Directions (Q. 1– 10):Read the following passage carefully and answer the questions given below it.
Chit funds, a savings avenue that is as popular with housewives as it is with businessmen, have earned a bad name. The reason is the scores of scams in the name of chit funds, the latest being allegedly perpetrated by the Saradha Group in West Bengal. Promoters put up a stern defence and say chit funds are the only financial product that gives people the option to both save and borrow, and the scams are giving them a reputation that is undeserved. India has nearly 10,000 registered chit fund companies, the largest one being run by the Kerala government which has been in existence since1969. Financial advisers also say that chit funds can be a good investment, provided the promoters follow the strict rules that have been laid down for them. There are many organised companies incorporated to do this as a business and these are governed by state or central laws. There is a central Chit Funds Act of 1982, apart from a number of state chit fund Acts. There is an office of “registrar of chit funds” in every state that monitors operations which are quite stringent. Utilisation and appropriation of subscriber ’s money is strictly prohibited. Chit fund is a unique financial concept, which has flexibility to borrow or save. By paying one-month instalment amount, a person can get to borrow from the chit value, by offering a discount not exceeding the maximum limit ascertained in the chit agreement. The duration of chits are normally 25 months, 40 months and 50 months. The chit groups vary from 25,000 to few lakhs depending on the Chit Fund Schemes. In a chit value of Rs.100000/- for a period of 50 months, first the subscriber can get an amount of 55000/-by paying only Rs.2000/- and remaining installments he pays over a period of 50 months. The rate of borrowing is much cheaper than several other financial schemes. The non prized subscriber who is a saving member up to the last installments gets dividend which is comparatively higher than the interest that are accrued by way of Recurring Deposit Schemes. The purpose of drawing the prized amount need not be disclosed. It can be used for any need by the member for Example: House construction, Marriage, Education, Expansion of business, buy a Computer or any other purpose at his discretion. The dividends earned in a chit are not taxable. If you want to claim the bid as loss then these dividends has to be shown as revenue income in the assessment. Thus Chit is a mutually beneficial scheme where in a group of people contributes towards the chit value and one member from the group is given the prize amount and the dividends are distributed to all the other members. The biggest risk is misuse of pooled funds by promoters. The other is default by subscribers, affecting the promised fund distribution. It is not advisable to invest in unregistered chit funds. Further, one should not put money in a chit fund whose other members are unknown to you.
Under which of the following act the chit fund companies are regulated?
1) Act – 1969 2) Act – 1925 3) Act – 1982 4) Data Inadequate 5) None of these
What is the income tax benefit from using chits ?
1) The Income from chits is not subject to Income Tax.
2) The chit loss can be deducted form the Income.
3) No relaxation from the Income Tax.
4) Income through chits above 1 lakh is taxable.
5) None of these
What are the duration of the chits ?
1) More than 3 years. 2) More than 1 year
3) Vary from more than 1 years to 4 years and 2 Months 4) Above 5 years
5) None of these
Which of the following is not a benefit of joining a chit ?
1) There will be a compulsory saving.
2) Through it dividends can be earned every month.
3) The total dividend earned by chit can be more than the bank interest rate.
4) It gives flexibility to borrow or save.
5) None of these
Which of the following statement is true in the context of the passage ?
1) Many chit funds with working history of over 30 years reveals that they have not defaulted in defaulted in repayment of any person’s money.
2) All chit funds in the interest of its subscribers offers a discount of 2% of the instalment, if the instalments are paid before the 10th of every month.
3) The investors pays an amount at specific intervals usually upto a fix period.
4) All of the above
5) None of these
Direction (Q. 6 – 8) : Choose the word which is most OPPOSITE in meaning of the word printed in bold as used in the passage.
Q. In a March Past, seven persons are standing in a row. Q is standing left to R but right to P. 0 is standing right to N and left to P. Similarly, S is standing right to R and …
