Hello VP Members,
I have doubt on how to look into NPS when it comes to categorization and also in terms accessing your Equity Portfolio for overlaps.
To Me - >
- NPS is to some extent similar to MF [I have equal weight-age to both Equity / Gov Bonds as of now].
- In terms of saving from tax perspective, gives me 30% saving on my 50K. [ my company is yet to implement employer contribution]
- I only put 50K mostly because of Tax Benefit since it has long term maturity
So should I keep it within my Debt investment corner? or how should one take it. Why am asking because the equity portion AMC is HDFC , and their portfolio might end up stocks having high % of allocation , for example.HDFC Bank , HUL and ITC [as i do have them in my PF My Portfolio -Roopak ]
I am very positive with NPS type of investment.
It is said that equivity is best for long term 10-20 yrs and NPS forces us with lockin to remain invested. Apart from this i believe whoever comes under 30% tax slab should have and invest 50k yearly and if employer also provides contribution thats awesome.
In a bad market or crash over investment will be erased by about 30% that is what we will be saving from tax and also employer will keep adding in that period which we personally wont be able to do. Only negative i see is 40% compulsory annuatity on maturity which again is approximately equal to total tax saved.
But still NPS is not famous preffered investment like PPF or others so would like to know others prespective on this.
I have chhosen Lic fund manager with max possible equity option.
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@Jatin_Parekh thanks for response. I totally agree with you, I am actively doing both with PPF since age 10.
I was asking from the perspective where should I place my NPS within my Portfolio for a more refined analysis. 
I guess to exclude it [while analyzing EQ and MF ] for a simplified approach
@roopakagarwal i am also looking out for 1 more option to take max benafit from Nps
I am planning to invest in NPS tier 2 prefebly with Gsec bonds. Lets say i put lumpsum 5lac in it and roi from it is generated at 8-10% then this gain i can move to NPS tier 1(nps has this facility to transfer from tier2 to tier1 reverse not possible) benafits from this will be no tax on Tier2 gains, investnent in tier1 can be claimed in ITR
So tier2 will become flexible FD for me and tax implications only if i debit from it. One time investment will take care of each year contribution.
These are all best case analysis, need to analyze worst cases.
I am not able to decide entry point to invest as dont underatant bond market, interest rate will be increased in near term so have fear of fall in bond NAV.
Whats your views on this?
@Jatin_Parekh I have to do more digging for the bonds and NAV effect .
Also i am not sure about the tax thing on Tier-2. Its complex with tier-2 as it has no tax benefit in tax slab [except central gov employees] so the tax on generated capital / gains from it doesn’t have specific rules . Plus I believe any debit from the account is technically considered as withdrawal. Unless your very sure shot of tax implications, need to check with CA or someone who is doing it
With the current market where as of now the interest rates for normal person are not that great I have seen a constant Increase in NAV for my current G-Sec Bonds.
Updating, I have updated my NPS split to 75% equity and 25% Gov Bonds. Last Month which would be April 2025.
And thankfully I am able to do a corporate contribution into NPS now for 3+ yrs. last time I check before the allocation changes the XIRR was ~12.
Well why it’s not so famous - IMHO
- with individual contribution is capped to 50K so this might not align in terms of significant returns for non-corporate people (aligning towards business class and people having income not in formal way), so they might already balance the return and have tax benefits (malpractice of tax avoidance).
- I see the most benefit is for corporate or white color jobs where your company can contribute that’s where a major return is realized in terms of tax savings (keeping aside the return from fund house)
- PPF on other hand is available to all and is EEE which again align more with non-corporate people (people from point 01)
If you see what gov is trying or at least what I think they are trying. With new tax regime and listing of protean-EGov awareness and popularity of NPS has increased (PPF / EPF are not exempted)
Plus, a hindsight effect and in long term PPF contributions will decrease with people in new tax regime opting for NPS, what this might do -
- is reduce the burden of fixed return from gov ends and flow money into Equity, as a result the equity and debt market gap in market valuation will decrease which in case of India is reverse and also a wanted step to become next (3) superpower and
- also increase gov revenue by eliminating PPF / EPF (which are EEE)
I see win-win situation for both, rest only time can tell also aiding to NPS now is India’s equity market advancements and maturity
As per with lock-in I don’t see much diff between PPF and NPS
But given where NPS is now and being in corporate I definitely favor it and recommend it to friends who are not aware.
Also found a related topic thread here for NPS related queries
