Infrastructure Bonds Are Better Than PPF

Updated: Jun 30 2002, 05:30am hrs
Our father had built a house in 1973. He died in 1997 and the house stood in his name. We are six brothers and sisters. Our mother and all of us now want to sell this house. It is learnt that for ancestral property, no registration stamp papers need to be bought for transfer of property from the name of the deceased to the names of his successors. Can we sell the house and can it be transferred from our fathers name direct to the purchaser What is the procedure The point is that we want to avoid the heavy expenses of transfer of house first in our names and then in the name of purchaser. Please advise.
K Goyal
Patiala

The transfer of property to the successors on death of a person does not require payment of stamp duty. If your father has made a will favouring all of you, your mother and six brothers and sisters, there should be no problem in getting the property transferred to your names. I am afraid, you will have to get the house transferred in your names before selling it.


Mutual funds managers all over praise the benefits of systematic investment plan which works on the rupee cost averaging concept. Suppose I decide to invest Rs 10,000 per month in a scheme. Since the concept emphasises that regular investing works to the investors advantage, does it stand to reason that an investor would benefit even more through systematic investing if he invests Rs 2,500 every week rather than Rs 10,000 every month
Prabhu VA
Prabhuva@sonyho.sid.in.sony.com.sg

Systematic or one time, there is no difference in earnings as far as pure-growth, open-ended, debt-based schemes are concerned. The schemes the fund managers are talking about are possibly equity-based schemes, NAVs of which fluctuate widely in sync with the equity market. The systematic investment can be profitable or not depending on the performance of the scheme. It is not logical to say that it will always work for the benefit of the investor.

As regards your suggestion of weekly contributions, to extend your argument further, it would be still better if one contributes daily.

Incidentally, I personally do not like systematic investment plans. These make you commit yourself for a certain prefixed amount of contribution at prefixed intervals. I like to invest your might, whenever you have investible funds in hand. A prefixed amount and the prefixed periodicity is not preferred by me.


1) Why do you prefer infrastructure bonds to PPF although the later being more secure and interest earned is totally tax-free unlike in infrastructure bonds.
2) What is the maximum an individual can invest in PPF during a year
3) What is the taxable limit for instruments like infrastructure bonds, bank deposits etc, u/s 80L
4) Are there any other instruments besides PPF & RBI Relief Bonds whereby the interest earned is totally tax free
5) Say for example, I have invested Rs 2 lakh in RBI Relief Bonds. If I further invest Rs 4 lakh [ie Rs 2 lakh each in the name of my wife & major son (both are non-earning members)] with myself remaining the second holder in such further investment, will the interest on Rs 4 lakh be taxable

Zubin Kanga
zubin_kanga@yahoo.co.in

1. The term of the infrastructure bonds is only three years. Even if the interest is lower than that of PPF, the tax rebate of 20 per cent (or 15 per cent) is spread over 3 years only which outstrips the return from PPF.

If you compare the break-even rates (equivalent fully taxable rate) of the 2 schemes you will realise that the bonds are superior to PPF.

2. One can invest upto Rs 60,000 in PPF accounts of self, minor child and HUF/AOP of which he is a member.

3. The aggregate limit for interest from ICICI/IDBI Bonds, Bank Accounts, NSC, NSS92 etc, is Rs 9,000 u/s 80L.

4. There are some bonds whose interest is tax-free; but those are available only for a short while. There are no open schemes like RBI Bonds or PPF.

5. You cannot invest more than Rs 2 lakh per year of your own money in RBI bonds. The interest from these RBI bonds is tax-free.


There is an NRO Account in India, in which interest from bonds is deposited. Can this amount be further invested in FD and small saving scheme such as NSC, PPF, MIS etc
I N Patel

Of course. It is your money which you had before becoming NRI. You have every right to invest it in any scheme which allows NRI to invest. I have a suggestion. Income from your original Indian assets has now become repatriable. You may arrange to do so if you so wish. Your bank should be able to help you to do so.

(The author may be contacted at anshanbhag@yahoo.com. Please indicate the source of the authors article, based on which the query is posed)