Chit funds 101: Should I invest in Chit fund. - Fintown.
Chit Funds are classified as Miscellaneous Non Banking Financial Institutions under the RBI Act 1934, playing a major role in the National Financial Inclusion program even before the evolution of banking. This system, with numerous in built advantages, viz., easy accessibility, user friendly services; and free of latent cost, periodic interest hikes, exorbitant pre-closure charges, is the most.
Chit Funds offer hassle-free, liquid investments in a simple, systematic manner. An centuries old indigenous form of financing, it is now extremely popular around the world under different names (classified as ROSCAs). Learn how chit funds work and how you can participate to achieve your goals.
Talk:Chit fund Jump to. There are tax benifits with Chit Funds. For example: if you have money in the bank, interest earned by the money is taxable. Where as in Chit Fund amount that you have saved on monthly basis is not taxable. Apart that of you happen to take the money out during the auction and if you have a loss that loss can be deducted from taxable income. These are some of the.
The Chit Funds (Amendment) Bill, 2019 was introduced in Lok Sabha on August 5, 2019. The Bill seeks to amend the Chit Funds Act, 1982. The 1982 Act regulates chit funds, and prohibits a fund from being created without the prior sanction of the state government. Under a chit fund, people agree to pay a certain amount from time to time into a fund.
Chit Funds are mostly regulated and some are also run by government entities. In Kerala, Chit Funds are regulated by the Kerala Chitties Act 1975, while in Karnataka it is regulated by the Chit.
Many people of the lower income bracket opt to invest in chit funds because they do not qualify or have documentation for a bank account. Chit funds are not necessarily a bad investment. It has a bad reputation because it has been misused in the past to scam naive investors. There are Government-run and registered chit funds that are safe to invest in. On the other hand, recurring deposits are.
With chit funds, there is no fixed return on investment. For example, 20 contributors invest in a chit fund for 12 months paying Rs. 1,000 each. In the first month, the fund is at Rs. 20,000, and the lowest bid goes at Rs. 17,000. 5% of the chit fund, or Rs. 1,000 in this case, has to be paid to the organiser. The remaining Rs. 2,000 will be.