The National Pension System (NPS) is a voluntary defined contribution plan for retirement income. Individuals aged between 18 and 60 years can open a Tier I and Tier II account. They need to contribute a minimum amount of INR 6,000 per annum to the Tier I NPS account.

The contribution is invested among different asset classes, such as government bonds, corporate bonds, and equities. Contributors can indicate their investment choice to maximize their returns on investments.

Although the NPS was launched in 2009, it did not gain much popularity initially. Individuals shied away from investing in the NPS because of its complexity and a general lack of clarity related to their contributions.

However, in the previous year’s Budget, Finance Minister Arun Jaitley took a huge step towards increasing the popularity of this tax saving investments plan. He made contributions of up to INR 50,000 tax deductible under the section 80 CCD (1B) of the Income Tax Act. This deduction was over and above the existing benefit available for investments up to INR 1.5 lakhs under the section 80 CCE. This offers individuals a total tax deduction benefit of INR 2 lakhs under sections 80 CCD (1) and 80 CCD (1B).

As a result, an increased number of investors started investing in the National Pension System. Assets under management for the NPS crossed INR 1 lakh crores for the first time since the launch of this tax saving scheme.

Working of the NPS

Individual subscribers

They can open their NPS accounts with any of the “Point of Presence (POP)” appointed by the regulatory authority, Pension Fund Regulatory and Development Authority (PFRDA). They need to fill and submit the Common Subscriber Registration Form (CRSF) to the POP along with KYC documents and initial contribution. On successfully opening an account, users receive a Welcome Kit comprising the Permanent Retirement Account Number (PRAN) card and other related documentation. The PRAN is unique for each subscriber and portable, giving you flexibility even if you change your job or location.

Tier I is the pension account while Tier II is the investment account. Withdrawals from Tier I accounts are limited and help to create the retirement corpus. Tier II is a voluntary investment facility and the amounts from this account can be withdrawn without any limitations.

Corporate subscribers

The corporate model for this tax saving scheme was made available from December 2011. It was customized to suit the requirements of different companies and employees. The NPS is an option offered for providing additional retirement benefits to the personnel, and can be made mandatory by the companies for their employees.

Companies can join this tax saving investments scheme through the POP. Employers who contribute to this pension plan on behalf of their employees also receive tax advantages, which make it attractive for them. Companies can claim such benefits for an amount that is up to 10% of the employees’ salaries (basic + dearness allowance) through deduction as business expenses.

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Everybody has heard the saying “health is wealth”. While it is true that good health is something that money cannot buy, access to funds can certainly give you the best medical care. Life is uncertain and despite all your safeguards, accidents and diseases can strike without warning. It is therefore prudent to make arrangements for the wellbeing of yourself and your family, well in advance.

Medical costs today are prohibitive, making the need for sudden treatment or hospitalization a huge financial burden. If you are not covered under a health plan, you may find yourself in a difficult situation and can end up depleting your savings.

Benefits of Health Insurance

• Financial stability – Medical costs are increasing at a rapid pace. In case of hospitalization, you will have to incur several expenses, such as doctors’ fees, diagnostic tests, medications, and lots more. If you have to pay for these, you may end up spending all your savings. When you have purchased the best health insurance coverage, all these expenses are paid for by the insurer.

• Avail the best medical care – Many people who are not covered under a health plan often compromise on the quality of care they receive. However, with adequate health insurance, you can focus on receiving the best medical care and recover earlier. Most insurers offer a wide network of hospitals, which gives you the additional benefit of cashless hospitalization.

• Tax benefits – In addition to the above-mentioned benefits, individuals can avail of tax benefits on the premium paid for purchasing the health insurance policy. Under section 80 D of the Income Tax Act, premium up to INR 25,000 per annum is tax deductible. An amount of INR 30,000, paid as premium for senior dependent parents covered under these health plans, is tax deductible under this section.

Tips to Avail the Best Plan

• Individuals must pay their monthly premiums on time to ensure the benefits under the health insurance plans remain valid throughout the policy term.

• If you receive any message asking for additional information and/or documentation, it is important that you submit the same quickly to avoid loss of coverage.

• It is also important to pay your renewal premium in a timely manner to continue enjoying the different benefits available under the insurance coverage.

If you follow these simple tips diligently, you can be sure to reap the benefits of your health insurance policy. Do not wait for a health crisis to learn more about health insurance.

Know more about health insurance tips at 5 Paisa Insurance

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If you are not able to keep your new business’s finances under control, then things can spiral pretty quickly. Businesses only succeed when they are financially secure, so here’s how to keep your money issues in order.

Budget

Budgeting is something that every business should do. If you are not budgeting for the year ahead, then you will face problems later on down the line. A strong budget will outline how much money you aim to bring into the company through revenue streams. And it will also outline how much you plan to spend. Then you obviously need to make sure that you make more money than you spend. Otherwise, you’ll make a loss, and that’s clearly not what you want. You can take advantage of loans and maximize loan budget in order to stretch your cash a little further if you really need to. This should all be prepared and planned out in advance though.

Organize Tax Documents from the Start

Nobody particularly enjoys paying taxes, but it has to be done. And failing to pay your business’s taxes is a criminal offence, so it’s not something that you can afford to ignore. Making sure that you pay the right amount of tax and meet all the relevant deadlines can be a challenge though. If you are not properly organized, then the whole task becomes so much harder than it really needs to be. So, you need to make sure that all your payroll documents, tax deductible expenses and other paperwork are kept in order. Then, when it comes to filling in your tax return, your life will be so much easier.

Consider Seasonal Cash Flow

Many businesses will see variable sales rates over the course of the year. This is pretty obvious for some companies. For example, a company that sells sunglasses will sell more in the summer than the winter. This is just common sense. But there can also be season cash flow variations for businesses operating in less obvious sectors too. You need to get to grips with your company’s sales cycles as quickly as possible. Once you know when your sales are at their highest and when they dip, you can organize your finances accordingly. If you don’t, you could be caught short when those sales dip.

Always Ask for Discounts

The amount of money you spend is one of the key financial considerations for your business. If you are spending more money than you need to be, that extra money will eat into your finances. Whereas, if you were to cut the amount of money that your business spent, there would be less pressure on your sales efforts. You can afford those sales dips if you are keeping your monthly expenditure as low as it possibly can be. One of the things that you should always do is ask for discounts. If you have suppliers that you are buying from in bulk, then you should be able to get some for of discount from them. This will certainly be possible if you can show them loyalty.

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There is no point in leaving all your cash in your current account. The interest rate will only be fairly low. It is much more advisable to move your money into a better investment that can help it increase. Of course, leave some money in your current account for everyday needs. But all your savings? It’s better off to invest them. If you are a complete novice when it comes to investing, it can be a very daunting prospect as there is a slight risk that you could lose some money. Here is what you need to know before you start.

Diversify

One of the big things to remember is the importance of diversifying. This helps you reduce the risks of investing. What does diversifying mean? Simply put, it is when you split up your money and invest in different methods. This is a much safer alternative than placing all your cash in just the one investment. Diversifying reduces the risks of investment. Because you are essentially spreading your eggs across different baskets.

Stocks And Shares

One of the most common ways to invest your money is in stocks and shares. This involves buying some stocks and shares of a company that is floating in the stock market. You will be able to buy as many as you like, although some companies have a minimum purchase limit. Before you commit to buying a company’s shares, you need to do your research. If the company is currently doing well, then there is a good chance the value of your shares will increase, leaving you with a profit. However, if the value falls, you could end up out of pocket. If you do your homework, you can make a lot of money over a long period of time!

Funds

Instead of investing directly in stocks and shares yourself, you can put your money into mutual funds. This is, basically, where you get a professional to invest your money for you. You transfer the money you want to invest to this financial advisor who then places it into a fund, so he can keep an eye on your money on a daily basis. This is known as a mutual fund, and your advisor is now the fund manager. There are a few different types of funds available. For self managed super fund advice, check online.

Savings Account

One of the safest ways to invest money is to place it in a high-interest savings account. There is no risk involved with a savings account, as the amount of money held in there won’t change depending on the economy. It is an easy way to get more money, though. The more money you have in the account, and the higher rate of interest, means you can get a substantial payment from your bank each month.

So, to be clever with your money, sometimes you have to take a risk and invest. If you do your research, you’ll find the benefits far outweigh any potential risks!

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Debts are an unfortunate part of life. Unless you come from a particularly rich family and have all the luck in the world, you’re going to have to deal with debts at some point. It might be loans for education, your home or your business. It might be because of credit cards that we’ve lost track of. Or perhaps overdrafts that we dug into a little too far. How much you dug into debt doesn’t matter all that much. What does is taking control and getting back out of it. Below, we take a look at how exactly that might happen. Whether it’s managing or getting your debt forgiven altogether. Or whether it’s rolling up your sleeves and organising your finances like you’ve never organised before.

Student loan

The biggest loan that most of us will carry on our backs is a student loan. Even if you’re not in trouble with your payments, it can weigh heavily over you. How do you take care of it? Do you save to get rid of it now in place of your retirement fund? Do you stick to having it cut out of your wages for years to come? Paying off your student loan can negatively affect your credit rating but that will repair in time. Freeing yourself from it early can let you save for the rest of your life a lot more consistently. Public service loan forgiveness is also available, helping some in getting their student loan shaken off.

Better organisation

The key to paying off their debts quicker for most people means putting a lot more money aside for it. This takes the skill set of managing more money on the side without seeing how much you’re actually putting together. The right usage of online resources can help you manage your finances with all the more precision and mindfulness. For example, online banking allows you to track your spending in real time. That way, you know whether or not you’ve gone over your budget every time you take money from the bank. Similarly, using Google Sheets or Microsoft Excel can help you turn all your earnings and outgoings into an easily tracked sheet. With the right forward planning, you might find yourself shaving off a lot to put towards repaying your debts.

Debt consolidation

Consolidation is a bit of a wary subject for a lot of people. Many don’t really understand how it works and whether or not it will actually benefit them. It’s an important question to ask before jumping at it. Consolidation can, indeed, be the exact wrong move in situations. If you’re worried about multiple credit card debts for example, you won’t want to consolidate. Debt consolidation companies and banks don’t have the upper limit on their interest that credit cards do. However, with other debts, it can be an easy way of making it more manageable if it’s reduced to just owing one company money. Check the interest rates carefully before you agree to anything, however.

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