[nishantgandhi]

Originally Posted by phamilyman

Sorry boss, FD ka income is taxed - while NSC/KVP etyadi are NOT.

What you need to make sure, though - is if he wants to explore debt/equity ELSS.

Interest from FDs is taxed only if it exceeds Rs 10,000 per year in one branch.

My personal banker suggested that you can break up the amount to be invested in FD in different branches and hence save the tax.

[vasudeva]

They are very safe. However, try to get your money at the end of tenure. It is painful (Govt. babus) and arduous.

[aka_iitd]

Nishant, it does not depend upon the branch. If you have different account then it is OK.
This is true suppose you have acc in HDFC bank and you online book FD from same account in different branch then they club interest for all as your Cutomer ID is same. If you have different accounts may be same branch then it is fine. But leagally TAX should be cut but bank does not track with name.

[ashthedivx]

Originally Posted by aka_iitd

Nishant, it does not depend upon the branch. If you have different account then it is OK.
This is true suppose you have acc in HDFC bank and you online book FD from same account in different branch then they club interest for all as your Cutomer ID is same. If you have different accounts may be same branch then it is fine. But leagally TAX should be cut but bank does not track with name.

Tracking by name is actually impossible as one branch can have 100s of account with the name Mr/Mrs XYZ.

However, so far it looks like KVP is better option then any secured dept investment instrument available in market currently. Any idea if Tax is deducted on KVP at source aka TDS or while filing return ??

[BaCkSeAtDrIVeR]

Originally Posted by ashthedivx

Tracking by name is actually impossible as one branch can have 100s of account with the name Mr/Mrs XYZ.

Ugh. You are actually identified by the IT department using the PAN number; not just your name.

[aka_iitd]

Originally Posted by BaCkSeAtDrIVeR

Ugh. You are actually identified by the IT department using the PAN number; not just your name.

Thats why bank is making mandatory to have a PAN number. Bank does not deduct the tax if the customer ID is same. AFAIK the liability is on customer to deposit the tax if FD interest earning goes beyond 10K

[ashthedivx]

Originally Posted by aka_iitd

Thats why bank is making mandatory to have a PAN number. Bank does not deduct the tax if the customer ID is same. AFAIK the liability is on customer to deposit the tax if FD interest earning goes beyond 10K

PAN No. ain't necessary in the case of a Student weather it is a Higher-secondary one or MBA one

[Lalvaz]

One avenue that your friend could consider might be real estate. While 1lac a year seems a little low, it might be possible to get a loan with an EMI of approx 8-9000 per month. Use the money to invest in a shop/flat etc...

The reason for recommending real estate is that its one of the few investments that keep pace with inflation. While giving you the potential for capital appreciation, you also get market linked returns by means of rent, so it protects you from the adverse impact of inflation.

However investment in real estate has a few disadvantages too, such as low liquidity, so, its feasible only if your friend is seriously looking at it only as an investment which will pay off by retirement. Having a long time horizon will help iron out any drastic erosion in values in the short term. Also the next 6 months to a year should throw up some good real estate investment opportunities, so definitely worth looking at.

Hope this helps. Do let us know once your friend makes a choice.

[Lalvaz]

Originally Posted by nishantgandhi

Interest from FDs is taxed only if it exceeds Rs 10,000 per year in one branch.

My personal banker suggested that you can break up the amount to be invested in FD in different branches and hence save the tax.

All interest income from FD's is taxable, however TDS will not be deducted if the interest income is less than 10000. However, it is the individuals responsibility to disclose and pay taxes on all income sources, if his total income falls in the taxable bracket.

Breaking FD's will ensure that no TDS is cut by the bank, but will not remove your liability to pay taxes.

[HarshVShrotriya]

Bumping an old thread. Anyone in Bangalore en cashed their NSC recently? Can you please help me with the steps?
I know I have to go to the nearby post office but, apart from my identification documents and the certificate, do I need to carry anything else?
Also, my certificate is from my home town post office and I am currently in Bangalore, will carrying the two passports(one from my home town but, expired and the latest one from Bangalore) be sufficient?
Thanks in advance.

[andydude]

Originally Posted by HarshVShrotriya

Also, my certificate is from my home town post office and I am currently in Bangalore, will carrying the two passports(one from my home town but, expired and the latest one from Bangalore) be sufficient?
Thanks in advance.

Hi, I had encased last year in Bangalore. But AFAIK NSC can be encashed only from the PO from where it has been issued. Please get this checked. Also they only need your ID proof so Passport would be fine.

[HarshVShrotriya]

Originally Posted by andydude

But AFAIK NSC can be encashed only from the PO from where it has been issued. Please get this checked.

Thanks Andy. I believe the easiest way is the hard way - try by myself.
Will update the result for all.

[faustus77]

Originally Posted by HarshVShrotriya

Bumping an old thread. Anyone in Bangalore en cashed their NSC recently? Can you please help me with the steps?
I know I have to go to the nearby post office but, apart from my identification documents and the certificate, do I need to carry anything else?
Also, my certificate is from my home town post office and I am currently in Bangalore, will carrying the two passports(one from my home town but, expired and the latest one from Bangalore) be sufficient?
Thanks in advance.

Harsh V
Hi.
You have to complete the formality of KYC at the NSC issuing post office. They give you a unique number. You can ask somebody to complete the formality but your signature is required. I am not aware if you can complete the KYC formality at Bangalore and whether that number will be valid in your NSC issuing PO.
One suggestion. Google for the PO telephone number or ask somebody to get it for you. Call the post master and you will be guided. Your presence is not necessary at the time of encashment. You can authorize somebody to collect the cheque on your behalf. You have to fill the backside of the NSC and sign. Then write a letter to the PO to deliver the cheque to your messenge. The letter should have the messenger's name and his signature on that letter duly attested by you.
Hope this helps
Regards

[rki2007]

Originally Posted by Lalvaz

Sorry phamilyman, Interest income from NSC/KVP is taxable. Not tax free.
So its the same as NSC's/KVP's if the FD is 5 years or more.

Sorry Sir.

The interest income from NSC for the period of four years is not taxed. In other words, you can claim deduction towards the accrued interest under section 80C of the Income-tax Act, 1961 subject to the threshold limit of Rs. 1.5 Lakhs. However, the interest that accrues for fifth year is taxable on account of the reason that it is not reinvested.

Any day NSC is the best option compared to the 5 year tax saving deposit with the banks. The interest earned from the bank deposits shall be taxable for all the five years. Further submission of form 15G/H is incorrect declaration as the same is only for those whose taxable income is lower than the prescribed annual threshold limit.

Also there exists a limit of Rs. 10,000 under section 194A of the Income Tax Act, 1961 where tax is deductible if the total interest earned is in excess of Rs. 10,000. It is applicable per PAN across all the branches of the same bank. Further each customer with an identified PAN will be allotted one Customer ID which shall be unique through out all the branches. So holding individual deposit with various branches of the same bank is not viable. Some banks track it and some do not. For ex smart private banks like ICICI bank easily tracks any number of Fds that you hold in any branch across the Country through the PAN, but some old age nationalised banks do not have such great internal controls. One may escape the TDS, but however offering the interest income to tax is the responsibility of the Tax Payer.

Hope the above is clear.

[HarshVShrotriya]

Originally Posted by faustus77

Hope this helps

Thank you so much faustus77.

Really appreciate your detailed explanation and time. I believe the first right step will be, like you said, call up home post office.