NPS Forms

NPS Withdrawal Forms

The Indian government has separated all NPS Withdrawal Forms into the employees of the government or subscribers belonging to corporates.

Withdrawal Forms pertaining to Government employees

  • Form 101GS – Employees in government service can avail of this form should they choose to withdraw their accumulated pension following their retirement
  • Form 102GP – Employees in government service can avail of this form should they choose to withdraw their accumulated pension before their time of retirement
  • Form 103GD – Nominees or any legal heir of an employee with the government, who is a part of the NPS, can avail of this form in order to claim the pension accumulated in the account of the subscriber.

Withdrawal Forms pertaining to Corporate Subscribers

  • Form 301 – Corporate employees, as well as other individuals and citizens who opt for withdrawal of their total accumulated pension following retirement, can use this form
  • Form 302 – Corporate employees as well as other individuals and citizens who opt for withdrawal of their total accumulated pension before retirement can use this form
  • Form 303 – Nominees or any legal heir of a corporate employee can avail of this form in order to claim the pension accumulated in the account of the subscriber.

Withdrawal forms for Claimants on the death of Subscriber

There are separate forms which a nominee/legal heir is expected to submit in the event of the death of subscriber. The following forms can be used for this purpose.

  • Form 103 GD – NPS withdrawal form can be used by a nominee/legal heir of a government employee who is covered under the National Pension Scheme. The nominee can fill this form to claim the amount in the account of a subscriber.
  • Form 303 – This form can be used by a nominee/legal heir of a corporate employee/regular citizen enrolled under the National Pension Scheme. The nominee can fill this form to claim the amount in the account of a subscriber.
  • Form 503 – This form can be used by a nominee/legal heir of an individual covered under the Swavalamban Sector. The nominee can fill this form to claim the amount in the account of a subscriber.

Documents to be submitted with forms

A subscriber/nominee who wishes to withdraw money from his/her account needs to submit the following documents with the relevant form.

  • Original PRAN card. In the event of the original PRAN card being lost/stolen, an individual should submit a notarized affidavit stating reasons for non-availability of this card.
  • Valid address and ID proof of subscriber.
  • A canceled cheque with the name, bank account number and IFSC code of subscriber. In the subscriber/nominee wishes to do an online transfer then he/she should give a bank certificate containing relevant details.
  • Age proof of subscriber – this could be a valid government ID card or matriculation certificate.
  • A death certificate is required if a nominee is claiming the amount on account of the death of a subscriber.
  • A nominee/legal heir should submit proof of their nomination if they are claiming the amount on account of the death of a subscriber.
  • Address and ID proof of nominee – A nominee/legal heir should provide their address and ID proof before they can claim the amount on behalf of a dead subscriber.

NPS Withdrawal Rules

National Pension Scheme (NPS) is the retirement pension product introduced by the government for all resident individuals. It became a very famous product due to the additional tax benefit that one gets on making these investments.

The features of NPS and how should one invest in NPS is discussed in our Article. Here, we have listed when and how can you withdraw the money invested into NPS and how the same should be managed.

Basic Withdrawal Rules:

There are majorly 2 types of NPS

  1. NPS tier 1 – the contributions made in tier 1 NPS have restrictions on withdrawal.
  2. NPS tier 2 – it is more like a savings account, there is no restriction on withdrawal.

Tier-I comes with partial withdrawal options, subject to conditions.

  • For those looking to exit before turning 60, there is an option to withdraw 20% of the accumulated savings but have to buy an annuity with the remaining 80%.
  • When you attain the age of 60, you have to invest at least 40% in an annuity with IRDA and can withdraw only up to 60 percent of the corpus.
  • The nominee can withdraw the full amount only after the death of the subscriber.

There are a few amendments which were made in the NPS withdrawal specifying the conditions where one can withdraw a part of their NPS balance and when.

You can withdraw 25% accumulated corpus

You are allowed to withdraw 25% of the accumulated corpus at any time (but excluding contributions made by the employer), as on the date of application of withdrawal.

There are a few conditions to do the same:

  • The subscriber must be in the National Pension System for at least 3 years.
  • The subscriber can withdraw a maximum of 25% of the contributions made by him and standing to his credit in his individual pension account, as on the date of the application for withdrawal.
  • The subscriber is allowed to withdraw only a maximum of 3 times during the entire tenure of subscription.
  • You must submit this withdrawal request in the specified form along with necessary documents to the central record keeping agency or the National Pension System Trust, as may be specified, for processing of such withdrawal claim.
  • If subscriber suffering from diseases, then a family member can submit the application.
  • For Tier II account, one can withdraw either partial or full amount available in this without any condition.

Purpose of withdrawal

You are not allowed to withdraw the NPS corpus as per your wish. There are certain purposes set by PFRDA. They are as below.

  • For higher education of your children including a legally adopted child (or) for self.
  • Individual NPS subscribers who wish to set up a new business or acquire a new business will also be allowed to make partial withdrawals from his contributions.
  • For the marriage of your children, including a legally adopted child
  • You can make a partial withdrawal for the purchase or construction of a residential house or flat in your name or in a joint name of your spouse. In case, you already own a residential house or flat (either individually or in the joint name), other than an ancestral property, no withdrawal under these regulations shall be permitted.
  • If you /your spouse, children, including legally adopted child or dependent parents suffer from any specified illness, a partial withdrawal request can be submitted by you or any of your family members. (Specified illness – which shall comprise of hospitalization and treatment in respect of the following disease) :
  1. Cancer;
  2. Kidney Failure (End Stage Renal Failure);
  3. Primary Pulmonary Arterial Hypertension;
  4. Multiple Sclerosis;
  5. Major Organ Transplant;
  6. Coronary Artery Bypass Graft;
  7. Aorta Graft Surgery;
  8. Heart Valve Surgery;
  9. Stroke;
  10. Myocardial Infarction;
  11. Coma;
  12. Total blindness;
  13. Paralysis;
  14. An accident of serious/ life-threatening nature.
  15. Any other critical illness of a life-threatening nature as stipulated in the circulars, guidelines or notifications issued by the Authority from time to time.
  • Such advance withdrawal will not attract any taxation. Hence, there is no tax liability for such advance withdrawal.

You can hold and contribute to NPS corpus even after your retirement up to the age of 70 Yrs.

Where you wish to continue to contribute to your NPS even after your retirement (i.e. age of 60 or after superannuation), you must give the same in writing in the prescribed form.

Such option can be exercised at least 15 days prior to the age of attaining 60 years or the age of superannuation, as the case may be to the central recordkeeping agency or the National Pension System Trust or any other intermediary or entity authorized by the Authority for the purpose.

If you not exercised the option within the period of 15 days, so stipulated, but desires to continue with his individual pension account under National Pension System, beyond the age of 60 years or the age of superannuation, as the case may be, and to the extent so permitted, may do so by making an application in writing with reasons for such delay to the National Pension System Trust, within 185 days of attaining such age or superannuation.

State and Central Government Employees NPS corpus may withhold the NPS withdrawal to recover any dues from an employee

If you are an employee of State or Central Government and if there any dues pending by you to be payable to your employer, then your employer may withhold the NPS withdrawal to recover such dues.

However, such authority is available only for Tier 1 accumulated corpus but not for Tier 2 accumulated corpus.

The pension wealth which is payable under the National Pension System will not be paid to the employer until the conclusion of the departmental or judicial proceedings, as the case may be and subject to the final orders, passed in such proceedings.

Who provides Annuity on withdrawal or maturity under NPS?

An annuity is a series of payments made at successive periods (intervals) of time. For NPS it is bought at withdrawal or on reaching 60 years in Tier 1 Account. ASPs would be responsible for delivering a regular monthly pension on exit from the NPS. The Annuity Service Providers empaneled by PFRDA for subscribers of NPS are as under:

  1. Life Insurance Corporation of India
  2. SBI Life Insurance Co. Ltd.
  3. ICICI Prudential Life Insurance Co. Ltd.
  4. Bajaj Allianz Life Insurance Co. Ltd.
  5. Star Union Dai-ichi Life Insurance Co. Ltd.
  6. Reliance Life Insurance Co. Ltd.

We have listed all the forms required for NPS withdrawal in our Article – Click here to read more.


NPS – National Pension Scheme – Things to Note

After the budget of 2017, every other person was trying to invest in this new product NPS to save further tax of INR. 50,000. Being a more conservative investor,  I asked around a few people to understand what is this NPS and is tax benefit the only reason to invest in it. Actually, by now I should stop being surprised by the lack of research from people around me. 8 out of 10 people, I knew had invested their money into NPS without knowing all the basic details about it.

What is a Pension Scheme?

NPS is a pension scheme, but what is a pension scheme. Is it Insurance? Is it a mutual fund? What is it? A pension plan is a financial product that ensures a fixed regular income after you retire for a fixed period of time. You invest your money in pension regularly/lump sum till you retire and post-retirement the same corpus is returned to you at regular intervals.

What is NPS?

NPS is the government approved pension plan. It is managed by PFRDA (Pension Fund Regulatory and Development Authority). This product helps you to create retirement corpus.

Any citizen of India (whether resident or NRI) can invest in this scheme. The age of the subscriber must be within 18-60 years of age. However, an individual of unsound mind or existing members of NPS are not allowed to open a new account.

Therefore, an individual can open only ONE NPS account.

NPS subscribers are issued with a Permanent Retirement Account Number (PRAN), which remains unchanged throughout the length of the scheme.

Structure of NPS

Before getting into the details of withdrawals, the difference between Tier 1 and Tier 2 and how the investments made in NPS is managed. It is important to understand the nature of the product.

  1. There are two types of account/ methods of NPS investments with different benefits and features.
  2. As an individual, a regular fixed sum or otherwise is invested by you in the NPS
  3. An equal contribution may (like EPF) or may not be made by your employer.
  4. The entire fund collected is managed by fund managers appointed by PFRDA which invests this pool of fund into various investment products over the period of time.
  5. A fee of 0.25% is deducted from your investment as a fund management fees.
  6. You cannot withdraw the money from NPS as and when you need the money, there are restrictions and limitations on the same.
  7. After retirement, you can withdraw a part as a lump sum; balance would be received as a monthly pension. To do so, one has to buy an annuity plan.
  8. There are No ASSURED RETURN IN NPS (like in EPF there is a fixed return of 8% -12%)

Types of NPS

There are majorly 2 types of NPS

  1. NPS tier 1 – the contributions made in tier 1 NPS have restrictions on withdrawal.
  2. NPS tier 2 – it is more like a savings account, there is no restriction on withdrawal.
  3. Swavalamban scheme or the NPS Lite – was a financial inclusion scheme for the economically backward sections of the society. It was applicable to all employees in the unorganized sector of employment. For Swavalamban accounts, a government made contributions of Rs.1000 for the first four years after enrollment. Swavalamban Yojna is replaced by Atal Pension Yojna.

How to open an NPS account?

  • Fill the application form.
  • Provide the relevant KYC documents at your nearest POP-PS (You will find the list in PFRDA portal) to open a Permanent retirement account (PRA)
  • If you want to open new Tier 2 account, then the process is different. You have to approach POP-PS with a copy of PRAN (Permanent Retirement Account Number) and Tier 2 activation form.
  • The subscriber has to make the first contribution while opening the account.
  • The minimum contribution for Tier 1 is Rs.500 and Rs.1, 000 for Tier 2.

You can also enroll into the NPS online through You can do so either by using your Aadhar number or through your PAN number and online banking (your bank account and PAN number must be linked) if your bank is enrolled with the NPS. You can check this on

Note-Now you can open NPS account online and also contribution can be made online through e-NPS portal.

What are the investment options and how should you go about it?

The NPS fund is invested into various investment products and is split into the three asset classes as below:

  • Class E: made in equity market instruments.
  • Class C: made in fixed income investment instruments. These investments do not include government securities.
  • Class G: made in government securities.

The NPS offers two choices: Active and Auto.

You may choose and change into either of the two. However, such a switch is only allowed once a year.

  • Active: Under this option, you can actively choose and change your investment amount in either of E, C, and G class. However, please note that you cannot have more than 50% under class E i.e. Equity Instruments.
  • Auto: The Auto choice offers a life-cycle fund, which decides the investment allocation depending on the age of the individual. The allocation to equity and fixed income comes down and the proportion of government securities in the portfolio goes up with the advancing age of the subscriber.
  • At the lowest age of entry (18 years), the auto choice will entail an investment of 50% of pension wealth in “E” Class, 30% in “C” Class and 20% in “G” Class.
  • These ratios of investment will remain fixed for all contributions until the participant reaches the age of 36.
  • From age 36 onwards, the weight in “E” and “C” asset class will decrease annually and the weight in “G” class will increase annually till it reaches 10% in “E”, 10% in “C” and 80% in “G” class at age 55.

Thus, you have to select whether you want an active or an auto option. Well where you select for auto, there is not much you have to do on the investment product side as the same is taken care of. In the case of active, you have to decide how much % of your investment has to go into which asset class.

After selecting the method of investment, you also have to select the fund which will manage your investment.

  • The accounts of government employees are managed by one of the three government fund managers, LIC Pension Plan, SBI Pension Plan and UTI Retirement Solutions,
  • Accounts of others are managed by one of the six fund managers: ICICI Prudential Pension, IDFC Pension, Kotak Mahindra Pension, Reliance Capital Pension, SBI Pension Funds and UTI Retirement Solutions.

What are the charges and fees associated with the National Pension Scheme?

Investors have to pay handling and administrative charges, fund management fees. The fund management fee is 0.0102% for Government employees and 0.25% of the invested amount for the private sector.

Difference between Tier 1 and Tier 2 Investments

After getting a brief idea on the basic of NPS, it is important to know what is tier 1 and tier 2 investments and why do we even have the choice of these 2.

FeaturesTier 1Tier 2
Mandatory for NPSYesNo
Requirements to openAny individualOnly those with Tier 1
Minimum contributions per annumINR 1000 (by non-government employees)INR 1000 at the time of account opening
10% of basic + DA  with matching from the government (by a government employee)
Minimum amount per contributionINR 500Nil
Minimum balance at the end of the accounting yearNANA
Bank AccountNot mandatoryMandatory
Tax benefits for the investments made and the maturity amountRefer Article – Click hereNo tax benefits


If the subscriber fails to contribute the minimum amount in a year, the account will become dormant. The subscriber will have to submit the form UOS-S10 to the POP-PS, along with a penalty of R100 and a minimum contribution of INR 500, to reactivate the account. The dormant account will be closed if the account value falls to zero.

Withdrawal/ Exit Rules for NPS

You cannot withdraw the money from Tier 1 account as and when you want to do the same.  It is a pension/retirement plan, thus, there are restrictions on withdrawal from NPS.

  • If you are withdrawing the money at your retirement at 60 years, you have the option to withdraw 40 per cent of the accumulated corpus tax-free.
  • At least 40 per cent of the accumulated corpus must be used to buy an annuity.
  • The remaining 20 per cent can be either withdrawn (it will be taxed as per the Income Tax slab applicable to the subscriber) or use it to buy an annuity.
  • The pension derived from the annuity will be taxed as income.
  • If the total corpus is below R2 lakh, it can be withdrawn entirely.
  • While exiting from the NPS before 60 years, one can withdraw only 20 percent of the corpus as a lump sum and one must use 80 percent of the corpus to buy an annuity.

An example of NPS Investment

Harsh makes a monthly contribution of INR 2000 to NPS which he started at the age of 30 and continued to do so till the age of 60. Assuming that he earned a return of 9% on average over the 30 years (the return in NPS is not fixed or assured).

Harsh will have a corpus of approximately 36.8. at the end of 30 years.

Out of this, 40% i.e. INR 14.72 lakhs can be withdrawn tax free. Balance 60% i.e. 22.08 would be used to buy an annuity product based on his requirements.

NPS may seem a bit complicated due to the fuss created around the product and its features. The cost and the initial tax benefit at the time of investments definitely make it a lucrative retirement product. You as an investor need not invest INR 50,000 per annum just to claim the tax benefits but it is that SIP, you know you will and you cannot ever withdraw.


How to create your UAN account?

How to know your UAN?

a. Through Employer

In the normal course, you can easily get your Universal Account Number from your employer allotted to you by the EPFO. Some employers print the UAN number in the salary slips too.

b. Through UAN Portal using PF number/member ID

It is possible, that you are unable to get your Universal Account Number from the employer, you can obtain the UAN number through UAN portal also. You need to follow the below steps:

Step 1: Go the UAN Portal Step 2: Click on the tab ‘Know your UAN Status’. The following page will appear.


Step 3: Select your state and EPFO office from dropdown menu and enter your PF number/member ID alongwith the other details such as name, date of birth, mobile no, captcha code . You can get the PF number/member ID from your salary slip. Enter the tab ‘Get Authorization Pin’.

Step 4: You will receive a PIN on your mobile number. Enter the PIN and click on ‘Validate OTP and get UAN’ button.

Step 5: Your Universal Account Number will be sent to your mobile number.

How to activate and login to the EPFO website using UAN?

In  order to activate UAN, it is essential that you have your Universal Account Number and PF member id with you. Given below are steps to activate.

Step 1: Go the EPFO homepage and click on ‘For Employees’ under ‘Our Services’ on the dashboard.




Step 2: Click on ‘Member UAN/Online services’ in the services section. You would reach the UAN portal.



Step 3: 

  • Enter your Universal Account Number, mobile number and PF member ID. Enter the captcha characters. Click on ‘Get authorization PIN’ button. You will receive the PIN on your registered mobile number.
  • Click on ‘I Agree’ under the Disclaimer checkbox and enter the OTP that you receive on your mobile number and click on ‘Validate OTP and Activate UAN’.
  • On activation of the UAN, you will receive a password on your registered mobile number to access your account.
  • If you wish to change your password it is possible, when you log into the UAN portal with your Universal Account Number as id and the password you receive on your mobile number.



UAN – Universal Account Number – Things to note

What is UAN?

The UAN or the Universal Account number is a 12 digit unique number allotted to each member of the Employee Provident Fund (EPF) which helps them to manage their EPF account.

The UAN will be associated with an employee and will connect all his PF (Provident Fund) accounts across organizations.

This number is issued by the Ministry of Labor and Employment, Government of India.

If an individual changes his job, he will get a new PF account with the organization. This way, multiple PF account numbers will be allotted to an employee. Multiple PF account numbers is an area of concern as many employees report grievances related to transfer and withdrawal of PF amount. To counter this problem and to make the management of provident fund accounts easier, the concept of UAN was introduced The UAN is a single account number that will connect the multiple IDs associated with an employer. With UAN, an employee can connect all his EPFO accounts to make the process of PF withdrawal and transfer easier.

Advantages of UAN

Once you have the UAN number and you register it then you can check many details. Benefit Of Registration of UAN  at UAN Member e-Sewa Portal are as follows:

  • You can download the updated EPF passbook. The passbook will tell you the EPF balance broken into Employee Contribution(EE) and Employer Contribution (ER). Also deduction for Employee Pension Scheme (EPS). Sample passbook is shown below.
  • You can link your previous PF accounts (before Oct 2014) which are not linked to UAN number.
  • All you have to do to bring your PF accounts together is give your UAN to current employer. After KYC verification, you will be able to view and manage all accounts.
  • You will get notifications on your mobile every time your employer makes a monthly deposit in your PF account.
  • You will know about all the movements in your PF account and thus, your employer cannot dominate the same anymore.
  • You can verify your transfer claims on EPFO web portal by mentioning your UAN.
  • You can change the mobile number and email address.

Read about the step by step process of opening your UAN account in the next article.


Basics of Employee Pension Scheme (EPS)

We have discussed the basic contributions of EPF and how the money is invested, contributed and received by the employees. There is a component called EPS (employee pension scheme) and as per the law, a fixed amount or % of the employer’s contribution goes towards EPS which works as a retirement pension corpus for the employees.

While reading about EPF, I realized that EPS is more detailed than I had imagined and it has implications on the financial decisions of each employee. At the outset, it is a very good scheme, each month 8.33% of the basic pay is contributed towards EPS and on retirement, one gets the money back as a pension. Thus, the EPS part of your EPF works like an annuity plan.

Employees’ Pension Scheme (EPS)

  • Employees are automatically enrolled in the EPS Scheme only if they are members of the EPF scheme.
  • EPS is financed by diverting 8.33% of employer’s monthly contribution from the EPF. Monthly contribution to EPS is restricted to 8.33% of Rs. 15,000 i.e. Rs. 1250.
  • Unlike the EPF contribution EPS, the part does NOT get any interest.
  • The fraction of service for six months or more shall be treated as one year and the service less than six months shall be ignored. So 9 years and 6 months will be rounded up to 10 years.
  • The lifelong pension is available to the member and upon his death members of the family are entitled for the balance pension.
  • Pension received is lifelong and passes on to spouse and two children upon the employee’s death
  • Employees can receive only pension from EPS and are eligible only after completion of 10 years of service and must have attained the age of 50 years for early pension and 58 years for regular pension
  • No pension is payable before the age of 50 years.
  • The maximum Pension per month is subject to a maximum of Rs 3,250 per month.
  • Maximum service for the calculation of service is 35 years.
  • No pensioner can receive more than one EPF Pension.

When can Employee Avail the Pension

Unlike EPF, EPS cannot be withdrawn at any point of career. There are only specific cases where the same will be receivable:

  • Through Superannuation, where he/she has completed 10 years of service and is above 58 years and can continue to work. No fresh EPF will be made in his/her name.
  • Early pension, when completed 10 years of service, between 50 to 58 years and is not working anymore.
  • Unfit to perform the job or permanent disability

Transfer of EPS on Transfer of EPF from one company to another. 

  • When the employee switches jobs, the EPF gets transferred to the new employer, but not the EPS.
  • When the employee switches jobs, the EPS amount or carries it forward to the next job. This, however, depends on the length of his service and his age.
  • If EPF gets transferred the EPS also gets transferred. However, the UAN passbook shows amount as 0.
  • While transferring PF from one establishment to another, the service details, information (like the length of service, non-contributory period, last wages drawn are furnished to the receiving PF office in Annexure K which will be used to calculate the pension benefits. AMOUNT IN PENSION FUND IS NOT REQ”.

Claiming Pension Money

  • If you have scheme certificate of pension

Once the employee crosses the age of 50, he or she is entitled to get pension by Scheme Certificate. The employee is required to fill Form 10-D to avail regular pension. If the employee has more than one Scheme Certificate, he or she can directly go to the EPF office. This requires attestation of the employee’s Form 10-D by the bank manager.

  • If you don’t have scheme certificate of pension

In case an employee has not completed 9.5 years of service, you must claim a pension refund. In order to do, you have to fill Form 10-C along with EPF Withdrawal form and submit it through your employer.


Forms of EPS

There are various forms that need to be submitted to avail different benefits under Employee Pension Scheme. They are:

Form nameFilled byBenefit
Form 10CBeneficiary or member·        Withdrawal benefit

·        Scheme Certificate

Form 10DMember·        To avail pension after 58 years of age

·        To avail pension before 58 years but after turning 50

·        To avail disability pension

Form 10DNominee or widow/widower or Children·        To avail nominee or dependant pension

·        To avail family pension

·        To avail children or orphan pension

Life CertificatePensioner·        To be submitted by pension beneficiary or children every November

·        To be submitted to the manager of the pension disbursing banks

Non-remarriage CertificateWidower/widow·           To be submitted by widower every year

·           To be submitted by the widow at the beginning of pension


Is your employer’s Health insurance sufficient?

I was personally always covered by the health insurance/medi-claim provided by my previous employer and thought that there is no need to have health insurance coverage for myself separately. The same even covered all my family members. It catered to all my health needs so I never looked around for additional health insurance.

There was some amendment in the health insurance scheme provided by my previous company and we were asked for our approvals on the same. During this time, I actually read the medi-claim policy of my employer. I noted the following points.

  • The medi-claim was a 20% co-pay health insurance (i.e. every time there is any claim to be recovered, I have to personally bear 20% cost of the medical bills as the insurance company will reimburse only 80%).
  • Siblings are not covered under the health insurance policy (my younger sister did not have a health insurance cover).
  • I was paying INR 350 per month towards critical illness diseases and an additional cover of my parents (i.e. INR 8400 per annum towards a health insurance premium which did not even give me a 100% cover).

I knew there were certain immediate action points that I must take.

  • I took a basic health insurance policy for my sibling.
  • I also got a health insurance policy for my mother. I had been delaying it for the pre-existing clause and the policy was expensive due to her age and blood pressure issues. However, I realized the more I push it, it is going to become more expensive.
  • When I decided to quit my job, I bought a health insurance policy for myself even before I put in my papers. In fact, I should have bought it the day I realized it was 20% co-pay. Nonetheless, later than never. I had quit my ex-employer in January 2016 and in February 2016, I had to be hospitalized for typhoid and all the expenses of my hospitalization were taken care off by my health insurance. Some may call it lucky, I call it smart financial planning.

Thus, one cannot completely rely on the health insurance provisions of the employer. I have listed below various reasons why you should not rely 100% on your employer’s health insurance policy.

  1. When you change your jobs – The earlier you buy insurance, the better and cheaper it is for you. Thus, if at the age of 40, you wish to change your job or retire early, your new employer may not provide your health insurance and buying one now could be very expensive or not possible.
  2. An employer may decide to change the configuration of the health insurance: The employer may even decide to reduce the members of your family to be covered at its expense or update certain conditions like introduce co-pay, refuse to cover pre or post hospitalization expenses etc. In such a scenario, though you would still be covered, the expenses to be incurred by you will definitely increase.
  3. Post-retirement: The health insurance provided by your employer shall in majority cases not extend post your retirement. Health Insurance may not be available for you in the years where it is most needed and you may not be able to obtain one during your retirement. Hence, buying a basic health insurance plan today itself (in spite of having one from your employer) is one of the major steps you can do for your financial plan.

Many of us do not buy the right financial products merely out of laziness, endangering our savings and future financial plan. Almost everyone knows the cost associated with a sudden health problem, in spite of that many of us refuse to obtain good and appropriate health insurance for self.

Read more about health insurance and things to focus on in our Article



House Rent Allowance (HRA)

House Rent Allowance is a component of the salary provided by the employer to his/her employee. If you receive HRA as part of your salary and you live in a rented accommodation, then you can claim full or partial HRA exemption u/s 10. However, HRA is fully taxable if you don’t live in a rented accommodation. How to calculate HRA? Your HRA depends upon the following 4 factors. They are:
  • Salary
  • HRA component
  • Rent Paid
  • Location of your rented house
Tax exemption on HRA is least of the following: 1) Actual HRA received 2) Actual rent paid reduced by 10% of salary 3) 50% of basic salary if the taxpayer is living in a metro city 4) 40% of basic salary if the taxpayer is living in a non-metro city Since the least of the above is exempt from tax, you can ask your employer to restructure your salary to get maximum tax benefit.
                                                                                                  Pay rent and save taxes
What if my employer does not provide me with the HRA? If you are making payments towards rent for any furnished or unfurnished residential accommodation occupied by you, but do not receive HRA from your employer, you can still claim the deduction and that would be under Section 80GG. Conditions that must be fulfilled to claim this deduction:
  1. You should be self-employed or salaried
  2. You have not received HRA at any time during the year for which you are claiming 80GG
  3. You or your spouse or your minor child or HUF of which you are a member – do not own any residential accommodation at the place where you currently reside, perform duties of office, or employment or carry on business or profession.
In case you own any residential property at any place other than the place mentioned above, then you should not claim the benefit of that property as self-occupied. That other property would be deemed to be let out in order to claim the deduction under section 80GG. Refer our Articles on Income from house property where we have discussed this in detail. As per section 80GG of the Act, the least of the following will be considered as tax-free:
  1. Rs 5,000 per month;
  2. 25% of adjusted total income*;
  3. Actual Rent less 10% of adjusted total Income*
*Adjusted Total Income means Total Income Less long-term capital gain, short-term capital gain under section 111A and Income under section 115A or 115D and deductions 80C to 80U (except deduction under section 80GG). How to Claim HRA When Living With Parents? Where you are staying in your parents’ house and your parents are owner of the same, you can still claim the HRA. You can pay the rent to your parents and claim the allowance provided. You will have to enter into a rent agreement with your parents, provide their PAN card to your employer, also generate rent receipts. In this case, please note that the rent amount that you showing as payment to your parents will be taxed as rental income in their hands. Is my landlord’s PAN mandatory to claim HRA? Yes, it is where your annual rent crosses 1 lakh INR. If your landlord does not have a PAN, then you (as the employee) have to obtain the declaration to this effect from the landlord along with  the name and address of the landlord. A Format of Deceleration May be as follows :- Date To Name & Address DECLARATION I ____________(Full name and address of the declarant) aged ____ do hereby declare that I have leased the Flat No._______________________________ From 1st April’2018 to 31st March’2019 to ___________( Name of lessor) at a monthly rent of  Rs. _______/- ( __________________ only). Further I do hereby declare that my total income during the financial year 2018-2019 did not exceed the statutory  limit prescribed under Income tax Act,1962 and have not assessed to tax and does not have a PAN card . Verification I,_________________ do hereby declare that what is stated above is true to the best of my knowledge and belief. Verified today, the _____________ day of _________________
Date : ________________Place : ________________(Name of the declarant)
HRA is one of the most common component of a salary structure and hence, you must claim the same where you are staying on rent. If you are not staying on rent and living with your parents, it is important you analyse the overall family’s taxability before declaring that you are paying rent to your parents.

How much cover is required for Term Insurance?

Have you looked at the insurance aggregator’s website and wondered how much insurance cover you should take? At the preliminary view, an insurance cover of INR 50 lakhs for someone who just started working also looks very good and an insurance cover of INR 1 crore may not be enough for someone who is married with 1 child. The amount of cover varies from person to person based on their financial background, situations, responsibilities, lifestyle etc.

You can read our Article on 10 things to note before buying term insurance which will give you an exact idea of what is term insurance and all the things that you must focus on before investing in one.

We have listed below the process to compute your term insurance cover.

Step 1 – Use your actual Income

You are opting for term insurance to ensure that the financial life of your loved ones is not impacted. Based on this, your term insurance cover must compensate for the income/earnings that you were providing to your family.

Your monthly income is the minimum amount that your financial dependents must get from the term insurance cover.

Accordingly, where your income is INR 1 lakh per month, your annual income would be 12 lakhs. Your insurance cover amount must be such that on investing it in a debt product of around 9% return, you get the annual income value as returns.

For example:

Income – 1 lakh per month

Annual income – 12 lakhs

Return % – 9%

Amount of cover – (12 lakhs*100)/9 = 1.33 crores

On an investment of INR 1.33 crores in a debt financial product which gives a return of almost 9% per annum, a return of INR 1 lakh per month (i.e. 12 lakhs per annum) will be received.

1.33 crores X 9% pa = 12 lakh per annum i.e. 1 lakh per month.

Post taxes of around 20% that would be INR 80,000 per month which shall be equal to the in-hand salary of the person with the monthly income of INR 1 lakh.

Reverse Calculation

  • You can also do a reverse calculation, where you may take the in-hand salary of say INR 1 lakh (this would be a post-tax number)
  • Accordingly, the pre-tax would be INR 1.25 lakhs
  • You have to earn INR 1.25 lakh for 12 months i.e. INR 15 lakhs.
  • The cover amount must be such that it gives 15 lakhs as 9% of the cover amount.
  • Using the above formula = (15 lakhs*100)/9 will give you 1.66 crores.

Hence, you should take an insurance cover of INR 1.66 crores.

Step 2 – Loans and other liabilities.

You should add the value of your total loans and other debts due to your insurance cover. This will ensure that there is no fallout of debt on your dependents.

In this case, if you already have home loan insurance, verify if it is sufficient to cover the entire outstanding loan.  If yes, then you need not add that amount to your term insurance cover, if not then add the loan amount to your insurance cover.

If there are any other loans or liabilities that you have taken from anyone, add that amount to your term insurance cover amount. For example, a car loan or a personal loan.

Step 3 – Reduce your assets

Where you have any investments made in the form of mutual funds or any other investments for your retirement, reduce the value of the same from your insurance cover amount.

In this case, please keep in mind that the value of the assets like the house you are residing in or depreciating assets like your car should not be considered. These are the assets that are used by your family/people.

Step 4 – Important Events

This includes setting aside a lump sum amount for important events or milestones of life such as education of your child, or their marriage or a business set-up for your partner. Calculate roughly how much you would need for your such events (Do include inflation into consideration).

For example, if you feel that today when your child is 5 years old, you would need INR 20 Lakhs for their education 15 years from now. Ensure that this INR 20 Lakhs is not based on the education cost today, but an estimated cost of the same 15 years from today.

Final Working

(Your annual income*100)/ return rate of a debt product + outstanding liabilities – Investments (saleable assets) + Inflated cost of important futuristic life events


Many insurance aggregators and their website calculate the term insurance cover that may be applicable to you.  These calculators work on a simple formula of the time value of money. Basically, it’s the present value of all the future income that you are expecting to earn until you retire. These easy to use calculators are available on the websites of all insurance providers and require certain information from your end like your current age, current annual income and expected future rate of return.

These calculations may not fulfill your entire insurance needs specific to your requirements. You must use an adequate method otherwise even after obtaining term insurance your family/dependents will not be free of their financial liabilities.

The best way to buy term insurance is to directly obtain the same from the website of the insurance provider. Refer to our Article


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