The investment benefit is present only for two girl child of an individual unless a person is blessed with two girls in the second birth. The account can be opened with a minimum amount of Rs 1,000. The maximum amount that can be deposited in a year is Rs 1.5 lakh. The amount can be deposited by cash, cheque or draft. There has to be a minimum amount of Rs 1,000 in a year. The deposit is to be made for a period of 14 years from the opening of the account and maturity is 21 years from the date of opening of the account or if the girl gets married before this date then such a period. While the amount of Rs 1.5 lakh can be invested each year for the duration of the scheme the return is not certain as this would be announced each year and this can go down as the rates in the economy fall. This makes the final figure of accumulation impossible to estimate as the time period of the scheme is extremely long and the rates can fluctuate significantly.
Taxation
The real benefit for the account has to be considered in the form of taxation that will be encountered by the individual when they are investing in the account. There are two angles to this whole process where the first is the amount that is contributed each year. The amount invested is eligible for a deduction under Section 80C of the Income Tax act upto a sum of Rs 1.5 lakh. However one has to know that there is a whole list of instruments that are covered under this specific section and for most people they would already be exhausting the limit that is available under this particular section. The other aspect is the income that is earned as interest on the scheme. The interest for the first year is 9.1 per cent and like the PPF account the figure would be announced each year so one will be able to know the returns only when this is announced. The income here is now tax free and hence would not have to be included in the taxable income of the individual. This makes the investments an easy option from the tax point as it would not involve any clubbing with the income of the parent since the income itself is tax free. This also ensures that the entire amount earned on the scheme would be available at the time of maturity of the scheme.
Comparison
Like the Public Provident Fund (PPF) the individual can use the Sukanya Samriddhi Yojana to accumulate amounts tax free but there is a fundamental difference between the two options. One is that the PPF is meant for retirement and hence structured accordingly whereby it can be extended indefinitely till required. The Sukanya Samriddhi Yojana is meant for the girl child to meet expenses for critical moments in her life and hence the target nature of the scheme is different. Also there is limited liquidity in this scheme so the individual has to undertake all the calculations properly before starting the investment. The liquidity options in a PPF are far more and these can be used effectively. On the whole one should look at this investment only if there is a specific need for a girl child and the time period matches with the requirement.
source:moneycontrol.com
Under this scheme, subscribers invest in a fund chosen by them and at the time of retirement they get a lump sum amount depending on the performance of that fund. The returns from NPS are not guaranteed; they are market-linked. NPS was introduced in 2004 for the new government employees but from 2009, it was extended to all on a voluntary basis.
Here is your 10-point cheat-sheet
1) Tax savings: The extra deduction of Rs. 50,000 on NPS can help those in the highest tax bracket of 30 per cent save an additional Rs. 16,000 in taxes. Those in 20 per cent tax bracket can save over Rs. 10,000 while those in 10 per cent can save over Rs. 5,000.
2) More tax-saving options: This extra deduction of Rs. 50,000 on NPS will increase the total deduction allowed under Section 80C and 80CCD of Income Tax Act to Rs. 2 lakh, says Mayur Shah, executive tax director at EY. The combined limit earlier was Rs. 1.5 lakh. Section 80C relates to deduction allowed under investments in instruments like PPF and insurance policies. Section 80CCD represents deduction with respect to a pension plan notified by the government, including NPS. The limit on deduction on 80CCD, including contribution to the New Pension Scheme, was also increased in the Budget to Rs. 1.5 lakh from Rs. 1 lakh. This will help investors have more tax-saving options.
3) Other Budget proposal: The Finance Minister also said that the government is planning to give an option to employees to opt out of Employees Provident Fund (EPF) and instead invest in NPS for retirement savings.
4) Tax on withdrawal: Mr Jaitley however did not extend tax breaks on withdrawal from NPS. So contribution to NPS up to Rs. 1.5 lakh and the interest earned are not taxed but the withdrawal becomes taxable. Other savings schemes such as public provident fund (PPF) and employee provident fund (EPF), however, enjoy tax benefits in all the three stages: contribution, interest earned and withdrawal.
5) NPS structure: The scheme is structured into two tiers: Tier-I and Tier II accounts. The Tier-I account is the non-withdrawable account meant for savings for retirement. The contribution to Tier-I account is only eligible for tax benefits.
Tier-II account is a voluntary withdrawable account which can be opened only when there is an active Tier I account in the name of the subscriber. The withdrawals are permitted from this account as per the needs of the subscriber. The Tier-II account is more like a bank savings account.
6) Withdrawal options: Subscribers can exit from NPS upon attaining the age of 60 (for all subscribers other than government employees). At least 40 per cent of the accumulated pension wealth of the subscriber needs to be mandatorily used for purchase of an annuity for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber. Annuity service providers are responsible for delivering a regular monthly pension to the subscriber after exit from the NPS.
Subscribers can exit from NPS even before attaining the age of 60 by using at least 80 per cent of the accumulated pension wealth for purchase of an annuity for providing for the monthly pension. The balance is paid as a lump sum payment to the subscriber.
7) Fund options: NPS offers a range of investment options and choice of pension fund manager who will manage subscribers' funds. Individuals also have an option to switch over from one investment option to another or from one fund manager to another. The returns are, however, totally market-linked. Investors have the option for choosing stocks, government bonds and other securities as their asset choice. But the equity part of the allocation cannot exceed 50 per cent.
8) Minimum deposit: For Tier-I account, Rs. 6,000 has to be deposited by the subscriber in a year and the minimum contribution is Rs. 500 at one time.
9) Portability: After opening an NPS account, a subscriber gets a Permanent Retirement Account Number (PRAN), which is a unique number and remains with the subscriber throughout his/her lifetime. NPS provides portability across jobs and across locations.
10) Opening and tracking of account: Many banks are registered with Pension Fund Regulatory and Development Authority (PFRDA) to provide NPA-related services to individuals. NPS account can be opened to anyone from 18 years to 60 years of age. All transactions as well as the current fund value can be tracked online.
Proposed New IT Slab in Budget 2011-12
Proposed New IT Slab in Budget 2011-12
Financial Minister Mr. Pranab Mukharjee will present the budget for the financial year 2011-12 on 28th of this month. It is expected that there will be change in income tax slab for the F.Y 2011-12.
Income Tax slab for the Year 2010-11
Tax Rates for individuals other than resident women & senior citizens for the year 2010-11
| NET INCOME | INCOME TAX RATES | EDUCATION CESS |
| Upto Rs 1,60,000 | NIL | NIL |
| Rs 1,60,000 to 5,00,000 | 10% of annual income exceeds 1,60,000 | 3% of Income Tax |
| Rs 5,00,001 to 8,00,000 | Rs 34,000 plus 20% of the amount exceeds Rs 5,00,000 | 3% of Income Tax |
| Above 8,00,000 | Rs 94,000 plus 30% of the amount exceeds 8,00,000 | 3% of Income Tax |
Tax Rates for resident women
| NET INCOME | INCOME TAX RATES | EDUCATION CESS |
| Upto Rs 1,90,000 | NIL | NIL |
| Rs 1,90,000 to 5,00,000 | 10% of annual income exceeds 1,90,000 | 3% of Income Tax |
| Rs 5,00,001 to 8,00,000 | Rs 31,000 plus 20% of the amount exceeds Rs 5,00,000 | 3% of Income Tax |
| Above 8,00,000 | Rs 91,000 plus 30% of the amount exceeds 8,00,000 | 3% of Income Tax |
Tax Rates for senior citizens
| NET INCOME | INCOME TAX RATES | EDUCATION CESS |
| Upto Rs 2,40,000 | NIL | NIL |
| Rs 2,40,000 to 5,000,00 | 10% of annual income exceeds 2,40,000 | 3% of Income Tax |
| Rs 5,00,001 to 8,00,000 | Rs 26,000 plus 20% of the amount exceeds Rs 5,00,000 | 3% of Income Tax |
| Above 8,00,000 | Rs 86,000 plus 30% of the amount exceeds 8,00,000 | 3% of Income Tax |
It is expected that at least 20,000 Rs increase will be there in income tax rates for each category.
ie for individuals other than resident women and senior citizen the income tax slab may be increased to Rs 1,80,000 instead of Rs 1,60,000.
For Resident women Income tax slab may be increased to 2,10,000.
For Senior citizen income tax slab may be increased to 2,60,000.
This is only an assumption and the clear picture will come on Monday only.
Earlier Finace chairman Yashwant Sinha suggested that theincome tax exemption limit should be increased to 2 Lakhs.
“ Standing Committee on Finance Chairman Yashwant Sinha has suggested raising the income tax exemption limit from Rs. 1.6 lakh to Rs. 2 lakh in the Budget to provide relief from high inflation. "He (the Finance Minister) should introduce some of the provision which are part of the DTC (direct tax code), like raising exemption limit," Sinha said
.
Inflation continues to be a concern for the common man as well as the government. Food inflation had touched 18.32 per cent in December, 2010, before moderating to over 11 per cent this month. The overall inflation continues to be above eight per cent as against the comfort level of 5-6 per cent.
Currently, income up to Rs. 1.6 lakh per annum is exempt from tax for individuals. For women and senior citizens, the limit is 1.9 lakh and 2.4 lakh, respectively. However, under the DTC Bill, which was introduced in Parliament last year, the I-T exemption limit is proposed at 2 lakh. ”
(As quoted from NDTV Profit)
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Web based tutorial on TDS provisions has been developed by the Income Tax Department.It is available on the website http://www.incometaxindiapr.gov.in
It covers the various important aspects of TDS law and procedures relating to the obligations of the deductors, tax rates for various categories of deductions at source, important dates, forms etc. Therefore all the State Government Drawing and Disbursing Officers, Accounts Officers and Treasury Officers are directed to make use of the e-tutorial launched by Income Tax Department for better and continuous understanding of TDS provisions and total compliance thereof.
Over View of TDS
TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries, one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion as well as expands the tax net.
Who Shall Deduct Tax at Source ?
Principal Officer of a company for TDS purpose including the employer in case of private employment or an employee making payment on behalf of the employer.
1: In the case of "interest on securities" other than payments made by or on behalf of the Central govt. or the State Government, it is the local authority, corporation or company, including the Principal Officer thereof.
Such person is called Deductor while the person from whom the tax is deducted is called Deductee.
Tax must be deducted at the time of payment in cash or cheque or credit to the payee's account whichever is earlier. Credit to payable account or suspense account is also considered to be credit to payee's account and TDS must be made at the time of such credit.
Learn More about Tax Deduction at Source
The govt raised the income tax (IT) exemption limit on gratuity from Rs 3.5 lakh to Rs 10 lakh, with effect from May 24,2010.
The Payment of Gratuity (Amendment) Bill, 2010, relating to the exemption was passed by Parliament in the Budget session. Initially, the Sixth Pay Commission had raised the limit for central government employees and the Cabinet later extended it for the private sector employees as well.