Pension scheme
According to section 80C of the Income Tax Act, individuals have the opportunity to save up to Rs. 1.5 lakh in a financial year by investing in Pension scheme like the National Pension System (NPS) or Employee Provident Fund (EPF). This investment amount is eligible for deduction from the individual’s taxable income, effectively reducing their overall tax liability. It’s important to keep in mind that the limit of Rs. 1.5 lakh applies to the total amount invested in various tax-saving instruments covered under section 80C. These instruments include not only schemes but also other investments such as life insurance premiums, tax-saving fixed deposits, and more.
FAQs:
- What is a pension scheme?
- A pension scheme is a retirement savings plan that provides regular income after retirement.
- Who can join a pension scheme?
- Anyone employed, self-employed, or voluntarily saving for retirement can join a pension scheme, depending on the scheme type.
- What are the types of pension schemes?
- Common types include government pensions, employer-provided pensions, and personal/private pension plans.
- When can I start receiving pension payments?
- Pension payments typically begin at retirement age, usually between 58 to 65 years, depending on the scheme.
- Can I contribute to more than one pension scheme?
- Yes, it is possible to contribute to multiple pension schemes simultaneously.
- Is the pension amount taxable?
- Yes, pension income is usually taxable, although some exemptions may apply based on the type of pension and jurisdiction.
- What happens to my pension if I change jobs?
- You may be able to transfer your pension to a new employer’s scheme or continue contributing to the old one.
- Can I withdraw my pension savings early?
- Early withdrawal is usually restricted and may incur penalties, depending on the scheme’s rules.
- What happens to my pension if I pass away?
- Most pension schemes provide options for beneficiaries or dependents to receive the pension after death.
- How much should I contribute to my pension scheme?
- It depends on your retirement goals, but contributing around 10-15% of your salary is generally recommended.
For more information, visit this site: https://enps.nsdl.com/eNPS/
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