Latest news with #SujitBangar
India Today
3 days ago
- Business
- India Today
Sold property and want to save tax? This tax expert suggests a smarter way
For many who have just sold a property, the next big concern is how to avoid paying a substantial tax on the profit. The go-to solution for most is to invest in 54EC bonds such as those issued by NHAI or REC, which are designed to shield sellers from a 12.5% capital gains tax. But according to tax expert Sujit Bangar, this popular strategy may not always be the a detailed explainer, Bangar lays out two key options available under the Income Tax Act for saving on long-term capital gains tax. 'You can save lakhs in capital gains tax using 2 options: Section 54/54F – Reinvest in a residential property. Section 54EC – Invest in notified bonds (NHAI/REC) within 6 months,' he 54EC is the focus of Bangar's analysis. As he explains, 'Under Section 54EC, you can invest up to Rs 50 lakh from your LTCG into NHAI (National Highways Authority of India) or REC (Rural Electrification Corporation). But the investment must be done within 6 months of sale of land/building.' These bonds come with certain conditions. 'Must be from sale of long-term land/building. Lock-in: 5 years. Cannot pledge/sell before 5 years. Interest: Taxable. Max. investment limit: Rs 50 lakhs,' he real test, however, is in comparing the potential returns. 'Say Ms. A earns Rs 50L as LTCG. Tax payable @ 12.5% + cess = Rs 6.5L. To save this, she invests in 54EC bonds,' Bangar explains. 'BUT the return is just 5.25% (taxable), and money is locked in for 5 years.'For those in the highest income tax bracket, the post-tax return works out to roughly 3.745%. That, Bangar argues, is not very compelling. 'Now compare this with investing in an equity mutual fund for 5 years,' he continues. 'Returns = 12–14% CAGR. Post-tax (after 12.5% LTCG) = 10.5%–12.25%.'The gap in outcomes can be significant. In fact, Bangar estimates that choosing the equity fund route over 54EC bonds could leave an investor 'with Rs 9.6L+ more in just 5 years.'So what is the smarter choice? Bangar does not dismiss 54EC bonds outright. 'If your priority is 100% tax savings, 54EC is safe,' he says. 'But if you can afford to pay tax and invest wisely, you may walk away with Rs 9.6L+ more.'He adds that 'a mix of arbitrage funds and equity funds may also be considered to balance stability and volatility.' In the end, as Bangar puts it, 'Let your goals decide it.'- EndsMust Watch
India Today
08-07-2025
- Business
- India Today
Have lost their tax edge: Expert sounds the alarm on ULIPs
For years, Unit Linked Insurance Plans (ULIPs) were sold as the ideal financial product, offering insurance, market-linked returns, and tax-free maturity benefits. But recent changes to tax laws have reshaped the picture in ways many investors are still catching up with. According to tax expert Sujit Bangar, ULIPs no longer offer the sweeping exemptions they once did, especially for those paying higher Section 80C of the Income Tax Act, ULIP premiums are eligible for deductions up to Rs 1.5 lakh a year. But that deduction is conditional. It's allowed only if the annual premium doesn't exceed 10% of the sum assured, for policies issued after April 1, 2012. And the policy must be held for at least five years—otherwise, the deduction is reversed. 'Policy must not be surrendered within 5 years,' Bangar bigger change, though, came in Budget 2021. ULIP maturity proceeds, which were previously tax-free across the board, are now taxable if annual premiums exceed Rs 2.5 lakh. This applies to all ULIP policies issued on or after February 1, 2021. And the threshold isn't per policy, it's cumulative. If the total premium paid across all ULIPs crosses Rs 2.5 lakh, the tax exemption is gone. 'ULIP maturity proceeds are tax-free only if annual premium Rs 2.5L,' says Bangar. For those who breach this threshold, the tax treatment begins to resemble that of mutual funds. Gains from ULIPs held for more than 12 months are taxed as long-term capital gains at 12.5%, but only on the amount exceeding Rs 1,25,000. If the holding period is shorter, the gains are taxed at 20% as short-term capital gains. The old assumption that ULIPs always offer tax-free returns no longer fund switches within ULIPs, which were once exempt from tax, are now taxable events if the policy exceeds the premium limit. If the ULIP doesn't qualify for Section 10(10D) exemption, any switch between equity and debt is treated like a withdrawal. 'Tax-free if ULIP qualifies for Sec 10(10D),' Bangar notes. 'Taxable as redemptions if it doesn't.'One area that remains untouched is the death benefit. The amount received by a nominee upon the policyholder's death is fully exempt under Section 10(10D), regardless of how much was paid in premiums. 'No premium cap applies here,' Bangar also a warning for early exits. If a ULIP is surrendered within five years, the tax deduction claimed under Section 80C is withdrawn and the entire surrender value is added to the policyholder's income. This can mean a significant tax hit if not accounted for in motivation behind these changes, Bangar explains, was to close a loophole that allowed high-net-worth individuals to gain tax-free equity exposure through insurance routes. 'ULIPs with premium > Rs 2.5L/year are taxed like mutual funds,' he points out. Before Budget 2021, all maturity proceeds from ULIPs were tax-exempt. After the changes, the playing field was result is that ULIPs have lost much of their appeal as tax-saving instruments, especially for those paying large premiums. Bangar offers a clear comparison: mutual funds are now more transparent, more flexible, and more cost-effective. 'ULIPs lost their tax edge at higher premiums. Mutual funds are more transparent & cost-effective,' he says. That leaves ULIPs best suited for those looking for long-term insurance and forced savings, rather than aggressive tax planning. 'Choose ULIPs only if insurance + forced savings is your priority.'As investors weigh their options, it's worth remembering that the tax benefits of a ULIP can quietly slip away with just a few extra rupees in annual premiums. What once looked like a dual-purpose product—offering safety and returns—now comes with more fine print than ever. And for many, the promise of tax-free income may end up being an This article is for general informational purposes only and does not constitute financial advice. Readers are encouraged to consult a certified financial advisor before making any investment or financial decisions. The views expressed are independent and do not reflect the official position of the India Today Group.)- Ends
Economic Times
04-07-2025
- Business
- Economic Times
How to build a Rs 12 crore retirement fund? Financial expert tells how to do it using just EPF and NPS
The two-instrument plan: EPF and NPS Benefits of EPF and VPF Why NPS adds flexibility How it helps avoid income tax Live Events Step-by-step strategy Important warnings (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Salaried professionals earning up to Rs 14.65 lakh annually can legally pay zero income tax under the new tax regime while building a retirement corpus worth over Rs 12 crore. Sujit Bangar, founder of shared this plan in a LinkedIn post, explaining how disciplined investing in Employees' Provident Fund ( EPF ) and National Pension System ( NPS ) can help achieve both tax savings and long-term financial recommends using a combination of EPF and NPS. He outlines a strategy for a 30-year-old earning Rs 75,000 a month. By contributing Rs 12,500 each to EPF (including the employer's share) and NPS, and assuming an 8% annual salary hike, the retirement savings can grow significantly. By age 60, the EPF corpus may grow to Rs 4.74 crore and the NPS corpus to Rs 7.42 crore, resulting in a combined retirement fund of Rs 12.16 crore. Most of this corpus would be offers an interest rate of 8.25% and tax-free maturity after five years. It also allows partial withdrawals. For higher returns, employees can opt for the Voluntary Provident Fund (VPF), contributing up to 100% of their basic salary. However, EPF has some liquidity constraints and should not be considered for short-term NPS offers market-linked returns, which have historically ranged between 9–11%. Subscribers can choose how their funds are invested through the 'Active' option or allow automatic adjustments with the 'Auto' option. Upon retirement, 60% of the NPS corpus can be withdrawn tax-free, and the remaining 40% must be converted into an annuity. This gives a balance between flexibility and stability for post-retirement the new income tax regime, employer contributions up to 12% of basic salary to EPF and up to 14% to NPS are tax-exempt. According to Bangar, this makes it possible for individuals earning up to Rs 14.65 lakh annually to legally reduce their tax liability to zero—while continuing to grow their retirement suggests a planned approach. In the early working years, use VPF for steady returns and select equity-heavy options under the NPS Active Choice. As retirement approaches, gradually shift the NPS corpus toward debt. After age 60, opt for a Systematic Lump-sum Withdrawal (SLW) from NPS to better manage tax impact during advises that while EPF and NPS are powerful tools, they are not meant for emergency or short-term savings. EPF has limited liquidity, and 40% of NPS is locked into an annuity after retirement. He cautions against using them for anything other than long-term planning.'Use them as the backbone of your retirement,' Bangar advises, 'but always consult a financial planner before locking in your strategy.'Disclaimer: This article is based on a user-generated post on LinkedIn for informational purposes. has not independently verified the claims made in the post and does not vouch for their accuracy. The views expressed are those of the individual and do not necessarily reflect the views of Reader discretion is advised.
Time of India
04-07-2025
- Business
- Time of India
How to build a Rs 12 crore retirement fund? Financial expert tells how to do it using just EPF and NPS
Salaried professionals earning up to Rs 14.65 lakh annually can legally pay zero income tax under the new tax regime while building a retirement corpus worth over Rs 12 crore. Sujit Bangar, founder of shared this plan in a LinkedIn post, explaining how disciplined investing in Employees' Provident Fund ( EPF ) and National Pension System ( NPS ) can help achieve both tax savings and long-term financial security. The two-instrument plan: EPF and NPS Bangar recommends using a combination of EPF and NPS. He outlines a strategy for a 30-year-old earning Rs 75,000 a month. By contributing Rs 12,500 each to EPF (including the employer's share) and NPS, and assuming an 8% annual salary hike, the retirement savings can grow significantly. By age 60, the EPF corpus may grow to Rs 4.74 crore and the NPS corpus to Rs 7.42 crore, resulting in a combined retirement fund of Rs 12.16 crore. Most of this corpus would be tax-free. Benefits of EPF and VPF EPF offers an interest rate of 8.25% and tax-free maturity after five years. It also allows partial withdrawals. For higher returns, employees can opt for the Voluntary Provident Fund (VPF), contributing up to 100% of their basic salary. However, EPF has some liquidity constraints and should not be considered for short-term needs. Why NPS adds flexibility The NPS offers market-linked returns, which have historically ranged between 9–11%. Subscribers can choose how their funds are invested through the 'Active' option or allow automatic adjustments with the 'Auto' option. Upon retirement, 60% of the NPS corpus can be withdrawn tax-free, and the remaining 40% must be converted into an annuity. This gives a balance between flexibility and stability for post-retirement income. How it helps avoid income tax Under the new income tax regime, employer contributions up to 12% of basic salary to EPF and up to 14% to NPS are tax-exempt. According to Bangar, this makes it possible for individuals earning up to Rs 14.65 lakh annually to legally reduce their tax liability to zero—while continuing to grow their retirement savings. Live Events Step-by-step strategy Bangar suggests a planned approach. In the early working years, use VPF for steady returns and select equity-heavy options under the NPS Active Choice. As retirement approaches, gradually shift the NPS corpus toward debt. After age 60, opt for a Systematic Lump-sum Withdrawal (SLW) from NPS to better manage tax impact during retirement. Important warnings Bangar advises that while EPF and NPS are powerful tools, they are not meant for emergency or short-term savings. EPF has limited liquidity, and 40% of NPS is locked into an annuity after retirement. He cautions against using them for anything other than long-term planning. 'Use them as the backbone of your retirement,' Bangar advises, 'but always consult a financial planner before locking in your strategy.'
India Today
04-07-2025
- Business
- India Today
EPF, NPS can build Rs 12 crore retirement fund. Tax expert breaks it down
A tax-free salary today and a Rs 12 crore retirement corpus tomorrow. That's the financial outcome tax expert Sujit Bangar says is possible using just two tools: the Employees' Provident Fund (EPF) and the National Pension System (NPS).For salaried individuals earning up to Rs 14.65 lakh annually, Bangar believes this combination offers the best of both worlds: zero tax under the new regime and long-term wealth a recent LinkedIn post, Bangar, who is the founder of shared a straightforward calculation. Take a 30-year-old earning Rs 75,000 a month. If this person contributes Rs 12,500 each to EPF and NPS — a figure that includes both employee and employer shares — and increases both salary and investments by 8% every year, the results can be substantial. Over a 30-year period, the EPF contribution would grow into a corpus of Rs 4.74 crore, while the NPS investment would reach Rs 7.42 that's a retirement fund of Rs 12.16 crore, most of it makes this strategy more appealing, according to Bangar, is how it aligns with the tax rules under the new income tax contributions of up to 12% of basic salary in EPF and up to 14% in NPS are tax-exempt. When structured correctly, these exemptions can effectively eliminate any tax liability for those with annual salaries up to Rs 14.65 in Bangar's view, offers stability and predictable growth. It earns 8.25% interest annually, and the maturity amount is tax-free after five those who want to increase their fixed-income exposure, additional contributions can be made through the Voluntary Provident Fund. NPS, meanwhile, brings flexibility and higher return potential. It allows investors to choose between an equity-heavy or age-based investment mix. Historically, NPS returns have ranged between 9 to 11%.At the time of retirement, 60% of the corpus can be withdrawn without tax, while the remaining 40% is used to purchase an annuity that provides monthly maximise the benefits, Bangar suggests starting with a higher equity allocation in NPS during early working years and gradually shifting to debt as retirement approaches. He also recommends using the Systematic Lump Sum Withdrawal option post-retirement to avoid large tax he cautions that neither product is a one-size-fits-all solution. EPF has limited liquidity, which means it shouldn't be relied on for short-term financial needs. NPS, by design, requires that 40% of the retirement corpus be locked into an annuity, which cannot be withdrawn during the retiree's lifetime. These tools are best used as part of a long-term strategy, not for meeting every investment for those focused on tax efficiency and retirement security, the case for EPF and NPS is strong.(Disclaimer: This article is for general informational purposes only and does not constitute financial advice. Readers are encouraged to consult a certified financial advisor before making any investment or financial decisions. The views expressed are independent and do not reflect the official position of the India Today Group.)- EndsMust Watch
