PPF- Public Provident Fund.- Explained - Rate & Limit Hiked Wef. 1st Dec,2011

PPF

• Eligibility- Individuals, individuals on behalf of minor
•  Min- Rs 500 per annum in multiples of 5
• Rs 1,00,000/- per annum (wef from : 1^st Dec,2011)
• Duration- 15 years, can be extended for one or more blocks of 5 years.
• Account can be discontinued but the repayment of subscription and interest will happen only after 15 years.
• Rate of Interest – 8.6% pa, credited in the account on the 31st of march and calculated on the minimum balance between 5th Day and the end of the month.
• Loans – During the third to sixth year the account holder can avail the facility of loan of an amount not exceeding 25% of the balance standing to his credit at the end of the second financial year immediately preceding the year of loan application. The principal amount of loan under the PPF scheme is required to be paid either in lump sum or in monthly installments within a period of 36 months. After the principal amount is repaid the interest is to be paid in not more than 2 monthly installments at the rate of 1% per annum calculated for the loan period. If the loan is not paid in 36 months then it would attract an interest rate of 6% pa. Withdrawals – is possible from the PPF account, one withdrawal is permitted per year of an amount not exceeding 50% of the balance standing to his credit at the end of the fourth financial year.
•  Clause of – “out of Tax payers income” done away with.
• Renewal of the PPF account- As per rule 9 (3) of the PPF scheme, a PPF account can be closed by the subscriber at the expiry of 15 years. Rule 9 (3A) provides that on the expiry of 15 year period the subscriber can extend the PPF account for a further block of 5 years

•  Rule 9 (3B) states that the subscriber shall be eligible to make one withdrawal every year subject to the condition that total withdrawals during the 5 year block shall not exceed 60% of the balance at the commencement of the block period.
•  NRI’s , HUF’s cannot invest in PPF A/c’s. However if a resident subsequently becomes an NRI, he can continue to do the investments until the maturity period on a Non- repatriable basis.
• Investments on behalf of minor- Can also be done (with a limit of 1,00,000). Since there’s no gift tax, it can be used for their education and this income will not be clubbed with the income of the subscriber.
• Its free from any attachment by a court but is subject to attach under the order of IT authorities
• PPF account can be opened only in an individual name and not in joint name.
• One Person cannot open more than ONE PPF Account. - If, at any point, it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest.

L&T Infrastructure Bonds - Tax Benefit U/s 80CCF

HAPPY DIWALI TO ALL THE READERS

Financial Planning Awareness: Rising Interest Rate…How It Impact on your budget

Financial Planning Awareness: Rising Interest Rate…How It Impact on your budget: RBI is constantly raising interest rate since a year. Inflation has become so scary for middle class people, and if one is paying a housi...

Rising Interest Rate…How It Impact on your budget

RBI is constantly raising interest rate since a year.

Inflation has become so scary for middle class people, and if one is paying a housing loan EMI under a floating rate, the EMI’s are going up too creating a picture scarier.

Some suggestions to cope up with this issue are:-

• As Festival seasons are around like Diwali & Christmas thereafter, look at your family budgets and actual expenses occurred or going to occur, cut down on unnecessary expenses, this is the right time to write your expenses and record it on daily basis.

• There are so many offers and discounts offered by Consumer good companies and electronic companies this festive season. (If not necessary) Try to get out of this mouth watering offers on LED’s & changing your old car to the newer one as it will increase the burden on your Monthly Budget by paying an EMI towards it.

• Pay by Cash / Cheque or by Debit Cards Instead of Credit Cards, this will automatically limit your expenses

• Don’t think of investing extra money to make quick returns….instead Prepay your Housing / Car loan as soon as possible.

• We as an Indian Middle Class always feels rising interest rate gives them more returns on FD’s, but the fact is inflation is rising with the same pace (example- FD Rate is 10% and inflation remains in the range of 9%-11%) ultimately one is not making money in FD’s + taxes to be paid on FD’s If any) (invest in asset class, which can have power to beat inflation in long run)

 

Manan Mankad

m2(money.manage)

Spending Money ? Stop Spending too much

Spending Money (Everyone’s Favorite Activity) 

STOP SPENDING MONEY – 

We will here talk about spending money….Spending that too when we don’t have to….we are talking about the psychology of managing money/cash, and the amount of cash spending started by India’s youth now a days.

We actually don’t realize that spending cash i.e. purchasing products or services are purchased under different reasons, most of the time whatever things/products or services we buy….its just because of our feeling (a feel good factor within us). This type of feeling & satisfaction on spending, leads to short fall of CASH. Sometime spending too much on unnecessary products & services don’t allow us to pay off our debt…or in other words “we don’t get debt free”.

We all have rainy days; a lot of people among us feel so empty and feels low self-esteem because sometime we spend a lot on unnecessary things.

Once we truly follow this and understand the emotions & feel good factor of spending money, this money crunch can be prevented so easily, and one will be able to save and manage cash quiet easily and when practiced this….for saving cash --- “sky becomes the limit”.

Now days, Credit cards are a form of money, available to all of us very easily. Many of us still understand that they are not using cash if they purchase products and services by swiping Credit Card. Its damn sure that we can tell ourselves that I bought a Laptop or a LCD Tv by our credit card and I will pay off to the company when we will get salary next month….isn’t it ? but this does not happen every month ?

The best ways to buy a product or services is cash….this helps you in managing your cash flows and prevent unnecessary expenses which incurred without knowing....some expenses are called lifestyle expenses.

Happy Spending!!!

-Manan Mankad

Check your Employees Provident Fund (EPF) Balance Online

Check your Employees Provident Fund (EPF) Balance Online 

http://epfoservices.in/epfo/member_balance/member_balance_office_select.php

For transferring the Provident Fund account of a member from one establishment to another establishment covered under the act / scheme

http://www.epfindia.com/downloads_forms.htm

m2(money.manage)

manan mankad

How it affects, if your housing loan interest is increased by 1% ?

Effect of 1% hike in your Housing Loan Interest:-

Calculation of Loan Amount Rs. 35,00,000 @ 9% Interest Rate

 

Loan Tenure	EMI	Total Interest		Total Principal	Total Paid
10 Years	44,337		18,20,382	35,00,000	53.20 Lacs
15 Years	35,499		28,89,879	35,00,000	63.89 Lacs
20 Years	31,490		40,57,698	35,00,000	75.57 lacs
25 Years	29,372		53,08,314	35,00,000	88.11 Lacs

Calculation of Loan Amount Rs. 35,00,000 @ 10 % Interest Rate

Loan Tenure	EMI	Total Interest	Total Principal	Total Paid
10 Years	46,253	20,50,330	35,00,000	55.50 Lacs
15 Years	37,611	32,70,012	35,00,000	67.70 Lacs
20 Years	33,776	46,06,181	35,00,000	81.06 Lacs
25 Years	31,805	60,41,357	35,00,000	95.41 Lacs

DIFFERENCE OF 1 % INCREMENT IN HOUSING LOAN

Loan Tenure	EMI  @ 9%	EMI  @ 10%	Total Paid @ 9%	Total Paid @ 10 %	EXCESS PAYMENT
10 Years	44,337	46,253	53.20 Lacs	55.50 Lacs	2.30 Lacs
15 Years	35,499	37,611	63.89 Lacs	67.70 Lacs	3.81 Lacs
20 Years	31,490	33,776	75.57 lacs	81.06 Lacs	5.49 Lacs
25 Years	29,372	31,805	88.11 Lacs	95.41 Lacs	7.30 Lacs

So, some questions arise if interest on your housing loan is increased by 1% :

1.    Advisable to close the housing loan on earliest basis?

2.    Is it worth buying a second house for Tax Rebate Purpose?

3.    Is your house going to appreciate more than the amount paid on interest?

Answers of this question depends upon the need of an individual person.

-Manan Mankad

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Unclaimed Mutual Fund Dividends ?

What happens to unclaimed MF dividends?

There are times when mutual fund (MF) investors fail to claim their dividend or even redemption proceeds. For instance, if the address of the investor changes, the cheque is not delivered. Typically, these cheques come back to the fund house. Sometimes investors collect the cheques but forget to encash them. Fund houses estimate that unclaimed redemption is one-tenth of the total pie; the significant chunk is dividend that is not claimed or encashed on time.

The six-month waiting game

Since a cheque is valid for six months, the investor can claim the amount during this time. Many investors choose to receive their dividends and redemption proceeds by electronic clearing system (ECS). But if they, too, change their bank account without informing the fund house, the amount goes back to the fund house. Therefore, the fund house sits quiet for a period of six months.

Investing unclaimed funds

Once the six-month period expires, the cheque sent to the investor becomes invalid. As per the Securities and Exchange Board of India’s (Sebi) rules, the fund house is supposed to invest this money in money-market instruments and manage and monitor it. For this, Sebi has allowed fund houses to charge up to 50 basis points of the unclaimed amount. If an investor comes forth to claim his share of dividends or redemption proceeds, the fund house has to return him the amount as well as the appreciation earned during this tenor.

Investor education fund

After three years, the amount continues to be managed in a similar way, except that Sebi has allowed fund houses to utilize the gains (earned after the initial six-month plus the three-year period gets over) for investor education; a separate fund in which such gains can be transferred. Investors who wish to claim their dividends any time after the completion of this three-year period will get their principal (original unclaimed amount) plus gains earned in three years.

What should you do?

Though MFs send you reminders of unclaimed amounts through your email or through physical letters at least once a year, it’s always a good practice to claim your dividends on time. Earlier, when the ECS facility was not in existence, unclaimed dividends and redemption proceeds used to run into crores because physical warrants could get lost in post, or not encashed in time. We suggest you make use of the ECS facility and get dividends and redemption proceeds directly credited in your bank account. But when you change your bank account, do intimate your fund house.