Good News for Investor after the hike in service tax and duties after Budget
After Budget session with hike in duties , Service tax & provident fund rate cut there is some good news for individuals citizen.The government is raising interest rate on small savings schemes such as National Savings Certificate and post office deposits by 20-50 basis points .
The move to raise small savings rates comes barely a fortnight after the Employees Provident Fund Organization (EPFO) slashed the annual return from 9.5% last year to 8.25% for the current financial year. In the Budget, finance minister decided to increase the excise duty and service tax rates from 10% to 12% which will put a burden of Rs 35,000 crore on common man.However there are some concessions by way of an increase in exemption limit for direct tax.
The new rates will, however, be applicable on investments that you make from April 1 , 2012.
As a result, NSC and public provident fund (PPF), will fetch for you 8.8-8.9% instead of 8.6% a year. Shorter tenure deposits like term deposits in post offices are expected to fetch you more than longer tenure products such as PPF or the 10-year NSC. But aving accounts in post offices will not see any change as the 4% return is most banks pay today.
Today most of the individual assume that Bank deposits however, look more attractive as they offer 9-10% return. But a scheme like PPF, which has a minimum term of 15 years, comes with additional tax sops. Not only is it part of the 80C benefits which entitles tax payers to get a concession of up to Rs 1 lakh a year, but the interest earned on the deposits is also taxfree. So, at the revised rates, the actual return for someone in the 30% tax bracket will work out to 12%.
Ther are one more point that the rate of return on small savings schemes that will be notified by finance ministry and will be for the full financial year, while bank deposit rates are expected to come down with the Reserve Bank of India widely assumed to begin the rate cut cycle by Many experts. Even before lending rates come down, banks will start pruning returns on deposits to lower their cost of funds.
Dear reader send us your valuable feedback on this article and feel good ask any query.
Warm Regards,
Arvind Trivedi
After Budget session with hike in duties , Service tax & provident fund rate cut there is some good news for individuals citizen.The government is raising interest rate on small savings schemes such as National Savings Certificate and post office deposits by 20-50 basis points .
The move to raise small savings rates comes barely a fortnight after the Employees Provident Fund Organization (EPFO) slashed the annual return from 9.5% last year to 8.25% for the current financial year. In the Budget, finance minister decided to increase the excise duty and service tax rates from 10% to 12% which will put a burden of Rs 35,000 crore on common man.However there are some concessions by way of an increase in exemption limit for direct tax.
The new rates will, however, be applicable on investments that you make from April 1 , 2012.
As a result, NSC and public provident fund (PPF), will fetch for you 8.8-8.9% instead of 8.6% a year. Shorter tenure deposits like term deposits in post offices are expected to fetch you more than longer tenure products such as PPF or the 10-year NSC. But aving accounts in post offices will not see any change as the 4% return is most banks pay today.
Today most of the individual assume that Bank deposits however, look more attractive as they offer 9-10% return. But a scheme like PPF, which has a minimum term of 15 years, comes with additional tax sops. Not only is it part of the 80C benefits which entitles tax payers to get a concession of up to Rs 1 lakh a year, but the interest earned on the deposits is also taxfree. So, at the revised rates, the actual return for someone in the 30% tax bracket will work out to 12%.
Ther are one more point that the rate of return on small savings schemes that will be notified by finance ministry and will be for the full financial year, while bank deposit rates are expected to come down with the Reserve Bank of India widely assumed to begin the rate cut cycle by Many experts. Even before lending rates come down, banks will start pruning returns on deposits to lower their cost of funds.
Dear reader send us your valuable feedback on this article and feel good ask any query.
Warm Regards,
Arvind Trivedi
seem useful article...Keep writing about investment and finance related issue..in future
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