Application For 3 Year Fixed Term Pension Fund: Fill & Download for Free

Let me kill many birds (questions and comparison requests) with one stone (answer).Under section 80C, a person can invest or buy options for various instruments. The limit for tax free exemption is Rs. 1.5 lakhs. What are these options:Provident Fund contributions deducted from an employee’s salary.Voluntary Provident Fund contributions are tax-deductible under and treated same as PF.Public Provident Fund: One can invest any amount from ₹500 upto ₹1.5 lakhs. It assures returns and accrues interest yearly. It matures in 15 years.Life insurance premium: Life insurance premium for the taxpayer, their spouse and their children is tax-deductible under Section 80C of Income Tax Act.ELSS: Equity Linked Savings Schemes are mutual funds designed specifically for tax saving.NSC: National Savings Certificate matures in 5 or 10 years and accrues interest every 6 months.Sukanya Samriddhi Scheme: Under this scheme, an account can be opened for a girl child at any point until she is 10 years of age. Compound interest is calculated yearly.ULIPs: There’s no need to wonder how to save tax and yet invest, earn, and secure a life cover. Unit Linked Insurance Plans provide all benefits at once. They come under the Exempt-Exempt-Exempt tax regime.Repayment of home loan principal: EMIs towards repayment of home loan principal (not the interest) are tax-deductible under Section 80C of Income Tax Act.NABARD Rural Bonds: NABARD Rural Bonds from National Bank for Agriculture and Rural Development are eligible for Income Tax exemption under Section 80C.SCSC: The Senior Citizens Savings Scheme is for individuals who are than 60 years old. Interest is earned every quarter.Five Year Post Office Time Deposit Scheme: This scheme is like a fixed deposit offered by India Post. The actual duration of this scheme can be between one and five years. Only interest on this scheme is tax-deductible.Section 80CCC: This includes investments in pension funds taken from any insurer by an individual taxpayer.Section 80CCD: Investments made by individuals and their employer towards pension schemes notified by the government are both tax-deductible upto 10% of salarySection 80CCF: This mentions deductions on infrastructure bonds notified by the government. It is applicable to individuals and Hindu Undivided Families, and the maximum limit of deduction is ₹20,000.Section 80CCG: This enlists equity savings investments notified by the government, which are tax-deductible upto 50% of the investment amount. The maximum deduction limit is ₹25,000 in a year.Since there are so many, the most important are PF/VPF, PPF, NPS, NSC, KVP, SSY, ELSS, Life insurance premium, ULIP and Housing Loan. Out of these Housing Loan principal repayment is not something that you control and so discarding for comparison.Now here are the good schemes and one should go with them: PF/VPF, PPF, NPS, SSY (if you have a girl child less than 10 years old).Life insurance premium is by default. You must always have life insurance. (see end note).The bad ones are ELSS, NSC, KVP, and ULIP. ELSS is not bad per se, but they have a lock-in of 3 years from the date of investment and that is what bothers me a lot. What if the ELSS funds stops giving good returns?Now on life insurance. Take out pure term life insurance. This is pure insurance, no return at the end and renewed year to year basis. Do not take out those endowment type policies sold by LIC that promise guaranteed returns such as:LIC New Endowment Plan 914LIC New Jeevan Anand 915LIC New Bima Bachat 916LIC Single Premium Endowment Plan 917LIC Jeevan Lakshya 933LIC Jeevan Labh 936LIC Aadhaar Stambh 943LIC Aadhaar Shila 944LIC Jeevan Umang 945LIC NEW MONEY BACK PLAN - 20 YEARS 920LIC’s NEW MONEY BACK PLAN - 25 YEARS 921LICs Jeevan Umang 945LIC NEW CHILDREN'S MONEY BACK PLAN 932LIC Jeevan Tarun 934LIC Jeevan Shiromani 947LIC Bima Shree 948Just avoid all of the above like a plague. All are bogus policies and they return very poor amount, typical CAGR is around 6%. You can do better. In fact avoid any “guaranteed return policy” from any private insurer also. Check my detailed analytical answer: Prasanna Bhalerao's answer to I have an LIC Jeevan Anand policy 815 for which I have to pay premiums for 30 years. I have paid 4 installments as of now. Should I continue or stop? If I stop, how much will be my loss? Also check Prasanna Bhalerao's answer to How is the LIC Jeevan Umang policy? Is it better compared to PPF? or A deep digging of “Guaranteed or Assured Return” policies.

I would like to provide details about different investment options in India available for retired people to get some income.Investment optionsRetired people get some money from their employer or through the investments they made or the corpus the have accumulated for the goal. Retirees should invest their corpus or money accumulated in a basket of secure investments that will yield attractive and tax free annuities. Apart from putting part of their fund in bank fixed deposits, they can spread their balance retirement corpus in the following investment options.Post Office Monthly Income Scheme (POMIS):In this scheme, you invest a certain amount and earn a fixed interest every month. POMIS is a 5 year investment option with a maximum cap of Rs 9 lakh under joint ownership and Rs 4.5 lakh under single ownership.The interest rate is set each quarter. It is currently at 7.8% per annum payable monthly. However, the interest is taxable. Those retirees whose total income is below the taxable limit can consider this investment option.Tax-free bonds:Tax-free bonds are issued primarily by government-owned institutions like Indian Railway Finance Corporation (IRFC), Power Finance Corporation (PFC), National Highways Authority of India (NHAI), Housing and Urban Development Corporation (HUDCO), Rural Electrification Corporation (REC) and NTPC. Retirees may take note of the following aspects of tax-free bonds before investing.They are long-term investments and mature after 10 to 15 years.One can invest in them if they okay with long lock-in period and do not need money.The interest is tax-free therefore, there is no Tax Deducted at Source (TDS).Pension plans of life insurance companies:There are different pension plans offered by life insurance companies, including pension for lifetime for self, after death pension to spouse and/or return of corpus to heirs.On most of the pension plans, the annuity yield currently is around 6% per annum. Though one should be very careful while choosing the annuity or pension plans.Senior Citizens’ Savings Scheme (SCSS):This is a government guaranteed savings scheme with a tenure of 5 years. It can be further extended for another 3 years on maturity. Senior citizens aged 60 years or early retirees under VRS can invest in this saving scheme.SCSS account can be opened in any of the authorized banks or post office branches. Present interest rate on SCSS is 8.7%. But the interest income is taxable. The upper investment limit is Rs 15 lakh. The interest rates on SCSS are revised each quarter.Pradhan Mantri Vaya Vanadana Yojana (PMVVY)This scheme is a pension scheme for senior citizens (60 & above) and it got introduced by Government of India on 4th May, 2017. The main objective of this scheme is to give senior citizens regular income source i.e. pension. This scheme available for purchase, both online and offline through Life Insurance Corporation of India (LIC), till Mar. 31, 2020.Term of policy is for 10 years and pension mode is monthly, quarterly, semi-annually and annually. PMVVY offers 7%-7.40% returns pa.The investment limit has been recently increased to 15 lakhs which were 7.5 lakh earlier. Also, this limit is applicable for per senior citizen. In other words, if husband and wife, both are senior citizen then they both can invest 15 lakhs each.Mutual Funds:Though equity mutual funds may give higher returns, there may be risks linked to stock market movements. Debt mutual funds have now been exposed to considerable risks due to defaults by corporate bond repayments and liquidity crunch in the NBFC industry.Feel free to connect in case of any further questions.Note: above answer is based on my article on my website.

WANT TO SAVE TAX?WANT TO MAKE MONEY?WANT TO RETIRE LIKE A BOSS AND BE SUPER RICH AT THE AGE OF 60?Remember a penny saved is a penny earned. Also earning is hard. Real hard.This article is for people who love every bit of their hard- earned money but are grappling with the dilemma on whether to deal with this hassle or just not fall into the trap.Well we all are very inquisitive about the whereabouts of our money. So why let it go when we can easily save it by following a simple procedure.Here's something that I've examined & evaluated over a period of time and hope it would help you in saving a huge chunk of your money in future.Just go through the entire article thoroughly and trust me you don't need to worry about saving tax after that.As an example I'm taking:Total base pay as Rs. 5,50,000Basic salary as Rs.2,20,000TAX COMPONENTSA) 80C- Investment under 80CB) 80D- Medical InsuranceC) 80DD- Handicapped DependentD) 80E- Education LoanE) 80U- Self With Physical DisabilityF) RentG) Interest On Housing LoanH) Other IncomeI) Previous EmploymentJ) Loss From Letout PropertyK) 80CCG- Rajiv Gandhi Equity Savings SchemeL) SEC80DDB- Self & DependentM) SEC80CCD- National Pension Scheme (NPS)N) Donation u/s 80GI'm guessing that for most of us only A)B)M)are of importance at this moment.A) 80C- Investment under 80CThis would be our major area of discussion as it lists down the instruments, which we can invest in order to save tax. We can invest a maximum of Rs 1.5 lakh in all these instruments put together and the entire amount of Rs 1.5 lakh will be deducted from our taxable income.1) Provident Fund or Voluntary Provident Fund or Employees Provident Fund2) Public Provident Fund3) National Savings Certificate4) Equity- Linked Savings Scheme5) Life Insurance Premiums6) Home Loan Principal Repayment7) Stamp Duty and Registration charged for home8) Five- year bank Fixed Deposits1) Provident Fund (PF)/ Voluntary Provident Fund (VPF)/ Employees Provident Fund (EPF)PF is a part of our salary, which is deducted every month and deposited on our behalf.It is 12% of our basic salary. I.e Rs.2200 (You can always contribute more than the stipulated amount (VPF); in fact you can contribute the entire salary)Your company now invests this amount in Debt bonds which are managed by Fund Managers and we get a return of 8.75% annually.When we leave our company we can apply and withdraw the amount saved.So we should always put this amount in the 80C tax components.Rs.2200/ month= Rs.26,400/ yearPF WITHDRAWAL:Firstly, we can withdraw this amount ONLY IF there is a gap of at least 2 months between the date we leave our previous organisation and the date we join the new one. If not, as per law, we must transfer our PF. (This is assuming that the new company too is covered under the PF Act).Secondly, as per Income Tax Act, premature withdrawal of PF balance will NOT be taxed only if we have had a continuous service of 5 years or more. [Good news is that this 5-year period will also include periods of our previous employment(s) provided we have transferred the PF balances from our previous employer(s) to the latest account.]Thus, under normal circumstances, we are liable to pay tax on our PF amount if the same is withdrawn before 5 years of continuous service. Therefore, it is advisable that we arrange to transfer our PF balance to our new employer(s) whenever we change our jobs and have not yet completed 5 years.2) Public Provident Fund (PPF)Minimum yearly deposit : Rs. 500 Maximum deposit : Rs.1.5 lakhs.The excess amount above Rs. 1.50 lac will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.The current interest rate of return is 8.70%/ Annually(compounded annually).Note: PPF cannot be attached under any court order with respect to any debt or liabilities of the account holder. In simple words, No government authority can attack your money in the PPF account (Good for Entrepreneurs)In a generalized view, if an individual deposits an amount of 1 lakh every year for 15 years without any exception, then he would receive a total sum of more than 30 lakh. This reflects the huge amount of benefit applicable on PPF account, for a total investment of 15 lakh (1 lakh every year * 15 years) interest received is more than 16 lakh, which is also in fact non-taxable.Note: Though with such high CPI Inflation numbers in India, it's hard to calculate the real value of Rs. 30 Lakh, fifteen years down the line.PPF LOANS:Loan facility available from 3rd financial year up to 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account shall be 2%. (Yes, we need to pay interest on our own money :-P)Up to a maximum of 25 per cent of the balance at the end of the 2nd immediately preceding year would be allowed as loan. Such withdrawals are to be repaid within 36 months.A second loan could be availed as long as we are within the 3rd and before the 6th year, and only if the first one is fully repaid. Also note that once we become eligible for withdrawals, no loans would be permitted. Inactive accounts or discontinued accounts are not eligible for loan.PPF WITHDRAWAL:There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period.After 15 years of maturity, full PPF amount can be withdrawn and all is tax free, including the interest amount as well.There's also an option to extend the term for 5 more years after maturity.(Max 20 Years)Note: We'll discuss the amount to be invested in PPF later.3) National Savings CertificateNSC VIII Issue:Minimum investment: Rs100Maximum limit: NORate of interest: 8.50% (Compounded half- yearly; twice a year)Tax benefit: Investment up to INR 1,50,000/- per annum qualifies for IT Rebate.The instrument is available for investment in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.INR.100/- purchased shall be INR. 151.62 after 5 years.Note: However, Interest earned on NSC is taxable.NSC IX issue:Minimum investment: Rs 100Maximum limit: NORate of interest: 8.80% (compounded half- yearly; twice a year)Tax benefit : Investment up to INR 1,50,000/- per annum qualifies for IT RebateINR. 100/- grows to INR 234.35 after 10 years.The instrument is available for investment in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.Note :However, Interest earned on NSC is taxableSummary:• Generally, it is advisable to declare accrued interest on NSC on a yearly basis. So, over the period of six years, you could declare the interest income for each year. In such a case, it does not amount to a huge sum.If you do not declare the interest on accrual basis, then the entire interest earned (difference between the amount deposited and the maturity value) would accumulate in the year of maturity. You could then claim it under Section 80C but it would be a huge amount and would be taxable at the current applicable tax rate.• Once you open an NSC, you can't keep adding to it. You will have to buy another. Let's say you buy a NSC of Rs 30,000. In a year's time, you want to add another Rs 30,000. You cannot add it to this amount. You will have to buy another NSC.This picture would clear up a lot of things:My suggestion Is to buy ten NSC IX certificate of value : Rs.1,000/yearSo your investment would be:March, 2016: 1000April, 2016: 1000...December, 2016: Rs.1000That is Rs. 10,000And subsequently for 2017.....2025And your return would be:March, 2026: Rs.2,343April, 2026: Rs. 2343..December, 2026: Rs. 2,343That is Rs. 23,435And subsequently for 2027...2035NOTE: Post offices in Delhi usually do not keep certificates below Rs. 5000. So we can go for two Rs.5000 certificates in a yearTotal amount invested in 10 years= 10,000 X 10 = Rs. 1,00,000Total amount earned in next 10 years=23,435 X 10= Rs. 2,34,3504) Equity- Linked Savings Scheme (ELSS)Mutual Funds:An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.3 Types of Mutual Funds:• Equity funds ( High risk, high return)• Balanced funds (Medium risk, medium return) (65%- 80% in equity securities and remaining in debt securities)•Debt funds (Low risk, low return)• Traditional InvestmentThe traditional investment method is buying mutual funds where you invest large amounts at one go in either of the three mutual funds (or multiple)The lock-in period is only three years, the shortest among all tax-saving options under Section 80C. You cannot redeem or switch to another option during this period.• Non- Traditional investment OR Systematic Investment plan (SIP)A Systematic Investment Plan or SIP is a smart and hassle free mode for investing money in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.In the case of SIPs, each instalment is treated as a separate investment and will have a three-year lock-in period.Summary:Min investment : Rs 500Max investment: NATax Benefit: Upto Rs. 1.50 lakh (all equity funds fall under tax benefit but not all balanced and debt funds).All the returns are Tax freeSince its your money and you are the sole owner of it, there would be no penalties even if you miss an SIPSince ELSS are essentially diversified mutual funds, there is no guarantee on returns and the return on your investments totally depends on the capability of the Fund Managers. Therefore a Mutual fund should be carefully studied before investing (Financial Advisors are the best people to guide you; ask for financial advisors in your area on JustDial)RDA V/S SIP:What is RDA?Recurring Deposit is a special kind of Term Deposit offered by banks in India which help people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn interest at the rate applicable to Fixed Deposits. It is similar to making FDs of a certain amount in monthly installments, for example Rs 1000 every month. This deposit matures on a specific date in the future along with all the deposits made every month. Thus, Recurring Deposit schemes allow customers with an opportunity to build up their savings through regular monthly deposits of fixed sum over a fixed period of time.Minimum Period of RD is 6 months and maximum is 10 years.What is variable RDA ?Similar to RDA. Here we can vary the amount invested every month according to our budget and needs."Indian bank" offers variable RDARDA (Recurring Deposit Account)Return in banks: 8.25- 8.50%/ yearReturn in post offices: 8.40%/ yearTax benefit: NoSIPAverage Return for debt funds for 3 years: 10.3%Average Return for balanced funds for 3 years: 13.6%Average Return for equity funds for 3 years : 14.10%Tax benefit: All equity funds fall under tax benefit provision but not all balanced and debt funds do. (Check with financial advisor)My suggestion would be to go with SIPs, which are the best source of investment today, giving us a handsome return after 3-5 years and are capable of dealing with the inflation.Plus we are young, some risk on a tiny part of our income is totally justifiable.I would say Rs.5000/ month In mutual funds will suffice.That is Rs.60,000/ annum5) Life Insurance PremiumsMost of us already have a life insurance. For those who don't have one and want to look at the good available options, here's something on life insurances:• ULIP (Unit Linked Insurance Plans)• Term InsuranceThis is a vast topic and an important one too. But to cut it short, Term insurances are the traditional insurances which give us a death cover but no amount on maturity.On the other hand ULIPS are an amalgamation of term insurances and investment, where a part of our premium is invested in the mutual funds and we get this amount on maturity of the insurance.ULIPS have higher premiums (Rs.40,000-Rs.50,000) compared to term insurances(Rs.5000-Rs.20,000) for our age group.There's no point in mixing life insurances with investments(that's what I feel) as we already have a lot of other options to invest our money in.The only setback with a term insurance is that we don't get any amount on its maturity but again the premium is worth it (death cover).Good Term plans:• Max (conversion rate = 96%)Premium: Rs. 9,918/ yearCover: 1 croreTerm: 35 yearsAdditional cover: Rs.40,000/ month for the next 10 years (after death) with a 10% increment every year.1st year: 40,000/ month2nd year: 44,000/ month..10th year: 94,317/ monthPlus 1 crore straight away.And a 10 day guarantee claim from MAX• HDFC (Conversion Rate= 91%)Premium: Rs.12,035/ yearCover: 1 croreTerm: 35 yearsAdditional cover: Rs.50,000/ month for the next 10 years (after death) with a 10% increment every year.1st year: 50,000/ month2nd year: 55,000/ month..10th year: Rs.1,17,897/ monthPlus 1 crore straight away.6) Home Loan Principal Repayment7) Stamp Duty and Registration charged for homeI'm ignoring these two options as they don't apply to most of us at this moment.8) Five- year bank Fixed DepositsReturn: ~8%Lock- in period: 5 years (no Loans or withdrawal before that)You can consider this option just for the purpose of saving tax and not as a money earning tool. (Low returns and long lock- in period)B) 80D- Medical InsuranceJust enter the whole amount of the medical insurance you have taken for yourself and your family.Exempt from tax: YesM) SEC80CCD- National Pension Scheme (NPS)Our government is reforming its policies and the PF account (with our companies) would convert totally into an NPS account as soon as the bill gets passed. The government is initiating this option to promote compulsive savings for our future.Minimum amount/ contribution: Rs.500Minimum annual contribution: Rs.6,000Maximum annual contribution: NANPS CALCULATOR:Current age: 22Retirement age: 60Monthly contribution: Rs.2,000Expected Rate of Return: 8%(Again our money is invested in mutual funds and we are given an option to select the type of mutual fund)I have taken an average of 8% return. Could be higher as well.Amount invested: Rs9,12,000Interest earned: Rs. 49,51,365Total tax saving: Rs. 2,73,600But return is not tax freeWe can withdraw 40% of the amount at the age of 60 and the rest 60% is again invested by the government and can be withdrawn by us on a monthly basis as pension.CONCLUSIONA) 80C- Investment under 80C (Limit: Rs.1,50,000/ annum)•Provident Fund or Voluntary Provident Fund or Employees Provident Fund : Rs.26,400/ annum•Equity- Linked Savings Scheme: Rs.60,000/ annum•Life Insurance Premiums : Rs.10,000/ annum•Public Provident Fund•National Savings CertificateNow we are left with Rs.53,600 of investment/ annum under 80C, which can be put into either PPF or NSC or both (your decision).B) 80D- Medical Insurance: Just enter the whole amount of the medical insurance you have taken for yourself and your family (approx Rs.4,000-5,000/ annum)M) SEC80CCD- National Pension Scheme (NPS): Rs.24,000/ annumYou may not want to invest your money under any of these schemes. That is totally fine and you'll get this money on a monthly basis as a part of your salary. But this part of your income would be taxable and tax would be deducted according to the tax slab you fall in.Good luck :-)