A thoughtful quote from a chinese philosopher
“The journey of a thousand miles begins with one step”– Lao Tzu.
Take your time. Think, observe, research, set your goals and finally make your pick, research, and observe again! Keep adding to your good investments and let your money grow! All of us at various points of life think of being rich, build enough wealth for our long term goals of retirement, child education Continue reading
Let me put it this way – there aren’t too many benefits to loyalty in this world, but Gratuity is one of the few benefits that do exist. If you work for same employer for five years or more, you qualify for gratuity. This benefit is mandated by payment of Gratuity act. Gratuity = gratefulness! I get a lot of questions regarding Gratuity benefits. The first comment almost always is:
“Gratuity sounds good! But what will I get?”
The amount you will receive is directly linked to the number of years you served and the last drawn monthly salary. This is the rough estimate. For example, if you have served for 10 years and if your last monthly basic and DA is Rs 25,000
Then, your gratuity=(number of years of service)*(last drawn monthly basic and DA)*15/26 which is 10*25000*15/26= Rs 1,44,230
A good amount! The next question that follows is:
“How does this impact me?”
Well, there is an impact on your tax! If you are a government employee up to Rs 10 lakh is tax exempt. For others, the limit was Rs 3.5Lakh. In 2013, this limit was changed to 10 lakh for everyone.
The price for your loyalty to your company is worth it, would you not agree?
VPF is best for those people, who are looking for long term savings with good returns coupled with tax benefits. If you are one such person, please read further.
We will start with the saying “A Rupee saved is a Rupee earned”.
PF is EEE (exempt from Tax) whereas FD is taxed. Let’s assume that you are planning to make a Fixed Deposit of your savings of 1 Lakh. This will get you about 8% interest (post tax around 6%) from most of the banks per year – that is an earning of Rs 6000 per annum post tax.
You can effectively do the same by contributing a higher Continue reading
Let’s get a quick briefing on what Superannuation is and how it works. A simple definition is that superannuation is a retirement benefit given by most of the employers to their employees.
How does it work?
It is pretty straightforward. Every month, 10% of your basic income is contributed to the fund. The host company pays this amount and there is no employee contribution like PF. Typically superannuation is managed by LIC in India.
I have also had questions about the criteria used and how the calculations are done. This is again very straightforward. If you have had less than one year of employment, superannuation remains nil. However, if the employment is between one and two years, you will get 50% of the contribution from the company plus interest earned. If your employment term ranges from two to three years, the company contributes 75% of contribution plus interest earned. If your employment has exceeded three years, 100% contribution plus interest earned will be your benefits!
Compared to PF and Gratuity, payment options are slightly complex. You can withdraw up to 1/3rd of the total, and of course, appropriate taxes will need to be paid. On the balance amount (2/3rd), you can opt for monthly, quarterly or yearly payments. Typically interest rates are close to PF rates. There are options for Life, with return of corpus or without return of corpus etc.
Remember that superannuation plans are meant as a retirement benefit and to grow your savings during your employment tenure. Know more about its benefits!