Post Office Saving Schemes - PORD

While we near the end of the year, I mean Financial Year, we all busy looking out for tax saving investments. My suggestion is that - Do not save for tax, but save and take tax benefits.

I would like to discuss the following saving avenues, which are secured and give good tax benefits too. Taken this from the Small savings website. So, better check with your consultant before investing.

(a) Post Office Recurring Deposit Scheme (PORD)

(b) Public Provident Fund (PPF)

(c) Post Office Monthly Income Scheme (POMIS)

(a) Post Office Recurring Deposit Scheme (PORD)
Maturity Period.....: 5 years
Minimum..............: Rs.10 (Deposits can be in multiples of Rs.5.)
Maximum..............: No limit
Place of Deposit.......: All Post Offices

For example of Rs. 10 every month for 5 years will fetch interest of Rs.128.90 with Principle of Rs.600/-.

After 5 years the account can be continued for another 5 years at the same rate of interest.

Opening of Account

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  The account can be opened by a single adult of two adults jointly or a minor who has attained the age of 10 years or a guardian on behalf of a minor.
  
  
  
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  Deposits may be made a minimum of Rs.10/- once in a calendar month, in multiples of Rs.5/-. Amount of deposit made at the time of opening the account shall not be changed.
  
  
  
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  A depositor may have more than one account in his own name or jointly with others.
  
  
  
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  There is no ceiling on deposit.
  
  
  
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  Monthly installments can be paid in advance and in that case, a suitable rebate is allowed
  
  
  

Loan Facility

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  Loan up to half of the deposit may be taken after one year and before maturity.
  
  
  
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  This must be repaid together with interest in one or more installments.
  
  
  
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  Loan not repaid is deducted together with interest from the amount payable at the time of closure of the account.
  
  
  

Insurance Benefit

In case of death of a depositor, his legal heir or nominee becomes entitled to get immediately the full maturity value of the account/accounts subject to the maximum account value of Rs.50 /-

• the account is not a discontinued one
• 24 months have elapsed from the dates of opening the account, and
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  the age of the depositor at the time of opening of the account was between 18 and 53 years.
  
  
  
• there should not be withdrawal during the first 24 months.

A recurring deposit will allow you to save little money every month. You can plan RD for a foreign trip or a Capital item!

In the next post, let us see the POMIS.

Cheers,
Gopal

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Finance Minister asks I T Department to Achieve Revised Tax Target

Finance Minister, Shri Pranab Mukherjee has directed the Income Tax Department to make all efforts to achieve the revised direct tax target of Rs.4 lakh crores. Addressing the All India Conference on Tax Deduction at Source (TDS) here today, Shri Mukherjee congratulated the department on reaching tax collection figure of Rs.2.50 lakh crore by December 2009 showing a growth rate of around 8.5%.

In order to achieve the revised target, the field formations may consider of taking steps which include identification of new areas for tax collection; indepth scrutiny of cross-border transactions; regular interactions with the Central Government and other State Government Departments who are responsible for deduction of TDS; monitoring of TDS at the district level where the massive social expenditure and infrastructure expenditure are incurred by the Government; and regular sharing of information amongst the Commissionerates to develop a common data base of new areas explored by each Commissionerate for collection of TDS.

Pointing out that although during the last 5 years the contribution from TDS had gone up from 33% to 38.5% of the net direct tax collection, Shri Mukherjee expected that this high growth rate in TDS collection could be further accelerated. He observed that smaller towns were witnessing greater tax collection due to buoyancy in the economy.

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Standardized lot size for derivative contracts on individual securities

The SEBI in consultation with the Stock Exchanges  wanted to standardise the lot size for derivative contracts on individual securities:

Explanation: The lot size for an underlying with a price of Rs. 250, i.e., in the price band of Rs. 201-400, shall be 1000 units.

The Stock Exchanges shall review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month and wherever warranted, revise the lot size by giving an advance notice of atleast 2 weeks to the market.

If the revised lot size is higher than the existing one, it will be effective for only new contracts. In case of corporate action, the revision in lot size of existing contracts shall be carried out as per SEBI circular SMDRP/DC/CIR-15/02 dated December 18, 2002.

The Stock Exchanges shall ensure that the lot size is same for an underlying traded across Exchanges.

This Circular is issued to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

This shall come into effect from March 31, 2010.

Cheers,

Gopal

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Cost Accounting Standards (CAS) made mandatory from 1st Apr 2010

As you are aware that the Institute of Cost & Works Accountants of India, the primary body for the Cost & Management accounting is issuing various standards called Cost Accounting Standards (CAS).

The Council of the ICWAI has decided to make the application of the CAS mandatory. So, far the following CAS are issued:

CAS 1  : Classifications of Costs

CAS 2  : Capacity Determination

CAS 3  : Overheads

CAS 4  : Cost of Production for Captive Consumption

CAS 5  : Determination of Average (Equalized) Cost of Transportation

CAS 6  : Material Cost

CAS 7  : Employee Cost

CAS 8  : Cost of Utilities

CAS 9  : Packing Material Cost

CAS 10: Direct Expenses

The above CAS shall be mandatory with effect from period commencing on or after 1st April 2010 for being applied for the preparation and certification of General PurposeCost Accounting Statements.

In case the cost accountant is of the opinion that the aforesaid standards have not been complied with for the preparation of the Cost Statements, it shall be his duty to make a suitable disclosure/qualification in his audit report/ certificate.

More such CAS are expected from ICWAI. These are really required and should also be easy to apply and comply.

Cheers,

Gopal

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It is one year now....the Satyam fraud !!!

It is on the 7th January 2009 the Satyam fraud was out, more talked about mismanagement ! One year has gone by now. Kudos to the Government, Mr.P.C.Gupta & Mr.Anurag Goel for taking immediate steps to revamp the board and making sure that the company is up and running to bail out the customers and employees.

There were lot of learning from this incident. The Ministry took quick calls and made sure that the legal provisions will not stand in the way of revamping it. It identified the learned people like Karnik, Parekh, Achuthan, Manoharan, Tarun Das,  and others for the Board and made sure that the company is not in problem.

Thanks to Mahindras to take it over and made it possible to put it back on rails.

Today with the case is still going on, auditors working to restate the financial, no one knows the exact impact.

Satyam is an aberration and cannot be generalised. Wish this is one of case and the industry boom in the years to come.

It was this Satyam episode which prompted me to start the blog !!!

Cheers,

Gopal

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GST - Implementation may be further delayed

I had earlier mentioned in my post that the GST implementation has been delayed from 1-Apr-2010 to 1-Oct-2010.

But now it seems that it may further delayed as it looks to iron-out differences with the states. The State finance ministers are scheduled to meet in mid-January to discuss details and timing.


There was a fear that the States may loose out if the GST is rolled out. In order to compensate states for potential lost revenue, a government panel has proposed to create a 500 billion rupee (USD10.8 billion) fund as incentive for states to buy into GST.

span style="font-family: Georgia, "Times New Roman", serif;">What are the next steps?

• The legislation to make constitutional amendments needs to be finalised 
• The mechanism for administering the tax needs to be created.
• The government also needs to set up the technology infrastructure to manage the tax.

What would be the revenue impact?


The GST is initially intended to be revenue-neutral but is eventually expected to increase the tax - thanks to more efficient collection and increased compliance. "It will smoothen the tax process, reduce transaction costs and raise the tax-to-GDP ratio," said DK Joshi, economist at ratings agency Crisil in Mumbai.


I was watching a TV news today, that the BJP is apposing the GST Roll-out and feel that if the GST can be rolled out after meeting all challenges  by 1-Oct-2010, it would be a great achievement by the Finance Minister.

Cheers,

Gopal

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