Category: General

Financial Literacy in School – very soon

Posted on by Jagoinvestor

Soon your children will start getting financial literacy in their school itself. A lot of developed countries like the UK, Netherlands, Spain etc have their national strategy for Financial education in place and a lot of other countries like India have been thinking and formulating this for a long time. Recently a draft for the financial literacy program was published on the RBI website.

You must have seen and experienced that our country average financial literacy is at pathetic levels and so many financial lives are destroyed just because they do not have minimum basic knowledge on personal finance to protect themselves. If your name is in CIBIL, its because you never knew the importance of right credit behavior, If you were missold (misbought) any financial product by an agent or financial planner (why not) – You probably always concentrated on numbers and not the hidden language and never were able to conclude the the returns from that financial product. In short you were not that financially literate.

The mission of the intiative is like this

To undertake massive Financial Education campaign to help people manage money more effectively to achieve financial well being by accessing appropriate financial products and services through regulated entities with fair and transparent machinery for consumer protection and grievance redressal.

You must probably be fantasicing that your kids will not be like you in terms of financial literacy and they will have a better level of information and understanding about personal finance compared to you. Thats where this national level initiative on financial literacy will help. It’s expected to be implemented in next 5 yrs period and you can be sure that it will arrive sooner or later, that will be a big day ! .

So what all your kids will learn about money in their Schools ?

There are 15 sections and sub sections defined and I can bet that even we all must grab the school level books on personal finance when it comes, because the list of topics to be taught is pretty good and deep. It will really help in shaping up the financial lives of those kids who study it. The best part is that as this will be school subject, they cant escape it. With their raw minds, they will be more open to learn it, unlike people today “who do not have time” . Once they learn about personal finance in school level, they will have a better chances of managing their financial lives when they start earning or well before it. Here are the topics (mostly spread across the full year) – Imagine something like “Hey I am bored in Maths Class, which is the next one” – “Personal finance Class!”

1. Money

  • History of Money

  • Barter System

  • Importance and Concept of money

  • Coins

  • Paper money

  • Plastic Money

  • E –Money

2. Household Economics

  • Earnings

  • Nature of Earnings

  • Needs and Wants

  • List your expenses

  • Find Simple ways to save money

  • Expenditure, Cost and Prices, Inflation

  • Savings & Thrift

  • What you save is what you earn

  • Borrowing – Mild Definition

  • Investment – Mild Definition

  • Interest — Mild Definition

  • Interest rate — Mild Definition

3. Banking

  • Definition

  • Role of a Bank – in growth of saving and Investment

  • Types of banks

  • Services offered by banks

  • Deposits and Loans

  • Types of A/c

  • Opening a bank A/c

  • How to Transact with banks

  • KYC norms – (A/c opening form, Address Proof)

  • How to read bank statement

  • Banking products and services

  • Net Banking

  • Calculating Interest –Saving, FD, Simple and Compound Interest

  • Power of compounding

  • Loans

  • Types of loans

  • Definition of EMI

  • Calculation of EMI

  • Difference between Banks and Money lenders

  • Micro Finance

  • How to make a complaint -Banking complaints

  • Ombudsman

  • Basic of Foreign Exchange

  • Importance and Use of Foreign Exchange

  • Check Counterfeit Currency

  • CIBIL

  • Regulator – Role of RBI

4. Investment

  • Piggy bank

  • Principles of Investment- Safety, liquidity and return

  • Bank saving

  • FD, RD, Post Office Savings

  • POMIS, NSC

  • PPF

  • NPS

  • Bonds and debentures

  • Shares

  • Mutual funds

  • Gold and Silver

  • Real estate

  • Arts and other investments

  • Commodities

  • Asset allocation

  • Risk and Return

  • Basics of Investment- liquidity, credit

  • Compounding and Time value of money

  • Nominal and Real Return(Inflation)

  • Effect of taxes

  • Long term v/s Short term

5. Behaviour Aspects

  • Concept of Needs and wants

  • Helping the needy

  • Spend wisely v/s waste spending

  • Conspicuous Consumption-lavish

  • Impulsive spending

  • What you save is what you earn

  • Using money responsibly

  • Avoiding cash payments

  • Insisting on bills

  • Dangers of excessive borrowing

  • Repayment of loans

  • Make informed choices

  • Ownership of your financial decision

  • Take care of your old ones

  • Tax payment

  • Insider Trading

  • Up Keep your Financial records

  • Free advise may be injurious

6. Financial Planning

  • Meaning

  • Household financial health check up

  • Important life stages

  • Education

  • Medical and other Emergencies

  • Social obligations

  • Goal setting

  • Budgeting

  • Marriage

  • Buying a house

  • Buying a vehicle

  • Plan a vacation

  • Retirement planning

  • Price of procrastination

7. Insurance

  • Meaning

  • Need and Purpose

  • Loss protection

  • Life ,non life and health

  • Benefits of Insurance

  • Term plans

  • Investment plans

  • Hybrid plans -Ulip etc

  • Agents, advisors

  • Role of Insurance companies

  • Regulator – IRDA

  • Ombudsman

  • How to take a new policy

  • How to revive old policy

  • Transaction cycle

  • Nomination

  • Assignment

  • Claims settlement
  • Exclusions
  • Difference between Insurance and Investment

8. Retirement and Estate planning

  • Concept

  • PPF, EPF, Gratuity, NPS, SCSS

  • Financial need after retirement

  • Three Stages -Saving, Accumulating and Dis-saving

  • Calculation of Corpus required after retirement

  • Protection from Inflation

  • Reverse Mortgage

  • Definition of will

  • Making a will

9. Securities markets

  • Entrepreneurship

  • Forms of Business enterprises

  • Company definition

  • Shares

  • Primary market – Reading a prospectus, what to read

  • Secondary market

  • Issuers, Investor and Intermediaries

  • Regulator – Role of SEBI

  • Dealing in Securities market

  • Demat account and Depository

  • ASBA

  • Broker

  • Stock exchange

  • Grievance and Redressal

  • Financial Advisor, CA, CFP, CPFA

  • Basic terms and processes in Securities Market

  • Market rumors and tips

  • Sources of reliable information

  • What are indices ( Sensex and Nifty)

  • Investment v/s Speculation

10. Use of Technology Do and Don’ts

  • Password protection

  • NEFT and RTGS

  • ATM

  • Online trading

  • Internet banking

  • Need for keeping mobile number with banks

  • Three in one account

  • Need of protecting your online account

  • Functioning of stock exchanges

  • Depository working mechanism

  • Algorithmic trading

  • Financial functions using excel

11. Scams, Frauds and Ponzi Schemes

  • Free tips

  • Insider trading

  • Money laundering

  • Phishing mail about winning a lottery

  • Price rigging

  • Dabba trading

  • Bogus companies

  • Multi level marketing

  • Schemes not regulated by anyone

  • Real Estate frauds

  • Banking and credit card scams

  • Preventive measures from getting duped

12. Borrowings Need for borrowing

  • Need for borrowing Source of borrowing

  • Merit and demerits of borrowing

  • How much to borrow

  • Avoid life of credit

  • Comparing interest rate on loan offering

  • Importance of timely payment

  • Avoid default

  • Avoid borrowing for conspicuous consumption

  • Credit cards – Merits and Demerits

13. Consumer protection and redressal mechanism

  • Rights of Consumers

  • Applicable to Financial services

  • Filing a complaint

  • Complain to entity concerned

  • Ombudsman

  • Regulators

  • Arbitration

  • Consumer courts

  • Govt. Websites -(PG Portals)

  • Investor Associations

14. Taxes

  • Meaning

  • Need of taxes

  • Types of taxes

  • How taxes impact income

  • Income, wealth and gift tax

  • Service tax, STT, Stamp Duty

  • Tax planning v/s tax evasion

  • Tax rates

  • Tax free bonds

  • Tax saving investment

15. Importance of maintaining financial records

  • PAN and its utility

  • Aadhar card

  • Demat Account

  • Bank statements and passbooks

  • Insurance policies

  • Tax return

  • Property documents

  • Helpline numbers of service providers

Note that this curriculum is also planned to be delivered to non-school people like adults through other various means. School is just one place where it will be implemented.

What do you think about this Financial Literacy Initiative ?

What do you think about this initiative ? Do you think its going to be one of the best things in our country in the area of financial literacy ? What kind of changes do you see after this Financial Literacy Initiative comes and our next generation arrives !

Does Govt work for Financial Services?

Posted on by Jagoinvestor

This is not an allegation, but I want to understand how things are related and putting 3 points which shows how govt policies are influenced by the financial services sector.

No tax on Saving Bank interest up to Rs 10,000

Some time back, there was this craze for liquid funds. The money will earn a much better return compared to your savings bank account and the money is highly liquid. You can get it in 1 day if you want it. This started making people believe that liquid funds are as good as saving bank account and people started parking their short term money in liquid funds. At the start it was just done by few people, then through advertisements, newspapers, websites etc, most of the investors came to know about this and started using to park their money in liquid funds.

What happened due to this?

When you don’t leave a lot of cash in your savings bank account, banks do not have enough money in their pool to further lend. Less money is available for them to use it for lending, less money is there to do anything. Note that saving bank money is the cheapest source of money to banks. All they need to pay is 4% (6% is mostly given for amount above 1 lac only). There is no alternative for the bank to find this cheap money. This issue was big for banks like SBI, ICICI, HDFC, and other several banks. What could be done?

This rule came in – “No tax on interest in saving bank account up to Rs 10,000”, a nice incentive for people to keep their money in Saving bank account, hence banks are benefitted by this move! This happened in this budget 2012 – Not very sure how it happened but from where this rule came in this budget? Can someone find any links!

No Indicative returns on FMP’s (Fixed Maturity Plans)

Fixed Maturity Plans (MP’s) are just like Fixed Deposits. FMP’s were allowed to give indicative returns and they could say – “You can expect a 9.4% return in one year”, this is when bank FDs were at 7-8% . FMP’s were also “extremely safe”. So a person wanting to put his 25 lacs in FD for 1 yr , could see that extra 1-2% return without much extra risk (he thought so) and the tax advantage was higher in FMP’s compared to fixed deposit (this was bonus). I hope you know that one of the biggest share of mutual funds investments go into FMP’s (not equity funds btw).

So What happened because of this?

Banks FD’s were affected, People started looking at FMP’s as alternative of the Fixed Deposits . The “indicative” returns were the issue, those were perceived as “guaranteed return” and people started flocking to FMPs, at least the bigger ones. No, I have no idea, but suddenly there was news sometime back that FMP’s are not allowed to declare any indicative return. I truly don’t understand why this rule came into existence. Can someone also find a link here?

LIC bailing out Indian Stock market

Markets sometime go up and down, but when its down, it puts pressure on a lot of people. Govt is one of them. Markets down for years is not a strong sign of a booming economy, so govt has vested interest in markets going up and look good. In the same way there are tons of PSU companies which are doing bad and no one wants to touch them. ONGC was one of the earlier and at the moment Air India is another one.

Can anyone really connect the dots why LIC invested in ONGC ? Can anyone tell why LIC invested 60,000 crore in 2011-2012 in stock markets? LIC might have thought that markets are low, but what is the reason to put 50% of its equity investments in PSU stocks? Did someone ask it to do so?

Subra has a point to make on this:

LIC’s top management has only ONE BOSS to please – the ruling party (not the government, note). This is scary. When I see fund managers beating the Sensex and the Nifty, I realise that it is by being underweight on the PSU stocks. LiC does not have this choice. (Source)

Comments? Do you think govt is really influenced by Financial Services Sector ?

Financial Planning Survey in India

Posted on by Jagoinvestor

Jagoinvestor recently conducted a online Financial Planning Survey in India and what a common man expects out of the financial plan and a financial planner. I will list down some key observations, some learning based on survey results and finally compilation of the survey in a decent pictorial graph. Note that the survey was also published by Mint Newspaper. Here are the survey results:

Key Observations

  • Total 869 people participated in Survey
  • 93% respondents were Male, 7% female
  • Trust Factor and Honest/Integrity was highest on rating. 92% said that the trust factor is extremely important, 93% said honesty and Integrity is extremely important.
  • Mumbai and Bangalore had highest number of respondents with 17% each Chennai and Hyderabad was lowest in Metro category, NRIs were 2% of overall survey
  • 21% respondents were having income of more than 10 lacs
  • Top 3 professions were Software (30%) and Finance (13%) and Govt (8%) . The smallest was BPO
  • Only 15% people said that Size of the Financial Planning firm is “very much important” to them
  • Only 9% people said that “appearing on TV/newspaper” matters to them , 62% clearly said that its “Not much Important” .
  • 83% people said that they expect or look for Sample Financial Plans before hiring a financial planner.
  • 85% people said that they expect clean financial plan with tables/graphs into it.
  • 91% people said that Discounts of Fees does not work if they dont see any value in them .
  • 75% people said they will not go for any financial planning with corporates like ICICI Direct, Edelweiss or such firms.
  • 90% people said that they will buy products from their financial planner only – if its a CHOICE, only 10% said they will not.
  • About 58% people know less than 2 planners in India by their name, 21% know no one!
  • 68% people feel that Financial Planning would have improved their financial life if they had taken it 5 yrs ago
  • 74% people are very clear that they will hire a planner sometime in future if they get a RIGHT one .
  • 73% people expect less than 20 pages in their financial plan , Only 12% said they would be happy to see more than 30 pages
  • Most of the people do not want the welcome message and those stories in their financial plans
  • In More than 10+ lacs income category , 42% people were from Software jobs
  • In more than 10+ lacs income category from Bangalore , 74% were from Software  and from Mumbai it was just 14% in Software , 48% Others
  • 68% of Govt jobs holders were from Non-metro cities and 60% among them had less than 5 lacs income per year

Financial Planning survey in India

Learnings for Financial Planners/Advisors out of Survey

1. Different Cities have their target markets

Each city is different from other. A Planner in Bangalore should mostly be targeting Software professionals (62%) rather than Doctors (1%), compared to some one in Delhi which had only 20% in software

2. Have a Dummy Sample Financial Plan for prospects , but make it beautiful

There is no doubt that prospects wants to know what they can expect from planners when it comes to that PDF which has things written to it, I know that one PDF is not Financial plan and it does not matter, still thats one tool to impress the prospect and show them what value one will get out of it .

3. Make your plans more attractive , clean and with tables/graphs

Its a clear indication that clients are not looking for 100% pure wordings in the plan, they expect some kind of tables or graphical representation in the plan. But make sure its only at places where it adds value or is required.

4. Don’t worry if you are not on TV or Newspaper

Being on TV/Newspaper is really a great way of increase a financial planner visibility, but only a handful of prospects will prefer a planner coming on TV than some one who is not . Coming on TV is good, but its not the business secret or the top most thing you should be looking for. 56% of survey takers said Appearning on TV/Newspaper is Not much important factor and only 37% said it was complementary , just 9% said that they would like to have some one who appears on TV shows or writes in Newspapers . However its very much clear that these factors increase visibility and helps a planner to increase trust .

5. Trim your Financial Plans to the point and short

A very big number said that they would like it to be less than 20 pages . Hardly few clients will read each and every page in great detail , for most of them what matters is the “solution” and how things look like . The maximum a plan should be of 25-30 page . More than 30 pages is some not expected from most of the clients.

6. Investors are afraid of Big Corporates companies For Financial Planning

Thanks to all the bad treatment all these years , big corporates firms (banking etc) , people are really not very much keen to go to them for financial planning . People seem to be more interested in pure financial planning firms or individuals .

7. Dont push for products – Clients will anyways buy it from you

I know most of the planners have experienced it already. 90% of the survey takers said that they are almost sure that they will buy the financial products from the planner/advisor only and will not go anywhere else . However a planner has to keep 2 things in mind. a) This point is true only if a client is satisfied with your work and is a happy client . b) At no point you should be pushing products to them or give them any feel that you are there just to sell them products (Too much product push is one of the biggest turn off) , hence just do what you should be doing and almost all the clients will buy the products from you, unless there is some other strong reason not to buy

What do investors think about this Financial Planning Survey in India ? 

As a reader of this blog and someone who might be one of the investor, what do you think about this survey and the results ! . Do you agree with it . Do you want to point out something and talk about it ? Jagoinvestor also provides financial planning , you can look at our services page here

Free Tax Filing for Women in India by Cleartax.in

Posted on by Jagoinvestor

Cleartax.in – a tax filing portal has made tax filing for women totally free. Women all over India can now file their tax returns for free, sitting at home at www.cleartax.in . Women will have free access to its very user friendly tax filing website till July 26, 2012. The ClearTax platform is an easy to use to file one’s tax returns. The offer is an initiative by the company to invite women to take ownership of their finances.

Cleartax observed that  more men than women e-filed online with them and their team learnt that in aggregate, women spent significantly less time paying attention to tax planning and personal finance compared with men. Jagoinvestor had done an article on Women & Personal Finance which revealed how 88% or more of urban women (who are well educated and live in big cities) have Zero or very less personal finance knowledge. Most of the tax filing work is handled by their father or husband and they generally refrain from any taxation related work.

What you can do ?

You can spread a word about this into your office and share it with all the women employees, you can also use this opportunity to file taxes online for your wife, sister, mother or any female relative.

Best Mutual Funds House [Graph]

Posted on by Jagoinvestor

Which is the best mutual fund House ? Is HDFC better than DSP Black Rock or Reliance ? A very good way of looking at it is to see all the equity oriented mutual fund schemes of a fund house and check how many of them have outperformed its benchmarks in different time frames like 3 yr, 5 yr and 7 yrs?

For instance, Birla Sun life which has 16 equity funds with more than 5 yrs of history, but out of those 16 funds almost 8 of them have not outperformed its benchmarks, which is not very encouraging. The same kind of scenario is with SBI & UTI mutual fund houses.

On the other hand if you see HDFC , Franklin templeton, Reliance & ICICI Prudential Fund house, they have done much better, a higher percentage of their schemes has outperformed their respective benchmarks. Its a very clear indicator of a AMC overall performance . So its very important to understand which AMC’s are doing better over their whole basket of mutual funds and which are not. Below is an info graphic which I have re-aligned using a PDF document published at Livemint article here . Credit goes to Kayezad E. Adajania from Livemint who has done this research. Good show !

Best Mutual Funds AMC

100% of HDFC Funds outperformed their benchmark

You can see in the above graph that only HDFC is one fund house which has all its equity schemes outperform its benchmarks in 3 yr, 5yr and 7 yr category. Which Mutual funds are you invested in? Do you feel you should move to the fund houses which have shown better performances ?

Which mutual fund AMC is your favorite and why ? What do you have to say about this study ?

Changes are required in Indian Taxation laws – Everything you want to know about income tax in India

Posted on by Jagoinvestor

A lot of people are trying to change our country. The way elections happen, the way schools run, the way govt. uses CBI for its own use, the way the judicial system works, etc. – the whole system needs to be changed!

In the same way, Taxation is one aspect of personal finance which needs some changes too. This is one sensitive topic I want to raise today – “Expenses allowed for Tax Deductions before paying tax”

Taxation rules in India

We all are aware that some deductions are allowed for saving tax – like up to Rs 1 lac through section 80C and many more. However, the taxation law has not considered some of the things which are very relevant in today’s world and should be considered as per logic, but the law does not recognize it.

There is only one parameter for taxation today and that’s “Income”. What about “Expenses“?

Each person is different and the number of family members compared to others is different. Each person’s living expenses are different and their liabilities are different too. Hence, there should be some consideration for this while taxing that person.

Imagine this situation:

There are two people Robert and Ajay. Robert lives in Mumbai earns Rs.12 lac per year in hand, whereas Ajay works in Indore and earns Rs.6 lacs a year. Robert and Ajay both put Rs.1 lac in 80C investments and then have to pay the taxes. Ajay pays tax on 11 lacs, which comes around 1.8 lacs, where as Ajay gives a tax of Rs.30,000. So Roberts pays higher taxes than Ajay.

Now, what about a number of family members in Robert’s House? What about the burden of children education on Robert which is very high in Mumbai- which Ajay might not have?

What about the expensiveness of the city like Mumbai where Robert has to spend a lot of money on fruits for his elder parents- which might not be the case with Ajay? If Robert has 6 family members including parents, 2 children and 1 sister- total of 7 members, then what will happen?

All them need food, clothes, basic necessities which one can’t escape! Should govt not consider these points before applying the tax. Should there be a minimum limit of deduction for all these points? Read these 7 Income tax-saving tips you might now know

Some Deductions allowed but are they realistic?

1. Conveyance Allowance-

Till date its just Rs.800 per month, which I feel is way too low for many people. A lot of people spend on an average 3,000 – 4,000 in commuting and that makes a 30k-40k valid deduction on travel to work.

2. Tuition Fees for Children Education –

Why only tuition fees is allowed for deductions, what about school dress, books, coaching classes, school bus fees, computer for study purpose. Are these not justified these days?

3. Health Expenses –

Only Rs.15,000 worth of medical bills are reimbursed, but are they realistic today? What if I have both parents who are not well and I spend Rs.50,000? What is the basis of limiting to medical expenses which are not in my control.

4. Rent –

Why rent paid is not considered as a valid deduction? What if I don’t have HRA component? What if I am not a salaried class? Why do I pay price for high rentals in our country? What if my rent is high because I live in Bangalore or Mumbai?

5. Grocery –

Food bills are a necessity and I don’t think one should be paying any tax on the amount spent on grocery. If a family has 5 people and their grocery bills are around Rs.8,000, that’s around 1 lac a year, then should this amount be not allowed as a valid deduction?

That’s a necessity of life, I can’t do anything about it.

Watch this video to learn more about Indian Tax System:

Single vs Married?

There should also be a consideration for married people who have just one source of earning. Why families should not be seen as one entity. If there is a family where husband and wife both are earning, but the consumption level is almost what a family with an earning husband and a housewife is there.

There can be a single earning point and multiple consumption points. That should also be accommodated in some manner.

These are all the points which just come to my mind, some of these might be making sense and some might not. Not sure how others think about it?

Can you share your comments on this?

FREE Online Tax Filing Coupons from Taxspanner & Cleartax

Posted on by Jagoinvestor

You can now enjoy FREE Online Tax Filing from taxspanner and clear tax websites. Tax filing season is on and I dont want jagoinvestor readers to wait till last moment. In all probabilities you have paid your taxes now and you are all set to file the returns now. We did Action Month last year were a lot of people completed a few important tasks in few days which were pending in their financial life. So now we are doing TAX FILING month where its an opportunity for you to file your returns online. So I have arranged for 1000+ Free tax filing coupons from 3 websites and you can file your taxes online for free. So Early action takers can file it for FREE, but later comers will have to bear there own cost.

Details of Free Online Tax Filing Coupons

 

Company Number of Coupons Coupon Code About
Cleartax.in 1000 JAGOINVESTOR

(Almost over)

 ClearTax – Income Tax filing portal for Individuals. We aim to be the easiest to use & Perfect for first-timers. You can just upload Form-16 and ClearTax reads all the relevant values. Usable from any Mobile, Tablet or a Computer.
Taxspanner.com 750 TSJAGO2012 (Almost over) Taxspanner is the largest online tax filing firm in India providing ITR1, ITR2 & ITR4 and they are the only portal which is certified for security and vulnerability by CERT-IN
Perfios.com 50 Not available now Perfios is the Leading and the most Automated Online Money Manager in India with more than 250000 registered users. Perfios is offering FREE Online Tax Filing for the jagoinvestor readers – for the first 50 Sign-Ups! If you miss it, you still get to file at a very economical rate of Rs.125″ Hurry Sign Up now !!

 

Free Online Tax Filing using the Govt Website

One can also file the taxes online using the official tax website of govt using the following steps.

  • Login to https://incometaxindiaefiling.gov.in/
  • Download the appropriate software from the website as per your case. This software is nothing but a nice detailed excel sheet (enable the macros)
  • Once you have the excel sheet on your computer, fill up all the details (if you dont have form 16, you can still fill all the details manually).
  • Once you fill up all the details, verify it once again and then export it to XML (the export button is there in the software itself)
  • Once you have the XML file with you, you need to login to the website (you will have to register for it once).
  • Once you are logged in there will be an option called “Upload Return” on the left side. Click on it
  • There will be two options called “Digital Signature” and “No Digital Signature” . As most of the people would not have a digital signature, just choose the option. Upload your XML file and just create your acknowledgment form called ITR-V, You need to download it. Once you have the acknowledge form, just verify it once again.
  • Just send this acknowledgment form using a regular or speed post (no courier allowed) to“Income Tax Department – CPC, Post Box No.1, Electronic City Post Office, Bangalore – 560100, Karnataka”
  • You will get the receipt of your ITR-V receipt by email in some weeks (takes time), you can track its status here

You can read the step by step procedure to file online taxes that are mentioned here in this article. I hope you know that tax refunds are processed faster if you file your taxes online. Ask your questions on tax filing here on this thread and I will try to bring in few experts on taxation to answer all your queries. I hope you have completed your FREE Online Tax Filing through these websites.

Should Income Tax limit be raised to 5 lacs ?

Posted on by Jagoinvestor

Do you know that 89% of tax payers in India have income of less than 5 lacs per year? Yes that’s true! Such is the case of most of the low earning people form the tax-paying population. However can you guess what is their share in total tax paid? It’s just 10%.

why doesn’t govt make income tax limit as 5 lacs ?

Yes, 10% of total income tax comes from 89% of taxpaying population. Now that brought a very interesting question in my mind, that why doesn’t govt make 5 lacs income as Tax free?  Only those who have more than 5 lacs income will be paying tax. Imagine what will be the situation!!

In one shot, 89% of the tax-payers will be free from the headache of paying tax each year and the govt will still get 90% of the taxes. What they can do is increase the taxation rate a little bit, so that they still get 100% of the taxation recovered from the rest 11% tax payers (having income of more than 5 lacs). If you look at deep down into the statistics, do you know that 1% of tax payers earn more than 20 lacs income and they account of 63% of tax payment. Imagine this – 63% tax coming from just 1% tax payers.

Tax Payer numbers in India 2012

Source

But it will not happen

Let’s come back to reality now. It was great to imagine that govt should raise the income tax limit to 5 lacs. But do you know that collecting tax from this segment is the easiest. Because these 89% tax payers are mostly salaried employees and the overall tax collected comes in the form of TDS. Companies hiring them have the responsibility of cutting the tax each month and paying it to govt. Hence Govt has almost no work to do to collect the tax from this section of 89%.

This brings us to a very important conclusion now, How should govt restructure the taxation rates and limits such that they increase their tax collection, but it impacts a small percentage of population? What about doubling the taxation rates for those having income of more than 20 lacs? What about making a marginal increase in taxation rates for those having income of more than 10 lacs?

I know I might be overlooking some important points here, but what do you think about it ? Dont you think govt should raise the income tax limit to 5 lacs or something like that ?

IRDA Fraud Calls – Beware of fake phone calls

Posted on by Jagoinvestor

There have been too many fake phone calls in the name of IRDA these days to many people. It have been noticed that these IRDA fraud calls are made by anonymous people claiming that they can help you get your money back for your Insurance policies which have become a big headache those those who invested in ULIP’s traditional policies without understanding them and are stuck in those plans now. They know that IRDA is a body which handles them (do they?). At times investors are so fed up with their policies, their life situations and are so desperate to get help that they believe anyone who claims to help them.

So some very smart people starting calling up people claiming they are from IRDA and they can help them in getting back their money back or showing some kind of hope to help them. There are several instances where some people lost more money falling for these calls and believing in them. Lets see some examples of these fraud calls and how investors again believed them without doing their study.

Fraud Case 1 : Deepak lost Rs 25,000

I also Received a call from a number 01206470443 saying that he is from IRDA and I will get a bonus of atleast Rs. 20000- for the insurance policy that I had taken few years back from hdfcsl. However, I had to make an investment of Rs. 25000/- for birla sun life insurance company. but i have no recieved documents of birla sun life insurance company. Any one can tell what I do for my payment back. (link)

Comment

It was very obvious that their was a fraud done with him and he had either signed some cheque or given DD to someone without understanding what he was doing. He must be very excited to get back some bonus (which didnt exist). He

Fraud Case 2 : How S Dash lost 51,000

I received a call from a lady named Riya Malhotra who said she was from IRDA. She said that IRDA is helping out investors in getting back their long stuck up policy funds. I had one Bajaj Allianz policy which I wanted to close. She said she will help me do it if I take a new policy from Kotak Mahindra or Birla Sunlife

She said that this is a five year term, we pay one-time 51000 now (no more premium payment till 5 years) and we will get 50% of the 51000 in 45 days and after 5 years we will receive approx 76000. However we will get a life cover till I attain age of 100. Moreover we can also recover any insurance amount which we are unsatisfied with within 45 days also. It’s already more than 50 days since I made the payment of 51000 by cheque but I have not received any communications from her. I try calling her @ her mobile. No answer.
Please suggest what should I do? (link)

Comment

Note sure whom did she write the cheque for ? There was no rational on choosing a new policy just to get back the money from old policy, there is no relation between both policies.

Fraud Case 3 : How Vikas Lost Rs 3 lacs

Mere pass call aya ki birla sun life me policy one time karane par ek verna car gift ki ja rhi hai , lekin rupees cash dene hoge maine three lakh rupees de diye lekin aaj ek mhina ho gya na to koi bond paper aaya h na hi mere paise sir plz me kya kru (link)

Comments 

I have no idea how a person can believe that if you if you buy a policy , you will be gifted a car ! . Thats too guaranteed ! , That too by giving cash ! .. While this was a fraud call , there was some common sense expected too !

Fraud Case 4 : How Sumit lost his money

In last December 2011 I got a call from IRDA (from number 0120-3050600 saying they are from IRDA) saying that your last policy premium will be recovered as we are from IRDA and we will give one regulatory to Birla Sun Life to return your money back but I’ll not get this amount directly to my account. What I need to do is to take a policy from Aegon Religare for the same amount Rs 36000. This policy will be actually for 16 years with 10 years locking period. But Due to IRDA intervention your policy will be for only 3 months locking period. Your first year premium will be paid by amount from Birla Sun Life policy and I need to pay another Rs 36000 as current year premium and I need to pay next year premium and then 4th year I can withdraw the amount which will be around 1.6L due to some calculation. Over and above that they committed that company will pay agent commission to my account which will be 25% of yearly premium. They will bypass agent from my policy.

They were continuously in contact with me till 18th Jan that I’ll get a separate statement. They know that I can cancel the policy within 15 days of receiving the documents so they were contacting me so that I’ll be convinced and cannot cancel the policy. But after 20th Jan they are neither picking my call nor calling me. So they have found a new way by picking weak vain of customer by giving promise that old lapsed policy amount will be recovered as well you will get agent commission. I had taken this policy bcaz of tenure will be 3 years as well as I’ll get agent commission with last policy lapsed amount.

The person whom I was in continuous contact was Anjali Oberai. Her mobile number is OXXXXXXXX and direct landline number is 0120-4396848. I have called many times on these two numbers to her. Before 20th Jan she entertained all my calls but now she is not picking my call. Also same policy benefits were explained to me by Neha Chaturvedi one of senior person of IRDA from Hyderabad. Anjali Oberai represented Neha Chaturvedias senior person from IRDA from Hyderabad and she came to NCR for some time. Many times I had doubt on them but due to greed of recovery of my loosed last policy amount and getting agent commission I was cheated by them. I know it’s completely my fault. But I would like to take in focus of all so that nobody can be cheated. (link)

Comment

I can see a clear gap in understanding of how life insurance industry works and too much faith in stranger who called up on the name of IRDA . If the policy was really taken from Aegon religare , it should be checked who was the agent in this whole process and nab him/her.

IRDA has clearly issued a notice saying that there is no initiative from IRDA like this 

Insurance Regulatory and Development Authority (IRDA) is a regulatory body established by an Act of Parliament to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

Some instances have been observed by the Authority that general public are receiving calls from individuals who claim to be representatives of IRDA and offering insurance policies of different insurance companies with various benefits (such as offering of scholarship along with policy etc.).

The general public is hereby informed that Insurance Regulatory and Development Authority is a regulatory body which does not involve directly or through any representative in sale of any kind of insurance or financial products. Any person making any kind of ‘transaction with such individuals/agents will be doing the same at their own risk. If any member of the public notices such instances he/she may lodge a police complaint in the local police station.

Sd/-
(Kunnel Prem)
Consultant and Special Officer (Life)

Don’t fall for IRDA Fraud Calls

IRDA is just a regulator for Insurance sector. They do not make any calls acting as mediator between you and company. All they can do is direct a company for some matter or ask them to follow a guideline. But they never work on individual cases and send people to collect money from you. Even if it did , it will never ask for Cash or any kind of cheque on personal names. These kind of calls are purely fraud done by those who know which policies you have (known somehow) and then they just try to see if you can fall for their false promises. Use common sense because making payment to anyone like this, do not pay any attention to these IRDA Fraud Calls.

Which is the best bank for Home Loan ?

Posted on by Jagoinvestor

Taking a Home loan is a big task in itself and one of the biggest financial decisions. A home loan is the longest debt in our life. At times 10-20 yrs, which makes demands a long term commitment. Each month you have to pay your EMI, sometimes you have to prepay some part of home loan, sometimes you need some documents and visit the bank. There are numerous things to be done during taking the home loan and after taking the home loan, hence you should be very clear that which is the best bank for Home Loan. Without much confusion, it’s very clear that everyone wants to go with the bank which makes your life easy at the time of taking a home loan and even after that. So the biggest question on everyone’s mind is “Which is the best bank for a Home loan?”

Best Home Loan Bank in India

First thing first, you have to be very very clear that their cant is a single bank or loan institution which is perfect for everything and you will never face any issue with them. Also, there is no “best bank for Home Loan” which has always worked for everyone to date. But overall we can always pick some banks which have been better than others on different parameters. You can say that on a high level “Bank A” is better than “Bank B” and this is based on many loan takers’ experience over the years. So now in this article, we will try to understand the difference between different banks and how they differ with each other. We will also see a survey result done with the vast community of this blog and which bank they choose collectively as the best bank for a home loan.

Public Companies vs Pvt Companies

While researching on this topic, the first thing which came to my mind was “all banks are the same, everyone has a bad experience will all kinds of banks, whether PSU or private”. But we have to understand that while some people can have a bad experience with some banks, there are a positive experiences too and we have to see things from a very high level and not judge a bank just based on a handful of bad experiences. The first confusion which comes to any loan taker mind is “PSU bank or private bank?” and based on the experience here is the conclusion.

PSU Banks are good post-loan but not friendly at the time of taking the loan

Private banks are very fast and friendly at the time of disbursing the home loan, they will treat you like a king up-till the loan is disbursed, but once every formality is complete and your home loan is sanctioned, you are a trash to them! As they are extremely aggressive in the marketing of home loans, a lot of people fall for it, Private companies presentation and the way they approach you is good but only till you are not a home loan customer. A lot of times private companies make things easy for you and also bend some rules for home loans. the number of documents they need also is less compared to a PSU bank.

On the other hand, PSU banks are not that great at the start of home loan , their rules are very strict and stringent and they still operate  in the “sarkari” style, however, once your loan process is complete and things start, their afterlife is much easier compared to private banks. The overall handling is much professional and as per the process. In short, they don’t suck your blood every now and then as private companies do.

Private banks are first to raise the interest rates

On the interest rates increase and reduction side, its seen that private companies are first to raise the interest rates after the rate increase from the RBI side, but private banks hide somewhere when there is a time for reducing the interest rates. However, PSU banks are more transparent on this front and much less annoying than Private banks. Also private banks arbitrarily increase the pre-payment charges (  like from 2% to 3%) the conversion fees are also charged heavily if you want to move down to lower interest rates.

Also the changes of fraud at employees level in Private bank is much higher than PSU Banks. I can’t say that PSU banks are not into the bad game, but it’s much much higher in Private banks because of sales pressure and targets. There has been cases of forced selling of home insurance and also cross selling of ULIP’s and other financial products along with the home loan

Which is the best bank for Home loan in India?

Now there are millions of people who have taken home loan and there are various parameters on which a bank can be ranked like Processing time for a home loan, Transparency in whole process, Attitude towards the customer, Interest rates and pre-payment charges, online tracking of your home loan after disbursement. But there is no ranking of banks on all these parameters. However still you can rank a bank overall as good or bad in total. I ran a survey on this blog and got around 1504 participants to vote for the best bank for home loans and based on that we can judge which banks are more preferable and more trusted. Here are the results.

Best Bank for Home Loan in India (Survey Results)

Best Bank for Home Loan in India - SBI , HDFC or LIC

A good place to look for all the home loan related data (Click here)

Top 5 banks for Home Loan at the moment

If you see the survey above, you can clearly see that the top 5 banks for a home loan are SBI, HDFC, LIC Housing, Axis Bank and ICICI Bank and these 5 banks comprise 83% votes. While a big reason for this can be that these are big banks having a wide reach and has more customers and hence the results are a little biased. But at least you can see that out of 1504 people on this blog, 83% of them have a home loan from these 5 big banks, in which SBI tops the list.

1. SBI Bank

Based on the survey and overall reading’s done over the net and comments section of this blog. SBI bank seems to be the best bank for Home Loan. While SBI Bank still carries the hangover of Sarkari culture and they are strict in the overall process, which means you will have to run all over the bank and many times to get things done, but once the whole process is complete, maybe you will have a smooth experience overall. Things will be easy post home loan process if you need anythings from bank compared to other banks. For those who want to know why SBI is preferred, follow this thread

2. HDFC Bank

Overall HDFC bank seems to be have mixed reviews. Some people had a great experience and some had a very bad experience. HDFC Bank is overall recognized as the bank for the home loan itself. But overall the experience was very very mixed.

3. LIC Housing Finance

LIC housing finance seems to be a decent option after SBI. While they are not that great as SBI, still they seem to be a good choice after HDFC and ICICI bank. LIC Housing Finance has lesser documentation requirements, but one has to run around for smaller details.  LIC seems to offer better rates and also giving the option to fix the interest rate for 5 years. One thing which many people do not know is that LIC reduces the interest rates for home loan for its customers having any insurance/investment policy with LIC by at least 0.25 %, but only if Sum assured of all policies collectively is more than 15,00,000 and all policies should be under the name of the loan applicant.

4. ICICI Bank

ICICI Bank seems to be very very fast and too friendly at the time of loan processing, but once the loan is done, life seems to be hell for most of the people. They are not very supportive most of the times and one gets too frustrated with their attitude. Overall their interest rates are also very high.

5. Axis Bank

Axis Bank is another good option as a big bank. One good thing about Axis bank is that they have NIL charges for any pre-payment. It’s a big surprise that Axis bank was more preferred than ICICI bank overall in the survey. While Axis Bank has few good options, there was one recent case from axis bank which I had highlighted on this blog on how they forced sell a life insurance policy along with home loan, While this was a negative thing from Axis Bank,  we have to understand that good and bad experience are part of all the banks.

So what is the final answer ?

While there are positive and negative experiences from different banks, the clear answer coming out of different comments from readers and survey is that if one has to choose just one name, SBI bank is the best bank for home loans. We have seen most of the votes going to SBI Bank and all the pointers are suggesting that its the right choice.

Which bank do you have home loan with and what was your experience overall from start till the end. Can you share it in for others benefit?