Tips to save IPO listing gains tax!
In the years 2023 and 2024, many IPOs brought huge earnings for the investors. But tax also has to be paid on this! What is the tax rule on booking listing gains from IPO? How can tax liability on listing gains be reduced? How will the tax be calculated on selling IPO shares?
Soon you will be able to withdraw the full amount from National Pension System (NPS ) at the time of maturity if your corpus is below Rs 5 lakh. The Pension Funds Regulatory and Development Authority (PFRDA) has proposed to hike the current limit with an aim to provide benefit to small subscribers.
Currently upon maturity, if your corpus exceeds Rs 2 lakh, you are allowed to withdraw 60% of the corpus which is tax-free under Section 10 (12A) of the Income Tax Act. The rest of the 40% gets annuitised which you receive as a pension amount every month. This limit has now been proposed to be increased to Rs 5 lakh from the current level of Rs 2 lakh.
In addition, PFRDA has proposed to increase the maximum age of entry for NPS from 65 to 70. The regulator has also proposed that subscribers who join after the age of 60 would be allowed to continue their NPS accounts till 75 years of age.
Due to a rise in the demand for guaranteed products, the pension funds regulator has also proposed the creation of a minimum guaranteed pension product in the NPS. The RFP (request for proposal) is to be floated within 15-20 days. Currently, guaranteed return plan from insurance companies has been gaining popularity because of a sharp decline in bank fixed deposit rates.
Currently, NPS gives you two investment options to choose from: Active and Auto choice. Under the active choice, you can save regularly through different asset classes which are Equity (E), Corporate debt (C) and Government Bonds (G). You also have the flexibility to choose the ratio of funds to be invested among E, C & G.
In auto choice, there is a Lifecycle Fund. You have to choose your Pension Fund Manager and your money get invested as per the Life cycle fund matrix on the basis of your age. At each birthdate, these proportions are adjusted with your age as mentioned in the life-cycle matrix. NPS also offers you two account types- Tier I and Tier II. While investment in a Tier I account is compulsory Tier II is optional and allows withdrawals.
The PFRDA manages assets of around Rs5.78 trillion under NPS and Atal Pension Yojana (APY) with 42.4 million subscribers as of 31 March 2021. The regulator expects a jump of 30% in its AUM this year.