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An insurance policy offers monetary protection against contingencies. Insurance is of two broad types: life insurance and general insurance. In this article, we discuss third party insurance, a subset of general insurance.

What is third party insurance?

The name ‘third party’ stems from the fact that the beneficiary of the policy is someone other than the two parties of the contract: the insured (that is, you) and the insurer. Also known as ‘act-only’ or ‘liability-only’ insurance, a third party insurance policy offers monetary coverage against a third party’s losses or damages caused by you or your insured asset. …

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Post office saving schemes are investments offered by India Post/Department of Posts (DoP) — a postal system operated by the government. These investments are known for their attractive interest rates and tax benefits. But what sets them apart from most other investments is the sovereign guarantee that they have. Meaning, Post Office Savings avenues are backed by the government, which makes them safe avenues.

Let us look at the various Post Office Savings schemes available for you to invest.

1. Post Office Savings Account (POSA)
Similar to a savings account offered by a bank, each individual can have only one POSA with one post office. However, this account can be transferred from one branch of the post office to the other. Post Office Savings Account offers an interest of 4%, which is fully taxable but it doesn’t attract TDS. However, you can claim a tax deduction of Rs 10,000 annually on interest earned from all your savings accounts combined including this under Section 80TTA.

The initial deposit required to open a Post Office Savings Account is Rs 20. Thereafter, you are required to maintain a minimum balance of Rs 50 for an account with a non-cheque facility and Rs 500 for an account with a cheque facility. You can also open POSA in the name of a minor. Recently, the government introduced the internet banking facility for POSA, making it convenient for investors to operate the savings account.

2. Senior Citizen Savings Scheme (SCSS)
As the name suggests, SCSS is a post office savings avenue specially designed for citizens aged 60 yrs. Nonetheless, those opting for voluntary retirement after the age of 55 can also open an account within a month of receiving their retirement benefits. Note that the investment amount, in this case, shouldn’t exceed the retirement corpus you receive therefrom. Talking about the benefits, SCSS offers a regular interest income to the investor, which is paid on a quarterly basis. This arrangement makes it quite convenient for senior citizens to meet their expenses in their sunset years. The current interest rate on an SCSS account is 7.4% pa.

An SCSS account can be opened individually or jointly with your spouse. While the maximum amount you can invest in this scheme is Rs 15 lakh, the investment should be in multiples of Rs 1,000. Talking about tax benefits, SCSS offers a deduction under Section 80C subject to the overall limit of Rs 1.5 lakh. However, interest income exceeding Rs 10,000 a year is subject to TDS. Although SCSS has a lock-in period of 5 yrs, it is liquid. The scheme allows you to make premature withdrawals of the principal on the completion of a year but only on paying a penalty of 1.5% after completion of a year and 1% after 2 yrs. If you wish to continue enjoying the benefits of SCSS after maturity, you can extend it for 3 more years.

3. Sukanya Samriddhi Yojana (SSY)
This Post Office Savings Scheme is specially designed for the welfare of girl children. The account can be opened by a girl child’s parents or legal guardians any time before she turns 10. SSY’s exempt-exempt-exempt (EEE) tax status makes the scheme extremely attractive. EEE means principal, interest, and maturity proceeds of the scheme are all exempt. The prevailing interest rate is 7.6%pa.

One girl child can have only one account registered under her name and parents can have a maximum of two SSY accounts in the name of 2 girl children. The maturity proceeds of SSY are paid to the girl child after the completion of 21 yrs. While the minimum investment for SSY is Rs 1,000, the maximum limit is Rs 1.5 lakh per year. In case you fail to pay the minimum deposit in a financial year, you’ll be liable to pay a penalty.

4. Post Office Monthly Income Scheme (POMIS)
This scheme offers a guaranteed fixed monthly income on a lump sum investment, making it a suitable avenue for risk-averse investors. POMIS can be opened only by a resident individual and they can do so individually or jointly. A minor can also invest in this post office savings avenue and if they are aged over 10 yrs, they can even operate their account. While the minimum investment is Rs 1,500, the maximum is Rs 4.5 lakh for a single account. In case of a joint account, the maximum limit is Rs 9 lakh. As the name suggests, POMIS pays a monthly interest for a maturity period of 5 yrs. On the completion of the tenor, you receive the principal amount.

While there’s no restriction on the number of POMIS accounts you can have, the combined maximum investment allowed is Rs 4.5 lakh. You can also make a premature withdrawal after the completion of a year, subject to a penalty, which is 2% on deposit if you withdraw between the 1st yr and the 3rd yr and 1% on withdrawals after 3 yrs. You can transfer a POMIS account from one post office to another. While interest received is taxable, it doesn’t attract TDS. Further, deposits are exempt from wealth tax. Although the interest rate is revised quarterly, your account will earn interest at the rate applicable to the quarter of your investment. The current interest rate is 6.6% pa payable monthly.

5. Post Office Time Deposit (POTD)
This post office savings scheme is similar to a fixed deposit offered by a bank. Although the Post Office Term Deposits are available in 4 tenors — 1 yr, 2 yrs, 3 yrs, and 5 yrs — only the one with 5 yr term offers tax benefits under Section 80C. The interest rate on this FD is revised quarterly but your scheme will earn interest at the rate applicable to the quarter of your investment. Currently, the account earns interest of 5.5% for the 1st, 2nd, and 3rd yrs and 6.7% for the 4th yr.

While the minimum investment is Rs 200, there is no maximum limit. You can hold any number of POTD accounts singly, jointly, and in the name of a minor. The FD account can be transferred from one branch of the post office to another. On maturity, your account automatically renews for the same tenor and earns interest at the rate prevailing on the date of maturity. POTD can also be opened by a minor.

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Happy new year, folks!

Even as we ring into 2021 with excitement, hoping that the deadly pandemic finally bids a goodbye, business tycoon Mukesh Ambani and his empire Reliance Industries Limited had a rather shocking start to the year on learning about the hefty-penalty that arose from a 13-yr old case. Let’s find out more.

The gist of the case

On 1 stJan 2021, SEBI declared in its order that RIL and its agents were involved in alleged manipulative trading, which garnered them undue profits. …

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Paying income tax is more like a national responsibility. That said, paying your taxes in advance can relieve you of stress arising from keeping it for the year-end. In this article, we talk about everything you need to know about advance tax.

What is advance tax?
Paying a portion of your income tax liability for a financial year in advance or before the year-end is called an advance tax. It is payable when your income tax liability for a financial year equals or exceeds Rs 10,000. You only attract advance tax on the income generated in a year.

Advance tax due dates
Advance tax payment is to be done in instalments before the specified due dates. …

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At ~19,480%, Majesco Ltd’s interim dividend may have enticed you to add the stock to your investment portfolio. After all, it is the highest dividend payout ever declared by an Indian firm. While it would be a delightful sight to see a hefty dividend deposited in your bank balance, it makes sense to know the consequences as well.

In this article, we discuss how dividends affect stock prices, information that would help you make better investment decisions if you are not an existing shareholder of Majesco but are looking to buy the stock for its handsome dividends. …

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Despite receiving SEBI’s nod to go public in 2018, Ludhiana-based buns and biscuit maker Mrs. Bector’s deferred its IPO due to unfavourable market conditions. After a failed first attempt, Mrs. Bector’s is back with its second attempt. Here’s everything you need to know before subscribing to the issue.

About Mrs. Bector’s Food Specialities Ltd (MBFS)
Incorporated in 1995 by Mrs Rajni Bector, Mrs. Bector’s Food Specialities is a leading company in the premium bakery and premium and mid-premium biscuits segments in North India boasting a 4.5% market share.

Products of Mrs. Bector’s
Mrs. Bector’s is involved in the manufacturing and marketing of a range of biscuits and bakery products. All of its products are manufactured in 6 in-house units located across 5 cities. Here’s a glimpse of Mrs. …

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Picking the right stocks from a large database is not an easy task. It is time-consuming and stressful. That’s where a stock screener comes in handy. In this article, let us look at the benefits of a stock screener and how Tickertape’s screener can help you make better and quicker investment decisions.

A stock screener saves time
Thousands of stocks are listed on bourses, which makes screening a handful of them tedious. Studying the financials of each stock thoroughly, evaluating its historical performance and future prospects, and analyzing the impact of current events and news on the scrip would take forever.

Thanks to the screener, this lengthy process of evaluating stocks is narrowed down to simply applying a couple of metrics that complement your investment objective. Once you select the metrics you want to apply, the screener filters out stocks that don’t meet your requirements. The result? You are only left with a list of stocks that fit your criteria.

For instance, if you are looking for stocks that are heavily funded with equity as opposed to debt, you can apply the debt-to-equity ratio. If you are looking for undervalued stocks, applying a low level of price-to-earnings ratio (P/E) makes sense. Similarly, if you are interested in stocks that have a comfortable short-term liquidity position, you can set a high current ratio as one of the metrics.

A stock screener eliminates emotional-biased decisions
When evaluating stocks, it is easy to steer away from our objective and make decisions based on emotions instead. Rarely are such illogical decisions fruitful, which ultimately impact your returns on investment.

For instance, investing or staying invested in a stock simply because you like their product doesn’t make sense if the company has unattractive prospects. Fortunately, a stock screener eliminates such biases and illogical decisions and filters out stocks based on logical parameters.

A stock screener presents new investment opportunities
Since a stock screener filters out scrips that meet your criteria from a large database, it presents certain opportunities that you may not have considered or were not aware of in the first place. Meaning, you may discover unpopular stocks, which may have the potential to grow but are often overlooked.

A stock screener allows you to save screens
Some screeners like that of Tickertape, allow you to save a particular screener for future reference. This way, you can quickly load a saved screener when evaluating stocks and accelerate the screening process based on metrics and filters that you use often.

A stock screener updates current information
Most screeners update current events and information regarding stocks regularly. For instance, Tickertape displays live price movements of stocks to help you analyse its performance better. …

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The retirement age in India is 60 yrs. However, companies, both public and private, can ask their employees to voluntarily retire before their actual retirement date. This way of cutting down labour in an organisation is called VRS (Voluntary Retirement Scheme).

Backdrop of voluntary retirement scheme in India
The Industrial Disputes Act, 1947 prohibits companies from reducing their excess staff via direct retrenchment. In other words, employees covered under a labour union cannot be retrenched directly in India. That’s why VRS was introduced as a legal solution to address the issue.

What is VRS?
Voluntary Retirement Scheme is a way to cut down surplus staff in an organisation. Here, employees are offered an option to retire before their actual retirement date and are paid compensation for severance of their services. VRS is voluntary and so no eligible employee can be forced to opt for it. They can do it at their will and wish. Similarly, an employer has the right to accept or reject any application. …

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When it comes to investing in the stock market, you would generally choose to place your bets on well-established largecap and midcap stocks — because they are relatively stable and less risky. While that’s true in most cases, let’s not forget about penny stocks. An apt description for these shares is “Chhota packet bada dhamaka” as they are volatile.

Let’s look at what penny stocks are, their features, and when you should invest in them.

What are penny stocks?
Stocks with current market price ranging from Rs 0.05 to Rs 10 are tagged as penny stocks in India. Such stocks also have low market capitalisation — typically less than Rs 500 cr. …

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Can you recall receiving an email from your employer requesting you to submit your investment declaration form at the beginning of every financial year? Such a hustle, right? But that’s the law and we have to abide by it. Based on this investment declaration that you submit, your employer estimates your taxable income and deducts tax at source every month before paying your monthly salary. Let’s learn more.

What is TDS?
As the name suggests, TDS is tax deducted at source. As per the Income Tax Act, 1961, an employer deducts TDS when the salary of an employee exceeds the exemption limit of income tax based on the current slab rate for the relevant financial year. The employer then deposits such tax with the government on behalf of you. …


Aradhana Gotur

Lives in both own and parallel universes and loves nature, music, and words (that turn into actions)

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