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Showing posts with label K.V.P.. Show all posts
Showing posts with label K.V.P.. Show all posts

Monday 2 February 2015

Investments can be made in denominations of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000 in the new KVP
The re-launched Kisan Vikas Patra (KVP) might add to concerns related to black money, among other issues, say investment experts. The notification on the re-launch of the scheme is silent on whether one will have to furnish his/her Permanent Account Number (PAN) for investing in it. Also, one can transfer KVP certificates multiple times, as was the case earlier. One can also invest in cash, and hence tracing back the source of funds can be difficult. While there are other rules that make it mandatory to provide PAN in transactions beyond certain amounts, there are also ways to get around those.

Automated Form 16 Part B for the F.Y.2014-15 with all new Tax Section and Tax Slab as per Budget 2014-15

"The Income Tax Act prescribes the PAN requirement when investments of more than Rs 50,000 are made in instruments such as bank or post office fixed deposits, mutual funds, etc," says Kuldip Kumar, executive director (tax and regulatory services), PwC. However, for those looking at larger investments in KVP, experts say smaller amounts (less than Rs 50,000) can be made in KVP to avoid quoting the PAN. And, holding 200-300 certificates for someone with more than Rs 1 crore to invest might not be difficult.
KISAN VIKAS PATRA 2.0
  • ·                                 Minimum investment should be Rs 1,000upper limit to the amount to be invested
  • ·                                 Certificates can be transferred multiple times
  • ·                                 These will mature in 8 years and 4 months
  • ·                                 Premature withdrawal is allowed, after a lock-in of 2 years and 6 months



Investments can be made in denominations of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000 in the new KVP. By comparison, the earlier version allowed investments of at least Rs 100. There is no upper limit to investments in this instrument.

"The certificates can be issued in single or joint names and can be transferred from one person to any other person/persons multiple times. The facility of transfer from one post office to another anywhere in India and of nomination will be available," says a finance ministry press release.

But there are some experts who see long-term benefits. "There are three readings coming out of the re-launch of KVP: 1) The nation needs savings at any cost, as the savings in the country have dropped; 2) the economy, in addition to foreign funds, also wants to mobilise domestic savings; and 3) it does not want hot money being invested, as this won't be invested for the long term; comparatively, retail money is stable," says Ashvin Parekh, managing partner of Ashvin Parekh Advisory Services LLP.

Should you invest?
"Even in its new avatar, KVP is not compelling enough for individual investors," Though KVP is offering lucrative returns at 8.7 per cent, it does not enjoy any tax benefit. Therefore, it is not meant for those in the 20 per cent and 30 per cent tax brackets, he adds. In the highest tax bracket, KVP will give you 6.09 per cent after tax. By comparison, State Bank of India's fixed deposits maturing in 5-10 years will give 8.5 per cent pre-tax or 5.95 per cent after tax (highest tax bracket). Interest income is taxed at the slab rate even for tax-saving fixed deposits of five years.

National Savings Certificate
 (NSC) gives 8.5 per cent for certificates maturing in five years and 8.8 per cent for those maturing in 10 years. Here, too, the interest income is taxable - a five-year certificate will give 5.95 per cent, while a 10-year certificate will give 6.16 per cent. Public Provident Fund, which earns 8.7 per cent exempt of tax, is the most attractive among these instruments, though the money is locked in for 15 years and only partial withdrawal is allowed from the seventh year.

Wednesday 28 January 2015

Download Automatic Excel Based Bank Fixed Deposit Interest Calculator 

The government recently relaunched erstwhile popular small savings scheme Kisan Vikas Patra to provide more investment options with the aim to raise the savings rate in the country. But financial planners say the Kisan Vikas Patra can be a good investment option for people who don't have access to regular financial products and don't fall under the tax bracket. But KVP is not an attractive option for those who have access to financial products like bank fixed deposits and mutual funds, they say.


"For people in lower economic strata who don't have access to regular financial products and don't fall under tax bracket, Kisan Vikas Patra can be a good option. But for those come under tax bracket and have access to other financial products it offers no real benefits,"


Under the new KVP scheme, the money invested in in KVPs will double in 100 months, or eight years and four months. This means an annual return of 8.67 per cent. It is available in the denomination of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000.

Download Automatic Master of Form 16 Part B for Financial Year 2014-15 [ This Excel Utility can prepare at a time 50 employees Form 16 Part B with all Update Tax Section ]

The bank fixed deposits can be a better bet than KVPs. Bank fixed deposits currently offer around 9 per cent on more than 1-year fixed deposits. And if an investor want invest for the long term, then some banks offer up to 10-year fixed deposits, he adds. These fixed deposits also offer rates around 9 per cent.

This has led to criticism about the attractiveness of KVP as an investment option. Expressing doubts over the success of the new Kisan Vikas Patra (KVP), former Finance Minister P Chidambaram said there are other investment schemes which offer better returns.

Mr Chambaram said though the ostensible purpose is to promote savings through KPV, "the argument is suspect because there are other fixed income instruments which offer better returns (than KVP)".

Apart from lower interest rates, another disadvantage is that KVPs offer no income tax benefits. Like bank fixed deposits, interest earned from KVPs is added to the investors' income and taxed at applicable rates. In other words, for investors in 10 per cent tax bracket, the effective interest from KVP will be around 7.8 per cent. For those in 20 per cent tax bracket, it is around 6.9 per cent while for 30 per cent slab it is 6 per cent.

The investors who are  in higher tax brackets can also look at fixed maturity plans (FMP) offered by mutual funds. Indexation benefits offered by debt mutual funds after three years help significantly reduce the tax outgo of investors. FMPs are close-ended funds that predominantly invest in debt markets.

Investors can expect around 8.5 per cent post-tax return in three-year FMPs,. Currently, fixed maturity plans are available of duration of up to five years.

Monday 26 January 2015

Download Automatic Excel Based Bank Fixed Deposit Interest Calculator 


The government recently relaunched erstwhile popular small savings scheme Kisan Vikas Patra to provide more investment options with the aim to raise the savings rate in the country. But financial planners say the Kisan Vikas Patra can be a good investment option for people who don't have access to regular financial products and don't fall under the tax bracket. But KVP is not an attractive option for those who have access to financial products like bank fixed deposits and mutual funds, they say.


"For people in lower economic strata who don't have access to regular financial products and don't fall under tax bracket, Kisan Vikas Patra can be a good option. But for those come under tax bracket and have access to other financial products it offers no real benefits,"

Under the new KVP scheme, the money invested in in KVPs will double in 100 months, or eight years and four months. This means an annual return of 8.67 per cent. It is available in the denomination of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000.

Download Automatic Master of Form 16 Part B for Financial Year 2014-15 [ This Excel Utility can prepare at a time 50 employees Form 16 Part B with all Update Tax Section ]

The bank fixed deposits can be a better bet than KVPs. Bank fixed deposits currently offer around 9 per cent on more than 1-year fixed deposits. And if an investor want invest for the long term, then some banks offer up to 10-year fixed deposits, he adds. These fixed deposits also offer rates around 9 per cent.

This has led to criticism about the attractiveness of KVP as an investment option. Expressing doubts over the success of the new Kisan Vikas Patra (KVP), former Finance Minister P Chidambaram said there are other investment schemes which offer better returns.

Mr Chambaram said though the ostensible purpose is to promote savings through KPV, "the argument is suspect because there are other fixed income instruments which offer better returns (than KVP)".

Apart from lower interest rates, another disadvantage is that KVPs offer no income tax benefits. Like bank fixed deposits, interest earned from KVPs is added to the investors' income and taxed at applicable rates. In other words, for investors in 10 per cent tax bracket, the effective interest from KVP will be around 7.8 per cent. For those in 20 per cent tax bracket, it is around 6.9 per cent while for 30 per cent slab it is 6 per cent.

The investors who are  in higher tax brackets can also look at fixed maturity plans (FMP) offered by mutual funds. Indexation benefits offered by debt mutual funds after three years help significantly reduce the tax outgo of investors. FMPs are close-ended funds that predominantly invest in debt markets.

Investors can expect around 8.5 per cent post-tax return in three-year FMPs,. Currently, fixed maturity plans are available of duration of up to five years.