Tag: Beginner Level

Is your Company Group Health Insurance Cover Enough ?

Posted on by Jagoinvestor

Are you covered under your company’s group health insurance policy? If you are a salaried person, then in all probabilities you must be having your employers health insurance plan which must be covering you, your spouse, children, and parents or some of them. But a lot of people do not want to take a separate health insurance plan from health insurance companies and just want to continue their employer’s group health insurance cover as it looks most affordable Health Insurance to them. However one should also consider an individual health insurance plan for various reasons. Let’s see a few points which you should think about your employer’s group Health Insurance.

Group Health Insurance

1. Your Employer may take back the Health benefit

Health Insurance costs are provided as a perk in many companies. Health Insurance costs are borne by companies themselves and it might happen that in future your employer might take back the benefit of health cover and tell you that it’s not available now onwards. Either you just don’t get it or you need to pay the premiums yourself, just that they can assist employees to get it faster. The other thing which can happen is that they can also reduce the cover itself to lower their burden.

2. Your company may exclude your parents from the health cover

Its something which has already started in many companies. Earlier parents were part of the employer’s health cover, but these days a lot of companies are excluding parents from the health policy provided to the employees. If this happens then anyways you need to cover your parents with an individual health insurance plan.

3. You might not get health cover with your next employer

This is pretty obvious. Not all companies provide health cover in the same way. What is the guarantee that you will get the same kind of cover and benefits in your next companies? I hope you are not going to argue that you will never leave your current job, many people have this point when they argue that they have the cover with their current employer, but then you never know about the future.

4. Will it help you in retirement?

By now you should have been clear that you need health insurance more for your bad days, when you cross 50 and reach your retirement because health insurance is a long term policy and you should always take it considering it for next 20-30 yrs. Things like lifetime renewal and no co-pay in later years are sought after features these days. So even if your employer provides a good health cover right now, what about retirement? When you go to health insurance companies later to buy the plans, be sure that you will not get it or you will pay in gold!

5. Do you have enough Company Health Insurance Cover?

Not many, In the recent survey we did on health insurance cover, the fact that 60% of people (on this blog) have their health insurance cover less than 50% of their annual take-home, now a lot of them must be having it from their employer. Don’t see that you have a health cover, look at the quantum of the health cover? Ask if it is enough for you? Is it something that can support you in case something goes wrong!

Good point about Employer group Health Insurance cover

I don’t say, your employer’s’s health insurance cover is bad. All I am saying it apart from your company health insurance , you might also want to look at a separate policy , that’s all . Some of the best things which an employer health insurance provides is that its easily available without any limitations and restrictions. If you are an employee and the group health insurance is there, you will get it even if you have any pre-existing illness . No one denies it because of a higher age or any past history.

Make sure you have independent Health insurance cover 

The point is that an employer group health insurance cover is a cover which is linked with your employer and hence dependent on him, Its so tied with your company. You should aim at having at-least one independent health insurance plan in your life which you can cover and control, This should be in addition to your employers group health insurance plan.

Do you agree with these points ? Do you think one should take a separate health plan apart from their employers group health cover ?

Transfer PPF account from Post Office to SBI Bank

Posted on by Jagoinvestor

How do you transfer the PPF account from Post Office to SBI Bank? This has been a big question mark for all the PPF account holders who opened their PPF account in Post Office and now want to transfer PPF account to SBI Bank or other banks so that they can take benefits of online money transfer to their PPF accounts. Also, it becomes easy for them to do another kind of activities if the PPF account is in some bank.

Transfer PPF account from Post Office to SBI Bank

So, in this article we will see the steps required to transfer PPF account from Post office to any Bank. In this example, we will use SBI as an example. But you can use the same procedure for any SBI Bank or its subsidiaries or even ICICI Bank which has recently started providing PPF accounts.

Steps required to Transfer PPF account from Post Office to SBI Bank

 

Step 1 The first step is to make sure your PPF Passbook is updated with all the interest credited to date. You need to go to the Post Office and get it updated.
Step 2 Fill up following documents

  • PPF Transfer Form SB-10(b). Download Form to transfer PPF Account here
  • An application on plain paper requesting PPF Account transfer from Post Office to SBI Bank
  • Incase you already have an SBI Account, then SBI passbook (Will fasten the process)
  • PAN/Address Proof (Can be confirmed at Post Office)
Step 3 Submit the form to Post Office Head PostMaster, He will verify your signature with the records at Post Office and verification will be completed.
Step 4 The balance in your PPF account in Post Office will be taken out and your PPF account will be closed by Head Post Master and he will note the remark of Transfer of PPF Account to SBI Bank on all the relevant documents.
Step 5 The balance amount in your PPF account will then be remitted back to State Bank of India through Cheque or Demand Draft along with other relevant documents.
Step 6 Your PPF account will then be opened (transferred) at SBI Branch and you will be notified on this. It would be better to not wait for it and you yourself keep track of the progress.

 

Go to SBI bank after all these steps are done and collect your new PPF Passbook. Note that all the previous entries of your Interest payments etc will not be present in the new PPF Passbook. It will only have the new and current entries now. So in-case you needed the previous information for claiming tax deductions, better take the printout of the previous PPF Passbook and keep photocopies of all the documents you filled and submitted for PPF Account Transfer. Read  – How to open a PPF account at SBI Bank

What about the interest part when you Transfer the PPF account from Post Office?

Do you know How PPF interest is calculated? Its only a monthly basis , but credited yearly. Now as per PPF Rules, the bank or the post office transferring the account will add interest up-to-the preceding 31st March in the account before it is transferred. The interest from 1st April onwards will be added by the transferee office after the close of the year. As per rule 8 of the scheme the interest in the account has to be added at the end of the year and not in the middle of the year in any case. So make sure to ask and confirm from Post Office Postmaster if he will do this step or not. And once the PPF Account is transferred, at the end of the year, make sure you get the total interest in your account. Just verify it at the end of the year.

What Problems you are can you face while Transfer of PPF Account?

Problem 1: The biggest problem you will face is the ignorance SBI & Post office employees have about this whole process. I think the Post Office Employee has more information (and less ego) than SBI Employees. They might reject the whole idea and say “It’s not possible to transfer”.

In that case, take the print out of Rule 153 of this document which is at the Post Office website and clearly defines the rules to Transfer PPF Account from Post Office to SBI Bank. Another thing you can do is very humanly and in a soft voice, tell them you will file an RTI to know the process of PPF Transfer from Post Office to SBI Bank and would come back with that RTI query (Post Office and SBI comes under RTI incase you didn’t know). I am sure this will be enough to speed up the whole process.

Problem 2: Another problem you may face is documentation, I am not very sure if PAN card/Address proof is required or not and what other documents, but in that case again take the help of your Post Office Head Post Master, he will surely help you. If you are stuck at any point, use sentences like “I will file an RTI and …”. That might help you 🙂

Share your experiences, and problems you faced when you wanted to Transfer PPF Account from Post Office to SBI Bank or vice versa, were you waiting for this from many years?

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.

What is form 26AS and how to view it online?

Posted on by Jagoinvestor

Form 26AS is a consolidated statement which reflects all the advance tax paid by you personally or through TDS way. The best part about it is that you can view Form 26AS online by just quoting your PAN Number. You can view your Form 26AS online or download it in PDF or Excel format, but for that, you need to register on the income tax website.

Why do we need Form 26AS?

We all check our bank accounts when someone deposits money into it. Once we see that the amount is matching, we feel at peace and confirmed that there is no issue. Now in the same way throughout the year, we might pay the tax in parts. It can be in form of the Advance tax cut by our companies, TDS cut by the bank on your fixed deposits, TDS cut by some third party who is making payment to us. They all pay this tax on our behalf to the tax department and it is linked to our PAN card.

Now at the end of the year before filing for tax returns, we might want to check that how much tax is already paid by us through different ways and then we might want to pay additional remaining tax or ask for a refund in case we see that we paid more tax in a year.

An important point to note is, do not disclose your PAN information to someone else, otherwise, it becomes a security issue. Others can also view your Form 26AS and hence find out how much tax you paid.

How to view Form 26AS online?

Click on this website to login or register. I have attached a screenshot as to how to register in this website so that you can view form 26AS online.

Step #1- To fill in the registration form, Enter Basic Details.

to register on e-filling income tax website to view your form26AS

Step #2- Once you enter the basic details, fill in the registration form.

fill in registration form to register

Step #3- Now verify your registration by entering OTP sent on your registered mobile number and email-id. Now click on validate.

once you fill in registration form ,verify your registration from otp sent on registered mobile number and email id

Step #4- Once you validate your registration, now you will have to log in so that you can view form 26AS

login in to e-filling website to view your form 26AS

Step #5- After you log in a pop-up window comes if your Aadhaar number is not linked with the PAN number. Enter details and click on Link now.

once you login, a pop up window comes if you have not linked your aadhaar number with pan. Link it now

Step #6- Now you are successfully logged in. Click on my account and again click on View Form 26AS (Tax Credit).

after login click on my accounts and then click on view form 26 AS

Step #7- To view your form 26AS, read the disclaimer and click on confirm.

once you click on view tax credit you get this window where you have to accept to there disclaimer. Now click on confirm

Step #8- Once you click on the disclaimer below window opens and again you have to click on View Tax Credit (Form 26AS).

now click on view form 26 AS

Step #9- Now select the assessment year ( for which year you want to view your form 26AS) and view as HTML and then click on export as PDF. You can now see your form 26AS.

once you click on view form 26AS this window appears. Now select the assessment year and view your form 26AS

Step #10- This is how form 26AS looks like

this is how form 26 AS looks like

Is it possible to link Form 26AS in your net banking?

Yes, A lot of banks like ICICI, SBI etc provide a direct link to your form 26AS through internet banking. On clicking the link, You can directly see 26AS.

Wasn’t this a very simple and easy way to register and view your form 26AS online. Let us know your past experience when you needed form 26AS online and how it was useful to you in the comment section.

How much Health Insurance Cover is good enough?

Posted on by Jagoinvestor

How much health insurance a person should buy? Is 5 lakhs cover enough or it should be 10 lakhs? Should it depend on job profile, city and income level? These are the most common questions which pop up when a person starts thinking about health insurance. Anil had raised this question on comments section few days back. He says –

I am recently married and look forward to start a family. Like for life insurance where you have a referral benchmark which say’s ideal insurance should be ideally be 10 times your salary, what would be an ideal coverage for us (Floater).

Now it’s not easy to answer this question, but we can brainstorm about it and get some ideas. There can be some ways you can think about how much coverage one should take while taking Health Insurance, let’s look at them one by one:

Health Insurance cover in India

1. Depends on Affordability

A big factor which decides how much health insurance a person requires depends on the premium amount. Not everyone can pay the premium for Rs 20 lacs cover, as it will be very huge. However, a person can pay some amount which fits within his expenses- affordability. Like lets say 2% of yearly income. If a person is earning Rs 6 lacs a year, he might be able to pay an amount that is up-to 2% of that yearly – Rs 12,000, which will give him decent cover from today’s standard. So a person with 3 lacs salary can pay for health insurance up-to Rs 6,000. A person with 20 lacs income can pay up-to Rs 40,000 per year. So you do not decide on the cover, but you decide on the premium which you can afford. Obviously, there is a limit above an income level. A person earning Rs 1 crore might not even need health insurance at all! He has so much of wealth already to take care of it!

2. As percentage of Income

One way to look at Health Insurance cover can be percentage of your income, like let’s say 100% of your income can be the ideal figure for your health insurance cover. Like a person earning 12 lacs a year should be covered for 12 lacs cover, a person earning 4 lacs per year income should be covered for Rs 4 lacs health cover. However, there has to be upper limit to this like say 20 lacs! This is because a person earning 40 lacs don’t need health cover of Rs 40 lacs. This percentage will depend on how you think about it, I think 100% of income is good enough, you may feel 50% is fine. As per a survey done by jagoinvestor. as high as 60% of the health insurance customers have their health cover less than or equal to 50% of their yearly income, which is quite low. Here are survey results

Health Income Survey by Jagoinvestor

3. Constant + Function(Past expenses)

If you have spent Rs 2 lacs in past 5 yrs on medical expenses and hospitals, one might want to consider it as the basis for calculating their health cover requirement. Like a person earning 6 lacs a year, who has spend Rs 2 lacs in past 5 yrs on health might be more inclined to take a higher cover than someone who has not spent anything in last 5 yrs. While the first person might feel a cover of Rs 5 lacs is important, the second person might feel Rs 3 lacs is good enough- because he has not experienced the pain of expenses on Health Insurance. So how about this

Health Insurance cover = 50% of Income + 100% of last 5 yrs expenses on Health (hospitals)

So in this case, the first guy will take a cover of 50% of income (6 lacs) + 100% of 2 lacs = 4 lacs in total. However the second person will take it for Rs 3 lacs only (50% of income).

4. Average bills these days

I think the most logical way of looking at health insurance cover can be, simply the expenses in the worst case for medical treatments these days for different kind of hospitalization. If you list down 10 things for which people are hospitalized and which are covered in health insurance and lets say the average bill of that comes to around 4-5 lacs, you can say that it can be the right figure for you.

5. Your Method

This method is your method. Each and every person has his/her own way of looking at a problem and I would like to hear how you think on this subject. So, I request you to please open up your thoughts and share on comments section what do you think should be the right health insurance cover and how it should be calculated ?

What are your thoughts on this? In your view how much health insurance cover is good enough ?

6 Best ways of gold investment in 2018

Posted on by Jagoinvestor

Gold recently crossed its Rs.31,000 per 10 gm mark. This is a historic moment and I am sure a lot of people want to get into gold investment for their own set of reasons. But how to invest in gold?

There are so many ways of gold investment these days; most of the people are stuck with so many choices. More than the price, the bigger deterrent the confusion of “best option of gold investment”.

In this article, we will see how to invest in gold in different ways and what are the pros and cons of all the options. The main focus of this article is to make the options more clear to you and help you make decisions.

How to invest in gold

6 ways to invest in gold

Earlier investing in gold was related to buying ornament, but now, the advanced technologies and developments in the field of finance and investment have extended these limits, because of which we have a lot of options for gold investment.

Let’s see some of the ways of gold investment.

1. Physical gold

The oldest and most widely used way of gold investment is in the form of physical gold. I would say this is a form with which most the people are comfortable with. For centuries, physical gold is the only way of gold investment.

Now coming to the point, there are two ways to invest in physical gold.

a) Jewelry –

This is the most famous way of investing in physical gold. This is mostly done for consumption rather than “investment”. Obviously jewelry is also an investment product in itself, but most people buy it for consumption purposes.

The best part of Jewelry is that it’s very easy to invest in it, all you need to do is cash or cheque and that’s all, you can buy it. Also, the whole family is more comfortable with this option. However, the sad part is that you do not just pay the market price of gold, but also making charges for jewelry.

As it’s in physical form, there are chances of theft also. One more problem with jewelry is that there are chances of fraud at times; you can be sold an inferior quality of gold in the name of “high quality” gold. So it’s very important from where you buy it.

When should you buy it?

It’s advisable that if there is some marriage going to be there in your house in the near future, you can invest in physical gold. Also, note that you are very clear that it will not be required for an emergency in the short term.

It might also be a possibility that you are more attached to physical things and do not believe in online options, that’s another reason you can go for it.

b) Gold Bar/Coin

The Gold Bar and Coins are another good way to invest in the physical form of gold. Gold bar/coins are sold by all the banks and jewelers. It’s a good way to invest in gold if you want to do it for pure investment purpose or for some distant future marriage like your sister or daughter marriage.

The good point about bars/coins is that depending on the requirement you can either buy more (bars) or less (coins) and easily available at Banks and jewelry shops, but banks only sell it, do not buy it back. Also generally there is no consumption done on a regular basis so a person can keep it in a locker or some safe place for a long time.

The bad part of gold bar/coins is that it’s always available at a premium price of 5-10% and at the time of selling them, you again will get a discounted price of 5-10 %, so overall your returns will go down.

When should you buy it?

You can buy a gold bar/coin if you are too attached to physical gold and cannot go for an online option. You can buy it for investment purposes also, but note that returns would be compromised because of the discounted price you get at the time of selling and at the time of buying.

In case you have some marriage at home in the coming future (not very near), then also you can buy it.

2. Gold ETF

Gold ETF’s are just like stocks; you can invest in these if you have a Demat account. An ETF an online version of physical gold. The best of gold ETF is that it’s convenient to invest in Gold ETF if you already have a Demat account and can start with a small amount (1 gm value) and as and when you want you can invest from time to time.

However, the sad part is that you have to pay the brokerage and you do not get a feel of gold in your hands which you get with physical gold. The gold ETF can also be illiquid at times if you have not chosen the right one.

Also, there are high chances that you will sell your gold ETF in the time of small emergencies which you will not do with physical gold. Gold Bees from Benchmark and Kotak Gold ETF are one of the biggest gold ETFs in India right now and they are highly liquid.

We recommend Gold ETF’s to our Financial Planning clients as their expectation is liquidity + some exposure to gold for investment point.

When should you buy it?

You should buy gold ETF if you already have a Demat account and would like to invest from a pure investment perspective, you can consider them as liquid as you can sell them on any day in the stock market.

Click here to read the difference between the gold ETF and gold savings fund.

3. Gold Fund of Funds

Gold Mutual funds are those mutual funds that invest in another parent mutual fund which finally invests in stocks of gold mining companies and companies which are related to gold-related activities. They also buy physical gold, but in very small quantities.

This is not a suitable investment for those who want to track gold prices, because these funds do not invest most of their money in gold, but gold-related companies. So it’s mainly an equity fund which invests in companies.

For example AIG World Gold Fund, which does nothing but invests in its parent mutual fund AIG PB Equity Fund Gold, which finally invests in different companies.

The good part of these funds is that if you are optimistic about the future of those companies involved in gold, these are good funds, but the sad part is that you will pay expense ratio two times because it is a fund of funds. A lot of people invest in these funds by mistake thinking that they invest in real gold.

When should you buy it?

By now you will be very clear that these are actually like a sectoral fund that invests in only those companies which have their work in gold-related things like mining gold etc. So it’s extremely risky or rewarding.

So if your criteria are to invest in gold companies and not gold, these are the funds to invest in

4. Gold Saving Funds

These are the mutual funds that invest in real gold. They take in money from people and buy gold and you can buy the units of these mutual funds. The best part of these funds is that you can systematically invest in gold per month through the SIP route.

The best part of this is that you don’t need to have a Demat account to invest in gold saving funds. You also can invest regularly in gold through SIP through these funds. But the sad part is that you pay administrative charges and expense ratio just like any other mutual funds.

When should you buy it?

This is really a great way to invest in Gold if you do not have a Demat account and would like to regularly invest on a monthly basis. This is a highly liquid option also because you can anytime sell the gold fund units like any other mutual funds unit.

5. E-Gold

E-Gold was launched some time back in India from the exchange called NSEL, which also has other commodities like Silver and Platinum in e-format. It’s very much like Gold ETF, where you can invest in Gold in an online format.

For investing in E-Gold you still need a Demat account, but with one of the companies authorized by NSEL (list here). The best part of this option is that you can also take physical delivery of gold with some terms and conditions.

But the sad part is that not all big broking houses Demat account can be used to buy this, you need to open another Demat account for this and this option is not too popular with retail investors.

When should you buy it?

You can buy this if you need physical delivery of gold at some future point of view, but you also want to benefit from the online advantages like the market price and no storage cost at your side.

Read more about this in detail here

6. Gold Futures

One more option to invest in Gold is through Gold Futures, but I would like to call it more of trading activity and not “investment” because of its short term in nature. You can use Gold Future to protect the pricing.

If the price of gold today is Rs.30,000 and a 3-month gold future price is 30,500, then you can lock the price at this moment to 30,500, so that when you want to buy the gold after 3 months, you get it at 30,500 only. This would require a little bit of knowledge on how future’s work.

When should you buy it?

This option is a bit more technical and one should only use it if you have a decent amount of knowledge. Do this if you want to lock the price of gold which you want to buy in the future if you fear that prices can go very high.

Which option are you going to choose and why? Are you now clear on how to invest in gold as per your condition? Leave your answer in the comment section.

Why Should you invest in gold?

Gold investment is one of the traditional ways of investment, that we are observing since childhood. It is one of the most trusted investment tools. Let,s see some of the benefits of gold investment, because of which a lot of investors prefer to invest their money in gold.

4 reasons to invest in GOLD

There are many reasons why we shall look beyond conventional Fixed Deposits, PPF and high growth Shares and Mutual Funds. Gold is always seen as a thing to own and only for consuming as ornaments, for jewellery but seldom as an investment purpose, in fact silver also for that matter.

But now there are many reasons to invest in GOLD, just like people invest in Shares, Mutual funds, PPF, NSC, and Fixed Deposits.

Reason 1: Stock Markets are becoming risky and uncertain

Stock Markets are in Bad shape for at least short or medium-term at least. No one knows whats going to happen in 6 months or 1 year or 2 years. Long term may be good but still, a medium-term perspective is not very clear.

Not only the Stock Market but the whole of financial Markets are uncertain if you consider problems like Inflation, dip in projected GDP growth of economy, etc.

Reason 2: It acts like a hedge towards Inflation and Foreign currency

As the Indian currency is gaining against Dollar and other currencies, Rupees is set to become more strong in the coming years. Gold has an inverse relation with Dollar.

https://news.goldseek.com/SpeculativeInvestor/1171382460.php

In the future as Dollar weakens, GOLD will become more strong.

Reason 3: Its a relatively less known investment option and has high potential in future

Looking at history, and every time we see that an investment option starts becoming popular and by the time most people know about it, it already gives most of its returns and becomes a talk of past.

GOLD has started gaining attention as an investment option and becoming popular and still in its middle stage, if not early.

So it’s the time to ride the boat.

Reason 4: Future High Demand and less supply

In future gold is going to in high demand and it’s already in less supply, so according to the demand-supply logic, the prices are bound to go up in the near future. Indians account for 23% of the world’s total annual consumption and overall global demand has increased 15% year on year

Gold demands were on an all-time high in 2007 and expected to increase in the coming years due to mismatch in demand and supply.

Reason 5: More Diversification 

Before some time back, diversification of portfolio was limited to Equity, Debt and Real Estate and some cash, so that your risk is spread across different class of assets. GOLD has evolved as another asset class and not it help in diversifying your portfolio.

I hope this information will help you to choose the better option of gold investment. If you still have any doubts, you can leave your query in the comment section.

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?

Prepayment Charges abolished by RBI

Posted on by Jagoinvestor

This is a little old news. RBI has finally abolished Prepayment charges or penalty on home loans with floating interest rates. Borrowers can now transfer to new lender which provides them less interest rates without paying any kind of charges or penalty. Damodaran Committee on customer service in banks, RBI) has been observed that banks have been unfair in asking for charges when home loan borrowers want to switch to some other lender with lesser interest rates. Now if you prepay the loan from your own sources or through another lender, you only pay the outstanding loan amount.

Here are the excerpts from the circular from RBI on abolition of fore-closure charges/pre-payment penalty

2. In this context, attention is invited to paragraphs 81 to 83 of the Monetary Policy Statement 2012-13 announced on April 17, 2012 with regard to home loans on floating interest rates. The Committee on Customer Service in Banks (Chairman: M. Damodaran) had observed that foreclosure charges levied by banks on prepayment of home loans are resented upon by home loan borrowers across the board especially since banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario. As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.

3. The removal of foreclosure charges/prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans. Though many banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there is a need to ensure uniformity across the banking system. It has, therefore, been decided that banks will not be permitted to charge foreclosure charges/pre-payment penalties on home loans on floating interest rate basis, with immediate effect.

Prepayment Charges removal will help !

This new rule will surely be taken in good spirit by borrowers and end the discrimination done by banks between old and new customers. This will also make sure that the interest rates become more competitive in the overall system.

Have you prepaid your home loan just some time back with charges ? Are you going to prepay the loan soon after this Prepayment Charges removal ? What are your thoughts about this new circular !

Relationship Manager – Who are they and what they do ?

Posted on by Jagoinvestor

In this article, we will discuss “Relationship managers” . I got an interesting comment about “Relationship Managers” on my facebook wall from Prasad when we were discussing recent HDFC Life offering on 100% Free Financial Planning through snapdeal. Here is Prasad’s sharing on his relationship manager and what happened with him.

I am totally disappointed with HDFC Bank , every time my RM calls, he wants me to sell an insurance plan. If i tell him that I have other commitments at this point of time, he tells me he can get me a credit card if I dont have one and use it to buy the insurance plan.. It can’t go down more !! had so much respect to this bank.. But the concept of RMs is the most misleading thing !!!

Focus on this comment and re-focus on one sentence – “he tells me he can get me a credit card if I dont have one and use it to buy the insurance plan” . What does it say? What comes to your mind when you read this? It shows that there is an extreme focus on performance, there is extreme pressure on meeting targets on relationship managers. Their jobs are at stake at times and there is a do or die situation.

What are Relationship Managers ?

Relationship Managers are generally assigned to a customer who have more money and resources than others, who has more longer-term relationship with Banks, you are told that you will be taken special care by this relationship manager, at times you can directly talk to him for any issues. All the people having more than a certain net-worth or salary are assigned, relationship managers.

You are told that he is supposed to help you out whenever you want and he will be available to you all the time when you need him. However relationship managers are generally MBA Marketing guys, who are hired to take the sales to go up, they are responsible to bring business by hook or by crook. The worst part of relationship managers is that their attrition rate is so high, that by the time you figure out that you 90% is-bought and were 10% missold a financial product, the relationship manager is not working in the same company anymore, he has moved to another job now.

I read this funny incident on Hemant’s article comment section where Shinoj is sharing something about customer care people lie

Recently got a call from kotak mahindra bank regarding some bullshit insurance policy. Usually whenever marketing calls comes to my mobile, I use to say “sorry, Not interested”. But this time I decided to elaborate why I am not interested by telling a lie. All I told was “Actually I was interested in this product and had fixed appointment with your relationship manager on last friday. But he dint came. So not interested.” The marketing guy replied that he will check back. After two or three minutes i got a call from them again. “Sir we are extremely sorry. We called that relationship manager. He was not able to come to you because he met with an accident that day. shall he come today?”

What does a relationship manager know about you?

A relationship manager knows how much money do you have in your bank account, he knows for how long it is lying there. He knows the recent credit and recent debit from your bank account. He can figure out that one of your FD maturity and is now “available” for the massacre. He can then call you or meet you and show you an amazing product, if you want to invest and “if you have any money” . Obviously he knows you are sitting on a 10 lac cash right now. He is innocent, he is just telling you about something FYI, after all, that’s his job!

Remember, If a relationship manager recommends you some product and if you manage to make good returns or it turns out to be a good thing for you, it’s mostly accidental! So now, if you are an HNI or if you are going to get a relationship manager from your bank, broker or whatever it is, just make sure you know that its most probably going to add to your headache. He will keep on pushing you, convince you about opportunities and prove to you how your money is getting wasted sitting at your bank account. I remember a comment made by Subra on one of his articles on relationship managers and doctors.

“Doctors over-diagnose and Relationship Managers over-analyze your portfolio. Doctors recommend treatment and drugs, RMs recommend ULIP.”

Relationship Manager interview

I can only imagine the interviews which banks or companies take for hiring relationship managers.

Question : Tell me something about why you will be a good relationship manager at our bank ? And What qualities in you makes you a great candidate ?

Candidate 1 : I have completed this amazing course on portfolio construction which is internationally accepted. I always think from the viewpoint of the client and what will make his life more easy and great . His interest should come before mine and bank and I say this because I think from long term point of view.

Candidate 2 : I am a behavioural finance expert and with use of words I can create situations of guilt , excitement and trust . I can make sure that the clients common sense and logical reasoning will just go for a toss and I also know how to do this all without appearing too pushy and deceptive . I have completed PHD in powerpoint and excel and can use those tools at 3:00 am in the morning too to impress a client.

You know who gets hired ! 

Why did you hire me ? – Asked Candidate 2

“So that we can learn somethings from you , anyways they never tought us anything useful in our MBA”  – Says Interviewers

“And Why did you reject me ” –  Asked Candidate 1

‘Because you took the title we were offering you very seriously” – Said interviewers

Any comments or experiences?

Do you think this topic of “relationship managers” deserves a Satyamev jayate episode ! . I can see some crying face’s already here, not on the show. Did this article help you understand exactly what relationship manager do?

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.