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NPS has a tax edge, but watch out for annuities

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NPS has a tax edge, but watch out for annuities

The New Pension Scheme (NPS) is likely to get a makeover if the revised Direct Tax Code is implemented. However, the government is doing its bit tolure investors to take a close look at the NPS. Recently, the government announced the ‘Swavalamban’ scheme through which it would add Rs 1,000 co-contribution every year for the next three years for everyone who joins the New Pension Scheme in this financial year. Any NPS subscriber who invests Rs 1,000-12,000 per annum between April 1, 2010 and March 31, 2011, will get Rs 3,000 free from the government.

The likely DTC impact

The revised DTC, if implemented without any changes, will keep the NPS out of the tax net. This new change will make the NPS an attractive investment opportunity. The government has proposed EEE (exempt-exempt-exempt) method of taxation for NPS, which implies the NPS will be exempt from taxes at all the three stages of deposit, appreciation and withdrawal. Earlier, the NPS proceeds were taxable at maturity.


One of the major advantages is also the lowest fund management charge, which is Rs 99 per lakh (0.0009%) compared to charges of a pension plan offered by an insurance company, which is around 0.75-1.75% per year. This low-cost structure makes it more attractive than most annuity/pension plans offered by insurance companies, financial advisors say. The custodian charges are in the range of 0.0075% to 0.05%. Despite all charges, the cost of investment is cheaper than charges of mutual find and ULIPs.

How does it work?

Investors have an option to choose their investment mix among three categories. The first one (E) refers to high investment exposure in equity, which targets investors with a high risk appetite. Equity investment, however, is capped at 50%, which mainly comprises index funds. The second option (C) is high exposure in fixed income instruments, which targets investors of a moderate risk profile. These instruments include liquid funds, corporate debt instruments, fixed deposits and infrastructure bonds. The last option is pure fixed investment products (G) which offer low returns. Ideally, you should start investing for your retirement in your early thirties. If you have the advantage of longer investment horizon (20 years plus), equity is the best option to start with. But in the case of the NPS, you have to buy a life annuity offered by life insurance companies. The NPS requires the investor to use the retirement corpus to buy annuities to avoid taxation. As per the existing stipulations, you have to invest 40% of the corpus in annuities.

Other alternatives

Annuity plans which don’t return the purchase price offer 8-9% and the ones that return the purchase price offer 50% a year are other options. Any bank deposits over five years, which offered 10% a couple years ago, offer around 8-8.5% today because of a decline in interest rates. There are other assured monthly income options like the Senior Citizens’ Savings Scheme (SCSS) which offer 9%, PPF at 15% and the post office monthly income scheme at 8%.
Courtesy : Economic Times


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Latest CSD Price List


Latest price list has been published in the website of www.govtempdiary.com, this content would be very informative for civilian defence employees who has eligible to purchase such kind of articles from Defence Canteen.

We reproduce the full text of the price list and given below...


(Note:The prices of all products are subject to change. Check the prices at CSD,Chennai)

Index No.
Item Description
Price Rs
67043 Ref.180 ltrs.New Supreme 7161
67046 Ref. 180 ltrs. New Royal 8715
67045 Ref.200 ltrs Furi 21 Pre 17829
67049 Ref.230 ltrs. Furi 24 pre 11705
67028 Ref.Professional 310 ltrs.Elite/FF/32 20263
67014 Ref.310 ltrs. Single Door CFC 9538
67031 Ref.Professional 340 ltrs.Elite/FF/35 11520

Index No.
Item Description
Price Rs
21650 W/M Supreme Wash SSAN 651/LG 6181
21651 W/M White Magic S70 7Kg 7583
21652 W/M Super Wash SSAN 652/LG 6634
21648 W/M White Magic FP-60 DLX 9826
21649 W/M Splash Auto F/Auto 9090
21653 W/M White Magic PRO 700S T/C 13130
21654 W/M White Magic PRO 700H T/C 14369

Index No.
Item Description
Price Rs
63074 H/Honda cd deluxe Cast Wheel 30943
63046 H/Honda Passion Pro 37912
63048 H/Honda Super Splendor Drum S/S 39385
63049 H/Honda Glamour (Drum) 40641
63105 H/Honda Splendor Plus (Spokes Wheel) 33442
63045 H/Honda CBZ Xtreme KS 150CC
63006 Scooter Honds/D10 4sp. 34513
63009 Honda Shine 125CC Kich 39584
63010 M/Cycle Unicon (Self) Alloy wheel 53178

Index No.
Item Description
Price Rs
21914 CTV 21 K44 Pure Flat 5757
21915 CTV 21 S8 7070
21916 CTV 21 K55 Pure Flat 5707
21917 CTV 29 K44 Pure Flat 10090
21918 CTV 29 T40 Pure Flat 13332
21919 CTV CS21 K45 Pure Flat 5404
22484 CTV LCD LA22B 450 12397
22490 CTV LCD LA26B 450 18960
22491 CTV LCD LA32B 450 24064
22495 CTV CS 21A 530 5959

Index No.
Item Description
Price Rs
21519 W/M WA 80R4G F/A 5.8Kg 8260
21584 W/M WA 8503 Semi/Auto 6.5Kg 5862
21585 W/M WA 85TPL F/A 6.5Kg 11015

Index No.
Item Description
Price Rs
67132 Window A/C AW T12 1Ton Remote 11042
67137 Window A/C AW T18 FIMD 1.5Ton Remote 12120
67138 Window A/C AW T24 2Ton W/Remote 15712
67253 Split A/C AST-18 1.5Ton 17148
67254 Split A/C AST-24 2Ton 21546

Index No.
Item Description
Price Rs
67001 Ref. RA18 NFO 170ltrs 7525
67025 Ref. RT31 IV F/F 315 ltrs. 14746
67026 Ref. RT34 IIV F/F 330 ltrs 16160

Index No.
Item Description
Price Rs
63132 M/Cycle Suzuki GS 150 54014
63133 M/Cycle Suzuki GT 125(A.Wheel) Heat 33101
63134 M/Cycle Suzuki GS 125 XU-Zeus 36704
63138 M/Cycle Suzuki UZ125 (Auto Self) Gearless 39396
63135 M/Cycle Suzuki GS125 XDU Zeus Drum Spokes Wheel/Self 38716

Source : Govtempdiary

Delhi govt employees health scheme simplified

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Delhi govt employees health scheme simplified

Sitting and former MLAs of Delhi as well as senior government employees will now be able to avail medical facilities in reputed private hospitals at government expenses without any hassle.

Delhi Cabinet, presided over by Chief Minister Sheila Dikshit, today approved certain modifications in Delhi Government Employees Health Scheme (DGEHS) simplifying procedure for getting treatment at empanelled private hospitals.

The DGHS was launched by Government in April, 1997.

Health Minister Kiran Walia said the modifications have been made to ensure hassle-free medical facilities to senior government officers, MLAs and former MLAs at private hospitals.

"As per existing norms, if somebody wants to get admitted into a private hospital, he has to be referred to the private hospital by a government hospital. There are certain other procedural bottlenecks also. The modifications aim to do away with all these," Walia said.

"It was felt that still there are certain provisions which need to be amended to ensure better healthcare to the beneficiaries," she said.

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