Question: I’m retiring in March 2022 with a pension of approx Rs. 30,000 per 30 days and lump sum fee of Rs. 75 lakh. Where can I make investments safely to handle month-to-month family bills and earn tax free revenue?
Answer: At current there isn’t any tax-free instrument obtainable. However, you should purchase tax-free bonds issued by numerous PSU (Public Sector Undertakings) and Reserve Bank of India (RBI) previously from the inventory alternate. These tax free bonds can be found at premium to the difficulty value and are usually not tax environment friendly for people who find themselves not in increased tax slabs so I’d advise you to take a position as underneath:
Out of your retirement corpus you may make investments Rs. 15 lakh in Senior Citizen Saving Scheme which affords you a greater charge of seven.40% and which is fastened for the tenure of 5 years and is paid quarterly. You can make investments extra Rs. 15 lakh in Pradhan Mantri Vaya Vandana Yojana which additionally provides you 7.40% p.a. fastened for ten years.
The steadiness will be invested in RBI floating charge saving bonds. with none restrict and that are equally secure and on the similar time give you higher returns than different related merchandise obtainable out there. The curiosity on these bonds is reviewed half yearly. These bonds have a tenure of seven years. Presently these bonds provide 7.15% annual curiosity. The curiosity on these bonds is payable half yearly and the speed is bench marked towards curiosity payable on National Saving Certificates (NSC).
The rate of interest will at all times be 0.35% increased than curiosity on NSC relevant on the time of revision of rate of interest. In the current circumstances these are the most suitable choice attainable the truth that you can not threat your capital. Income from all of the funding devices said are taxable and aside from Pradhan Mantri Vay Vandana Yojana tax can even be deducted at supply on the curiosity payable. You can submit type no. 15G for fee of curiosity with out deduction of tax in the event you fulfill the eligibility circumstances.
Balwant Jain is a tax and funding skilled and will be reached on jainbalwant@gmail and @jainbalwant on Twitter.com.
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