A chain is no stronger than its weakest link and life after all a chain.

A chain is no stronger than its weakest link and life after all a chain.

PPF vs NSC: What's the difference?

When we carried an earlier piece on PF vs PPF: What's the difference?, we were flooded with mails telling us to do a piece on PPF vs NSC. This is what we attempt to do here. Explain the difference between the Public Provident Fund and the National Savings Certificate. The NSC is a post-office savings scheme while the PPF was established by the central government in 1968. But both are very safe since they are backed by the government. How much goes in? The minimum amount you have to put into your PPF account in a year is Rs 500. The maximum you can put is Rs 70,000 per year. With NSC, the minimum amount is Rs 100. Here, is no upper limit on investment. However, NSC is sold in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. So, if you want to invest Rs 30,000, you will have to buy three certificates of Rs 10,000 each. What do I get? On the face of it, both give an identical rate of interest: 8% per annum. Or so it seems. The only difference is in the way it is computed. PPF is compounded annually. NSC is compounded half-yearly (twice a year). Let's say on April 1, 2006, you invested Rs 30,000 in PPF and the same amount in NSC. On April 1, 2007, your PPF account will have Rs 32,400 while your NSC will have Rs 32,448. Are your NSCs maturing? What's the tax impact? The most important issue! Both these investments fall under Section 80C. That means the investments made under this section are eligible for an income deduction upto a maximum Rs 1,00,000. This is as far as your principal investment goes. Let's look at the interest earned. With PPF, you pay no tax on the interest you earn. What about NSC?Till FY 2004-'05, an individual could avail of a deduction under Section 80L of the Income Tax Act. This limit was Rs 12,000 of interest income received during the financial year. This deduction has been done away with from FY 2005-'06. Now, all interest income is taxable at the respective slab rate of the individual. The interest accrued on NSC is taxable. But, it is also eligible for a deduction under Section 80C. Generally, it is advisable to declare accrued interest on NSC on a yearly basis. So, over the period of six years, you could declare the interest income for each year. In such a case, it does not amount to a huge sum. If you do not declare the interest on accrual basis, then the entire interest earned (difference between the amount deposited and the maturity value) would accumulate in the year of maturity. You could then claim it under Section 80C but it would be a huge amount and would be taxable at the current applicable tax rate. How long do I hold it? PPF is for 15 years, but you can extend it for a block of five years. Let's say you open a PPF account when you are 21 years old. It matures when you are in your late 30s, when you may be earning well and may not need the money. In that case, you can continue with the account. Of course, you do have the option of withdrawing the entire balance on maturity, that is, after 15 years of the close of the financial year in which you opened the account. So, if you opened it in FY 2006-07 (this financial year), you will be able to withdraw it 15 years later, starting March 31, 2007 (end of this financial year). That is April 1, 2022. If you extend it for five years after that, you continue to earn the rate of interest and can also make fresh deposits and get the tax benefit. NSC is for a much shorter duration -- just six years from the date of investment. How many can I have? Once you open an NSC, you can't keep adding to it. You will have to buy another. Let's say you buy a NSC of Rs 30,000. In a year's time, you want to add another Rs 30,000. You cannot add it to this amount. You will have to buy another NSC. With PPF, you can have just one account. But this does not matter because you have to make annual additions. Every year, you keep adding to it. However, if you like the safety of the investment and a guaranteed return of 8% per annum, you can open one in your child's name. So you can have one account for yourself and one for your child. But this does not mean the tax benefit is doubled. The limit is the same -- Rs 70,000, irrespective if it all goes in your account or in your account and your child's. Let's say you open an account for your minor child. You can deposit Rs 70,000 in your account and Rs 70,000 in your child's account. But you will only get the tax benefit on Rs 70,000. How is it held? The PPF account cannot be held jointly. You can nominate someone but it cannot be jointly held with someone else. With NSC, you can hold it jointly or you can hold it singly and nominate someone. Where can I open it? To open a PPF account, you can drop by a State Bank of India branch. No, you do not have to have an account with them. You can also ask your nationalised bank where you have an account if they are authorised to open PPF accounts. You can also approach the head post office in your area. If that is inconvenient, ask your local post office (selection grade sub post offices are allowed to do so). To buy an NSC, just approach any post office.

WORDS OF WISDOM

Don't kick a man when he's down unless you're certain he won't get up. Indecision is the key to flexibility.You can't tell which way the train went by looking at the track. Be kind, everyone you meet is fighting a tough battle too. There is no substitute for genuine lack of preparation. This is as bad as it can get...but don't bet on it. By the time you can make ends meet,they move the ends. Nostalgia isn't what it used to be. Sometimes too much drink is not enough. The facts, although interesting, are generally irrelevant. The world gets a little better every day, and worse in the evening. Someone who thinks logically is a nice contrast to the real world. The other line always moves faster...until you get in it. Anything worth fighting for is worth fighting dirty for. Everything should be made as simple as possible, but no simpler. Friends may come and go but enemies accumulate. It's hard to be nostalgic when you can't remember anything good. I have seen the truth and it makes no sense. If you think that there is good in everybody, you haven't met everybody. If you can smile when things go wrong, you have someone in mind to blame. One seventh of your life is spent on Monday. The more you run over a dead cat, the flatter it gets. Happiness is good health and a bad memory. Do unto others. Artificial Intelligence is no match for Natural Stupidity. Plagiarism saves time. Teamwork...means never having to take all the blame yourself. Never underestimate the power of very stupid people in large groups. We waste time, so you don't have to. Go the extra mile. It makes your boss look like an incompetent slacker. The Romans did not create a great empire by having meetings; they didit by killing all those people who opposed them. If you can stay calm while all around you is chaos...then you probablyhaven't completely understood the seriousness of the situation. Sometimes I think the surest sign that intelligent life exist elsewhere inthe universe is that none of it has tried to contact us. As you journey through life take a minute every now and then to give athought for the other fellow. He could be plotting something.If you find something you like, buy a lifetime supply, because they will stopmaking it. Always remember you're unique, just like everyone else

Quote of the Day

Any man who takes a job with the idea that it is simply a springboard for something else is a chump. His attention will be more on the other things than on the job at hand and so he will fail.

Charles Edison

Govt scraps new I-T return form

   June 08, 2006 18:58 IST Under severe attack from various quarters, including the Congress party, the United Progressive Alliance government said on Thursday that the new form for filing income tax returns would be dropped from next year. "The new four-page form which replaces the one-page Naya Saral (simple) form is meant for this year alone and will be optional for filing returns," Revenue Secretary K M Chandrasekhar told reporters. The salaried tax assessees have the option of filing income tax returns this year either in the existing Naya Saral form or the new 2F form, he said. The government will come out with another form next year based on the feedback it receives this year, he added. Earlier, the government, while notifying the 2F form, had said it would be optional for this year and mandatory from next year with the withdrawal of Naya Saral form. The new form next year could be a modified one based on the feedback the tax department receives or could be an improved version of either the existing saral form or 2F, he said. Giving a detailed rationale behind the form 2F, he said the new form was really 'simple' and an attempt to make it self-explanatory and do away with all annexures, including Form 16A, providing details of tax deducted at source by the employer. Critical of the attempts to depict the new form in a bad light, Chandrasekhar said the new form was certainly more simpler than the existing Naya Saral form and the additional pages provided only 'worksheets' to make the filing of returns easier for the common man. Under the earlier 'Naya Saral' form, which will cease to exist from July 31, the last day of filing returns, these worksheets were provided by way of annexures, details of which could be worked out only by experts and not by the common man as no instructions were provided. The new form also needed the tax assessees to provide cash flow statement indicating the broad income, expenditure and investments. Providing the cash flow statement was however optional, he said. The basic purpose of cash flow statement is to track if the assessees were concealing income, he said adding unlike in the past, tax authorities have access to a lot of information like annual information return (AIR) to track the lifestyle of tax assessees. "We have collated individual ledgers of tax payers," he said adding whenever income tax returns are filed, the tax authority can access on his computer all details about the tax assessees like Pan and other details including some of the high value purchases and investments.

All the world loves a lover

How Much Text is in a Kilobyte or Megabyte?

A bit is the most basic unit of information. At their most fundamental level, most modern computers operate on binary bits which means that they can have two states, usually specified as a 0 or 1. Long strings of these bits can be used to represent most types of information including text, pictures and music. Most modern computers are binary systems and therefore, they are particularly well suited to working with bits. Pure binary information, however, is of little use to humans. The binary number 11000101110 is equivalent to 1582; it is obvious that we are much more suited to working with digits and text instead of ones and zeros. To help make computers more like our language-based way of thinking, groups of bits are joined into bytes. One byte is comprised of 8 bits. A set of 8 bits was chosen because this provides 256 total possibilities which is sufficient for specifying letters, numbers, spaces, punctuation and other extended characters. This very sentence, for example is composed of 125 bytes because there are 125 letters, digits, spaces and punctuation marks. Keep in mind that we are discussing pure text; some word processing programs, include other sorts of formatting data, and therefore the filesizes will be greater than the number of characters in the file. It is estimated that a kilobyte can accommodate about 1/2 of a typewritten page. Therefore, one full page requires about 2 kilobytes. The chart below illustrates the number of bytes in common terms such as kilobyte and megabyte and how much text could be stored: name number of bytes amount of text kilobyte (kB) 210 or 1,024 1/2 page megabyte (mB) 220 or 1,048,576 500 pages or 1 thick book gigabyte (gB) 230 or 1,073,741,824 500,000 pages or 1,000 thick books terabyte (tB) 240 or 1,099,511,627,776 1,000,000 thick books petabyte 250 or 1,125,899,906,842,624 180 Libraries of Congress exabyte 260 or 1,152,921,504,606,846,976 180 thousand Libraries of Congress zettabyte 270 or 1,180,591,620,717,411,303,424 180 million Libraries of Congress yottabyte 280 or 1,208,925,819,614,629,174,706,176 180 billion Libraries of Congress The Library of Congress in Washington D.C. is said to be the world's largest library with over 28 million volumes. The numbers listed in the chart above are based on the assumption that the average book has 200 pages. Most Compact Discs (CD) can hold approximately 750 megabytes (mB) which is roughly equivalent to 375,000 pages of text! DVDs can store 4.7 gigabytes (gB) or 2.3 million pages. The next generation of optical media, Blu-Ray discs, can hold an astonishing 27 gigabytes or 13.5 million pages which is roughly equivalent to the text contained in 67,500 books! Data Measurement Chart Data Measurement Size Bit Single Binary Digit (1 or 0) Byte 8 bits Kilobyte (KB) 1,024 Bytes or » 8192 bits ------------------- Megabyte (MB) 1,024 Kilobytes or » 1048576 Bytes 8388608 Bits ------------------- Gigabyte (GB) 1,024 Megabytes or » 1048576 KB 1073741824 Bytes 8589934592 Bits ------------------------------------ Terabyte (TB) 1,024 Gigabytes or » 1048576 MB 1073741824 KB 1099511627776 Bytes 8796093022208 Bits --------------------------------------- Petabyte (PB) 1,024 Terabytes or » 1048576 GB 1073741824 MB 1099511627776 KB 1125899906842624 Bytes 9007199254740992 Bits ------------------------------------------ Exabyte (EB) 1,024 Petabytes or » 1048576 TB 1073741824 GB 1099511627776 MB 1125899906842624 KB 11522921504606846976 Bytes 9223372036854775808 Bits ------------------------------------------- Thats all for the day !