The PRSA Scheme is applicable to both an employee and a self employed individual. Unlike any other plan, this scheme is advantageous to workers as it offers flexible and functional savings for retirement. You can contribute how much ever you want and withdraw your funds whenever you decide to retire. Another convenience this scheme offers is that you can continue your PSRA plan already while switching different jobs. If you work for a company, your employer makes a contribution in addition to your own contribution to your PSRA plan. Usually, contributions are done on two terms. One is by monthly contributions and the other is by a one-time contribution as a whole. Most employees prefer monthly contributions as it is easier to pay it every month. These aspects are the most favourable and motivate each employee to contribute to their retirement savings while they nevertheless work. In addition to this the government encourages employees to enroll PSRA plans by providing tax relief options. Again both employees and self-employed individuals are eligible to avail tax relief.
Claiming tax relief depends upon various aspects such as the age of the employee and the amount of contribution up to a fixed percentage of gross earnings of the individual. However, there are no limitations on the contributions you make. These contributions are in turn invested in various funds and the attained interest will be tax-free until the benefits are withdrawn after retirement. Usually, the retirement funds are withdrawn at an age of 60 to 75 years.
The maximum gross earnings for tax relief vary with different PSRA procedures followed in various regions. It can be availed by employees with a minimum age limit under 30 to a maximum of 60 and above. For employees under 30 years of age,It received as a percentage of their income is 15%. For the age group above 30 to 40, it is 20%. For the age group above 40 to 50, it is 30%. For the age group above 50 to 60, it is 35% and for the age group above 60 and over, it is 40%.
To claim tax relief, one of the important requirements is that your annual income must be taxable under the income tax laws of the government. All the contributions made to the PSRA plan will receive tax relief at the final withdrawal of the retirement funds. It is mandatory for all self employed people to add their contributions to the self assessment tax return form obtainable online. This is required to be eligible for tax relief in case of self employed business persons.
If you satisfy all the above mentioned criteria, then you are eligible to file. You can contact your PSRA provider to know the details and claim tax relief when you decide to withdraw your contributions and receive the funds after your retirement. Contribute more to receive a higher percentage of tax relief to enjoy a satisfying retirement.