NPS vs Other Tax Saving Investments: Where Should A Tax Saver Invest

INVESTMENT

Apart from building a sufficient corpus, there can be several other factors that you might be interested in while choosing a financial instrument. Saving taxes can be a crucial factor among them and instruments like NPS can help you save additional funds through the tax benefits it offers to an investor. According to section 80C, you can apply for a tax exemption of up to 10% from the NPS contribution made by your employer. Now, let’s compare NPS with instruments like FDs, PPF, tax-saving FDs, etc. based on tax benefits, liquidity options, returns, and some other features:

Tax Benefits

ELSS i.e. Equity Linked Savings Scheme enables you to claim a tax deduction of up to Rs. 1,50,000 as per section 80C of the Income Tax Act. On the other hand, PPF provides 100% tax exemption for the invested amount, interest earnings, and returns whereas you will have to pay taxes for the pension that you will receive through NPS after retirement. Therefore, PPF is a better investment option if saving taxes is your only goal.

A tax-saving FD also lets you save taxes of up to Rs. 1.5 lakhs but you will need to keep your deposits locked in for at least 5 years to receive this benefit. Also, you cannot withdraw from a tax-saving prematurely and the withdrawal policies of the NPS Scheme are also complex. Instead, you can invest in a corporate fixed deposit like Bajaj Finance FD that offers a high interest rate of 6.75%, flexible tenor range, and other impressive features that are listed below:

Higher Interest Rates for Senior Citizens

Bajaj Finance FD gives a 0.25% higher FD interest rate to senior citizens. If you are a senior citizen, you can use this higher interest rate to withdraw higher periodic interests by investing in a non-cumulative Bajaj Finance FD.

Also, you will have the option of withdrawing interest after each month, quarter, year, or six-month as per your needs after investing in this FD type. Therefore, instead of investing in NPS for collecting a corpus till retirement, you can invest in Bajaj Finance FD and estimate the corpus that you may achieve to earn using FD calculator for 20 years, 25 years, or any number of years remaining for you to retire.

Moreover, like NPS, the period interest payout offered by Bajaj Finance Non-cumulative FD will ensure that you can meet your financial needs without any issues after retirement.

Online Investment Procedure

Bajaj Finance offers a complete online procedure for its FD investors. This means that you need not step outside your house even once as even the payment for the FD and document verification process can be completed online along with the provision of an online FD form that lets you invest in an FD seamlessly. Also, as an online investor, you will be liable for a 0.10% higher FD rate.

Lenient Withdrawal and Easy Investment Policies

Bajaj Finance FD employs lenient withdrawal policies and it is evident by the fact that you are allowed to withdraw your deposits anytime you need them once they finish a tenor of 3 months. The loan against FD feature offered by Bajaj Finance gives you the chance to maintain your investment even during a financial crisis.

Your tenor choice can land anywhere between 12 and 60 months and you are allowed to reinvest your returns automatically for the same period by setting the auto-renewal option while filling the application form. These flexible investment policies and lenient withdrawal terms make it a much better investment option in 2021.

Saving taxes might be among your top priorities while choosing an instrument. You can invest in a tax-saving FD, NPS, or PPF for availing of tax benefits. However, these instruments might not provide the flexibility in terms of withdrawal norms, investment process, and tenor that you expect from an instrument. Therefore, you can invest in a Bajaj Finance FD that comes with all these features. Moreover, it even offers a high FD rate of 6.75% and provides an online process for investment purposes. It is also a stable investment platform and provides higher FD rates to online investors and senior citizens.