If the total pension corpus is less than or equal to Rs 5 lakh, you can process a 100% withdrawal, and there is no mandate for purchasing annuity. In case of death, 100% accumulated pension corpus is paid to the nominee, or legal heir.
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I am a 58-year-old consultant and plan to retire in 2-5 years. I have already planned my finances for retirement. For tax reasons, I want to invest in NPS Tier 1. Can I do so at this age, and is there a minimum number of years for which I will have to invest?
Raj Khosla, Founder and Managing Director, MyMoneyMantra.com, replies: You can invest in the NPS as the maximum age of entry is 70. After turning 60, you can choose to exit from the scheme or continue parking tax free savings in the NPS account till the age of 70. While exiting from the scheme, you are required to make a residuary investment of at least 40% of the corpus for annuity. From the following year, you will start earning monthly pension from this corpus. If the total pension corpus is less than or equal to `5 lakh, you can process a 100% withdrawal, and there is no mandate for purchasing annuity. In case of death, 100% accumulated pension corpus is paid to the nominee, or legal heir.
My father sold a property recently. He bought it in 2014 for `11 lakh and sold it in 2021 at `18 lakh. What would be the LTCG tax incurred? We don’t want to buy any new property. Is there a way to save tax on capital gains? I am servicing a separate home loan. Can my father give me some money for loan repayment?
Amit Maheshwari, Partner, AKM Global, replies: Sale of property held for more than 24 months would attract long term capital gains tax at the rate of 20% (plus surcharge and cess). The gain is computed by deducting indexed cost of acquisition from sale consideration. Assuming that the purchase was made in 2014-15 and sale took place in 2020-21, and index for respective years being 240 and 301, the indexed cost would be `13,79,583 and consequent gain would be `4,20,417. Assuming that your father is in the 20% or a higher tax slab, the tax liability on such gains would be `87,447 (with cess). To claim exemption, apart from investing in a new house property, you can invest in NHAI or RECL bonds within six months. If you are inclined to take a riskier bet, you can also invest in an eligible startup u/s 54GB of the Income-tax Act, 1961 but therein the capital gain exemption is allowed in proportion to the sale consideration invested in the eligible startup. Your father can freely transfer any amount as gift to you. There will not be any tax implications for either of you.