{"id":2312,"date":"2010-06-16T14:37:47","date_gmt":"2010-06-16T14:37:47","guid":{"rendered":"http:\/\/www.bhagwad.com\/blog\/?p=2312"},"modified":"2010-10-09T02:18:35","modified_gmt":"2010-10-08T20:48:35","slug":"worries-over-new-dtc-direct-tax-code-law-equities-vs-nps","status":"publish","type":"post","link":"https:\/\/www.bhagwad.com\/blog\/2010\/personal\/worries-over-new-dtc-direct-tax-code-law-equities-vs-nps.html\/","title":{"rendered":"Worries over new DTC (Direct Tax Code) Law \u2013 Equities vs NPS"},"content":{"rendered":"<p>There&#8217;s one thing that worries me about the DTC:<\/p>\n<p><strong>There&#8217;s no provision for 100% equi<\/strong><strong>ty long term savings that will give me tax breaks.<\/strong><\/p>\n<p>Right now, I save Rs. 10,000 in tax because I invest 1 Lakh in Templeton&#8217;s Tax Shield ELSS scheme every year. This mutual fund invests my money in equities and equities only. Over the long term, I get outstanding returns &#8211; so I get tax breaks and satisfy my investment needs as well.<\/p>\n<p>Since I&#8217;m not formally employed, with the new DTC the only scheme where I get tax breaks is the New Pension Scheme (NPS). I did a bit of research on the NPS and found that I can only invest 50% in equities. This will significantly lower my returns over the long term (25 years). It&#8217;s not worth saving 10,000 a year when I can get almost double the returns if I invest in 100% equities. Plus the NPS website is horrible, badly organized and doesn&#8217;t instill any confidence in me.<\/p>\n<p>Plus as of now they&#8217;re only accepting payments by cheque (gasp!). Do people still use paper slips for financial transactions? At least we&#8217;re told that <a href=\"http:\/\/www.business-standard.com\/india\/news\/regulator-plans-e-payment-online-application-for-nps\/360575\/\">e-payment facilities are in the pipeline<\/a>. Another problem with the NPS is that if I retire early, I&#8217;ll be forced to buy an annuity from an Insurance company with the money. I hate insurance products and want to have nothing to do with them. It&#8217;s <em>my<\/em> money carefully invested over the years and I don&#8217;t like being told what can and can&#8217;t be done with it.<\/p>\n<p>But unless I invest in the NPS, I get taxed:<\/p>\n<ol>\n<li>When I invest &#8211; since ELSS schemes will be dead<\/li>\n<li>When I withdraw<\/li>\n<\/ol>\n<p>Also worrying is the fact that others will come to the same conclusion. Since equities will lose their tax benefits, the stock market may crash. This isn&#8217;t really that bad for me since I&#8217;m a long term investor and stock market crashes simply allow me to buy stocks and cheap prices. But it&#8217;s something to keep in mind nonetheless.<\/p>\n<p>Waiting for more information to come out on this. Why can&#8217;t the government let me invest 100% equity in the NPS? That would ease my troubled heart a bit&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why the Direct Tax Code (DTC) worries me and how it&#8217;ll affect my equity mutual fund investments. Examines alternatives like the New Pension Scheme (NPS) and how I want it to allow 100% equity investments<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30,31,21,33],"tags":[],"class_list":["post-2312","post","type-post","status-publish","format-standard","hentry","category-financial-matters","category-nr","category-personal","category-sa"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Worries over new DTC (Direct Tax Code) Law \u2013 Equities vs NPS<\/title>\n<meta name=\"description\" content=\"Why the Direct Tax Code (DTC) makes me worry for my equity mutual funds. 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