From the 150,000 limit u/s 80C, do I have to deduct my contribution to EPF ? Or can I invest 1.5 lac and claim EPF deduction as well separately?

[missionindia]

Am kind of confused. The IT Declaration portal in my company's site does not include any subheading for contributions to EPF. But some googling around shows me that my contribution to EPF and VPF needs to be deducted from the 1.5 lac limit.

Can I invest 1.5 lac + EPF as deduction? Or shall I invest 1.5 lac - EPF - VPF ?

 

[isika]

@missionindia invest 1.5 lac - EPF - VPF.

Also such small questions should go in biweekly thread or the discord server, to avoid overcrowding sub with simple questions. Hope you understand.

 

[missionindia]

@isika Sorry, and thanks.

 

[sixteeen7leven]

@missionindia 80c has the upper limit of 1.5 lacs. So if your EPF contribution for the year was 1.2 lacs. You can add 30k to VPF, life Insurance premium, NPS or elss funds. Not considering things like child education etc.

Plus, if you invest 50k more into your NPS account. You can stretch the limit to 2 lac.

Considering the fact that NPS is for retirement and not liquidity. It will be tax free, if your annuity is below the salary slabs at retirement. I consider it a very good product.

 

[brothernature]

@missionindia Invest in NPS tier1 for additional 50k

 

[uktom]

@brothernature And lock away the corpus till retirement after which only 60% is withdrawn while rest is forced annuity? No thanks.

 

[crissybee87]

@uktom Its not just this, I don't want to be part of some government schemes where they keep changing rules every now and then. Initially the 60% lumpsum was supposed to be taxed, which they removed later on to make the scheme more attractive. Who the hell can guarantee that in next 30-40 years they are going to keep it same and not screw up the middle class.

While changing rules for general equity market will have consequences considering lot of FII and even sovereign funds are intvested thus even foreign government are involved. Changing rule for a government promoted scheme is very easy for them. As most of middle class invests in it.
BJP government in 2016 tried to do the same in EPF. I am surprised how people suffer from short term memory loss. Read this: https://wap.business-standard.com/a...-back-pf-withdrawal-norms-116042000057_1.html

 

[uktom]

@crissybee87 Some people care more about saving taxes than anything else. It blinds them from all logic.

 

[1008]

@uktom Some people like passive investing and NPS is perfect for retirement planning bucket. If NPS is your only investment or a huge portion then thats a problem.

 

[xsmbchunhat]

@uktom For 30% tax benefit while money compounds at equity rate, why not

 

[coplin48]

@xsmbchunhat Yeah, 50k is negligible for them, and creates a decent nest egg.

 

[uktom]

@xsmbchunhat Same money invested in an equity index will give the same results with added liquidity and no forced annuity. Don't know why folks like lockin in money especially in Covid era. The 15k saved a year on tax (highest bracket) is negated by the forced annuity and loss in time value of money.

 

[followtheshepherd]

@uktom

The 15k saved a year on tax (highest bracket) is negated by the forced annuity and loss in time value of money.

Thanks for this! Was considering NPS again seeing a video which said if you invest in PPF (EEE) and same in NPS, the 60% of NPS amount would be equal/more than 100% of PPF corpus. But investing in index fund can give you more than or similar to NPS return but you get 100% of the corpus at retirement, vs 60% with NPS. You don't get tax benefits, but I think even if we consider that, I'd think index and NPS would give very similar total corpus but I'd rather have 100% corpus than 60% + annuity.