National savings certificate
NSC is an assured return scheme and provides for tax rebates under section 88. Interest is payable at 8 per cent for a duration of six years, which is relatively lower compared to other small saving schemes. Here, investors are required to make a single deposit and the interest compounded is returned along with the principal amount on maturity.
However, NSC suffers on account of liquidity, as premature withdrawals can be done under specific circumstances only, such as death of the holder(s), forfeiture by the pledgee or under court's order. Like PPF, NSCs are not suitable for those who yearn for regular income and are basically for those looking at safe long-term investments.
NSC investors enjoy tax benefits under section 88. Interest is eligible for deduction under section 80L upto a maximum limit of Rs 12,000. Also, the accrued interest is automatically reinvested, and qualifies for benefit under section 88.
Thus, NSC is an ideal vehicle for those investors who are looking at tax benefits on a longer-term basis and are not too bothered about liquidity.
Showing posts with label Saving Schemes. Show all posts
Showing posts with label Saving Schemes. Show all posts
Saving Schemes: Kisan Vikas Patra
Kisan Vikas Patra
Want to double your investments in less than nine years? KVP is for you then. But there's a catch. The scheme, which offers to double your money in eight years and seven months, offers no benefits under the Income Tax Act. In terms of liquidity the scheme is better than PPF and NSC.
One can exit the scheme any time after 2.5 years from the investment date, though investors will have to bear the loss of interest for the invested time period. Though KVP is not meant for regular income, it is a safe avenue of investment for those without pressing tax concerns. Liquidity is also reasonably higher here.
Want to double your investments in less than nine years? KVP is for you then. But there's a catch. The scheme, which offers to double your money in eight years and seven months, offers no benefits under the Income Tax Act. In terms of liquidity the scheme is better than PPF and NSC.
One can exit the scheme any time after 2.5 years from the investment date, though investors will have to bear the loss of interest for the invested time period. Though KVP is not meant for regular income, it is a safe avenue of investment for those without pressing tax concerns. Liquidity is also reasonably higher here.
Saving Schemes: RBI Relief Bonds
RBI Relief Bonds
Some bonds have a special provision that allows the investor to save on tax. These are termed as Tax-Saving Bonds, and are widely used by individual investors as a tax-saving tool.
Examples of such bonds are:
- Infrastructure Bonds under Section 88 of the Income Tax Act, 1961
- Capital Gains Bonds under Section 54EC of the Income Tax Act, 1961
- RBI Tax Relief Bonds
For more information visit This Site
Some bonds have a special provision that allows the investor to save on tax. These are termed as Tax-Saving Bonds, and are widely used by individual investors as a tax-saving tool.
Examples of such bonds are:
- Infrastructure Bonds under Section 88 of the Income Tax Act, 1961
- Capital Gains Bonds under Section 54EC of the Income Tax Act, 1961
- RBI Tax Relief Bonds
For more information visit This Site
Saving Schemes: tax-saving deposite schemes
Tax-saving deposit schemes
Yes, this is great step by government for people who want to invest in fixed deposit and looking for tax-saving too on it. Govt of India has understood that education is key to India's future growth. So they want to promote students and parents to aspire for higher educations and to help them Govt will provide low interest rate loans to them. Over all Govt is doing lot of reforms in education sector and for this reforms they need funding, for this funding they have designed special purpose tax-saving deposit schemes. This is good option for people who want to stick to fixed deposits and also want to save tax on it.
For more information read http://economictimes.indiatimes.com/news/economy/finance/Tax-saving-deposit-scheme-to-fund-loans-to-students-educational-institutions/articleshow/5924147.cms
Yes, this is great step by government for people who want to invest in fixed deposit and looking for tax-saving too on it. Govt of India has understood that education is key to India's future growth. So they want to promote students and parents to aspire for higher educations and to help them Govt will provide low interest rate loans to them. Over all Govt is doing lot of reforms in education sector and for this reforms they need funding, for this funding they have designed special purpose tax-saving deposit schemes. This is good option for people who want to stick to fixed deposits and also want to save tax on it.
For more information read http://economictimes.indiatimes.com/news/economy/finance/Tax-saving-deposit-scheme-to-fund-loans-to-students-educational-institutions/articleshow/5924147.cms
Saving Schemes: Post Office Monthly Income Scheme
Post Office Monthly Income Scheme
For the retired people, the Post Office Monthly Income Scheme is a good savings instrument. The interest is 8% divided on a monthly payout basis. The payout if not required can be channeled to a recurring deposit. The effective returns increases by almost 10% by doing this.
On completion of six years, a 10 per cent bonus on the principal sum is provided. The scheme offers better liquidity, with investors having an exit option after one year from the investment date.
The interest can be credited to a savings account of any bank too. The account can be closed after 1 year with a 5% penalty and after 3 years without any penalty. The limitation however is that the maximum investment for any individual is only Rs.6 L.
The interest on investments as well as bonus received on maturity is eligible for tax benefits under Section 80L.
For the retired people, the Post Office Monthly Income Scheme is a good savings instrument. The interest is 8% divided on a monthly payout basis. The payout if not required can be channeled to a recurring deposit. The effective returns increases by almost 10% by doing this.
On completion of six years, a 10 per cent bonus on the principal sum is provided. The scheme offers better liquidity, with investors having an exit option after one year from the investment date.
The interest can be credited to a savings account of any bank too. The account can be closed after 1 year with a 5% penalty and after 3 years without any penalty. The limitation however is that the maximum investment for any individual is only Rs.6 L.
The interest on investments as well as bonus received on maturity is eligible for tax benefits under Section 80L.
Saving Schemes: Mutual Fund Monthly Income Plan – Growth Option
Mutual Fund Monthly Income Plan – Growth Option
For people who have a higher risk quotient during the short term, monthly income plan (MIP) of mutual funds is good. Here a small portion (generally not more than 20%) of the funds is invested in equity. So the returns can be better than the normal debt mutual fund when the market is rising. The typical returns in the last 3 years are 12% to 14% for the top 5 funds.
However caution needs to be taken when choosing the growth option. This is due to the fact that if we start to receive the monthly payouts there may be months when the principal is used for the payout. This will drain the fund particularly when the market goes down.
Being largely a debt oriented mutual fund, the tax treatment is the same as the debt mutual fund.
For people who have a higher risk quotient during the short term, monthly income plan (MIP) of mutual funds is good. Here a small portion (generally not more than 20%) of the funds is invested in equity. So the returns can be better than the normal debt mutual fund when the market is rising. The typical returns in the last 3 years are 12% to 14% for the top 5 funds.
However caution needs to be taken when choosing the growth option. This is due to the fact that if we start to receive the monthly payouts there may be months when the principal is used for the payout. This will drain the fund particularly when the market goes down.
Being largely a debt oriented mutual fund, the tax treatment is the same as the debt mutual fund.
Saving Schemes: Company deposites
Company Deposits
Companies that offer deposit schemes to consumers tend to offer rates that are in-between bank deposit rates and bank lending rates. This is a win-win situation for the company and the person saving.
The bank has to make a profit when borrowing from the public and lending to companies. So they have an interest rate difference (spread) of about 4.5%. In effect, the deposit holders are paid less and the borrowers are charged more. When a company has direct access to the depositor, both benefit. The depositor gets a better rate than what the bank can offer and the company is able to borrow at a lesser rate when compared to a bank interest rate.
However, it is in the best interest of the borrower to do his reasearch thoroughly and double check how good the credit rating of the company is before investing. On an average estimates show that one can easily get 11% - 12% on reputed companies’ deposits for a 3 year term.
The returns will be taxed as interest and will have TDS.
Companies that offer deposit schemes to consumers tend to offer rates that are in-between bank deposit rates and bank lending rates. This is a win-win situation for the company and the person saving.
The bank has to make a profit when borrowing from the public and lending to companies. So they have an interest rate difference (spread) of about 4.5%. In effect, the deposit holders are paid less and the borrowers are charged more. When a company has direct access to the depositor, both benefit. The depositor gets a better rate than what the bank can offer and the company is able to borrow at a lesser rate when compared to a bank interest rate.
However, it is in the best interest of the borrower to do his reasearch thoroughly and double check how good the credit rating of the company is before investing. On an average estimates show that one can easily get 11% - 12% on reputed companies’ deposits for a 3 year term.
The returns will be taxed as interest and will have TDS.
Saving Schemes: Debt Mutual Funds
Debt Mutual Funds
These are managed funds that invest in debt and debt oriented schemes.
There are a number of advantages that these mutual funds give compared to a direct deposit. The most apparent is the fact that this is a managed fund and the returns can be better as the manager has access to more information and will leverage that compared to individual investors. There is no TDS or tax on the interest. The returns will be processed as capital gains.
Returns from this fund are expected to be good. The top five debt mutual funds have given compounded returns in the range of 10.50-14.50% in the last 3 years. This is much better than the normal bank deposit or company deposit. The advantage is that debt mutual funds can create capital gains when the interest rates go down.
Saving Schemes: Top 5 saving options
Are you saving for the rainy day? Here are 5 top saving options
In India and everywhere in world, interest rates are rising. well this is good news for some (those who look at making deposits) and bad news for some (those who are looking at taking loans). Now if you fall into first group and are planning to save money, the first thing come to mind is bank FDs. But savings however have to be channeled carefully so that the maximum can be gained from the deposits. Here are the top 5 savings instruments in a rising interest rate regime and better than bank FDs from return perspetive. the top 5 savings instruments are:
well so you want to save some money then above are good options to channelise your money properly. You should re-adjsut your saving according to current interest rate environmnet.
In India and everywhere in world, interest rates are rising. well this is good news for some (those who look at making deposits) and bad news for some (those who are looking at taking loans). Now if you fall into first group and are planning to save money, the first thing come to mind is bank FDs. But savings however have to be channeled carefully so that the maximum can be gained from the deposits. Here are the top 5 savings instruments in a rising interest rate regime and better than bank FDs from return perspetive. the top 5 savings instruments are:
1) Debt Mutual Funds
2) Mutual Fund Monthly Income Plan – Growth Option
3) Company Deposits
4) Post Office Recurring Deposit
5) Post Office Monthly Income Scheme
well so you want to save some money then above are good options to channelise your money properly. You should re-adjsut your saving according to current interest rate environmnet.
"when interest rate are rising you should save more in top 3 and when interest rate are going down you should save in bottom 2."
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