Why National Pension System may be best retirement planning scheme in India:
National Pension System vs Mutual Funds: The recent changes to National Pension System by the government has brought (NPS) at par with schemes like EPF, PPF and GPF. You may be surprised to know that in many ways, NPS is a better option than Mutual Funds for retirement planning.
1. The Union Cabinet has decided to make NPS withdrawal fully tax-free. You will get full tax exemption on the 60% of the corpus allowed for withdrawal after retirement. 40% of the corpus to be invested for annuity is also tax-free. That means NPS investment is now completely tax-free.
2. Tax-free NPS withdrawal applies to both the government and private subscribers.
3. While NPS is mandatory for government employees who joined service after 2004, private sector employees can also gain big with the recent changes announced by the government.