There should be 15000 salary to contribute to EPF
National Pension System was launched in 2004
According to the new rule, EPF will also be taxed
EPF vs NPS: The common man always has the question of where to invest his money. Especially after retirement when there is no source of income and people have to live on investment. National Pension System (NPS) and Employees Provident Fund (EPF) are two options where investors want to invest money.
Both these options are better in terms of investment, in such a situation, the investor gets confused as to where he should invest money, so that he can be safe and profit is also big. So let us tell you what are the benefits of these two schemes so that you can invest at your convenience: –
Who can contribute to EPF: Investment in Provident Fund is considered the safest in the country and it is quite old. This is why people have a lot of faith in it. It is mandatory for any company where there are more than 20 employees to invest in this fund. There should be a salary of 15 thousand to contribute to this. Although even the low paid can contribute to the EPF, there is no compulsion. Those whose salary is 15 thousand, they can contribute up to 12 percent in it.
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Who can contribute to NPS : NPS means National Pension System is a new scheme. It is not as old as the EPF, on which people trust. It is a government retirement saving scheme, launched by the central government on 1 January 2004. Indian citizens and overseas citizens of India cardholders can invest in it. NPS is a voluntary contribution scheme in which a minimum contribution of Rs 500 in Tier 1 and a minimum of Rs 1000 in Tier 2 account can be made. Any individual can connect to the NPS through its employer or independently.
Tax deduction: Under regular tax system, the employment contribution in NPS (Tier 1) up to Rs 1.5 lakh through the employer can be deducted from the total income. At the same time, under the regular tax system, its contribution of Rs. 50 thousand can be deducted in the total income. When NPS subscribers are 60 years old, they get approval to withdraw 60 percent of the amount from the corpus. The remaining 40 per cent is paid to the individual as annuity. Apart from this, after 10 years of becoming part of the scheme, it is approved to withdraw up to 25 percent of the amount from the corpus.
Under the regular tax system in EPF, there can be an employment contribution deduction of up to Rs 1.5 lakh from the total income. In addition, up to 12 per cent of the basic employee employment contribution is allowed. No deduction is available in the EPF under the Simplified Tax System. After the job is over, the interest becomes taxable. However the conditions are applicable here and no tax has to be paid on sickness and other circumstances. According to the new provision of the budget, those receiving high salary will also have to pay tax on EPF.
