Invest in NPS

 You should opt for National Pension Scheme (NPS) if you want a tailor-made government-backed retirement product

 

You should opt for National Pension Scheme (NPS) if you want a tailor-made government-backed retirement product. It also forces you to save regularly, save on taxes and build a retirement corpus. If withdrawal is made after 60 years of age, at least 40 per cent of the accumulated funds must be used to buy an annuity. The rest of the money can be withdrawn in a lump sum. If the total corpus is below R2 lakh, it can be withdrawn entirely. if you are exiting the NPS before 60 years, one can withdraw only 20 per cent of the funds as a lump sum and one must use 80 per cent of the funds to buy an annuity.

You haven't said whether your employer is going to match your contribution in NPS. If the company is also matching your contribution, that is an additional incentive for you to join the scheme. You can claim a tax deduction on your contribution as well as your employer's contribution. You can also claim an additional tax deduction of R50,000 on your contribution to NPS. These are tax advantages.

However, if you are a disciplined investor you can also bank on equity mutual funds to create a retirement corpus. Equity mutual funds have an edge over NPS on two counts. One is taxation. Investors need not pay any tax on the returns on investments in equity mutual funds held over a year. The withdrawal from the NPS is taxed. The money will be added to the income of the investor and taxed as per the applicable tax slab. Even annuity income, bought with the remaining corpus, is taxable.

Best Tax Saver Mutual Funds 2016 or Top ELSS Mutual Funds for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Good Returns by Investing in ELSS Mutual Funds Online

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