In the past few weeks, we have seen banks either introducing new charges or hiking the existing ones sharply. While many customers complain of banks robbing them with higher charges, those from the banking industry say customers need to pay for the services they enjoy. Customers’ pain point, however, is not just the fee, but the non-transparent, arbitrary manner in which charges are being levied.

Income Tax: Check before 31st Mar’2017!

Savings for Income Tax

All tax-saving investments and expenses have to be made before March 31 2017.

  • 80(C) : Ensure  savings  of  Rs 1,50,000/- atleast  (EPF, PPF, NPS, Life Insurance premium, Home loan principal repayments etc)
  • 80(D): Health Insurance premium of Rs 25,000/- for self and family and Rs 30,000 for parents who are senior citizens. You can claim of Rs 5,000/- for health check up under section 80 (D).
  • Get reimbursements  from your employer  by submitting medical bills maximum of Rs 15,000/-
  • LTA: Keep the journey tickets as evidence for tax exemption. 
  • Calculate your tax liability by taking(a) Interest on housing loan(b) Exemption from HRA  factoring the house rent paid and (c) Conveyance allowance(Rs1,600pm)
  • Advise the salary section to stop Income Tax deduction for February and March 2017, if the tax deducted has exceeded your tax liability. Alternatively you have to apply for refund of excess tax paid by you.

There is a debate on segregating sales from investment advice.SEBI has proposed that mutual fund distributors cannot give investment advice to buyers and proposed to make it compulsory for mutual fund distributors  who give advice to register as investment advisers. We reproduce the view of Prof Pattabiraman at  IIT-Madras as published in ET wealth on 16th January 2017.

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Steve Jobs said, "People don't know what they want until you show it to them". This applies to conflict of interest. In a recent consultation paper, Sebi proposed that mutual fund distributors should not provide incidental or basic investment advice in respect of mutual fund products and should not call themselves advisers.

How to open NPS account online?

NPS has emerged as a popular tax saving tool at par with EPF. but the issue on taxation of 60% of the proceeds on maturity or buying annuity is a moot point and hoped to be resolved soon. Opening of NPS account was a herculean task till now but have been made easier through online NPS account.

Types of NPS accounts: There are Two types of account i.e TIER I and TIER II

  • Tier I is the mandatory account for long-term savings. Additional Tax benefit upto Rs.50,000 is available u/s 80CCD (1B) over and above the 80C limit of Rs1,50,000/-
  • Tier II is an add-on account which provides you the flexibility to invest and withdraw from various schemes available in NPS without any exit load.
  • To open Tier II account you need to have Tier I account first.

Facing uncertainties in 2017...

These are times of uncertainties! Who could have predicted the address to the nation by the Prime Minister on the evening of 8th November 2016. Remonitisation have become painful for many for standing in long queues. More uncertainties are in store in the coming days! GST will overhaul the indirect taxation system in the country. Short term pains but long term gains? Now coming to personal finance; there is a need to question our core beliefs and think differently. Let us take income, assets, liabilities, expenses and retirement!

Income: Where does your income come from? Is it salary from your employer? This is an   external source. It is like water flow in a river. But looking it from a bigger picture, the real source of river water is the spring. Similarly the source of income is not the monthly salary but your skill, time, intelligence and experience. If you focus on up gradation of your skills that generates your income streams, you are more likely to preserve a steady income in the long run. Conversely if do not upgrade your skills in tune with the demand of the times, you are more likely to miss out on generating income. Think for a moment about the prospect of losing your job, look at your skill sets. They may be more valuable if you have kept them honed. Do not ignore skill building and networking even after you have settled in a job.

The Govt of India has announced demonetisation scheme for Rs 500 and Rs 1000 rupee notes from the mid night of 8th Nov 2016.There are long queues before the bank branches and ATMs. We have addressed apprehensions about the taxation issues in an earlier blog. Recently the Parliament has amended Income Tax Rules pertaining to deposit of cash in the accounts. The tax treatment will be as follows:

Deposited with disclosures in Tax return

1. Tax @30% plus surcharge @33% and penalty of @10% of the deposit amount which makes it almost 50% of the deposit(In the earlier voluntary disclosure which ended on 30th September 2016,the      total amount was 45%)

2. 25% of the deposit will be kept with the bank for a period of 4 years at nil rate of interest.

3. The balance 25% can be withdrawn by the depositor

Can you become cashless?

Yesterday we went to buy vegetables from Vishnu, our local vendor. With limited cash in hand we were wondering how to pay him? We were surprised to see a board with paytm sign in front of the shop. After completing our shopping, I took out my Smartphone and made the payment through Paytm. The transaction was successful and the vendor got an SMS alert. It was so smooth and a big relief!!

If you want relief from the queues in front of the ATMs and Bank branches, it is not difficult. You can become less dependent on cash by making online payments. As may be observed below, if a family has a monthly expenses of Rs 50,000/-, they need not keep more than Rs 2,500/- of cash with them. A big relief from the long queues!!

Frauds in Online transactions

Today our office cleaning lady was very worried .On enquiry we were told that her son got his first salary which was credited to his Bank of India account. But when he went to withdraw the amount, there was no balance; it has already been withdrawn. On further enquiry he revealed that someone asked him his debit card number for reissuing a new card and after some time also asked to share the  OTP which was just sent. Ignorant of the risk, he shared the details.

The long queues before ATMs and Bank branches for exchange, deposit and withdrawal of cash has made everyone realize that electronic transactions are much convenient. But it has its own risks of frauds . We describe herewith the various frauds in online transactions and precautions to be taken. Card frauds basically involve theft of identity or information on your card.

The Govt of India has announced demonetisation scheme for Rs 500 and Rs 1000 rupee notes from the mid night of 8th Nov 2016.There are long queues before the bank branches and ATMs. We try to address apprehensions about the taxation issues.

Some people are posting the unverified computation chart of tax and penalty on cash deposit. It is a perception by some that the penalty of 200% is on the amount deposited. It is not correct.The facts are as follows:

1. You have time   till 30th December 2016 to deposit the same in banks (extended till 31 March 2017 with additional documentation)

2. As soon as one deposits, one needs to have an explanation ready for the source of this cash. Note here the explanation needs to be ready, neither the banks nor the Income Tax will ask for it as of now.The explanation will be on case to case basis;

e -Term insurance policy

e-Term insurance plan is a form of term life cover, it provides coverage for defined period of time. If the insured expires during the term of the policy then sum assured is payable to nominee. Term plans are specifically designed to secure the financial needs of the family or liquidation of liability in case of death of the bread earner of the family.

Low Premiums 

The premiums for Term insurance policies are the lowest among all the types of life insurance policies. The premiums are low since there is no investment component and the entire premium goes for covering the risk. eTerm insurance is cheaper by 25-35% to the regular term insurance since there is no element of commission in e term insurance.The comparative chart of some eTerm Insurance Policies are provided at the end.

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