12 January 2012

Small Savings Can Yield Higher Revenues

Saving is unspent income, or a delayed expense. There are many methods to save which includes reducing expenses and keeping a record of them and making a budget and setting saving goals.These all comes under primary steps to save money. But there are some secondary steps which prove to be very fruitful while yielding the profits along with the savings. One can have a pension plan, or save money in the bank through a deposit account, invest in a Mutual Fund or investing in a Fixed Deposit scheme. Here are some schemes in India, where saving the money will be a boon.

1. National Savings Certificate (NSC):

NSC is a long term savings option for an investor, which is provided by the Postal Department of Government of India. Any salaried class of publics such as Government employees, Businessmen, and also Job-holders of private sector can hold an NSC. This scheme not only helps in growth of money but also reduces tax as per the provision of the Income Tax Act, 1961. The duration of this scheme is 6 years as mentioned in www.indiapost.gov.in. This certificate can be issued for a single holder or multiple holders, or on behalf of minors. The denominations for NSC are 100, 500, 1, 000 and 10, 000 for a maturity period of 10 years.

 2. Post Office Savings Accounts:

This account can be opened by a single adult or two-three adults jointly or also by group accounts by provident fund, superannuation fund or gratuity fund or by an employee, contractor, or agent of a government company or of a university for depositing security amounts. This account can be opened with a minimum of 20 to maximum of 1 lakh for single holders and 2 lakhs for joint holders. There is no lock-in / maturity period prescribed. Any amount subject to keeping a minimum balance of 50 can be withdrawn and the present interest rate is 3.5 percent per annum for general public.

3. Public Provident Fund Scheme (PPF):

Under this scheme an individual can open an account in his own name, on behalf of a minor of whom he is a guardian, a hindu undivided family. This can be opened at designated post offices throughout the country and at branches of public sector banks throughout the country. This account matures for a closure after 15 years which can be continued with or without subscriptions after maturity for block periods of five years. Deposit required is minimum of Rs,500 to maximum of 70,000 in a financial year. There can be maximum of twelve deposits can be made in a year. After the completion of one year from the end of the financial year of opening of the account, loans can be taken from the amount credited in PPF.

 4. Post Office Monthly Income Accounts:

This account can be opened by a single adult or 2-3 adults jointly at any post offices. Period of maturity of an account is six years. The deposit limit is minimum of 1,000 to maximum of 3 lakhs for single account and 6 lakhs for joint account. The depositor’s shares in the balances of joint accounts will be half or one third of such balance according to the number of persons holding the account. The rate of interest provided for this scheme is 8 percent. In addition to this, bonus equal to ten percent of the deposited amount is payable at the time of repayment on maturity. The depositer is provided with a passbook with entries of the deposited amount and other particulars duly stamped by the post office. 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.

 5. Post Office Recurring Deposit Account:

This account can be opened by a single adult or two adults jointly and a minor who has attained the age of ten year can avail the account in his own name in any post office. Period of maturity of an account id five years. As per deposit, sixty equal monthly deposits shall be made in an account in multiples of 5 subjected to a minimum of 10. Accounts with not more than four defaults in deposits can be regularized within a period of two months on payment of a default fee but account becomes discontinued after more than four defaults. The depositor is provided with a pass book with entries of the deposited amount and other particulars duly stamped by the post office. For a ten rupees account, the amount payable to the depositor is 728.90 is payable. Premature closure of accounts is permissible after expiry of three years provided that interest at the rate applicable to post office savings account shall be payable on such premature closure of account.