Category: News

5 Major Changes in Budget 2020 (NRI Taxation Myths + New vs Old Slab)

Posted on by Jagoinvestor

Budget 2020 was a big event.

For last so many days before the budget, there was this noise and expectations around raising 80C limits, change in tax slabs, and reversal of Long term capital gains tax on equity or at least giving the benefit of Indexation in equity taxation.

However, nothing like that happened.

budget 2020 highlights

Infact, things have become more complicated for investors while I think the govt intention was to make it simple. So let me jot down all the relevant points and important news items.

Here is my audio commentary for 15 min on Budget 2020

 

 

1. New Tax Slabs vs Old Tax Slabs

A new (and optional) tax slab is introduced now which has lower tax rates compared to old one. The investor will have choice of either staying with the old slabs along with various exemptions and deductions they used to enjoy, or they can shift to new slabs without any exemptions/deductions.

New Income tax slab rates

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Tax Slab

Tax Rate
Below 2.5 Lacs No Tax
2.5 Lacs- 5.0 Lacs 5%
5.0 Lacs- 7.5 Lacs 10%
7.5 Lacs – 10.0 Lacs 15%
10.0 Lacs – 12.5 Lacs 20%
12.5 Lacs – 15.0 Lacs 25%
Above 15 Lacs 30%

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  • Education cess @4% on the tax amount
  • Surcharge of 10% applicable if income > 50 Lacs and 15% if income > 1 Cr

Old Income tax slab rates (for those below 60 yrs.)

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Tax Slab

Tax Rate
Below 2.5 Lacs No Tax
2.5 Lacs- 5.0 Lacs 5%
5.0 Lacs- 10 Lacs 20%
Above 10 Lacs 30%

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Which tax slab is better?

Basically the new tax slabs are of not much to those who take benefit of various deductions and benefits anyways, because they are able to bring down their taxable income by some decent margin. Only those who have income range of 6-9 lacs and do not take benefit of any exemption/deduction will benefit from the new slabs.

Example 1 – Let’s see an example here and calculate the tax to be paid under old and new system.

  • Income : Rs 15,00,000
  • 80C – Rs 1,50,000
  • Home Loan Interest – Rs 2,00,000
  • Medical Insurance – Rs 20,000
  • Standard Deduction – Rs 50,000

Calculation of Tax under OLD SLABS

You can see that here, the taxable income will come down by 4.2 lacs directly. So under the old slab system, the taxable income will be Rs 10.8 Lacs (15 lacs – 4.2 lacs)

Let’s see tax calculations

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Slab Slab Higher Amount Income Tax Rate Taxable Income under Slab Tax
0 – 2.5 Lacs 250000 0% 250000 0
2.5 – 5 lacs 500000 5% 250000 12500
5 – 10 Lacs 1000000 20% 500000 100000
Above 10 lacs No Limit 30% 80000 24000
Income Tax 136500
Education Cess @4% 5460
Surcharge 0
Total Tax 141960

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Calculation of Tax under NEW SLABS

In new slab, there is no way of getting any deductions/benefits , so let’s directly jump into the tax calculations

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Slab Slab Higher Amount Income Tax Rate Taxable Income under Slab Tax
0 – 2.5 lacs 250000 0% 250000 0
2.5 – 5 lacs 500000 5% 250000 12500
5 – 7.5 Lacs 750000 10% 250000 25000
7.5 – 10 lacs 1000000 15% 250000 37500
10 – 12.5 Lacs 1250000 20% 250000 50000
12.5 – 15 Lacs 1500000 25% 250000 62500
Above 15 lacs No Limit 30% 0 0
Income Tax 187500
Education Cess @4% 7500
Surcharge 0
Total Tax 195000

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Which tax system is better – Old or New?

  • Old slab tax is Rs. 1,41,960
  • New slab tax is Rs. 1,95,000
  • Difference of Rs. 53,040

We can clearly see that the tax is lesser in the older system, compared to the newer system.

Important Points

  • You can choose each year which tax system you want to choose from – New vs Old. However this choice is only those, who do not have a BUSINESS INCOME. For those who have any kind of business income, will not be able to switch back to the other system once they have done it.
  • Remember, that there is a tax rebate under sec 87A in both new and old tax slabs where a person earning up to Rs 5 lacs gets a tax rebate of Rs 12,500, which technically means that if someone’s taxable income is less than 5 lacs, then they will have to not pay any tax.

2. No Deductions or Exemptions under New Tax Regime

I have already mentioned this, but if one chooses the new tax regime, they will not be able to take benefit of following things

  • 80C investments (PPF, ELSS, EPF, Life Insurance Premium)
  • Medical Insurance Premium
  • Home Loan Interest
  • HRA
  • LTA
  • Standard Deduction of Rs 50,000
  • Extra 50,000 deduction for NPS (apart from 80C limit)
  • Donations under 80G
  • Education Loan Interest

Note that you can still put your money in all those 80C investment products and medical insurance etc., but you will not be able to take tax benefits (not for those who stick with old system)

However, the employer contribution to NPS and EPF is still tax free up to 7.5 lacs per year. So you can ask your employer to contribute more on your behalf in these two things.

3. NRI definition change + Taxation Rule

There was too much confusion around new rules for NRI’s for the whole day and twitter saw many people debating if many NRI’s especially from Middle east will have to pay taxes in India or not.

Here is what the new rule says –

“If a person is not resident of any country, then they are deemed to be a resident of India and they will be taxed on their global income”

Check out the official confirmation here

There are a lot of citizens of India, who stay in different countries for small period of time and technically are not resident of any country and hence don’t pay any taxes. Those investors will not have to pay the TAX in India for their global income.

This is different than those investors who are living in countries like UAE etc. where there is ZERO tax. Because they are a “tax resident” of these countries. They are just not paying tax because the law is like that. So these kinds of investors don’t have to worry at all, and nothing changes for them. Check out the video clarification from officials

Now as per the new rule, a person has to stay out of India for more than 240 days to qualify as an NRI, against the old limit of 182 days.

4. Dividends will be taxable in the hands of investors

The DDT (dividend distribution tax) is now abolished and the dividends will now be taxed in the hands of investors as per their slab rates.

Till now the DDT rates for companies was 20.35%. So every investor who got any kind of dividend took that kind of hit indirectly (even thought it was tax free in investors hands).

This is not great news for those who are in higher tax bracket, because they will pay higher tax now compared to what they paid earlier and now there will be additional headache to track and mention all dividend income while filing tax returns.

There will be TDS @10% deducted by mutual funds, if the dividend to be given is more than Rs 5,000 in a financial year to an investor.

Important Update : There was a big confusion around investors and advisors community that TDS of 10% will also be applicable on redemption from mutual funds or not? But the govt has already clarified that the TDS is only applicable on mutual funds dividend and nothing else. Any redemptions you do from mutual funds, that will not attract any TDS for residents (for NRI’s , the TDS is already there since long time)

Clarification from govt that TDS will only apply on TDS from mutual funds and not on capital gains

5. Banks Deposit Insurance raised from 1 lacs to Rs 5 lacs

The insurance on your bank deposits have gone up from Rs 1 lacs to Rs 5 lacs. This was much needed change and finally it’s done. Recently we saw the problems in PMC bank (the bank is not yet closed or shut, hence the insurance will still not apply there)

Bank deposit insurance in India vs other countries

Conclusion

As govt said, they want to simplify taxation rules in long run and I feel over next 5-6 yrs, they will slowly try to remove the old system of deductions and exemptions with lesser tax rates coming in.

However I feel, most of the investors needs that carrot of “tax saving” for investments otherwise they don’t do it.

While, its correct that one should invest anyways whether there is tax benefit or not, but when you go to ground level and see, the reality is that people need that nudge to invest. We need to trick them for their own benefit, else they will not think of investments.

From that point, it might be a bad news.

Also, for some years, we will see this confusion of old vs new tax rules and which one should we be choosing, but this can’t continue forever and eventually we will have a single tax system and you guess it right, it will be the new one.

Let me know what are your comments on this budget and how do you see it?

Arogya Sanjeevani Policy – A uniform health insurance plan (REVIEW)

Posted on by Jagoinvestor

IRDA has recently announced the launch of health insurance policy called “Arogya Sanjeevani Policy” (official link) which will have standard features which are required by a common man for his health insurance requirement.

IRDA thought of a standard policy which will be exactly same across insurers with similar features. In this review, I plan to give you details of this policy.

Arogya sanjeevani health insurance policy review

What is Arogya Sanjeevani Policy?

It’s a standard health insurance policy for a common man with standard features. It will be offered by all health insurance companies in India starting from 1st April, 2020 onwards. The name of the policy will be ‘Arogya Sanjeevani Policy – Insurance company name’. The premium, however, may be set by the insurers on their own.

The existing health insurance policies in market are quite complex at times with fancy features and differ from each other so much that a normal investor finds it very tough to choose a suitable policy. Hence IRDA came with this policy.

Who can buy the policy and for whom?

Any person whose age is between 18 and 65 yrs can take this policy. Either the person can buy an individual policy or buy the family floater option if one wants to cover other family members.

“Family” here means

  • Spouse
  • Parents
  • Parents-In-Law
  • Dependent children between 3 months to 25 years (natural or adopted)

Note that any children who are above 18 yrs and financially independent will not be eligible for family floater.

Features Arogya Sanjeevani Policy

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Feature

Explanation
Sum Assured The minimum sum assured is Rs 1 Lac and maximum sum assured is Rs 5 Lacs (in the multiple of 50,000)
Premium Payment Frequency Premiums can be paid on a monthly, quarterly, half-yearly and on a yearly basis. It will be a 1 yr policy renewable each year
Cashless Benefit Yes, there is cashless benefit under this policy
Maternity Benefit Not Available
Renewability Lifetime renewability is available in this policy.
Minimum & Maximum Age The minimum entry age for the principal insured is 18 years and the maximum entry age is 65 years.
Waiting Period 30 days of waiting period. Hence no claim will be paid in first 30 days after buying policy
Co-payment A fixed copay for 5% is applicable for all ages in this policy.
Portability Yes, the policy offers the portability option to other health insurance companies
Ambulance Charges Max Rs. 2000 per hospitalization
Pre & post Hospitalization 30 days Pre Hospitalization & 60 days Post Hospitalization expenses
Ayush Treatment Yes, it’s Available.

AYUSH means all treatments related to Ayurvedic, Yoga, and Naturopathy, Unani, Siddha, Homeopathy
Waiting Periods There are 2 types of waiting periods, 24 months and 48 months.

Most of the illness have only 24 months of waiting period, but two of them have 48 months of waiting period.
Sub Limits
  • For hospitalization expenses like room, boarding, nursing expenses up to 2% of Sum Assured or a maximum of Rs.5,000 per day.
  • ICU/ICCU expenses will also be provided up to 5% of sum assured or a maximum of Rs.10,000 per day.
  • Sub-limits of cataract surgery are equal to actual expenses i.e. 25% sum assured or Rs 4 lakhs, whichever is lower.
NCB (No Claim Bonus) NCB (No Claim Bonus) of 5% for each year up to 50% of the sum assured is covered.
Riders Not Available

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Policy Cancellation and Refunds

You can cancel the policy subject to following refund options

  • If you cancel within 30 days, you will get 75% premiums back
  • If you cancel from 31 to 90 days, then you get 50% premiums back
  • If you cancel between 3 months to 6 months, then you get 25% premiums back
  • After 6 months, you get NO refund

Is there any grace period in the policy?

Yes, For a yearly premium payment, 30 days grace period is allowed and for other modes of premium payment 15 days grace period is allowed.

Will the premium depend on my city or the zone?

No, it will be same across India. Note that some policies have zone-based premiums model

What are some exclusion of the policy.

The main exclusion is the maternity treatment expenses, but even treatments related to weight loss, change of gender, plastic surgery, hazardous adventure sports, breach of law or due to war, etc are excluded from the policy.

Good points of Arogya Sanjeevani Policy

  • All main features are available in the policy which is required by any investor
  • The policy has standard features, so no chance of getting confused when comparing the premiums of different companies
  • It’s my guess, but the premiums of this policy would not be very high as copay is there in this policy and no complicated features exist. Also there is a very large market for this policy hence all insurance companies will compete with each other to keep premiums down
  • Its a no brainer policy for someone who wants to buy a “decent policy”
  • You can buy multiple Arogya Sanjeevani Policy from different insurers

Should you buy Arogya Sanjeevani Policy?

At the end, let me answer this important question.

Health Insurance is a long term product, and if you can afford the permission, you should go for a base policy which is very strong overall. I suggest one to go for a 10-15 lacs of base cover and extend the cover using super top up policies beyond that.

Overall Arogya sanjeevani policy is decent for a common man who wants a good enough health insurance policy which works. It’s like the Jan Dhan account which has all the decent features. However there are few things which are the issues

  • 5% copay
  • Sub limits of room rent
  • Maximum Sum assured limit of Rs 5 lacs
  • 30 days of waiting period

Hence, I would suggest to explore other health insurance policies which give option to take a higher sum assured and may also not have copay limits.

We also need to wait for couple of more months to see how this policy launch turns out to be and what kind of premiums will be charged by various companies. Overall, it’s a very positive development in health insurance space and this policy will give an opportunity to people from lower sections of society to buy a good enough health insurance policy.

5 changes in PPF rules which will impact you (PPF scheme 2019)

Posted on by Anuradha Singh

On 12th December, the Government of India has notified some changes to the PPF Scheme 1968. The government has replaced the earlier PPF Scheme, 1968 to the new Public Provident Fund (PPF) Scheme, 2019. You can view the following 5 min video I created on this topic.

Let us see what changes have been made –

1) Premature Closure allowed when residency status changes

OLD RULE – In 2016, the Government allowed premature closure of the PPF Account after 5 yrs, in case of account holders death, higher education of account holder, life threatening illness in family.

NEW RULE – As per new rules, two more condition is added.

Condition 1 : Now, a PPF account holder can close the PPF account after 5 yrs, in case of change in residency status (when you become an NRI or when NRI’s become resident) on the production of a copy of passport and visa or income tax return. However in that case, the account holder will earn 1% lower interest. This is great benefit to those NRI’s who are returning to India and want to redeem money from their PPF account, but they had to wait for 15 yrs lock in period.

Condition 2 : Now the PPF can be withdrawn to finance higher education of the dependent children of the account holder. For that one has to submit fees bills or confirmation of admission in a recognized institute of higher education in India or abroad

2) NRI investors might be able to open a PPF account

OLD RULE – As per old rules, it was very clear that NRI investors can’t open a fresh PPF account, however if they have an existing account they can continue holding it till maturity and then close it.

NEW RULE – However, the new PPF law is not clear on this. It does not restrict NRI investors to open the fresh account and it does mention if they have to close it on maturity. Hence looks like NRI investors can operate the PPF account in the same way the residents can. However in Form 1 (PPF account opening form) one has to give declaration that one is resident of India of not.

In that case, it’s unclear how NRI’s will be able to fillup form 1 to open a fresh PPF account. However it’s very sure that they are not required to close the PPF account on maturity and can continue it like any other investor.

3) Deposits allowed in multiple of 50 without limits

OLD RULE – Earlier as per PPF Scheme 1968, deposits were allowed in multiples of 5 with a maximum limit of 12 deposits in a 1 year.

NEW RULE – As per PPF Scheme, 2019 deposits are now allowed in multiples of ₹50 with no maximum limit on a number of total deposits that have been specified. In other words, you can make deposits to the PPF account as many times as you want, subject to the maximum limit amount.

Note – The minimum annual contribution of ₹500 and the maximum annual contribution of ₹1.5 lakh have been kept as it is.

4) PPF can’t be extended if there are no deposits made after maturity

OLD RULE – As per old rules, Once you choose to extend your PPF account on maturity with the option of “without deposits”, you could still choose to deposit the money when you renew if further after 5 yrs.

NEW RULE – However, as per new rules, once you have not made any deposits for 1 yrs after maturity, you will never be able to deposit the money after that in PPF account. All you can do is continue the PPF account and it will earn the returns till there is any balance.

Note : Once the PPF account is matured, you can renew it in the block of 5 yrs and if you want to continue depositing the money, you need to fill-up a form and mention specifically that you will continue your PPF account “with deposits”

5) Interest on Loan reduced by 1%

OLD RULE – Earlier as per PPF Scheme 1968, Interest on loan against your PPF Account was 2% per annum above the prevailing PPF interest rate. For example, if the PPF interest rate was 7%, you would have to pay an interest rate of 9% (7+2).

NEW RULE – As per PPF Scheme 2019, the interest on loan rate has been reduced to 1% per annum above the prevailing PPF interest rate. For example, if the PPF interest rate is 7%, you would have to pay a rate of 8% (7+1).

Note – In both cases, the interest is levied from the first day of the month in which the loan is taken to the last day of the month in which the last installment of the loan is paid.

Changes in the FORM of PPF

Apart from these changes above, now there will be just 5 PPF related forms which are as follows

  • Form 1 – Opening of Account form
  • Form 2 – Form for application for loan/withdrawal
  • From 3 – Form for application for closure of the account
  • Form 4 – Application for extension of account
  • Form 5 – Form for premature closure of the account

Here is a table showing how the old forms changed to new forms

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Name of the Form OLD Form NEW Form
a) Account Opening Form Form A Form 1
b) Contribution Form Form B Not specified
c) Partial withdrawals Form C Form 2
d) Account closure after maturity Form C Form 3
e) PPF Loan Form D Form 2
f) Extension Form Form H Form 4
g) Premature Closure Form N/A Form 5
h) Nomination Form Form E Form 1

[/su_table]

Conclusion –

So now you all know the updated version of the PPF Scheme. Do let us know your views on the article in the comment section. Till then keep sharing this article with your family and Friends and Happy Learning.

75% of EPF can be withdrawn just after a month of unemployment

Posted on by Team Jagoinvestor

EPF is a long term retirement saving scheme. Therefore, it can be withdrawn fully(100%) only after retirement. And early retirement is not considered until the person reaches 55 years of age. However, if you get unemployed for a period of not less than 2 months, then as per the old rule of section 69(2) of the EPF act, you can withdraw 100% of EPF balance outstanding in your account.

Now, EPFO has made the Employee Provident Fund withdrawal rules more flexible for cases of job loss and inserted a new rule under section 68HH.

EPF withdrawal rules old v/s new comparison

A new clause, 68HH has been inserted after para 68H in the 1952 EPF act

As per this, If a person has been unemployed for a period of not less 1 month can withdraw upto 75% of EPF balance outstanding in his account as on date. The section says that, even after such withdrawal is made, the person shall remain part of the EPF and eligible for pension benefits. However, the advance cannot be remitted back into the EPF i.e. it will be non-refundable.

In addition to this, the circular clearly states that para 69(2) (old rule) is still continuing. That means, after two months of continuous unemployment, 100% of EPF withdrawal is allowed. However, the waiting period of 2 months does not apply in cases of woman retiring from services for the purpose of getting married. The snapshot of circular is given below,

snapshot of circular of section 68HH of EPF

Do you think this small change in the rule of EFP withdrawal, would be beneficial on a larger scale?? Let us know your views in the comment section.

How Rs 3,700 crore online fraud happened with with 7 lacs investors !

Posted on by Jagoinvestor

A new online fraud worth Rs 3,700 crores has been busted recently by Uttar Pradesh special task force. Around 7 lacs people have been cheated in the name of ‘Earn Rs 5 per click’ investment scheme.

This was a classic example of a very smart online fraud structure where you first make a lump sum investment in the company scheme, and you get a chance to earn a daily income by liking facebook pages. You can also add people under you (more money comes in the company) and you get benefits from that.

Structure wise it’s very similar to speakasia where you earned money by taking the survey’s and here you get it by click on the pages.

A company was set up with the name of “Ablaze Info” whose board of directors named Anubhav Mittal, Shreedhar Prasad, and Mahesh Dayal are arrested. They had set up various websites to dupe people like socialtrade.biz, freehub.com, intmaart.com, frenzzup.com.

How this scheme worked?

There were 4 schemes where you had to pay a joining fee ranging from Rs 5750 to Rs 57,500 and you got X number of clicks each day which assured you get Rs 5 for each click, making sure you get a monthly income.

social trade online fraud

There was also a bonus for adding more people under you (2 people) and some more benefits apart from that. It was a classic case, where few people join the scheme, get the assured income for 1-2 months and by then they bring more people by word of mouth, who bring more money in a company which makes sure that the fraud company has more money to pay everyone …

This continues for a few months/years and once there are thousands of people at the bottom who brought millions in the company, that’s the time when the company either runs away with all the money or they are caught by the law as it happened in this case.

Members trying to add other members

Every MLM scheme works on the basis of referrals and most of the people were trying to add others under them to get the bonus and added benefits which come out of referrals.

People started approaching their friends and other relatives to join this “business” and you can see in the video below how one of the people who was part of this is explaining the business model and is so convinced about it himself.

Why most people get duped in these kinds of fraud schemes?

You will find a lot of people who still believe in this kind of schemes mostly because they are not duped themselves and have experienced earning income consistently from these companies, but that is true for a small minority of people who join this fraud business early, because that’s the time when the company properly pays money without fail

The problem happens when the user base is quite big (in this case, 7 lacs) and then it becomes almost impossible to sustain the madness. Here is how the MLM business looks like

In the video below you can see how this one guy is so convinced about the authenticity of this social trade business and feels that the crackdown on the company because govt can’t sees poor people earning lots of money.

Do you know anyone who was cheated by Social trade company? What do you think about these kinds of MLM schemes?

EPF interest rate reduced to 8.65% from old 8.8%

Posted on by Jagoinvestor

The EPFO department (Employees Provident Fund Organisation) reduced the EPF interest rate to 8.65% today. The old interest rate was 8.8%.

This interest will be applicable for the deposits made for financial year 2016-2017. Which means that all the deposits which were made after 1st Apr, 2016 by the employers will be earning the interest of 8.65% only, and not 8.8%.

EPF Interest rate reduced

Why was the EPF Interest rate was reduced?

As per a Hindu report

While an interest rate of 8.62 per cent would allow the EPFO to keep a surplus of around Rs 22 crore, fixing the interest rate at the present rate of 8.8 per cent would have left it with a deficit of Rs 700 crore, EPFO’s income projections showed.

According to sources in EPFO, the lower interest rate is on account of poor rate of return on investments made by the EPFO on all fronts.

You will notice that the bank deposits interest rates were also reduced recently and this move might be in tune to that decision, as it’s tough to provide high interest as the money availability is high.

What do you think of this EPF rate cute?

Rs 500/1000 notes banned – Here are 5 critical facts to know

Posted on by Jagoinvestor

Last night, it was a historic moment when our Prime Minister informed the whole nation that Rs 500 and Rs 1000 notes will not be eligible currency notes from midnight at the end of 8th Nov, 2016. Here is the RBI notification

old currency notes ban

PM Modi had also explained all the points very well in his speech and shared how people should not worry about this if they have money with them and it can be exchanged with new notes in next 50 days, however seems like a lot of confusion is there around this topic and many myths are floating around.

5 important facts about the old notes bank

Below are some of the most important facts which you should know after this Rs 500 and Rs 1000 notes bank. There are lots of myths around and I wanted to clear them. These points which I have mentioned below are taken out of the RBI notification itself.

Fact #1 – You can deposit any amount of old notes in your bank/Post Office account

You can “deposit” your old currency in your bank account till 30st Dec, 2016. There is no limit on this amount and if you have Rs 50 lacs with you in Cash, you can just walk into your bank branch (expect a lot of rush) and just deposit the amount in your bank account. The limit which is there is on the “exchange” which is the next point. Please find below the exact wording from the RBI notification.

rbi notification note ban

Also note that there is no limit of deposit for account whose KYC is complete. If KYC is not yet complete, the limit is Rs 50,000.

#2 – You can exchange up to Rs 4,000 notes in ANY bank branch in first 15 days

You can walk to ANY bank branch and exchange up to Rs 4,000 of old notes along with your identity proof (PAN, Aadhaar card, Passport etc). You don’t need a bank account in the same bank. After 15 days, this limit of Rs 4,000 will be reviewed and raised. I am sure this small limit is kept so that most of the middle class and poor people are handled before other privileged class 🙂 . Apart from the bank branches, you can also visit RBI centers for this exchange.

#3 – You can deposit the money in 3rd party account also

It is also possible to deposit the money to 3rd party account also if you follow the full procedure and produce a valid ID proof (your own)

#4 – Cash withdrawal Limit from ATM and Bank Branch

There is following withdrawal limit set by the govt.

  • ATM – Withdrawal from ATMs would be restricted to Rs.2,000 per day per card up
    to November 18, 2016. The limit will be raised to Rs.4,000 per day per card
    from November 19, 2016 onwards.
  • Bank Branch – Till 24th Nov, 2016, you can walk to your bank branch and withdraw up to Rs 10,000 in a go, but the overall limit is Rs 20,000 per week.

You can walk to ANY bank branch and exchange up to Rs 4,000 of old notes along with your identity proof (PAN, Aadhaar card, Passport etc). You don’t need a bank account in the same bank. After 15 days, this limit of Rs 4,000 will be reviewed and raised. I am sure this small limit is kept so that most of the middle class and poor people are handled before other privileged class 🙂 . Apart from the bank branches, you can also visit RBI centers for this exchange.

#5 – You can deposit the old notes till 31st Mar, 2017 in worst case

In worst case, if you are not able to deposit the cash in your bank account or exchange those till 30st Dec, 2016, Still you will get another change to deposit the amount at RBI designated branched till 31st Mar, 2017 with proper documentation. One of my close friend parents are coming back to India from US after Jan, and they were worried after this news. I told them about this 31st Mar, 2017 deadline which calmed them!

Below is the speech by our Prime minister in case you want to hear it.

The big confusion and the Panic

This whole news which came out last night has created a big confusion among people and I can see many of them in panic situation. A lot of people who know clearly that their money is still safe and can be deposited back in bank account are also acting like the world has come to the end.

On the lighter note, social media went crazy and there were some really hilarious tweets which started circulating across various platforms.

tweet on note ban

There was news of people rushing to buying gold, doing shopping last night (till midnight) and what not. Understand that if your money is legally earned and you are paying the taxes, you need not panic and just keep calm, you can deposit it with bank and your money is 100% safe.

Only those who have black money will be facing problem as now all the money they have is worthless.

Discomfort because of the BAN

While there is surely some level of discomfort, but that’s very obvious and it’s bound to happen when things change at this level. This bank of old bank notes is for good and our countries future. This will really help curb black money and corruption in a big way.

notes ban image

Will update more on this topic in coming days. New notes of Rs 500, and Rs 2,000 will get started from Nov 11th .

Let us know your views around this topic in comments section below

Inactive EPF accounts to get interest from now onwards at 8.8%

Posted on by Jagoinvestor

Good news, the inactive EPF accounts will now start getting interest. Also the interest will be paid since Mar month of this year. This will start once the govt issues the notification regarding this. Since 2011, the EPF accounts which were not active for 3 yrs before inoperative EPF accounts and they stopped getting the interest.

Now Inoperative EPF accounts will earn interest

However now the rules are changed and if someone wants to keep the money in EPF account, they can do so. The EPF account will keep earning the interest decided by EPFO from time to time. This year itself the news was out that the inoperative accounts will get interest. However the notification news has come just now yesterday.

As per the EPF officials, Around 42,000 crore has been lying in inoperative EPF accounts and they will get interest @8.8% now.

“The inoperative EPF accounts are not being paid interest since 2011. As per the instructions given by Prime Minister Narendra Modi and Finance Minister Arun Jaitley, we decided to start paying interest on those accounts to make them operative,” Mr. Dattatreya said on Monday.

You can now leave your EPF accounts active even after leaving the job

As per this latest development, now after you leave your job, and do not join somewhere else, you can leave the EPF account to keep earning the interest. Given that the EPF interest is upwards of 8%, it’s a good place to park the money.

6.5 million Debit Cards compromised in India – Was your card one of them?

Posted on by Jagoinvestor

Around 6.5 million Indian Debit Cards have been compromised recently which is one of the biggest security breaches our country has seen to date.

Around 641 customers of 19 different banks have reported frauds worth Rs 1.3 crores in total as of now and after that, all banks started investigating the matter. Some of the banks that are worst affected are SBI bank, ICICI bank, HDFC bank, and Axis bank.

Here is a real incident reported by Vishal Sharma on this article below in the comments section

My card got cloned and my account was wiped out on 5th Sept 2016 by cash withdrawals from china . I immediately informed my bank Standard chartered who then blocked my card. It took 10 days and a lot of following up before they gave me a temporary credit.

SBI alone has reported that it has blocked around 6 lacs debit cards and going to issue new cards soon. This is done as a precautionary measure so that no frauds are done on these 6 lacs cards.

As per the following video, these compromised debit cards were used in the US and China while the debit card owners were in India.

How did this all start?

Around Sept start, various customers started complaining to banks about the fraudulent transactions, and that when banks started reaching out to National Payments Corporation of India (NPCI), which found out that it was a malware-related security breach in various ATM’s and Points of sale systems which were managed by Hitachi Payment Services.

That’s when the banks asked its customers to change their PIN. Banks also blocked cards and started providing the new cards to its users.

The banks are saying that this security breach has happened outside the bank’s network, but still, the investigation is going on right now and more details will come up in coming times.

How did the security breach happen & What got Hacked?

As per the above video from NDTV, almost every detail of the card was hacked like

  • Name on the card
  • Expiry Number
  • Card Number
  • CVV number

When you use your card at an ATM or a point of sale (in some shop), the data first goes to a central server (central server switch) and that further sends the data to your bank to check if you have balance in your account or not. This central server had the malware sitting and the data was compromised at that point.

Around 3.2 million debit cards hacked in India

Can you take some precautions?

The only thing you can do right now is either change your PIN. Most of the security measures are already taken by the banks, so you can’t do much from your side now other than getting your card blocked (not recommended). You can read more details about this news here

Do you know anyone who faced the card fraud? Can you share that?

What do you think about this issue? What are your views?

CIBIL to provide 1 free credit report a year – Says RBI Governor

Posted on by Jagoinvestor

CIBIL will soon be providing 1 free credit report a year to every person starting Jan 1, 2017 as per RBI directions . This was said by RBI governor Raghuram rajan at a seminar on ‘Transforming Rural India through Financial Inclusion’.

This is great news for investors because right now one has to pay Rs 550 for getting a onetime credit score and report from CIBIL. While Rs 550 is not a very big amount for many people, for a majority it’s quite a good amount and most of the people are not in agreement to pay for a PDF report, as they think that it should be freely available.

free-credit-report-india

How the FREE credit report will help investors?

A lot of investors have till date not checked their credit report and hence they are not aware of any issues which might be present in their report. Not everyone is ready to pay Rs 550 for their report and even that’s the reason why many people are not aware of their credit score.

With this free credit report, I think a lot of people will start looking at their report and start working on improving their score and take measures to remove the bad remarks from their report. Investors will also be able to find out if there are any fraud loans on their name taken by others if any.

Seems like RBI has really pushed on this matter of free credit report. The reason why I say this is because around a month back in June, 2016 , there news channels had reported that RBI has suggested CIBIL and other credit bureau to provide a one free report. You can check out this youtube video.

What is Credit Report?

In case you are not aware, Credit report is a comprehensive report which is prepared by CIBIL or other credit bureau from the data they get from various banks and lending institutions. The report contains your credit history and all the details about our past loan payments (including credit card). Every lender uses this report to understand how trustworthy you are and if you should be given a loan or not.

In a lot countries consumers are entitled for one free credit report a year and now it’s going to be a reality in India too. I went to https://www.usa.gov/credit-reports to understand how it works in US and found out that Americans are entitled to get 1 free credit report from all the three credit bureau there. See the snapshot mentioning that below

free-credit-report

In India apart from CIBIL, we have Experian and Equifax as other two credit bureau, but at this moment RBI governor has only announced that one will get a free report from CIBIL. He has not mentioned about the other two.

However, I think over time even they will start providing a free credit report to catch up with the rules.

What you think about this news? Do you think it’s fair for CIBIL to charge people for providing the credit report or it should always be FREE?