India Broadband Forum

Rameshjeee

Many of us in this forum might be young (around 23~26) & earning.
This is the right age to start saving your money. I started saving when I was 23.I have planned to save 25~30 % of my annual income.
There are many ways where you can invest your money.
For a given financial year you can get tax benifit upto 1 lac.

I am begining with Fixed Deposits (FD). I would welcome everyone to give ideas. People like admin could give us rich ideas as they have good experience.

Get the most out of Fixed Deposits (FD)

High volatility in stock markets combined with the easing inflation has again made fixed deposits an attractive avenue for investors, particularly those seeking assured returns. For, FD schemes of banks not only give assured returns but risk-free returns as well, and all one has to do is park one’s money in such a scheme and forget about it till maturity.

The best part of FD schemes are that they are one of the safe investment avenues and there is very little chance of losing you money as banks are closely regulated and monitored by the Reserve Bank of India. In the current turbulent times, investors are increasingly banking on such age-old investment tools.

Another advantage of FD schemes are that they can get you loans of up to 75-90% of the amount deposited with the bank.

Here are some tips to get the most out of FD schemes

Interest Rate Calculation
Take a look at the interest rates offered by different banks before going in for a scheme. You also need to decide the tenure of your deposit. The interest rates offered by different banks could vary. Also, the interest rates for different tenures are different.

Interests offered by banks are either calculated quarterly, half-yearly, yearly or at maturity. So, calculate which bank is going to get you the highest interest.

Suppose there are two banks -- 'A' & 'B'. Bank 'A' gives an interest rate of 10% p.a on a fixed deposit of five years and the interest is calculated on a quarterly basis.

Bank 'B' gives the same interest rate for the same period, but the interest is calculated on a yearly basis. In this case, Bank 'A' will get you more interest than Bank 'B'. The more frequently interests are calculated, the more interest you will get.


TDS
TDS (tax deductable as source) at 10% is applicable on fixed deposits if the interest earned exceeds Rs 10,000 in a financial year. The tax liability of TDS is determined at the branch level.

To avoid TDS, you can split your fixed deposits, that is, open fixed deposits in different branches of the bank, so that the interest earned does not exceed Rs 10,000 in a particular branch. You could also open fixed deposits in different banks to avoid TDS.

Splitting you fixed deposits has another benefit as well. If you are in need of urgent cash and need to withdraw money, you won't have to break all your fixed deposits.

You could get the money by breaking either one or two FD accounts while the remaining accounts would continue to earn you the predetermined interest.


Reinvesting
You have the option of either withdrawing the interest earned or reinvesting the same. If you opt for the withdrawal option, the interest earned will be credited to the savings account specified by you on a regular basis.

The interest you earn every year will be higher compared to the previous year if you keep reinvesting the interest. On the other hand, if you withdraw the interest, you will earn the same interest every year until maturity.

Let’s assume that you are planning to invest Rs 50,000 in a FD scheme for 5 years at the rate of 9.5% p.a. and the interest is calculated on a quarterly basis. If you reinvest the interest, your total interest earned will amount to Rs 29,955.49 in 5 years.

If you withdraw the interest, your total interest earned will amount to Rs 24,609.55. That is a difference of Rs 5,345.94. The greater the fixed deposit, the greater the difference will be.


Tax Benifit
Tax saver fixed deposits give you dual benefits. Apart from giving you an assured return, they are also eligible for exemption under Section 80C of the Income Tax Act 1961. However, TDS is applicable.

These fixed deposits have a lock-in period of five years and premature withdrawal is not allowed. You can’t use this deposit as a means to secure loan from the bank and the maximum amount you can invest in this instrument is Rs 1 lakh.

HDFC Bank at present offers 9.50% interest (calculated quarterly) on tax-saving FDs as well as on regular FDs for 5 years. ICICI Bank, on the other hand, gives 8.5% interest (calculated quarterly) on tax-saving FDs and 9.5% (calculated quarterly) interest on regular FDs for 5 years.

If you fall in the higher tax-slab, investing in tax-saver FDs will fetch you more return than a regular FD as tax-saving FDs are exempted under Section 80C.

Rameshjeee

PUBLIC PROVIDENT FUND (PPF)

Ask anyone where you should invest to avoid tax. The first answer you will get is: open a PPF account.The Public Provident Fund is now synonymous with tax saving.Scheme introduced by Central Government in 1968. The Scheme enables the members of the public to make contributions to the Fund and obtain Income Tax rebate under the relevant provisions of the Income Tax.

Here's a run down on the pros and cons of this investment.

~ The best of PPF

# Who can subscribe
Any individual in his own name or on behalf of a minor, for whom he/she is a guardian and HUF, can open a PPF in addition to a GPF account. Only one PPF A/c can be opened in one name.

# Where to apply
A PPF account can be opened at any branch of State Bank of India and its subsidiaries or at the head offices or sub post offices or sub post offices in section grade or at branches of the nationalised banks engaged in the collection of direct taxes.

# Subscription
PPF is a 15 year scheme, requiring minimum 16 contributions in all. The amount of annual subscription ranges from Rs 500 to Rs 70,000 payable either in lump sum or convenient instalments, not exceeding 12 in a year. The instalment should be in multiples of Rs 5.

# Excess deposits
Amount deposited in excess of Rs 70,000 in a year, will not be treated as ‘subscription’ and shall be returned without any interest.

Although one person can have only one PPF account in his name at a time, he can contribute on behalf of his children or spouses and enjoy all the tax benefit as in his account.

# Interest
Deposits in the account earns an interest of 8% per annum compounded annually. Interest is payable on the lowest balance between the fifth day and the last day of the calendar month.

# Nomination
One or more person can be nominated. The nomination facility is also available in respect of an account opened on behalf of an HUF.

# Maturity
The normal maturity period is 15 years from the close of the financial year in which the initial subscription was made. An Account, on the expiry of fifteen years, may be extended for a period of five years at a time.

# Loan
Depositors can take a loan in the third financial year from the financial year in which the account was opened. Loan can be taken up to 25% of the amount standing at the end of second preceding financial year, repayable in 36 instalments having the interest rate 1% higher than he receives. Second, the loan will be given only after the repayment of the first loan. No loan can be obtained after the end of 5th year following the expiry of the year in which the initial subscription was made. In case of death of the subscriber, the nominee/legal heir is liable to pay interest on loans availed of by the subscriber but not paid before his death.

# Withdrawals
A subscriber is permitted to make one withdrawal every year from the 7th financial year. An amount not exceeding 50% of the balance to his credit at the end of 4th year immediately preceding the year of withdrawal or at the end of preceding year, which ever is lower. The withdrawal can be made even every year.
Example:
Years Balance (Rs)
31.3.2000 200,000
31.3.1999 150,000
31.3.1998 120,000
31.3.1997 100,000

In the above case, the subscriber can withdraw Rs 50,000 in the year 2000-01.

# In event of death of the subscriber
The amount standing to subscriber’s credit will be repaid on demand to his legal heirs or the nominee. However the un-drawn balance will continue to earn interest till the end of the month, preceding the month in which the amount is paid to the nominee/legal heir.

# In case of no nomination
The scheme now permits payment of balance up to Rs 100,000 to the legal heirs on the basis of affidavits. Earlier the heirs had to produce a succession certificate to get back the balance to the credit of the deceased.

# Default
Where no amount is deposited in PPF account in any year the same should be got regularized by depositing at least Rs 500 per year along with a penalty of Rs 100 per year

# Continuity after maturity
At the subscriber’s option, the scheme may be continued for another 5 years after maturity. This facility can availed for further period of 5 years on the expiry of 20th years and yet another 5 years on the expiry of 25 years and so on. The option should be exercised within one year after expiry of 15 years or the extended block period by applying in Form H.

Subscribers who continue their account after 15 years, with fresh subscription, can make one withdrawal per year subject to the condition that the total of the withdrawals during a block period shall not exceed 60 percent of the balance to their credit at the commencement of the extended period.

# Tax benefit
The amount deposited and interest earned on it (including interest during the extension period) is completely exempted from income tax u/s 10(11) and the entire deposit in the account is exempted from wealth tax.

The annual contribution upto Rs 70,000 is eligible for rebate u/s 80C. An Investor can deposit Rs 70,000 in their PPF A/c, even if they have already paid the amount in LIC, NSC, ULIP. Rebate is also available on contributions made during the extended period provided the option to continue is exercised within one year of expiry of 15 years (or the extended block period).

~ The worst of PPF

1. The interest rate keeps changing
It was initially 12% per annum, dropped to 11%, then 9.5% and is now 8%. This rate of interest is fixed by the government and there is nothing you can do about it.

How to make this work for you: If the interest rate on PPF declines, interest rates on all other deposits (company and bank) and bonds also declines. So, frankly, there are no other alternative fixed-return investments that can compete because, overall, the interest rates are declining.

2. Lengthy lock-in period
Fifteen years to be exact. But, in actuality, it works out to 16 years since the last contribution is made in the 16th financial year.

Even if you make an investment on the last day of your account (the day it is due to mature), you will still get a tax rebate. But, of course, you will not earn interest on that amount on the last day.

How to make this work for you: Use this as a retirement planning tool. Money you will never touch. If you are just 22, you will get the money when you are around 38. You can use it to prepay your housing loan then.

3. Interest is calculated on the lowest balance
Interest is calculated on the lowest balance between the fifth and the last day of the month of March.

Let's say you have Rs 100,000 in your PPF account and on the 10th, you deposit an additional Rs 10,000. Your interest will be calculated on Rs 100,000 (not Rs 110,000).

How to make this work for you: If making a last minute deposit at the end of the financial year, do so before March 5.

4. Lack of liquidity
Your money is stuck for years on end. It is not as easy as selling some shares or mutual fund units.

How to make this work for you: Take a loan from the third year of opening your account to the sixth year. So if the account is opened during the financial year 1997-98, the first loan can be taken during financial year 1999-2000 (the financial year is from April 1 to March 31).

The loan amount will be up to a maximum of 25% of the balance in your account at the end of the first financial year. In this case, it will be March 31, 1998.

You can make a partial withdrawal only after five financial years are completed from the end of the year in which the initial subscription was made. So, in effect, it works out from the seventh year onwards.

The amount of withdrawal is limited to 50% of the balance in your account at the end of the fourth year immediately preceding the year in which the amount is to be withdrawn; or at the end of the preceding year, whichever is lower.

For example, if the account is opened in 1993-94 and the first withdrawal is made during 1999-2000, the amount of withdrawal will be limited to 50% of the balance as on March 31, 1996, or March 31, 1999, whichever is lower.

~ So should you?

Definitely. It is one of the best long term investment options around, in safety, tax rebates and return!

Check out this: PPF Calculator

Admin

Thats some good information I agree every investor should have some part of their investments in either bank fixed deposits or government bonds as it will keep that part of your money safe from any market ups and downs.

Rameshjeee

Life Insurance

Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. The family is put to hardship. Sometimes, survival itself is at stake for the dependants. Risks are unpredictable. Death/disability may occur when one least expects it. An individual can protect himself or herself against such contingencies through life insurance.

Life insurance is insurance on human beings. Though Human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’ in the case of life insurance. Life insurance products provide a definite amount of money to the dependants of the insured in case the life insured dies during his active income earning period or becomes disabled on account of an accident causing reduction/complete loss in his income earnings


Life Insurance Basics
The process of buying life insurance is a series of decisions:

• Choosing a type of policy,
• Selecting your level of coverage, and
• Naming a beneficiary are all important decisions you will have to make.

Choosing the beneficiary
The beneficiary, put simply, is the person whom you want to receive the life insurance proceeds at the time of your death. Usually, this is pretty cut and dry. A spouse is the most common beneficiary, followed by children, but anyone can be named as a beneficiary. (More on choosing the beneficiary)

Choosing the types of insurance
The types of insurance are categorized as term or permanent insurance. Both offer basic coverage, but for different time periods. The cost of term life insurance is usually much, much lower than permanent insurance.However, price should not be the deciding factor, rather your family's security should be. So, take the time to read through the details of each type of insurance while weighing your needs and each policy's benefits.

Calculating the level of coverage
The amount of money your family receives after your death is called a "death benefit". You might be more familiar with a person being insured for a specific amount, and that is exactly what the death benefit is: the amount for which you are insured.

When you purchase a life insurance policy, the death benefit is calculated to cover your specific financial circumstances. Your dependents, debts, and standard of living should all be taken into account. Of course, the more the death benefit is, the more expensive the policy will be.

Some of the other Insurance Benefits are :-
Basic benefits of the insurance policy. That is, the person enrolling for the policy is entitled to receive the financial compensation in case of actual occurrence of the loss/hazard/damage.

Optional Insurance Benefits are also given by the companies to their policy holders in order to entice them to access their insurance package. These optional benefits include health and dental insurance of the family, life insurance of the spouse and the child, accidental death policy for the policy holder in addition to the actual insurance for which he/she has enrolled for,
long term and short term insurance plans against disability of the policy holder unit linked insurance schemes meant for appreciation of the accumulated capital during the life span of the same, managed by an experienced and well-learned fund manager

Pre-tax insurance benefits
These benefits are an added advantage to the insurance holders because they help them in saving a large portion of their tax payment. When the tax-payment gets curtailed then consequently their disposable income increases leading to more enjoyment out of a secured life.

sb21pro

additional tax rebate info on insurance

upto 100000 prem benifit

that is if a person earns 3 lc
then he pays tax for 1.5 lac
but if he is paying 50 K as pem then it would be 1 lac only
+ there are tax benefits on interests on loans as well

just4kix

Very nice information.

Alexina

thanks Ramesh, that was good info.
i will be starting my career soon, so will need to remember this.

Rameshjeee

National Savings Certificate (NSC)

National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at all post office counters in the country. It is a long term safe savings option for the investor. The scheme combines growth in money with reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years.

Features
NSCs are issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 for a maturity period of 6 years. There is no prescribed upper limit on investment.

Individuals, singly or jointly or on behalf of minors and trust can purchase a NSC by applying to the Post Office through a representative or an agent.

One person can be nominated for certificates of denomination of Rs. 100- and more than one person can be nominated for higher denominations.

The certificates are easily transferable from one person to another through the post office. There is a nominal fee for registering the transfer. They can also be transferred from one post office to another.

One can take a loan against the NSC by pledging it to the RBI or a scheduled bank or a co-operative society, a corporation or a government company, a housing finance company approved by the National Housing Bank etc with the permission of the concerned post master.

Though premature encashment is not possible under normal course, under sub-rule (1) of rule 16 it is possible after the expiry of three years from the date of purchase of certificate.

Tax benefits are available on amounts invested in NSC under section 88, and exemption can be claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88.

Return
It is having a high interest rate at 8% compounded half yearly. Post maturity interest will be paid for a maximum period of 24 months at the rate applicable to individual savings account. A Rs1000 denomination certificate will increase to Rs. 1601 on completion of 6 years.

Interest rates for the NSC Certificate of Rs 1000

Year Rate of Interest
-------------------------------------------------
1 year - Rs 81.60
2 year - Rs 88.30
3 year - Rs 95.50
4 years - Rs103.30
5 years - Rs 111.70
6 years - Rs 120.80

Who can purchase:
An adult in his own name or on behalf of a minor,
A minor,
A trust,
Two adults jointly,
Hindu Undivided Family.

Where available:
Available for purchase/issue at all Post Offices in India.

Minimum Purchase Value:
The minimum amount of investment under NSC is Rs 100/-

Maturity:
Period of maturity of a certificate is six Years.

Nomination / Transferability:
Nomination facility is available.Certificates can be transferred from one post office to any other post office.Transfer from one person to another person permissible in certain conditions.

Denomination / Deposit limits:
Certificates are available in denominations (face value) of Rs. 100, Rs.500, Rs. 1000, Rs. 5000 & Rs. 10,000.
There is no maximum limit for purchase of the certificates.

Interest/maturity value:
Interest is avaialbe on this scheme @ 8%, compunded half-yearly
With effect from 1st March, 2003, Maturity value a certificate of Rs. 100
denomination is Rs. 160.10. Maturity value of a certificate of any other denomination shall be at proportionate rate. Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested.

Premature encashment:
Premature encashment of the certificate is not permissible except at a
discount in the case of death of the holder(s), forfeiture by a pledgee and
when ordered by a court of law.

Place of Encashment/discharge on maturity:
Can be encashed/discharged at the post office where it is registered or any other post office.

Income Tax relief:
Income Tax rebate is available on the amount invested and interest accruing every year under Section 88 of Income tax Act, as amended from time to time. [under Sec 80C]
Income tax relief is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.

Rameshjeee

Young investors: To Risk or not to Risk?

To risk or not to risk?
What is an appropriate risk level that an investor should take? How much is too much? These are concerns that every investor has. For someone who had all his investment in equities, he would have now realised that the exposure was definitely too much. A crude thumb rule is to have equity exposure of 100 -- your age + equity exposure (eg your age is 25 years, then you could have an equity exposure of 75 per cent).

It is ideal to have different forms of investments within equity and debt forms. For instance one can pick stocks directly while also investing in mutual funds. You can simultaneously use the Systematic Investment Plan (SIP) approach of monthly investments in mutual funds.

For many of us who have burnt our fingers investing the first time, learn from this experience the next time around. The other mistake made was to increase risk at peaks. This is a temptation one should resist and never take a higher risk than one can afford.

To Invest or Not To Invest?
On the other hand one is tempted not to invest and spend in initial years. You need to invest for your future and also to reduce your taxes. A person in the 30 per cent tax bracket investing Rs 100 at an 8 per cent post tax return would get Rs 125 in three years.

On the other hand if you did not invest, your take-home would be lesser by Rs 30 and hence you can spend only Rs 70. You have lost out an opportunity to increase your money by Rs 55 over the base of Rs 70 you would have otherwise had to spend -- you have made a whole 80 per cent higher return in a short span of three years, even in a conservative investment avenue.

If you take advantage of your full limit for the initial years of your career, there is a substantial asset creation that you are building for yourself. Investments made in the initial years provide the best compounding -- so the more you invest in your initial years, the better.

Spread your investment across short-medium-long term horizons to also take care of your financial needs. Short definitely doesn't mean 'a day' or 'a week', it is a period of three-five years if you are using equity. Equities take that long to reap you best returns in line with market cycles.

Tips to get started!

• Set aside at least 20 per cent of your income towards investments as a thumb rule.
• Use the power of compounding -- the earlier you start the better.
• Have clarity on your risk/ return profile and don't overdo your equity exposure.
• Use SIPs into equity mutual funds for most part of your investments initially.
• Enter direct equities in a phased manner.
• Have some amount in debt funds as well.
• Choose your investments after good amount of research. Use this as an opportunity of learning on the practical aspects of finance.
• Learn from your mistakes. Patience and self discipline are key factors to being a successful investor.

sb21pro

you are gr8 jee

u reallyy cleared a lot of of my doubts

thanks man

Rameshjeee

Get rich with SIP

In a rising market, most people get confused when investment advisers ask them to go for a disciplined approach towards investment -- through systematic investments plans. The reason: A lump-sum investment of Rs 60,000 can become Rs 1,20,000 in two or three months. On the other hand, Rs 20,000 invested over three months might just become Rs 90,000 or Rs 1,00,000.

However, the importance of investing through SIPs can only be appreciated when we consider volatility. A comprehensive look at the situation can help investors understand this approach. Under an SIP, a regular sum of money is invested each month. It means that units are purchased in a staggered manner. This ensures that there is no break in the investment process and a corpus is built over time.

Compare this with lump-sum investment and the dynamics are completely different. You invest an X amount of sum at one point in time and, over a period of time, the money can double or treble.

Of course, there is the element of risk. If the market were to fall sharply, like it has since January, the lump-sum investment takes a bigger hit. The reduction, in case of a mutual fund, is equivalent to the fall in the net asset value of the scheme.

On the other hand, if there is an ongoing SIP, investors actually end up gaining as only a part of their investment is eroding -- the part that has been purchased when the NAVs were quite high. In spite of a falling market, investors buy units of the fund when the NAV is falling. So, they gather more units of the same scheme. The best part is that when the market turns around a little, the investor in SIPs stands to make money much more quickly than a lump-sum investor because he has acquired more units over time.

Let's understand with an example. Consider two investors, who want to invest Rs 60,000 each in a particular scheme. Whereas, one does it in a lump-sum fashion, the other does it over a year.

Investor A (lump-sum investment) gets 3,000 units of the scheme for Rs 60,000 (NAV = Rs 20). Investor B (SIP investment) puts in Rs 5,000 each for six months.

Now, if the market rises for the first three months, then corrects for seven months and again recovers, this is a kind of situation both investors could find themselves in.

Investor A's money will rise in the first three months from Rs 60,000 to Rs 88,800. In the following correction, his corpus goes down sharply to Rs 32,100 in the next seven months. That is, when the NAV in the tenth month stands at Rs 10.7.

Investor B, who is investing Rs 5,000 a month, gets only 250 units in the first month. After that, when the NAV starts rising, he gets 168.92 units at Rs 29.6 per unit, resulting in a total of 624.68 units. This will be valued at Rs 18,491 against the invested amount of Rs 15,000. The gain: A mere Rs 3,491. Investor A, on the other hand, is sitting on handsome returns of Rs 28,000 by now.

After this, when the NAVs start falling for the next six months, Investor B starts gaining in terms of units added. By the tenth month, when the NAVs are languishing at Rs 10.7, his investments are worth Rs 30,325 whereas he has only invested Rs 50,000. Investor A's Rs 60,000 has become Rs 32,100.

However, as soon as the NAVs start improving from Rs 10.7 to Rs 17.6 in the last two months, Investor B is in the positive zone. His corpus is now worth Rs 60,908, a good Rs 8,000 more than Investor A's. All this is simply because of more units. That is, Investor B has accumulated 3,460.69 units in one year, whereas Investor A is still stuck with 3,000 units initially purchased.

The lesson: SIPs may look slower in the short term and, especially, in a rising market. But over time, they give better returns.

Rameshjeee

FIRST, there were two-minute noodles. Then there were 30-minute pizzas. And now you can file your tax returns, online, in 20 minutes! And here's the icing on the cake: the government has done away with that long list of documents you had to submit, earlier.

Should I go the online way?
If your only income source is your salary, then filing returns online, is easy and cheap. But if you have multiple sources of income, multiple bank accounts, investments that your parents made in your name, investment income that you have no clue about, you will need professional help.

The cost factor
A chartered accountant charges you between Rs 1,000 and Rs 2,500, depending on your income sources and the documentation required.The fees charged by tax-filing portals range between Rs 181 and Rs 750.

How to file your tax returns online
Step 1: Visit any of the e-tax filing portals and register yourself. The popular ones are:

Taxshax - 2008 Home
www.myitreturn.com
Online Tax filing | E-file taxes with complete guidance | Taxsmile.com (I) Pvt. Ltd.

Compare all three. You can also visit the Government's web site and file your returns.

Step 2: Enter your details.
The portal takes you through a simple process where you need to share your salary income, rental income, interest and dividends, investments, et al. Keep the following documents ready, so that you have easy access too the details.

Form 16: It has the details of tax deducted from your income by your employer on your behalf. You will get this form 16 from your employer, if you work in a company.

TDS (tax deducted at source) certificates: It has the details of the tax deducted by your clients (made on your behalf) before making your payment. Get these from your clients if you are an entrepreneur.

Bank statements: You will need to find out the interest amounts credited every quarter on your savings account. You will find this in your bank statement.

Statement of interest paid on your house loan: Get this from your bank.

Details about your income from house property: You will have to enter this on the basis of the home rental agreement and rent receipts issued.

Statement specifying the transactions made via broker for shares: Get this from your demat account or broker contract notes.

Keep the following details handy: bank account number, branch, MICR (magnetic ink character recognition) code. The MICR code is a 9-digit code, which follows your cheque number at the bottom of the cheque. Submit this code if a refund is due, so that the refund amount is directly credited to your account.

Step 3: Once you enter the details, the system will calculate the tax-payable amount.

In case you have to pay tax in addition to the TDS, deposit a cheque for that amount in any bank or make an online payment on the income tax web site.

Step 4: Pay online.
The portal generates the tax return form, automatically. Pay online or visit the nearest branch and complete the process.

Online payment can be made using your credit card, debit card, cheque book, demand draft or Internet banking. The fee ranges from Rs 180 to Rs 750, depending on the portal you choose and the complexity of your return.

Step 5: Get an acknowledgment.
The portal sends your details to the tax authorities, who will send you an acknowledgment within 20 minutes to 24 hours.

All that remains is for you to sign the form. Attach a digital signature* while submitting your form, online . Or you could take a printout of the acknowledgment and sign it, manually.

Submit this to the tax authorities or at the portal's office (who will submit it on your behalf).

What is a digital signature?
This is your physical signature presented in the electronic form. Apply for it at any of these web sites. It is protected by a password to avoid fraud and is valid for two to three years. It costs between Rs 500 and 750.

The downside
The tax-payable amount is based on the details entered by you. If your details are incorrect, you will end up filing incorrect returns. So, accuracy is a must!

fms007

Hi
As Rameshjeee has brought out most valuable points.....its really useful info
As this post is about sharing info....my experience
My motto:"Do not put your eggs in one basket"

FDs at banks is a very safe option, so is PPF where even the interest generated cant be taxed.
Life insurance for young investor's (single) can be put on a back burner...more useful after having a family.
NSC, MIS, KVPS, Term deposit are different schemes given by the post office.
a scheme like MIS one gets monthly income.
Stock markets also a little will not harm, as it would diversify one's portfolio.
MFs for people who do not have time to track the market on a daily basis...but an SIP option is appropriate. Only wait for the right dips before entering. Investing in blue chip company is the best option as these companies will not close suddenly (eg:SBI, HDFC, RIL, REL, BHEL, Infosys, TCS, etc).
Tax saving FDs is also a good option but these usually have a lockin period of 5 years or so, and for an early investor who does not cross the limit of 150000/185000 can put in those schemes when they really need to make use of them.
File of returns and investing in tax schemes in order to avail of tax rebate from the beginning is very important or later one's finances lend up being in a total mess. Also keeping a record of bank statements and of your investments and having an exact record of the path your finances take is very important specially if one has to prove to the IT where your funds have come from.
One useful tip is to invest in schemes where u get good rate of interest, but play it safe and at the end of it all if you have an income of a certain amount coming in every month than a pat of your expanses are reduced by this income.

kimik

thank you for this wonderful informations. Saving at an early age would be really good. but investing it in a good program would be better. a young man who starts investing at an early age, can be a millionaire in the future.
20% of the monthly income is a good way to start with the savings.

NrN Kill

I am not sure i got this part...
If TDS is applicable then what are we exempted from? Is it the regular tax exception?

deepmohan

@Rameshjeee

Really nice info.

Rep+