It doesn’t matter where you invest your money, the matter is you know the investment rules well and invest like a rational being; otherwise, these lack of information will cost you hazards in each and every step you take to move ahead with your investments. As you can’t play hockey with football rules, you can’t invest in banks with the knowledge of Share market rules. Each investment has different rules and regulations which you need to be aware of. In this article I’ll discuss about investment rules in different areas segment wise-
Segment-1 | Post Office Savings Scheme
– Post Office Savings has the current rate of interest is 3.5%. You can invest a maximum of Rs.1, 00,000 in one account in single name & Rs.2, 00,000 in Joint account. The topmost attraction of this kind of saving is- you will get Rs.3, 500 as interest in one year by investing Rs.1, 00,000 and Rs.7, 000 in one year Joint account, the amount of which is totally TAX FREE.
– The current rate of interest in PPF Account is 8% and it also is totally Tax free. You can extend the tenure of this investment by 5 years after 15 year’s completion.
– There is no Tax deducted at source from Post Office Deposits, but it doesn’t mean it’s totally Tax FREE (with exception to PPF).
Segment-2 | Bank Deposit
– All kind of interests received from Bank Deposit are totally taxable.
– Interests are calculated on a daily balance basis.
– You’ll have to inform your bankers whether you renew your fixed deposit within 15 days after its maturity. Otherwise bank will renew it from the very next day of its maturity after 15 days are over with the same tenure.
– If the interest you receive exceeds Rs.10, 000 annually, TDS of 10% deducted from source. If you don’t inform bank about your PAN, bank will deduct double the amount of TDS from your source.
– You can use your debit card or ATM card to withdraw money from other bank’s ATMs also; you don’t need to pay anything if such numbers of transactions are limited to 5. Also keep it in mind that you can only withdraw Rs.10,000 per day using your debit card in other bank’s ATMs.
– Some banks are providing current interest rate for 10 yearlong fixed deposit schemes.
– You can also open Recurring Deposit Schemes in Commercial Banks as per your choice of amount and tenure.
Segment-3 | Mutual Funds
– Quoting your PAN is necessary for investing in Shares and Mutual Funds.
– You can invest a minimum of Rs.500 in SAP system in any mutual fund schemes.
– Transaction charge of Rs.150 is applicable in any transaction over Rs.10, 000. In old investments the amount of fee is Rs.100.
– There is a high risk of huge loss if you encash your investment before maturity or immediately after lock in period of Unit Linked Insurance. If you intend to encash your investment, it is preferable that you invest in mutual funds instead of ULIP.
– It is preferable to invest in Fixed Maturity Plan (FMP) schemes for high tax payers.
Segment-4 | Share Market
– For share trading, you need to have a DE-MAT account. You also need to have a share trading account in any of the recognized share broker’s hand.
– With DE-MAT Account, you can only buy or sale 1 share of any company.
– If you sell shares and gain profit after holding them for at least 1 year, you don’t need to pay any tax. For not being so patience, you should be ready to pay tax for any gain in the head “Capital Gain”.
– The dividend on shares and mutual funds of any Indian company are totally tax free income.
– Nomination facilities are available for shares and mutual fund investments and it is highly recommended to avail such facilities.
Segment-5 | Other Investments
– Gold is Gold. No one has ever seen the price of gold reduced in long run. Its prices are increased whenever we see uncertain scenario in world share market. You can invest Gold ETF in mutual fund investment scheme thus you’ll be able to avoid the risk of keeping gold in your home.
– The value of silver is also increasing day by day. In one side, the uses of silver are increasing and in the other side, its supply is getting reduced.
– Pension is taxable as salary. Getting retired and being rewarded as senior citizen does not mean that you get rid of all kinds of taxes.
– If you have more than one house property, one will be regarded as your own residence and tax will be imposed on the other(s) assuming that they are being rented, whether they’re rented or not is not a matter at all.
– The higher the interest is, the higher the risk is. If you see somebody is promising to pay you absurd high interest, you need to be more cautious before going to make any investment decision with them.