FACT

New TER slabs to be implemented from April 1, 2019: SEBI - Cafemutual.com The market regulator has given four months’ time to fund houses to comply with the new TER slabs.

NPS is now a EEE product like EPF, PPF. Similarity ends there. Why I am saying that, I will explain in a moment. But first what EEE means? EEE stands for exempt - exempt - exempt i.e. you can claim for tax exemption at the time of investment; there is no tax to be paid when gain is accrued; and at maturity also no tax is to be paid.

But 2 pain points are still there in NPS which do not make it comparable with EPF and PPF. (Though NPS is anyway can never be comparable with EPF, PPF in the sense that return in NPS is market linked, whereas in the other two, return is guaranteed.)

These pain points are:

(1) Investment in NPS is illiquid. You cannot withdraw money from NPS before your age of 60 (even if you still want to withdraw, then with 80% of fund you have to buy annuity and rest 20% you can withdraw).

(2) Even at age 60 when you withdraw from NPS, only 60% of it you can withdraw tax-free, with rest 40% you compulsorily have to buy annuity (annuity income is again taxable).

This illiquidity and non-flexibility in utilising fund at maturity makes NPS non-attractive and non-recommendable.

(The above is my personal view)

A rediff article on How to invest without loosing money and create wealth

How to invest without losing money and create wealth Definition of wealth is different for each and every person, but for a common person wealth would mean Rs 1 crore | How to invest without losing money and create wealth