EPF and PPF
We all want to save taxes and you know what the amazing part is, that our tax laws provide many options to help us in saving our taxes. One such option is tax saving investments, these investments grant numerous tax benefits and make our income EXEMPT-EXEMPT-EXEMPT.
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- The interest earned on such investments is exempt from tax.
- Also, the lump sum amount withdrawn is also tax-free (provided it's invested for a certain time period).
Isn't it magical having so many tax benefits from just one investment? That well judged investment is investment in Public Provident Fund and Employee Provident Fund and both come under EEE category. Amount invested in PPF and EPF are eligible for deduction up to Rs.1,50,000 u/s 80C of the Income Tax Act,1961. Let’s us understand in brief about EPF and PPF.
PPF
- PPF or Public Provident Fund is one of the most popular saving schemes among Indian households. Since it’s managed by the Central Government, the money in the PPF account and the returns it generates are guaranteed.
- With a minimum investment of only Rs 500 per financial year, PPF is a clear choice for those looking for safe and guaranteed returns.
- PPF is a long-term investment with a lock-in period of 15 years which means it can be withdrawn only at maturity.
- Interest rates currently payable on such accounts stand at 7.1% and is subject to quarterly updates at the discretion of the government.
EPF
- EPF is a Retirement Benefit Scheme in which both employee and employer contribute a small portion towards the scheme.
- EPF is a short-term investment with a lock-in period of 5 years.
- * Both employer and employee are required to contribute 12% of the basic pay to EPF account.
- EPF gives around 8%-13%p.a. interest.
- The current interest rate is 8.5% and withdrawals are not taxed if made after 5 years.
Tips to improve Credit Score
First of all, we need to know what is a credit score. A credit score also known as credit rating, is an indicator of a person’s financial health or creditworthiness, or their ability to repay debt. In India, there are four Credit Information Companies (CICs) licensed by RBI viz, CIBIL, Equifax, Experian and Highmark.
There are “n” number of tips and tricks to improve one’s credit score but at times it can be a bit difficult to understand, where to start from. No matter a person is starting to build their score from scratch or is rebuilding, it’s significant to know how credit scores are calculated.
Your credit score is calculated by taking into account several factors and each factor has a different weightage attached to it. The factors under consideration include the following:
- Repayment history
- Total amount owed
- Credit utilization
- Number of loans and credit cards used
Pay down your revolving credit balances
If you are having sufficient funds or can afford to pay more than your minimum payment every month then you should do this. This will basically help in keeping your credit utilization rate low. In simple words, the sooner you can pay off your balance each month, the better it would be.
Manage your bill payments wisely
Lenders generally see 4-5 factors that are – Payment history, credit usage, age of credit accounts, new credit inquiry and credit mix.
Avoid late payments at any cost and manage your credit. You must pay your dues timely.
You can make a planner or mark a calendar with your payment deadlines and set up reminders so that you don’t miss the deadlines. Also, use the service that lets you automate bill payments to avoid any delay. If you are consistent in paying your dues timely, there are high chances that the credit score might hike within just a few months.
Consolidate your debt
One basic tactic is to consolidate your multiple outstanding debts into one and pay them all together by taking a debt consolidation loan from bank. Then you’ll just have one debt to deal with and there might be a chance to get a lower interest rate on the loan. This will ultimately help in maintaining your credit score.
Avoid late payments at any cost and manage your credit. You must pay your dues timely.
You can make a planner or mark a calendar with your payment deadlines and set up reminders so that you don’t miss the deadlines. Also, use the service that lets you automate bill payments to avoid any delay. If you are consistent in paying your dues timely, there are high chances that the credit score might hike within just a few months.
Pay attention to Credit Utilization
Credit utilization refers to the portion of your credit limit that you’re using at any given time. Keeping a check on your credit utilization ratio is a major factor that affects your credit score. The simplest way to keep your credit utilization in check is to pay your credit card balances in full each month. Let us understand this with the help of an example. Let us assume that you have a total available credit limit of Rs10,000 on two credit cards, and a balance of Rs6000 on one, this implies that your credit utilization rate is 60% i.e., you are using 60% of that total credit available.
Choose the Right Structure for your Enterprise
The first decision you have to make is to select the most suitable legal structure for your venture. Each offers distinct advantages and regulations, which we will explore later in this newsletter.
Types of Company Under the Companies Act, 2013 are as follows:
- Private Limited Company (PLC)
- One Person Company (OPC)
- Limited Liability Partnerships (LLP)
- Public Limited Company
- Section 8 Company (NGO)
Essential Documents for Registration
- Proof of Address and Identity: Valid documents of directors and shareholders.
- Digital Signature Certificate (DSC): Acts as your electronic signature for online filings and legal documents
- We can file an application for DIN along with the SPICe+ for the interest of the directors from other entities.
- Nominee’s asset in case of OPC.
- Identity proof and residential proof of nominee in case of OPC.
- The Declaration from the proposed directors.
- DIR-2 consent to act as a director.