Banks, PoPs Levy Recurring Charges For NPS
Rajiv Ranjan, Kanpur
Which is a better way to open a National Pension System (NPS) account—through my bank or through the NSDL website? What is the difference between the two?
The Centre has initiated the NPS to provide a pension system towards retirement security.
The Pension Fund Regulatory And Development Authority had appointed NSDL, KFINTECH and CAMS as the central recordkeeping agencies (CRAs).
These CRAs appoint point of presence (PoP) entities, such as banks, stock brokers and non-banking financial companies (NBFCs), where subscribers to NPS can open an account through physical facility or their online platforms. You can open an NPS account either directly through an e-NPS facility from NSDL, KFINTECH or the CAMS website or through PoPs.
Charges taken by CRAs and PoPs vary for initial subscription, for contribution, for non-financial transactions, and for annual maintenance. These can be compared from their websites.
Opening an account directly through CRAs is beneficial and avoids extra costs of PoPs, and you also get to save on recurring transaction, persistency cost, and account opening charges.
That said, the CRA interface is purely online, and if you are not that tech-savvy or financially literate and require guidance or help to invest in NPS, opening an account through a bank or other PoP might be more suitable for the sake of ease.
Hina Shah, CFPCM Financial Coach, Luhem
Kartik Chandan, Pune
I plan to buy a house on loan. Is there a way I can ensure that at the time of taking the loan, the bank doesn’t put a clause for any prepayment penalty if I clear off the loan before the term?
Most banks will allow you to repay the loan ahead of schedule by making lump sum payments. That said, many banks will also charge prepayment penalties up to 2-3 per cent of the principal amount outstanding.
Hence, you may credit more than your equated monthly instalment (EMI) amount into your loan account on a periodic basis to bring down your interest burden. Most banks will not charge a pre-payment penalty if you deposit more than your EMI payable on a periodic basis.
Therefore, it would be best if you could check with the concerned bank or lending institution from where you plan to finally take the home loan regarding their repayment guidelines and prepayment penalties.
Suhel Chander, CFPCM, Handholding Financials
Palak Tiwari, Noida
I had invested in some mutual funds about 10 years ago when I worked as a teacher. I am a homemaker now, and without any income. Do I have to pay any taxes if I want to redeem them now? Will the mutual fund house deduct the taxes while making the redemption, or do I have to pay it myself?
For equity mutual funds, you will have to pay a long-term capital gains tax (LTCG) at 10 per cent over capital gains above Rs 1 lakh (up to Rs 1 lakh is allowed as tax-free every financial year).
If these are debt mutual funds, then you will have to pay 20 per cent tax after indexation.
Assuming you are a resident Indian and not a non-resident (NRI) under tax rules, the mutual fund house will not deduct the tax. If you are an NRI, then the mutual fund will deduct the tax and make the payout.
Uma S. Chander, CFPCM, Handholding Financials