As the financial year 2024-2025 comes to a close, it’s time for taxpayers to think about saving taxes and investing for a better future. The clock is ticking, and there are only two days left to make investments that will help you reduce your tax burden and also secure your retirement. One of the best options for this is the National Pension System (NPS). Here’s why you should consider investing in NPS before March 31st 2025.
Invest Before the Deadline to Save Tax
To claim tax deductions under Section 80C of the Income Tax Act, you must make your investment before the last date of the financial year, which is March 31st, 2025. If you are looking to save tax, it’s crucial to act quickly and submit your investment proof to the income tax department. By investing in various government schemes, including NPS, you can reduce your taxable income and save a significant amount on taxes.
Why NPS is a Smart Choice
The National Pension System (NPS) is a government-backed retirement scheme that offers tax benefits and helps you build a substantial corpus for retirement. You can claim a tax deduction of Rs 50,000 under Section 80CCD of the Income Tax Act. This is in addition to the Rs 2 lakh deduction available under Section 80C. The NPS allows you to start with as little as Rs 1,000 per month, and you can also make a lump sum investment of Rs 50,000 to take advantage of tax savings.
Anyone between the ages of 18 and 65 can open an NPS account and start investing in this scheme through any authorized bank. It’s an excellent way to save taxes and secure a stable future.
Two Days Left to Invest
As the new financial year (2025-2026) approaches, time is running out. If you want to take advantage of the tax savings, don’t wait until the last minute. If you invest on March 28, 2025, your funds may take up to 48 hours to process. This means that with the weekend in between, your investment may not show up in the current financial year, and you could miss out on the tax benefits. So, it’s better to complete your investment today to avoid any delays.
The Benefits of NPS
NPS offers long-term financial growth and tax benefits. It’s a market-linked scheme, which means it provides returns based on the performance of the share market. Therefore, the returns can be higher in the long run, making it a great way to build wealth for retirement.
The NPS is portable, meaning it can be operated from anywhere in India. It also allows contributions from both the employee and the employer, increasing the amount saved for retirement. After retirement, you can withdraw up to 60% of the accumulated corpus as a lump sum, and the remaining 40% will be used to provide a monthly pension.
How to Get Rs 1 Lakh Monthly Pension
If you aim to receive a monthly pension of Rs 1 lakh after retirement, here’s how you can plan your NPS investment. By investing Rs 20,000 per month and increasing it by 10% every year, you can expect a total corpus of around Rs 3.23 crore after 20 years, assuming a 10% return on investment. Out of this, Rs 1.85 crore will be the return, and Rs 1.37 crore will be the investment.
With proper planning, your pension wealth can be around Rs 1.62 crore. If you invest in an annuity plan with an 8 per cent rate, you can receive a monthly pension of around Rs 1 lakh.
The National Pension System (NPS) is a fantastic way to save taxes and plan for a comfortable retirement. But with only two days left to invest before the financial year ends, make sure you act quickly. Start today, and you could reap the benefits of both tax savings and long-term financial security.
