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Tag: kvp

  • How is KVP taxed on the time of redemption?

    In 2021, I bought Kisan Vikas Patra (KVP) for ₹20 lakh. I’ve been paying income tax on the curiosity accrued on this yearly and as well as embrace it in my income tax returns (ITRs) . Since there’s no provision of tax deducted at provide (TDS) on the curiosity earned by KVP, its consolidated curiosity will mirror in my 26AS and annual information assertion. What must I do to steer clear of double taxation on the time of redeeming the KVP?

    —Name withheld on request

    It is assumed that you just’re not required to maintain up and get the books of accounts audited beneath the provisions of the Income-tax Act, 1961.

    Section 145 of the Act provides for taxation of income from completely different sources (like curiosity) in accordance with each cash or mercantile system of accounting recurrently employed by the assessee. Hence, if cash basis is recurrently adopted, curiosity from Kisan Vikas Patra (KVP) is also provided to tax inside the 12 months of its maturity. If mercantile basis is recurrently adopted, the curiosity must be provided to tax yearly on an accrual basis.

    In the second case, you might need opted to produce to tax the curiosity income earned from KVP on mercantile basis, which is presumably the frequent system of accounting adopted by you, in accordance with the above provisions.

    In case of any inquiry regarding the mismatch of the curiosity income displaying inside the AIS inside the 12 months of maturity vis-à-vis the curiosity income provided to tax in that 12 months, the equivalent is also outlined on the premise of a reconciliation of the accrued amount provided to tax in earlier years’ tax return and very important documentary proof.

    It is also individually well-known that as per the current provisions of half 194A of the Act, on maturity of the KVP, no taxes are required to be deducted on the curiosity income. Hence, tax due (if any) is completely payable as self-assessment tax / advance tax (as related).

    Can an individual who’s a minor open a public provident fund (PPF) account ?

    —Name withheld on request

    As per the provisions of the ‘PPF scheme, any specific particular person may, on his private behalf or on behalf of a minor, of whom he is the guardian, subscribe to the PPF. Hence, solely a guardian on behalf of a minor is eligible to open a PPF account.

    Do phrase that only one account can be opened inside the establish of a minor by any guardian. All completely different circumstances / limits as related in case of a PPF account are related for such account as correctly.

    Parizad Sirwalla is confederate and head, worldwide mobility suppliers, tax, KPMG in India.

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  • Small financial savings scheme doubles cash in 123 months, pays extra curiosity than SBI FD

    Fixed-income buyers are scrambling to seek out the financial institution guaranteeing the very best rates of interest in gentle of the rising rates of interest on financial institution mounted deposits. Individuals must bear in mind that the State Bank of India (SBI) just lately introduced a rise in rates of interest of as much as 80 foundation factors on October 22, 2022. Following the latest uptick, SBI is now offering most people with a most rate of interest of 6.25% on deposits maturing in 2 to three years, and senior residents with a most rate of interest of 6.90% on deposits maturing in 5 to 10 years. Fixed-income buyers in search of even higher rates of interest must be conscious that the Kisan Vikas Patra, a publish workplace financial savings scheme not solely doubles buyers’ cash but in addition provides rates of interest which can be considerably larger than SBI FD.

    Kisan Vikas Patra

    A small financial savings scheme backed by the Indian authorities is Kisan Vikas Patra (KVP). The funding quantity doubles in the course of the time period of the scheme, which is 123 months (10 years and three months). A KVP account might be opened at any publish workplace within the nation by a single grownup, a joint account (as much as 3 adults), a guardian on behalf of a minor or an individual of unsound thoughts, or a minor over 10 years outdated in his personal identify. A minimal deposit of Rs. 1000, in multiples of Rs. 100, is required with no higher restrict to make the account operational. 

    Under the scheme, a resident buyer could open an unrestricted variety of accounts. KVP might be transferred from one particular person to a different when the account holder passes away leaving nominated or authorized heirs when the account holder passes away leaving joint holders, when the courtroom points an order, or when the account is pledged to the designated authority.

    Kisan Vikas Patra Calculator

    On various small financial savings schemes, the federal government had raised rates of interest by as a lot as 30 foundation factors (bps) for the third quarter (October to December) of the present fiscal yr, or FY23. The authorities has modified the tenure and rates of interest for Kisan Vikas Patra (KVP). In comparability to the earlier rate of interest of 6.9 per cent and the maturity interval of 124 months, the brand new fee for KVP can be 7 per cent and the maturity interval can be 123 months. As a consequence, the rate of interest supplied by KVP is larger than that of SBI in addition to that of FDs from quite a lot of prestigious establishments, together with ICICI Bank, HDFC Bank, Axis Bank, BoB, PNB, and plenty of extra. If you make investments Rs. 1 lakh in KVP immediately, you’d obtain Rs. 2,00,000 when it matures on December 29, 2031.

    View Full Image

    Kisan Vikas Patra Calculator (dailytools.in)

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  • Invest ₹5 lac on this govt scheme and get double-digit return in 124 months

    A small financial savings scheme referred to as Kisan Vikas Patra (KVP), which is backed by the federal government and ruled by the Department of Posts beneath the route of the Ministry of Communications, is offered to traders who usually are not considering taking over lots of dangers however want to see their cash develop by twofold over time. There are 9 small financial savings plans out there from the Department of Posts, every with distinctive options and benefits. Because KVP is a guaranteed-to-double funding product with a 124-month maturity time, traders with long-term monetary targets however lack market consciousness can use it to supply risk-free long-term beneficial properties.

    Kisan Vikas Patra Calculator

    The Ministry of Finance saved the identical rates of interest out there for the quarter ending September 2022. KVP will thus present a 6.9% yearly compound rate of interest. Investors ought to be conscious, nonetheless, that the federal government modifies the rates of interest of Post Office Small Savings Accounts on a quarterly foundation. A minimal funding of Rs. 1000 and deposits in multiples of Rs. 100 with no most restrict are required to put money into KVP for a interval of 124 months (10 years and 4 months).

    Therefore, should you keep invested for all the period with out taking any withdrawals, your cash will double because of the compounding impact. Therefore, should you make investments Rs. 5 lakhs at a 6.9% rate of interest, you’ll obtain Rs. 10 lakhs at maturity, which is able to embrace the entire curiosity earned of Rs. 5 lakhs. The funding return could be ₹1 Cr if an investor invested ₹50 lakh in KVP over the period of 124 months.

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    Kisan Vikas Patra Calculator (fintra.co.in) Features of Kisan Vikas Patra

    A single grownup, a joint account (as much as 3 adults), a guardian on behalf of a minor or an individual of unsound thoughts, a minor beneath 10 years previous in his personal identify, and any variety of accounts could be established beneath the plan are all eligible for opening Kisan Vikas Patra (KVP) accounts. Tax-savers ought to be conscious that this plan provides no tax advantages, and the earned curiosity is topic to taxation as “income from other sources.”

    Premature withdrawals from a Kisan Vikas Patra (KVP) account are permitted within the following circumstances: within the occasion of the account holder’s loss of life; upon forfeiture by a pledge who’s a Gazette official; upon courtroom order; or after two years and 6 months have handed from the date of deposit. In the conditions talked about above, a Kisan Vikas Patra (KVP) account may also be transferred from one particular person to a different.

     

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  • How revenue tax on KVP is calculated

    How is revenue tax on Kisan Vikas Patra (KVP) calculated. Can tax on its curiosity be paid on a yearly foundation?

                               — Rajiv Kaushik

     

    If the taxpayer follows ‘cash basis’ of accounting, curiosity from Kisan Vikas Patra (KVP) could also be taxed within the 12 months of its maturity/pre-mature encashment. The similar shall be taxable on the relevant slab charges for such 12 months.

    On the opposite hand, if the taxpayer follows ‘accrual basis’ of accounting, accrued curiosity for every year must be calculated foundation the relevant rate of interest and the identical shall be taxable on the relevant slab charges for such respective years.

     

    I’ve invested round ₹1 lakh in mutual funds. While withdrawing the quantity, do I must pay revenue tax if returns are greater than ₹1 lakh after 10 years, particularly if I don’t have every other revenue?

    — Name withheld on request

     

    We have assumed that you’ve got invested in these mutual funds on or after 1 February 2018. Based on the restricted details obtainable, if the unit of a mutual fund is held for greater than 12 months (in case of an equity-oriented fund) or greater than 36 months (in case of every other mutual fund), then the identical would qualify as a long-term capital asset and taxation for the long-term capital beneficial properties revenue (LTCG) will likely be as follows:

    a. Equity oriented mutual funds: As per part 112A of the I-T Act, 1961, LTCG exceeding ₹1 lacs will likely be taxable @10% (with out adjusting for the fee inflation index) – plus relevant cess and surcharge;

    b. Other mutual funds: As per part 112 of the Act, LTCG from the sale of models will likely be taxable @ 20% (after adjusting for the fee inflation index) – plus relevant cess and surcharge

    Further, assuming that you just qualify as a resident of India and you wouldn’t have any revenue apart from the LTCG from the sale of mutual fund models within the 12 months of such sale whereas computing the tax legal responsibility as specified above, the LTCG shall be lowered by the utmost quantity which isn’t chargeable to income-tax (i.e. presently ₹2.5 lakh for people under 60 years of age). Also, relying upon the revenue stage, reduction beneath part 87A (obtainable presently) could also be evaluated on tax legal responsibility arising beneath part 112 of the Act on the sale of  mutual funds apart from equity-oriented mutual funds. This is topic to the prevailing tax guidelines within the 12 months of sale.

    Parizad Sirwalla is companion and head, world mobility companies, tax, KPMG in India.

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  • Will your PPF, NSC, SCSS see rate of interest lower? Know what specialists are saying

    NEW DELHI: Interest charges on small saving schemes (SSS) resembling Public Provident Funds (PPF), Senior Citizens Saving Schemes (SCSS), National Saving Certificate (NSC), Kisan Vikas Patra (KVP) might be reviewed in a few days.

    Last quarter, the federal government had withdrawn a notification which revised decrease the rates of interest, calling it an “oversight”. There was hypothesis that the notification was withdrawn on condition that elections have been on in West Bengal at the moment.

    Experts consider the federal government is unlikely to decrease rates of interest on small saving schemes amid rising inflation. Madan Sabnavis, chief economist, Care Ratings stated, “ It is unlikely that the federal government will cut back the charges. The rising inflation won’t allow them to achieve this.”

    The Reserve Bank of India (RBI) in its newest financial coverage assertion had expressed concern about rising inflation and stated it was prone to stay round 5% for the remainder of the monetary yr 2021. Rising inflation has come as a double whammy for buyers as rates of interest on financial institution mounted deposits are at a multi-year low. This has pushed the unique return charges (nominal rates of interest minus inflation) in damaging territory.

    If one goes by the formulae by which rates of interest on small saving schemes are calculated, ideally the charges ought to go down. Interest charges are pegged to yields of the federal government securities of comparable maturity. Plus, there’s a markup added by the federal government. So, on PPF the mark-up is 0.25%. The markup is added to the quarterly common of G-sec yield of the earlier quarter.

    Currently, PPF provides an rate of interest of seven.1% which is approach greater than that of the G-sec yields even after together with the mark-up. The present yield on the 10-year benchmark G-sec is round 6%.

    “They have a cause to chop the rate of interest on small saving schemes as G-sec yields have fallen since final time charges have been modified. In April it was not completed because of the elections however right this moment with excessive inflation it won’t be well-liked,” stated Sabnavis.

    Madan believes that it’s time for the federal government to overview the system of figuring out the rates of interest on small financial savings schemes.

    “There is certainly a robust cause to overview this method of fixing charges for small financial savings by linking to the market because the measures of the central financial institution are making certain that the yield curve won’t transfer up by direct motion as said within the credit score coverage. In that case, it’s now not reflective of the market and linking the small financial savings charge to them will give a distorted image,” stated Sabnavis.

    As an investor, it is best to proceed to spend money on small saving schemes because the rate of interest supplied is greater than that of financial institution deposits plus a few of the schemes like PPF, SCSS, NSC additionally supply tax advantages.

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