Chit Money - 5 Lakhs Cash - Where to Invest

2129 views 5 replies

asoganb

M.Com

45 Points Posted on 22 March 2011

I am contributing cash every month for a Chit run by an individual locally in our town market.

Now I received lump sum cash of 5 Lakhs (Five Lacs). Kindly tell me where to invest this 5 Lakhs Cash. I have the following options & Questions.

1) Put in Postal Savings Account which gives 3.5% fully tax exempted interest.

2) Buy Gold.

3) Pay income tax by showing this as "Income from Other Sources". I do not own any property. I do not have any documentation.

If I declare this as Income from Other Sources, what I should say for the source. I do not own any property / have documentation for this 5 lakhs cash.

Kindly give me some ideas the best way to invest the lumpsum of 5 Lakhs Cash.

Asogan

Tiruttani, Tamilnadu

Replies (5)

Pankaj Arora

Learner

3134 Points Posted on 22 March 2011

I think you highlighted with black color so question is not clear ……..

Vikas Marele

CA in Service

1144 Points Posted on 22 March 2011

I Think ur contributing every month for this, so this is not ur income..! & question of investment is depend upon the risk bearing capacity & expected return. which is diff from person to person.

arjun s

CA Final

299 Points Posted on 22 March 2011

U can buy gold because that will fetch u very good return than others

kartheekkangati

Company Secretary

40 Points Posted on 22 March 2011

i think u will get very nomial by investing in postal saving account it is better to buy gold

Siyaram Kumar

CA FINAL/ Jr. Superintendent(Accounts)

97 Points Posted on 23 March 2011

Dear,

The Chit Company forms different group each consisting of a certain number of subscribers. They agree to contribute a specific amount as instalment for a certain number of months.

chit Funds have the advantage both for serving a need and as an investment. Money can be readily drawn in an emergency or could be continued as an investment.

· Interest rate is determined by the subscribers themselves, based on mutual decisions and varies from auction to auction.

· The money that you borrow is against your own future contributions.

· The amount is given on personal sureties too; unlike in banks and other financial institutions which demand a tangible security.

Because a sum received in chit fund is against your future contribution, may be taxed in same head in which original income falls. If it is untaxed income, may be taxed accordingly.

As far as saving is concrened, you can invest partially in Infrastructure Bonds which fetch additional deduction in section 80CCF upto 20,000.00 and remaining amount may be invested in FDRs, gold etc as per your wishes.