Retirement
NPS
Also known as: National Pension System
A low-cost retirement scheme mixing equity and debt, with extra tax breaks and a mandatory annuity at the end.
NPS is a government retirement product where your money is invested in a chosen mix of equity and debt at very low cost.
It gives an extra ₹50,000 tax deduction under 80CCD(1B), on top of 80C, which is its biggest draw.
The catch: at retirement you must use at least 40% of the corpus to buy an annuity, locking part of your money into a modest pension.
For example
Contributing to NPS can save extra tax via the ₹50,000 80CCD(1B) deduction, but remember a chunk must later buy an annuity.