SBI’s tax saving deposits advertisement claims to give you 17.77% return. While it assumes you are in the 30% tax bracket at the time of investment, it conveniently calculates the return without considering tax obligation on the interest generated at the time of exit
During the tax savings season, people are desperate to save Rs30,900 in taxes by investing their hard-earned Rs1 lakh in certain kinds of savings instruments. One such avenue is a tax-saving fixed deposit (FD) which is for a five-year term without option for premature withdrawal. SBI has put a front page advertisement in Times of India and other leading national dailies claiming to give 17.77% effective annual yield. It assumes you are in the 30% bracket (which may not be true) and it gives an effective annual yield without considering the tax on the interest generated, which could be up to 30%.
While your effective annual yield will vary based on your tax bracket at entry and exit, SBI’s calculations in the advertisement shows the slick marketing which wants to consider highest possible tax savings on entry and no tax liability on exit. It is misleading to an average investor who can get dazzled by the big returns claimed in the advertisement.
This kind of advertisement is usually seen with infrastructure bonds giving tax benefit under 80CCF for Rs20,000 investment. Last year, IDFC bond claimed a tax-adjusted yield of up to 17.85% to investors on buyback (after five years for 10-year bond), which was confusing to the average investor. The company was offering 8% return last financial year.
On a positive note, SBI’s rate of interest for tax savings five-year FD is 9.25% per annum (p.a.) which is also the same as it offers for regular FD. In the past, tax savings deposit FD used to offer a little lower rate than the regular FD. With tight liquidity for banks, they want to entice deposits with high interest rates.
It is important to note that there is no option for premature withdrawal even with penalty for tax savings FD and the interest is taxable. There are other better options for tax savings under 80C. Consider all the options before jumping in with tax savings FD.
SBI has been advertising heavily for attracting big deposits. It is giving 8.5% p.a. interest for deposit of Rs1 crore and above for only seven-day FD. This is a good option for high-net-worth individuals, who want good return as well as liquidity.
BPCL, which last year began buying 20,000 barrels a day of crude oil from Iran, was last month refused permission by Turkey’s state-controlled Halkbank to open an account similar to ones Indian refiners like Essar Oil and Mangalore Refinery use for paying to Iran
New Delhi: State-run oil marketing and refining major Bharat Petroleum Corporation (BPCL) has suspended crude oil purchase from Iran after Turkey refused to route its payments, sending India to scramble for alternative methods to pay its second largest oil supplier, reports PTI.
BPCL, which last year began buying 20,000 barrels a day of crude oil from Iran, was last month refused permission by Turkey’s state-controlled Halkbank to open an account similar to ones Indian refiners like Essar Oil and Mangalore Refinery use for paying to Iran.
Highly placed sources said BPCL, which could not pay $107 million to Iran on the due date of 12th December, has decided to stop buying from Tehran till a payment mechanism is finalised.
BPCL would make up for the shortfall from countries such as Saudi Arabia.
Indian refiners began using Halkbank to pay Iran in July last year after Reserve Bank of India (RBI) scrapped a long-standing mechanism of payment through central banks.
New Delhi fears Turkey may come under pressure to halt the conduit after US imposed fresh round of sanctions against Iran and European Union was slated to announce tough measures in this regard on its own at the end of the month.
Sources said refiners and oil ministry officials today discussed alternative methods to pay for Iranian oil imports.
An Indian delegation comprising of officials from RBI, oil ministry, finance ministry and refiners would visit Tehran on 16th January to discuss alternative modes and routes.
Refiners have already begun talks with alternative suppliers to slowly replace some quantity of the 3,70,000 barrels per day (bpd) of oil they buy from Iran.
MRPL, the biggest buyer of Iranian oil at 1,42,000 bpd, has not yet contracted any supplies for the year beginning April.
India is Iran’s second-largest crude buyer, taking about 3,52,000 bpd, or 13.5% of Iran’s 2.6 million bpd of exports. New Delhi currently pays the world's fourth largest oil producer about $1 billion every month through Turkey.
Sources said possibility of paying Iran in rupee or through yen payments would be discussed in the 16th January meeting.
Routing payments through Russia was discussed during the visit of prime minister Manmohan Singh to Moscow last month.
However, Russia has so far not agreed to route payments for India due to the ‘complexities’ involved.
US president Barack Obama signed a Bill into law late last month empowering US authorities to impose penalties on foreign banks dealing with the Central Bank of Iran to settle oil import payments.
National Security Advisor Shivshankar Menon last week discussed alternative payment routes with officials from the ministries of finance, petroleum and external affairs.
The Sahara group informed the Supreme Court that it has filed affidavit explaining that it will protect the interests of 2.3 crore investors who have put in their money in Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation) and Sahara Housing Investment Corporation
New Delhi: The Supreme Court on Monday admitted the Sahara group’s plea challenging the Securities Appellate Tribunal (SAT) order directing its two companies to refund around Rs17,400 crore to their investors, and extended its interim order to stay tribunal’s decision till further date, reports PTI.
Admitting Sahara’s plea, a bench headed by Chief Justice SH Kapadia listed the matter for further hearing on 20th January 20.
The group informed the court that it has filed affidavit explaining that it will protect the interests of 2.3 crore investors who have put in their money in Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation) and Sahara Housing Investment Corporation.
The bench had earlier on 28th November asked the companies to place before it their 2010-11 balance sheets and statements of accounts for November 2011 by Monday.
“Net worth of the companies particularly assets against which liability has been created, financial statements including balance sheets of 2010-11 and statements of accounts of the companies of November 2011 shall be mentioned in the affidavit,” the bench had said.
The apex court had earlier issued notices to the central government and the Securities and Exchange Board of India (SEBI) seeking their response on Sahara’s plea challenging SAT’s 18th October order, directing it to refund the money, raised through optionally fully convertible debentures (OFCD) to investors within six weeks.
It extended till 8th January the time limit set by SAT, which had passed the order on the Sahara group’s appeal against the SEBI's June order asking the group’s firms to return the money, collected from investors through financial instrument OFCD, on grounds of violation of regulatory norms.
The stock market regulator had also restrained the two entities from accessing the securities market for raising funds till payments were made to the satisfaction of SEBI.
The two companies and its promoter Subrata Roy Sahara, and the directors—Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary—were told jointly and severely to refund the collected money.
The company had then approached the Supreme Court which asked it to approach the tribunal.
While dismissing the appeal, the SAT had held that the market regulator has jurisdiction over such fund-raising schemes.