lic etc
- I personally like the mix of equity, bonds and gilts and it is a perfect asset allocation within a product.
- During the market crash of 2020 when capital was eroded in direct investments my loss in value in nps was just 1 percent. (I was invested since 2010 or so in nps). This was mainly due to asset allocation i believe
- This is one product which i cannot put my hands on when i need money for consumptions. So its off limit for frivolous consumption needs.
- Experts always say the longer you are invested the compounding effect kicks in. No emotional issue whether to sell now or later as i do not have any access and dont check it on a daily basis. Once a month i get a statement which i look at.
- The cost is miniscule.
- You get another 10 years after age 60 to take a call on withdrawal. So its not that i am 60 and market crashes and forced to take the money out at that point of time
- I read somewhere the nps committee are thinking of a swp on this fund instead of going for annuity. This is only at discussion stage
- I am sure there will be many changes over the years which will make this product greater
To conclude tax benefit in total of 2 lacks and a asset allocation within a product makes this product perfect for an annual contribution of 2 lacks a year.
Disc: these are my personal views and this product meets my strategy. It need not be for others.