The ideal gift for your cute little daughter!


What Is SSY?

Sukanya Samriddhi Yojana (SSY) is a small deposit scheme for a girl child, launched as a part of the ‘Beti Bachao, Beti Padhao’ campaign so that the education and marriage of every Indian girl is taken care of. Key points of the scheme:-

  • Attractive Tax-free returns – currently at 7.6% p.a (reset on quarterly basis)
  • Income Tax Section 80C deduction available
  • Can be started for a girl child below 10 yrs of age
  • Minimum Deposit: Rs 250, Maximum Deposit: Rs1.5 lacs per year
  • Maturity Period: 21 yrs or till the marriage of the girl after she attains the age of 18 yrs
  • Upto 50% Withdrawal allowed for higher education, after she turns 18 yrs of age

Should you start it for your daughter?

A daughter’s good education and marriage is considered an important responsibility of every Indian parent and no parent would ever like to compromise with either of them. While education is already very expensive in India, it is further inflating at an average of 10% per annum. Foreign education is definitely an even more expensive option. Investing just Rs.1.5 lacs per annum in SSY will not fulfill the corpus requirement but it cannot be denied that it a good and safe investment avenue.

Hence, one must invest in SSY along with other inflation beating investment avenues like equity Mutual Funds to build up a good corpus to meet the costly requirements for your daughter(s) when the time comes in future.

(Contributed by Sumeet Kumar, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)

Use your losses from investments wisely to reduce tax liability

‘No risk, no gain’ is what everyone is already aware of. Risk can yield either positive or negative outcome – that is what risk actually means. While we all look for positive outcomes, negative outcome can never be eliminated in investments. And an aware investor can turn negative outcome in his favour also. Remember, no situation is bad, if you have the ability to extract the positive out of it.

Losses incurred on the sale of any capital asset, broadly listed as equity shares, equity mutual funds, property or gold, can be set off against gains incurred on the sale of similar assets to claim tax exemption as follows:-

  • Short-term capital losses can be set off against any capital gain – Long-term or Short-term.
  • Long-term capital losses can be set off only against long-term capital gain.
  • A capital loss, long or short term, can be carried forward for next 8 consecutive years if it does not get adjusted in the current financial year and can be fully or partly set off against similar category gains in future.

Investors often commit the mistake of not reflecting their loss transactions while filing their Income Tax Returns (ITR). Please remember that unless you do so, the losses cannot be set off. Also, if you have any carry forward losses of past years, they have to reflected in the ITR till they are set-off and all such carry-forward ITRs have to be filed before the due date of filing ITR for that financial year.

(Contributed by Manish Kumar, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)

Agricultural Land: A good investment avenue?

Agricultural lands have always held a charm for a lot of us for varied reasons, primarily being that most of us have our roots in villages and the farm lands. We also look at agricultural land as being advantageous due to one or more of the following reasons:-

  • Farmland income is free from taxes as it is agri-income.
  • There is a scope to grow crops and try to monetize the investment, even after factoring in for the vagaries associated with a yield.
  • You have a getaway home for you and your family to relax and do things unhurried.

While all the above points are very valid and true, one also has to keep following points in mind:-

  • Cultivating a farm land is a lot of hard work and for many years, it could be very unremunerative if one tries to do it himself. Getting it done on contract is rarely profitable considering the sunk land cost and profit-sharing. Selling the farmland produce at a good price is also not easy, given numerous federal laws applicable to it as also functioning of local cartels.
  • Tending to farmland by ownself could mean staying away from the family unless one decides to stay with family at the location and finds solace in nature.
  • Getaway home (farm house) also demands a lot of attention and expenses if one uses it only intermittently, especially if it is far away from one’s permanent location.

Sometimes some sudden developments like construction of a highway, SEZ, IT parks etc result in a windfall for agricultural land owners but please remember that such instances are very rare and if one tries to time own purchase with it, the prices would have, most probably, already risen in the area. Other points that cannot be ignored:

1) Conversion is not easy: You cannot convert a fertile piece of agricultural land into a residential one. The land should be a dry land for conversion.

2) Land Ceiling Act: A number of states restrict the ownership of land. Therefore, check how much can be bought in that state.

3) Land is a state subject, laws are different in each state and not having a thorough knowledge, will be disadvantageous, considering the legalities involved in the process.

So, if you have been thinking of buying agricultural land for yourself, do keep the above points in mind before taking action.

(Contributed by Jatin Uppal, Deputy Manager, Hum Fauji Initiatives)

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