PAN Cards And FDs

wealthymatters.comUnder section 139A of the I-T Act,only persons whose income is chargeable to tax are required to obtain a PAN.However section 206 AA of the same Act, which became effective from assessment year 2010-11, makes it mandatory for every person to furnish PAN card in their transactions with banks and financial institutions.So section 206AA compeled even those without a taxable income to obtain a PAN, failing which tax would be deducted at source.

A writ petition was filed before the Karnataka High Court by A Kowsalya and two other small investors, who had made investments in financial institutions (F Is). They do not have any income other than the income received from F I s and they have declared this under Form 15G. Form 15G is usually used for declaring that a person’s income is below taxable limit, and therefore, the bank or FI is not required to deduct tax at source while making payments.The FIs, however, told the petitioners that tax would be deducted at source if they did not furnish PAN cards as required under section 206AA of the Income-Tax Act. The petitioners challenged the validity of Section 206AA of the Income-tax Act in their writ petition. Read more of this post


Recurring Deposits

wealthymatters.comA Recurring Deposit(RD) is a type of term deposit account opened by a person/persons with a bank or a post office wherein the investor or investors deposit a fixed amount of money every month for a fixed tenure . This scheme is meant for investors who want to deposit a fixed amount every month, in order to get a lump sum at the end of the tenure. The interest on RDs normally offered by banks is one percent below Fixed  Deposit(FD) rates compounded quarterly.Often there is nothing extra by way of  interest offered for senior citizens.Otherwise the rules for operating a RD account are the same as that for a FD account.The PO offers a fixed 7.5% interest compounded quarterly for a 5 year term.

RDs are great for people to develop the savings habit.It is especially useful to teach kids to save especially the Post Office Recurring Deposit (PORD) which has a minimum deposit of 10 rupees per month.Often banks package RDs as schemes to become or to make your child a lakhpati,millionaire etc or as schemes to build the down-payment on a house or vehicle.  Read more of this post

%d bloggers like this: