[ghodlur]

Originally Posted by smartcat

1) NCDs can be quite safe if the credit ratings are high. Look at the CARE/CRISIL rating.
3) NCDs are great investment tool if you FEEL that interest rates will fall over the next few years. You can sell your NCD online when the interest rates start falling and get a nice profit.

Smartcat,

Thanks a lot for the advise. My only concern here is are there any chances of the ratings being fudged and are the ratings uniform till the end of the tenure of NCD's. Nowhere the NCD initiating co's mention about the plans for the corpus collected. Although I am not a weak heart but these things do make me worry. So I am better off in Mutual funds I guess.

[SmartCat]

Originally Posted by ghodlur

Thanks a lot for the advise. My only concern here is are there any chances of the ratings being fudged and are the ratings uniform till the end of the tenure of NCD's. Nowhere the NCD initiating co's mention about the plans for the corpus collected. Although I am not a weak heart but these things do make me worry. So I am better off in Mutual funds I guess.

Rating agencies like CRISIL & CARE are professionally managed, and their ratings cannot be doubted. And when they analyze a company, they do it with a view of the tenure of the NCD. But if you are still worried, you could look at the financials of the company offering the NCD.

If a company like L&T Finance is offering a NCD, its pretty safe - because the company is continuously seeing higher profits every year.

But if a company like Unitech is offering a NCD, just run!

If you want to opt for the mutual fund route, take a look at these "long term bond" funds (also called Income Funds)
http://www.valueresearchonline.com/f...at=4&exc=close

Go for 4 or 5 star rated funds. Remember that these funds might offer negative returns in the short run (based on what RBI does with the interest rates), but if you hold for 3 years+, you will get around 10% per annum.

This is also more tax efficient if you are in 30% plus tax bracket. Your returns will be almost tax free - but make sure you opt for the "growth" option when you buy funds.
http://articles.economictimes.indiat...ncial-services

[carboy]

Unitech had high ratings from the CRISIL, CARE kind of agencies before the scandal. And was continuously seeing higher profits every year. You never know when a company is going to get into a scandal or find out that the books are cooked.

And check 4 & 5 star rated funds like DSP Blackrock Top 100 & HDFC Top 200 - they have given 6% pa returns in the last 3 years.

[driverace]

Hello all Tax gurus,

Good morning!

I have saved up for a flat's down payment in Pune.
Now, good portion of my money is currently in FDs (since I would need it any time in next 2 months or so).

so, my question is - what would be the tax applicable on these FDs?

( Around 3.5Lac worth FDs in SBI 1 year FDs - kept here since 2+ years.
Around 1.4 Lac worth FDs in HDFC renewed every 46 days since it gives 8.25% interest rate -- these are savings done from salary..).
This year my salary account has been in ICICI.

Also I will be prematurely liquidating 30K worth NSCs.

Detailed answer would help me understand what "crunch" I may face in coming 2-3 months - If the decision of going for a flat now goes through!

Help Highly appreciated

Ace.

P.S. I have some concerns regarding "bubble" burst / right timing to invest in a home(?) -- putting them in real estate thread.. (Tax gurus who are also - property gurus please help me there too )

[carboy]

Originally Posted by driverace

so, my question is - what would be the tax applicable on these FDs?

Your marginal rate will be applicable. i.e. for eg. if you are currently in the 30% bracket, then the interest on the FD will be taxed 30%.
If you are in the 20% bracket and adding the FD interest doesn't push you into the 30% bracket, then you will be taxed at 20% and so on.

[driverace]

Originally Posted by carboy

Your marginal rate will be applicable. i.e. for eg. if you are currently in the 30% bracket, then the interest on the FD will be taxed 30%.
If you are in the 20% bracket and adding the FD interest doesn't push you into the 30% bracket, then you will be taxed at 20% and so on.

Ohkay!
So, I recall reading somewhere - that if the FDs in one particular bank account do not earn me more than 10K - they are not taxed (?)
^ Is that true or similar rule exists?

thanks for the prompt help!

Ace.

[carboy]

Originally Posted by driverace

account do not earn me more than 10K - they are not taxed (?)

That's rubbish. The bank will not do TDS but you still have to show it in your return and pay tax.

[Lalvaz]

Originally Posted by driverace

Ohkay!
So, I recall reading somewhere - that if the FDs in one particular bank account do not earn me more than 10K - they are not taxed (?)
^ Is that true or similar rule exists?

thanks for the prompt help!

Ace.

Carboy is right, the income from FD's is taxable based on what tax slab you fall under. Its supposed to be added to your total income and taxes are supposed to be paid by the assessee. Thats precisely the reason why people invest in debt mutual funds, since the tax treatment is more favourable than FD's.

[alpha1]

@thread Just remind me: the house rent that we pay is exempted from tax, but the maintenance is not?
Right?

Also regarding the FDs, I was always under the impression that banks deduct TDS, since they always ask for some Form XYZ (I guess its Form H or something like that) if you don't want tax deducted. (or perhaps I am confusing this with something else ...)

[S_U_N]

Originally Posted by driverace

Ohkay!
So, I recall reading somewhere - that if the FDs in one particular bank account do not earn me more than 10K - they are not taxed (?)
^ Is that true or similar rule exists?

thanks for the prompt help!

Ace.

That 10K of interest is tax free only in case of interest from savings account (perhaps current accounts is also OK?)
FD interest cannot be clubbed with that one.
So, if you have 3 savings accounts, and if total interest combined is 11K, you will have to pay tax on 11K-10K = 1K.
The tax would be based on your braket, say 20% or 30% of 1000 Rs.

[driverace]

Originally Posted by S_U_N

That 10K of interest is tax free only in case of interest from savings account (perhaps current accounts is also OK?)
FD interest cannot be clubbed with that one.
So, if you have 3 savings accounts, and if total interest combined is 11K, you will have to pay tax on 11K-10K = 1K.
The tax would be based on your braket, say 20% or 30% of 1000 Rs.

Aahhh.. My bad!
But, thanks a lot for the clarity

@Lalvaz, @carboy - thank you both for your inputs guys!

Appreciate the help.
Case closed!

Ace.

[alpha1]

Any idea how good is Max as life insurance etc?
Specifically these: http://www.maxlifeinsurance.com/Plan...tect-plan.aspx
http://www.maxlifeinsurance.com/Plan...ner-super.aspx
http://www.maxlifeinsurance.com/Plan...ife-super.aspx


Also do all such policies have PAPER based documentation? I mean someone needs to preserve the paper doc to claim the policy? I find it laughable since the paper can easily perish in 20-25 years ... what happens then?

[S_U_N]

Originally Posted by alpha1

Any idea how good is Max as life insurance etc?
Specifically these: http://www.maxlifeinsurance.com/Plan...tect-plan.aspx
http://www.maxlifeinsurance.com/Plan...ner-super.aspx
http://www.maxlifeinsurance.com/Plan...ife-super.aspx


Also do all such policies have PAPER based documentation? I mean someone needs to preserve the paper doc to claim the policy? I find it laughable since the paper can easily perish in 20-25 years ... what happens then?

No idea about Max.
But, for paper-less insurance, you can convert them to electronic format.
http://www.policyholder.gov.in/eInsurance_Policies.aspx

[creative420]

This may sound very amateurish, but I need to quickly invest about 60K for tax saving. I was travelling a bit and there was my wedding then another wedding in the family and I somehow missed out on the last day of submission in my office. So, apart from NSC, are there any tax saving investment options which can be done in a day's time? Do let me know.

[saket77]

Originally Posted by creative420

This may sound very amateurish, but I need to quickly invest about 60K for tax saving. I was travelling a bit and there was my wedding then another wedding in the family and I somehow missed out on the last day of submission in my office. So, apart from NSC, are there any tax saving investment options which can be done in a day's time? Do let me know.

Since, you don't have much time, and the amount is not very high, you may consider a 5 year term FD. The only downsides are that it is a 5 year lock-in, and the interest generated is not tax free. However, the amount you put into the FD will qualify as deductions, obviously total deductions subject to equal or less than one lakh.

Regards,
Saket