INVESTMENT PLANNER 

Convert your income tax payment into savings by investing in small savings schemes!

 Tax concession available under Small Savings Schemes!

1. Free from Income Tax for Interest

                   The interest earned on the balances and investments in the following accounts and certificates enjoy complete exemption from Income Tax under sub section 11 and 15 of Section 10 of the Income Tax Act.

a.   Post Office Savings Accounts –
(current interest rate 3 % to 3.5 %)

b.   Public Provident Fund Account
( current interest rate 8 % Compound)

c.   Deposit Scheme for Retiring Government Employees 1989
( current rate of interest 7%)

d.   Deposit Scheme for retiring Employees of Public Sector Companies,1991. 
( current rate of interest 7%) 

2. Interest subject to Income Tax:

       The interest on the following securities is subject to income tax under 80L of Income Tax Act. But such tax will not be deducted at source. Interest on these deposits and certificates will qualify for exemption from income tax up to a maximum of Rs.9000 in a year fixed under section 80L of the Income Tax Act including interest on investments in other specified securities.

a.      5- Year Recurring Deposit accounts.

b.      1/2/3/5 year Time Deposit Accounts

c.       Monthly Income Account Scheme

d.      N.S.C VIII issue.

3.    Since the interest of 6 year NSC VIII issue is deemed to have been reinvested, whether the holder of the NSC VIII issue is entitled to claim benefit of section 88 on this reinvested interest ?

       The interest accruing at the end of each year and deemed to have been reinvested up to 5 the year will enjoy tax rebate under section 88 of Income Tax Act.

4. Whether the benefit of contributions made towards Public Provident Fund maintained in the name of spouse being deductible under section 88 is available to a husband’s contribution to a wife’s account and vice versa ?

      The only condition that should be satisfied is that it should come out of the contributor’s income chargeable to tax.

5. Whether rebate in income tax under section 88 will be available to husband/father where the NSC (VIII issue) are purchased by him out of his income in the name of his wife/minor children.

  No . As clarified by the CBDT in his letter No.DIR(HQ)/CH(DT)1090/22-8-95

 Some Amendments:

 Amendment of section 24:

a)   The modified version provides that where a self-occupied property is acquired or constructed with capital borrowed on or after April, 1999,  the deduction for interest up to Rs.150000 will be allowed if the acquisition or construction is completed within 3 years from the end of the financial year in which capital was borrowed.

b)   No such deduction shall be allowed in respect of such interest,  unless the person extending the loan, certifies that such interest was payable in respect of the amount advanced for acquisition or construction of the house or as refinance of the principle amount outstanding under an earlier loan taken for such acquisition or construction. This is applicable only in the case of self occupied property.

3. Amendment of section 194H: Reduction of TDS rate on commission/brokerage:

The rate tax deduction under section 194H has been reduced from 10 per cent (plus surcharge) to 5 per cent (plus surcharge) with effect from June 1,2002 

1.     National Savings Certificate VIII issue: 

                 National Savings Certificate VIII is one of the high yield certificate now available to the College Professors, School teachers, Bank Officers, Government officials, professionals, proprietors and commercials establishments. Investment in the scrip is  safe, secure and solid . Income Tax rebate and exemption under IT Act make the scrip becomes the best option for high yield and assured return.

Salient Features: A single holder Type Certificate can be purchased by  A) an adult for himself or on behalf of a minor or to a minor. B) a Trust.

Joint ‘‘ A” Type Certificates may be purchased jointly by two adults payable to both the holders jointly or to the survivor. and Joint ‘B’ Type Certificates may be purchased jointly by two adults payable to either of the holders or to the survivor.

The certificate can be transferred from one post office to another post office, wherever in India.

i)          Investment limits: Minimum Rs.100. No maximum limit. Available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5000, and Rs.10000.
  ii)         Legal tender: Payment for the purchase of a certificate may be made to a post office in any one of the following kinds:
a) cash. 
b) a locally executed cheque, ay order or demand draft drawn in favour of the Postmaster.  
c) By presenting withdrawal form duly signed to withdraw from the post office savings bank account. 
iii)         Rate of interest: 8 % half yearly compounded. Rs.100 becomes Rs.169.59 after six years. Can be encashed after six years.  
iv)        Rebate and Exemption: Deposit qualify for tax rebate under section 88 of IT Act. The interest accruing annually but deemed to be reinvested will also qualify for tax rebate under section 88 of IT Act. Such interest will be entitled to exemption under section 80L of the Income Tax Act.

On maturity Rs.100 grows to Rs.169.59. Annual accrual rate of interest on investment of Rs.1000 is as under and is in proportion for other denominations
Interest accruing for	Investment made
	from 1-3-2003	from 1-3-2002	1-3-2001 to 28-2-2002	15-1.2000  to  28-2-2001	1-1.1999  to 14-1-2000	Prior to 1-1-1999
1st Year     Rs.	81.60	92	97.2	113	118.3	124
2nd Year   Rs.	88.30	100.5	106.7	125.8	132.3	139
3rd Year    Rs.	95.50	109.7	117.1	140	148	156
4th Year    Rs.	103.30	119.8	128.5 .	155.8	165.4	175
5th Year    Rs.	111.70	130.9	141	173.5	185.1	197
6th Year    Rs.	120.80	142.9	154.7	193.1	206.9	224

 PUBLIC PROVIDENT FUND

The Public Provident Scheme is the best scheme compared to other similar schemes introduced by the UTI, LIC etc., It has all the benefits of tax concessions. The Public Provident Fund Scheme has been introduced for both Government and non-Government Employees, self-employed persons, professionals, and executives to save and avail tax concessions. A prudent investor will opt for PPF scheme as it gives incomparable high returns and concessions. If we take into account 20% and 15% rebate on deposits in income tax, the actual rate of interest on the deposits works out as:

(i) In 10% income tax slab          ----- 10%

(ii) In 20% income tax slab         ----- 11.25 %

(iii) In 30% income tax slab        ----- 10.59 %  

Salient Features:

1. An individual can open a PPF account in his own name. He can also open an additional account on behalf of each minor of whom he is the guardian.
2. Minimum subscription is Rs.500 and maximum subscription is Rs.70000 in a year.
3. The subscription can be deposited in lump sum or in convenient installment. Not more than 12 installment can be deposited in a year. It is not necessary to deposit subscriptions in every month of the year.
4. The balance deposit in the account after withdrawal if any earns compound interest at the rate of 8% . The interest will be allowed for a calendar month on the  balance at credit of an account between the close of the 5^th day and the end of the month.
5. The account can be transferred at the request of the subscriber from one post office to another. The account standing in the State Bank or nationalized bank can also be transferred to post office and vice versa.
6. A subscriber can take a loan from the fund in case of need. The first loan can be taken in the third year of opening the account. The amount of loan is restricted to 25 % of the balance in deposit including the interest.
7. A subscriber can make one withdrawal during any one year. The first withdrawal can be made any time after the expiry of 5 years from the end of the year in which the initial subscription was made. The amount of withdrawal is limited to 50% of the balance at credit at the end of the 4^th year immediately preceding the year.
8. The interest credited to the fund is totally exempt from income tax.
9. The amount standing to the credit of the subscriber in the fund is totally exempt from wealth tax.
10. The subscriber is not subject to attachment under any order or decree of court in respect of any debt or liability against the credit balance of the PPF account

             Invest today for your children Higher Education / marriage !

              AVAIL TAX REBATE AND TAX-FREE INTEREST EVERY YEAR!

TABLE SHOWING THE MATURITY VALUE AND THE TAX REBATE AND TAX-FREE INTEREST ACCRUAL IF Rs.1000/- is deposited per month from 1^st to 5^th of April  for 15 years in PPF account. 

        Compound Interest Rate 9 %

Public Provident Fund Scheme is a boon to self employed professionals, business people and Executives

         Invest in Public Provident Account and gift it to your Children.  See the investment grows with your Children! 

     Table showing the maturity value of PPF accounts if Rs.10000/- is deposited as birthday gift every year —Rate of compound interest 9% p.a

        At the age of 26 Rs. Ten thousand deposit  every year earns the maturity amount of TEN LAKHS SEVENTEEN THOUSAND! At the end of 25 years.