I am investing in various Mutual Fund SIPs. Is it correct if I now want to invest in NPS for 80CCD benefit

All the funds you have invested in are funds with strong track record (we think the Franklin Templeton fund you have invested in is Franklin India Smaller Companies Fund; please check). Investing in a large number of mutual fund schemes does not necessarily result in better risk diversification or better performance. For your additional SIPs, you can invest in some of the funds you are already investing in. Birla Sun Life Top 100 and ICICI Focused Bluechip Equity Fund are large cap funds, while Reliance Small Cap and Franklin India Smaller Companies Fund are small and midcap funds. Select one or two funds from your existing portfolio based on your risk tolerance and consult your financial advisor if required.

By investing Rs 5000 monthly in National Pension Scheme you can an additional Rs 50,000 in income tax under section 80CCD. While you get additional tax savings by investing in National Pension Scheme, in terms of taxation of returns in National Pension Scheme is not as tax friendly as equity mutual funds. Long term capital gains in equity mutual funds are tax free, the maturity corpus of the National Pension Scheme is not tax free. Firstly at least 40% of the maturity corpus must be used to purchase annuities (one can buy annuities from life insurance companies like LIC). Please note that the annuity interest is taxable. Of the balance 60% which can be withdrawn by the investor on maturity, only 33% is tax exempt if you are a non Government employee and the rest will be taxed as per your tax rate. You can see that there is tax disadvantage with National Pension as far as the maturity proceeds are concerned. However, the Government is telling us to treat National Pension Scheme as what it is, a pure retirement planning investment that will give annuity income post retirement. Therefore the Government ideally expects that you invest most of your maturity proceeds in purchasing annuities. There is sound logic in the Government’s view on National Pension Scheme, as it want India to become a pensioned society. In this Budget, the Finance Minister tried to introduce a similar tax treatment for Employee Provident Fund. But he had to withdraw his EPF tax proposal after public criticism. Critics argue whether the Government should be telling you what to do with your money. It is philosophical debate and I do not think we have seen an end to its debate.