Monday, August 4, 2008

Tax & Money Saving Tips, Investment Resources for Indian investers

you can find various tips and resources that will help you saving your hard earned money. There are lots of financial schemes available in India. Many of them provides you guaranteed returns, high interest rates, tax savings under various sections of Indian Income Tax Act and much more benefits.
These financial plans not only provide you money growth but also provide you with financial security at various steps in your life.It depends on your needs which product suits you best.What are your requirements? i.e. short term or long term planningHow much risk you can take? i.e. you need assured returns or not. [less risk less returns]How would you like to invest? [one time or regular savings]How much do you know about the product? i.e. are you aware of ifs and buts of your instements?
Just for an example if you are looking for short term savings then you can invest your money in post offices , government bonds, mutual funds, and if you are concentrated to long term savings then public provident funds (PPF ), life insurance, long term bank deposits (FDs, RDs) can help you.
Bank Savings
1. Bank Fixed Deposits, [Term Deposit]
In a Fixed Deposit Saving Scheme a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest.
When you want to invest your hard earned money for a longer period of time and get a regular income, Fixed Deposit Scheme is ideal. It is SAFE, LIQUID and FETCHES HIGH RETURNS.
Loan / Overdraft facility is available against bank fixed deposits. Now many banks don’t charges for premature withdrawal.
2. Recurring Deposits
Under a Recurring Bank Deposit Saving Scheme, investor invests a specific amount in a bank on a monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which you get your principal sum as well as the interest earned during that period.
Recurring Deposit provides you the element of compulsion to save at high rates of interest applicable to Term Deposits alongwith liquidity to access that savings any time.
Government Tax Savings
RBI Bonds, or RBI Relief Bonds
RBI Bonds are tax saving bonds that have a special provision that allows the investor to save on tax. These Bonds are instruments that are issued by the RBI.
The interest is compounded half-yearly. Maturity period of RBI Bonds is five years, and interest received is tax-free in the hands of the investor.
Post Office Savings
Post Office Time Deposits
Post Office Recurring Deposits
Post Office Monthly Income Scheme [Post office MIS ]
National Savings Certificates [NSC ]
National Savings Scheme [NSS]
Kisan Vikas Patra - [KVP ]
Public Provident Funds [PPF ]
Other Savings
1. Infrastructure Bonds,
Infrastructure bonds are available through issues of ICICI and IDBI, brought out in the name of ICICI Safety Bonds and IDBI Flexibonds. These provide tax-saving benefits under Section 88 of the Income Tax Act, 1961, for the investor. You can reduce your tax liability by upto Rs 16,000 per annum
2. Company Fixed Deposits
Fixed deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits.
3. Life Insurance:
Life insurance saving schemes for government owned Life Insurance Corporation of India and other private life insurance companies like Bajaj Allianz, Birla Sun Life Insurance, HDFC Life Insurance, ICICI Prudential
Tax Rebates under Indian Income Tax Act
Specified Investment Schemes u/s 80C
Life insurance premium payments
Contributions to Employees Provident Fund/GPF
Public Provident Fund (maximum Rs 70,000 in a year)
Nattional Saving Certificates. [NSC]
Unit Linked Insurance Plan (ULIP)
Repayment of Housing Loan (Principal)
Equity Linked Savings Scheme (ELSS)
Tuition Fees including admission fees or college fees paid for Full-time education of any two children of the assessee (Any Development fees or donation or payment of similar nature shall not be eligible for deduction).
Infrastructure Bonds issued by Institutions/ Banks such as IDBI, ICICI, REC, PFC etc.
Interest accrued in respect of NSC VIII issue.
Deduction under section 80 CCC(1)
This section allows a deduction of up to Rs. 10,000 to an individual in respect of contribution to ‘Pension’ scheme of LIC of India or any other Insurance Co.
Tax saving Pension plans available in market are LIC’s Jeevan Suraksha, ICICI Pru Life Time Pension, Aviva Life Pension Plus, Max Easy Life policy, Tata AIG’s Nirvana Plus etc.
Section 80 CCE
Aggregate deduction u/s 80 C, u/s 80 CCC and 80 CCD can not exceed Rs. 1,00,000. ( One Lac)
Deduction under section 80D.
Under This section, a deduction up to Rs 10,000 (Rs 15,000 in case of senior citizens) is allowed in respect of premium paid by cheque towards health insurance policy, like "Mediclaim". Such premium can be paid towards health insurance of spouse, dependent parents as well as dependent children.
Deduction under section 24(b)
Under this section, Interest on borrowed capital for the purpose of house purchase or construction is deductible from taxable income up to Rs. 1,50,000 with some conditions to be fulfilled.

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