• Individual above 60 years (VRS persons 55 and above) can invest.
• Duration 5 years. Can be extended for further 3 years.
• Multiple/Joint accounts are allowed.
• Maximum Limit 15 Lakhs.
• Lock-in period 1 year. Premature closure allowed with penal interest.
• Interest @ 9% p.a. payable Qly.
• Effective post-tax return about 6% for highest tax bracket.
• 1 lakh invested earns Rs. 2250 per Qtr.
• Interest earned is taxable. • Tax Exemption:
Eligible for exemption u/s 80C for overall Investment upto Rs. 1 Iakh. Interest earned is taxable.
POST OFFICE TIME DEPOSIT ACCOUNT
• Any individual can open an account singly or jointly.
• More than one account can be opened without any limit.
• Account can be opened for 1,2,3, & 5 yrs.
• Interest for 5 years deposit is 7.5%
• Premature withdrawal after 1 year attracts 2% penalty on interest applicable.
• Amount withdrawn before 5 years period, tax will have to be paid on the withdrawn amount treating it as the income of that year. • Tax Exemption: Only 5 years term deposit witha Max. Investment of Rs. 1 lakh eligible u/s 80C.
PUBLIC PROVIDENT FUND (PPF)
• An individual can open only one account besides his GPF account.
• Option to pay each contribution in one lump sum p.a or in 12 installments.
• Period:15 yrs (Min.16 annual contributions). Can be contd. further every 5 yrs.
• Option to continue aftermaturityforevery 5 years.
• Investment: Mm. 500; Max: 70000 p.a.
• Interest @ 8% compounded annually. • Can withdraw 50% of the balance from 7th year onwards. • An amount equal to withdrawal can be invested from current year’s income to make the account a self sustaining one.
• Loan upto 25% of balance available (2 years ago) is allowed upto the end of 5th year.
• Second loan is given after clearing the first loan.
• No loan is given after 6 years from the date of first subscription.
• After 15 years entire balance can be withdrawn. • Interest earned is totally exempt u/s10(11).
• Tax Exemption:Investment upto Rs. 70,000 qualifies for deduction u/s 80C.
• A term Deposit to be opened with a scheduled Bank in the prescribed form.
• Mi Investment Rs. 100/- Max. 1 Lakb.
• The Term will be 5 Years.
• Premature encashment not permited.
• Income-tax benefit amount of term deposit invested along with PPF/LIC/ NSC/ULIP, etc upto a max. of Rs. 1 Lakh is eligible for deduction u/s 80C.
• Interest earned on the deposit is taxable.
UNIT LINKED INSURANCE PLAN (ULIP)
• Can be invested Singly/Jointly.
• Duration: 10 or 15 years.
• ULlP can betakeninthenameof spouse & children – major/minor. • Provides Life Insurance, Accident Insurance coverage and also reinvestment of dividend in units.
• Target amount: Minimum-Rs. 15,000. Maximum – As. 5 lakhs.
• Personal Accident cover upto Rs. 50,000. • On maturity, NAV+Bonus @ 5% for 10 yrs & 7.5% for 15 yrs term (cash equivalent of units will be paid). • Can remain in the plan to participate in further growth (0.5% additional maturity bonus). • Tax exemption: Investment upto Rs. 1 lakh is eligible for tax exemption ufs8OC. Dividend declared is fullyexemptu/s 10(35). Maturitybonus is taxable in the year of maturity.
LIFE INSURANCEPOLICIES (LIC)
• Variety of Plans available.
• Major Benefit: Life Risk Cover.
• Encourages to save compulsorily.
• Besides covering life risk, gets tax benefit both at entry (premiums paid) & exit point (Maturity + Bonus).
• Asset is created without having one. • Tax Exemption: Eligible u/s 80C for overall Investment upto As. 1 lakh & maturity amount (lnvestment+Bonus) is totally exempt u/s 10(1OD).
From the F/Y 2003-04, premiums exceeding 20% of the S.A., in any year, will not enjoy tax free returns u/s 10(10 D) or benefit u/s 80C.
LIC’S JEEVAN AKSHAY VI
• Immediate Pension Plan for individual between 40 & 79 years. • Mm. Investment: Rs. 50,000. • e.g. Investment of As. 10 lakhs for age at entry 40 will give monthly pension of Rs. 5858. • Tax Exemption:
Eligible for exemption u/s 80C for overall Investment upto Rs. 1 Iakh.
• Any individual between 18 & 70 years can take a policy.
• Investment: Mm. Premium – As. 2,500 pa.; Rs.10,000 for Single Premium; Max. – No Limit.
• Minimum pension starting age is 50 years & maximum is 79 years.
• Guaranteed Pension eitherfor 5,10,15, 20 years or for life time.
• Option to commute 25% of Pension. • Tax Exemption: Premium paid upto As. 1 Lakh p.a., either under Single Premium or regular Policy is totally exempt u/s 8OCCC (Under 80C).
EQUITY LINKED SAVINGS SCHEME (ELSS)
• Most favourite investment.
• Open ended. Lock-in 3 period years.
• Manyof the Funds have given excellent returns during recent past. Max. tax benefit plus max. returns • Tax Exemption/Benefit: Eligible for exemption u/s 80C for overall Investment upto As. 1 lakh • Dividend earned is exempt u/s 10(33)
NATIONAL SAVINGS CERTIFICATES
• Can buy Singly/Joinfy.
• Duration 6 years. • Interest rate from 1.3.2003 is 8% p.a.
(compounded half yearly).• Interest accrued between Ist. ’ & 5 th. year is deemed to have been reinvested. • Investment & deemed reinvestment upto Rs. 1,00,000 is eligible U/s 80C
Rs. 1000 NSC accrues interest as shown below:
INT. @8% (on or afterl.3.2003)
NATIONAL SAVINGS SCHEMES ELIGIBLE U/S 80C
Rate of Int. p.a.
( in Yrs.)
Max. Limit (Rs.)
Aggregate Tax Exemption Limit U/s 80C
Bank Depsoit-Tax Saving
8 – 9 %
Employee Provident Fund (EPF)
12% of B.P.
Equity Linked ( ELSS) Fund Scheme
NABARD Rurla Bonds
Nationa Saving Certificate (NSC)
Post Time Depsot Account ( 5 Yrs.)
Public Provedent Fund (PPF)
Unit Linked Insurance Plan ( ULIPs)
Prem. paid on Life Insurance Policies including Pension Plan