Financial Planning query

POSTED BY Venkatesh ON November 4, 2012 4:02 pm COMMENTS (4)

I have my friend’s sister (aged 45) who was recently widowed and inherited her husband’s savings.  She had invested the liquid portion of Rs.15 lakhs as FD in two banks.  But she is paying lot of tax on the amount invested.  Could you please suggest some other short term investment option for her, to minimize her tax outgo?  She is looking at a time range of 1 to 5 years.  Though she is a PAN holder, she has not filed any returns so far.

She is living in her own house, having no children and no other commitments or loan, etc.  She is planning to take up a job in the near future.  Her monthly expenses would be in the range of Rs.6 to 8 thousand.

She would get some money from sale of their house property in a year’s time and some insurance pay out after 5 years.  She has some money in PPF transferred from her husband.

Please suggest suitable investment avenues for her, with low tax liability.

4 replies on this article “Financial Planning query”

  1. Dear Venkatesh, any update on the issue?

    thanks

    Ashal

  2. BanyanFA says:

    Venkatesh,
    You should promote the idea of investing in long term FDs (10 years) with quarterly interest payout. Every year your sister should go to the bank and submit Form 15H – a very easy and straight forward process. This would prevent deduction fo TDS. She would get roughy 10K per month for next years via this method. After her monthly expense of 6-7K, she would be left with around 4K every month.

    I would suggest that of these extra 4K per month, she should invest around 2K per month into an Equity mutual fund via monthly SIP. This would build a long term capital for her without putting her existing capital at risk.

    Regards
    Banyan Financial Advisors (BanyanFA)

  3. bharat shah says:

    the form no. is 15H/G and she is required to submit PAN Card copy to the bank.

  4. Muthu Krishnan V says:

    for 15K, the interest per annum would not be more than 1.5L. On this amount, there should not be any tax if there is no income which looks unlikely as she is not filing IT returns.

    she should approach the bank and fill a form (forgot the number) stating that her interest does not fall into the taxable category and the bank will stop the TDS.

    alternately, she can invest into debt funds (quantum liquid fund, hdfc cash management fund) if she is not going to withdraw within a financial year to take advantage of indexation.

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