Who can open Monthly Income Scheme
* A single adult or 2-3 adults jointly can open monthly income scheme in Indian post office.
* More than one account can be opened subject to maximum deposit limits.
Where can be opened :
At any post office in India.
Maturity of Monthly Income Scheme
Period of maturity of an account is six years.
Deposits:
Only one deposit shall be made in an account.
Deposit limits
* Minimum:
o Single or Jointly – Rs 1500
* Maximum:
o Single Account Holder: Rs 4.5 Lakhs
o Joint Account holder: Rs 9 lakhs
Interest Rates for MIS
* Interest @ 8 per cent/ per annum.
* In addition, bonus equal to five percent (5%) of the deposited amount ispayable at the time of repayment on maturity.
* If the interest payable every month is not claimed by a depositor, such interest will not earn any additional interest.
Pass Book :
On opening an account, the depositor will be given a pass
book bearing the date of opening of account, the number of his account, his name and address and the amount deposited and also the monthly interest payable along with the date on which the deposit will be due for final payment.
The pass books shall be presented to the post office at the time of collecting interest every month and also at the time of closing the account.
The depositor availing facility of deposits of interest in his savings account under shall present the pass book to the post office at least
once in six months for completion of entries.
Premature cloasure of Monthly Income Scheme:
Premature closure facility is available after one year subject to condition.
* (i) If the account is closed on or before expiry of three years of opening of such account, an amount equal to two percent (2%) of the deposit shall be deducted and remainder paid to him and
* (ii) If the account is closed after expiry of three years from the date of opening of such account an amount equal to one per cent of the deposit shall be deducted and remainder paid to him.
Closure of account
Account shall be closed after expiry of 6 years, bonus equal to five percent of deposits shall be paid alongwith principle amount.
Nomination option under MIS
(1) The depositor may at the time of opening the account under
these rules, nominate a person or persons who, in the event of death of the depositor, shall become entitled to payment due on the account.
(2) if such nomination is not made at the time of opening the account, it may be
made by the depositor at any time after the opening the account, but before its closure
by means of an application, accompanies by the pass book to the Postmaster of the post
office.
Income Tax relief under Monthly Income Scheme:
Income tax relief is available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.
Monday, January 10, 2011
Thursday, January 6, 2011
Tax Free Municipal Bonds
Tax Free Municipal Bonds - It Could Suit Your Portfolio Perfectly!
Tax Free Municipal Bonds are debt obligations or IOUs that are issued by the state, county, city, or any other political sub-division to individuals who have lent money for community projects such as building a school, hospital, or road.
These bonds are attractive to individual investors, since, as the name indicates, the government does not tax the interest received. When you invest in buying a municipal bond, you are loaning money to the issuer for a fixed number of interest payments over a certain period. At the end of that period, the bond has matured, and you will get back the full amount of your original investment.
What are the Characteristics of Municipal Bonds?
The chief characteristic of Municipal Bonds, or Munis as they are called, is the tax-free interest that the investor receives. These 'bank-qualified new issue municipal bonds/bank qualified municipal bonds' or 'qualified tax-exempt obligation' depends on who the issuer of the bond is and what type of bond is being issued.
There are primarily two types of municipal bonds:
* The General Obligation [GO] bond is issued by a body that has the power to tax. So the interest on the municipal bond funds come from the payment of other taxes the issuer receives. These bonds are issued to raise immediate capital to fund community projects.
* The Revenue Bond is issued by businesses that work on infrastructure projects and the interest paid is actually the revenue earned from these projects themselves. So the success of this bond depends on how profitable the project turns out to be.
Benjamin Graham states that a municipal bond must have
* a population of 10,000 or greater
* a diverse economy
* a history of punctual payment on past obligations
What are the Benefits of Municipal Bonds?
* Tax-Free income - When you invest in a municipal bond, you do not pay taxes on the interest you receive. Not only is the interest payment free from federal taxes, but also, if the issuer of the bond is in your state then the interest is exempt from state and other local taxes.
* Preservation of Capital - After the regular payment of interest payments over a period of time, when the bond reaches maturity, you will get back the original investment amount. So, your capital has been in safe keeping as well as earning you revenue over a period of time in the form of interest.
* Stability - Understanding Municipal Bonds Investments are the safest form of the different types of investment. The capital that you have invested in used for public enterprise and not for private projects, so risks are minimal. Also, in interest payments, the general obligation bonds are particularly safe as they are guaranteed by the other taxes received by the bond issuer.
* Community welfare - Besides financial benefits, you play a worthwhile role in your community by investing money in municipal bonds new issue funds that are used for community projects.
Tax Free Municipal Bonds are debt obligations or IOUs that are issued by the state, county, city, or any other political sub-division to individuals who have lent money for community projects such as building a school, hospital, or road.
These bonds are attractive to individual investors, since, as the name indicates, the government does not tax the interest received. When you invest in buying a municipal bond, you are loaning money to the issuer for a fixed number of interest payments over a certain period. At the end of that period, the bond has matured, and you will get back the full amount of your original investment.
What are the Characteristics of Municipal Bonds?
The chief characteristic of Municipal Bonds, or Munis as they are called, is the tax-free interest that the investor receives. These 'bank-qualified new issue municipal bonds/bank qualified municipal bonds' or 'qualified tax-exempt obligation' depends on who the issuer of the bond is and what type of bond is being issued.
There are primarily two types of municipal bonds:
* The General Obligation [GO] bond is issued by a body that has the power to tax. So the interest on the municipal bond funds come from the payment of other taxes the issuer receives. These bonds are issued to raise immediate capital to fund community projects.
* The Revenue Bond is issued by businesses that work on infrastructure projects and the interest paid is actually the revenue earned from these projects themselves. So the success of this bond depends on how profitable the project turns out to be.
Benjamin Graham states that a municipal bond must have
* a population of 10,000 or greater
* a diverse economy
* a history of punctual payment on past obligations
What are the Benefits of Municipal Bonds?
* Tax-Free income - When you invest in a municipal bond, you do not pay taxes on the interest you receive. Not only is the interest payment free from federal taxes, but also, if the issuer of the bond is in your state then the interest is exempt from state and other local taxes.
* Preservation of Capital - After the regular payment of interest payments over a period of time, when the bond reaches maturity, you will get back the original investment amount. So, your capital has been in safe keeping as well as earning you revenue over a period of time in the form of interest.
* Stability - Understanding Municipal Bonds Investments are the safest form of the different types of investment. The capital that you have invested in used for public enterprise and not for private projects, so risks are minimal. Also, in interest payments, the general obligation bonds are particularly safe as they are guaranteed by the other taxes received by the bond issuer.
* Community welfare - Besides financial benefits, you play a worthwhile role in your community by investing money in municipal bonds new issue funds that are used for community projects.
Sunday, January 2, 2011
Tips to ensure your agent doesn’t cheat you
GONE are the days when financial products meant only fixed deposits and small savings schemes. Now, there are an array of investments for your benefit!
For instance, there are insurance plans that provide equity and debt investment like Unit-Linked Insurance Plans, investment plans that provide insurance like Systematic Investment Plans + Insurance and so on.
With so many products, it is easy to get sweet talked (by an agent) into investing in the wrong schemes. And that’s probably why you find young people with an insurance cover that they don’t need and many more such cases of mis-selling.
The intense competition amongst financial players has only made matters worse. Distributors and agents with unattainable sales targets pitch products left, right and centre. After all, what do they have to do with your needs and goals, they earn their commissions!
However, mis-buying is as much a problem as mis-selling. Too often, the real culprit is staring back at you every time you shave!
For instance, there are insurance plans that provide equity and debt investment like Unit-Linked Insurance Plans, investment plans that provide insurance like Systematic Investment Plans + Insurance and so on.
With so many products, it is easy to get sweet talked (by an agent) into investing in the wrong schemes. And that’s probably why you find young people with an insurance cover that they don’t need and many more such cases of mis-selling.
The intense competition amongst financial players has only made matters worse. Distributors and agents with unattainable sales targets pitch products left, right and centre. After all, what do they have to do with your needs and goals, they earn their commissions!
However, mis-buying is as much a problem as mis-selling. Too often, the real culprit is staring back at you every time you shave!
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