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  • Category: Finance and Banking Jobs

    Goverment Employee and Investment

    Interested in investing in mutual funds? Confused whether government employees can legally invest? Find advice fro experts here and resolve your query.

    Can State Government employee or Central Government employee invest in mutual funds or stock market? Is this investment illegal for government employees? Can government employee do any business in his/her free time? Is this legally right or wrong?
  • Answers

    7 Answers found.
  • A Govt employee can invest in mutual funds as well as share market. There is absolutely no problem in that.

    Only thing is the amount invested should be from your salary and the amount invested should be commensurate with your salary. If the amount invested is far more than your salary levels the tax authorities or vigilance departments can ask the source of the excess money and enquiry or investigation against you can be initiated.

    A Govt servant is not supposed to do any business as it will hamper his performance in office. So it is considered illegal.

    Knowledge is power.

  • A government employee,as an individual and citizen of this country can do investments in legally permitted funds and investment avenues. The only condition is that he should not have used his position as a government employee to get any benefit in this regard. The money should be from his known and declared source of income. He should also show the investments in his assets and liability statements to the employer, wherever applicable. The investments should be investments or savings, and not speculative trading.

    A government employee should not indulge in any profitable business as it is prohibited in the conduct rules, except when it is as a nature of helping his spouse or family members , but the same should be divulged and concurrence obtained from the relevant authorities. He should ensure that the same does not come in way of his job and make conflict of interests.

  • As per Conduct Rules, there is absolutely no bar for Government employees to invest in equity market or in mutual fund. However, the investment should be commensurate with the income of the particular employee. Furthermore, Government expects that the employees should not inulge in speculative activities in equity market during working hours.

    Beware! I question everything and everybody.

  • An employee of government is also a citizen of this country.He will have all the rights like any other citizen. As long as the amount you are investing is legal and you can explain the source of income and you are paying income tax correctly, there is no problem. You can invest in mutual funds, shares, FDs. You will not have any problem.

    always confident

  • Government employees are allowed to invest into mutual fund. However they will be taxed for the profit. So that would be same treatment like the other people who pay the taxes. So if the investment into mutual funds yields taxable income, then that will be taxed. Apart from FD, NPS and other tax free investment like sukanya samridhi and others may also have collective tax check at the end of the year. It all depends on which tax slab one is and how they account for the investment.

  • As long as you are honest in the declaration of your income from the the different sources from your service or otherwise, any government - employee is not likely to be questioned.
    The employee would be required to furnish all the relevant details in the Income - tax declaration from indicating the nature of investments such as Mutual funds, Fixed- deposit, Equity - shares and other assets in his possession.
    Time to time, the Banks offer fixed deposits carrying attractive rate of interest and are exempted from Income - tax. Such schemes should be availed.
    However, the employee would be required to intimate the employer regarding his activity in the share - market and he should ensure the employer that such activities are not being taken in course of his duty - hours and his involvement is no way likely to interfere with his responsibilities entrusted by the Management.

  • As per the established norms of Central Government servants service contract, there should not be two source of income for its employees. That means while drawing government salary, one should not earn from the other sources. However investing in bank deposits, investing in mutual funds and other fixed deposits are supposed to be the personal earnings and saved from the past salaries and thus they can be invested and there is nothing wrong in it. But telling truth to the government is always good as central government employees are bound by their contract with the department.

    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

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