Credit score Improve your score by keeping enquiries for new loans lower as credit agencies keep a track of this.

You need to be more careful about your repayments and credit history now if you want to take loans in the future. The country’s first credit rating agency, the Credit Information Bureau (India) Ltd (Cibil), on Wednesday stated that banks are now considering a higher credit score for loans, especially for auto loans. This means that you will need a higher credit score to get a loan. Moreover, Cibil said that the number of enquiries for credit score by financial institutions have increased after the 2008 crisis.

 

What is a credit score?

Credit score is a number based on your credit report, which is a summary of your past and current borrowing and your repayment history, that a credit bureau agency prepares. If you have been regular with your loan repayments, your credit score is likely to be higher. Banks use this score to assess your repayment capacity and the chances of you defaulting on the loan. Your chances of getting a loan and a better rate increase with a higher credit score and vice-versa.

Currently, Cibil and Equifax Credit Information Services Ltd provides credit score. Experian Credit Information Co. of India Pvt. Ltd, another credit bureau agency, provides credit report.

The bank from where you are in the process of taking a loan gets your credit score directly from the credit bureau agency. If you want to know your score, you can get it but at a cost. 

How do they reach the score?

The score is based on various parameters such as past credit payment history, current credit activity, number of secured and unsecured loans, credit cards and demographic variables such as address, income and place. The score is offered differently by different companies. For instance, Cibil’s credit score is a three-digit number ranging between 300 and 900 for those who have a borrowing history of at least six months. Those who have a borrowing history of less than six month get a score between 1 and 5. In case of Equifax, the score varies between 1 and 999.

How can you improve your credit score?

Paying your dues on time obviously will give you a good credit score. Besides that, you can also improve your credit score by keeping enquiries for new loans lower. This is because the credit agency keeps a track of all such enquiries.

Stay long in Gold: Karvy Commodities

Stay long in Gold: Karvy Commodities

Karvy Commodities Broking has come out with its report on Gold and Silver. The research firm expects the Fed will be continuing its accommodative stance in its first meet of the year on Jan 31st. Gold would therefore be beneficial out of this logic. Hence, recommend staying long for the metal from lower levels.



Gold: Gold has changed a little at present and is trading marginally up by USD2 (USD1665) at the Globex. Expectedly, the Asian equities are also trading firm eyeing the Fed meeting. Going ahead, we expect gold to stay strong on the back of poor Q4, 2012 GDP number from the US. In Q4 the fiscal cliff resolution would have deterred the government to spend more, which was a major component for Q3 GDP to surpass the estimates over 3%. In the month of December, US have already hit the debt ceiling of USD16.4 trillion which is 105% of its nominal GDP of USD15.6trillion. Therefore, we expect the GDP growth to be slowed. Also, we expect the Fed to continue with its accommodative stance in today’s meeting. For the first time after April 2011, the US 10year bond yield rose above 2%.

This means an addition to the refunding cost of US which should force them to keep the yield low and hence accommodation should be in place. Consistent with its statutory mandate, the Fed seeks to foster maximum employment and price stability. Without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. Hence, to support a stronger economic recovery and to ensure that inflation remains at or below 2%, we expect the Fed will be continuing its accommodative stance in its first meet of the year on Jan 31st. Gold would therefore be beneficial out of this logic. Hence, we recommend staying long for the metal from lower levels.

Silver: Silver has extended gains at the early Globex by adding USD0.25 from its prior closing. We expect this gain to continue on increased demand for the metal. The US mint silver coin sales resumed after Jan 28th and surged to an all time monthly high. Despite a suspension for sales, huge demand triggered sales to soar up to 7.42million ounces so far in January. From the economic data front as well, as discussed in gold’s outlook, the US Q4 GDP is expected to come below 3% while Fed is expected to continue with the accommodative stance. Silver would therefore be remaining on a higher note. We therefore recommend staying long from lower levels.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

You can open a bank savings account online If you do not want to disclose your KYC details online, you can opt for partial or nil disclosure.

With technology playing a big role in the banking space, now you have the option of opening a bank savings account online. Most banks, including Kotak Mahindra Bank Ltd and Yes Bank Ltd, started offering this service a couple of months ago.

 

How does it work?

To start with, go to the bank’s website and click on the relevant link. For instance, Yes Bank Ltd has Yes Touch which is an online savings account opening service (http://tinyurl.com/bc4q27l). Similarly, Kotak Mahindra Bank will lead you to an option where you can apply online (http://tinyurl.com/czrqee4). In the account opening form, you will have to give your name, mobile number, email address, and the city and branch that you prefer. Once you enter these details the bank would send an authentication code on your mobile number. You will have to enter this code on the website to continue further. This code is for verification purpose only. They will also send you a reference number on your mobile which you can use for any other future transactions. This number is sent to you immediately after the authentication code. After this you will be prompted to enter your personal details such as occupation, marital status, annual income and mailing address.

Then you will have to select the account type you need, facilities you choose and your nominee details. 

 

Verification process

You will be asked to provide your know-your-client (KYC) documents. Here again, different banks have different facility. In case of Yes Bank, you can either upload your documents such as permanent account number, voter’s identity or driving licence or hand it to the bank representative who will come and visit you. The facility to upload the KYC documents online is provided by Yes Bank so far. Some banks such as Kotak Mahindra Bank do not have the uploading facility and instead send their representatives to collect the KYC documents. In case of State Bank of India, you can only fill the form online, but have to visit the bank to submit the documents.

Once the verification is done, you can start using the account. The bank will send you the bank account kit to your mailing address with the cheque book and automated teller machine card, among other essentials.

 

Security concerns

For those who are sceptical about disclosing their KYC details on the website, banks have the option of partial or nil disclosure; you can either give the details to the representative who will visit your house or office or you can carry the documents with you to the branch of the bank. Visiting the branch after filling the details helps you save on time in terms of the account’s activation.

For the Net savvy, this is the way to go. However, only few banks have taken the process completely online. Go for it only if you are comfortable with it.

Aadhaar must to open provident fund account

If you are joining your first job or are changing jobs and opting for a new employees’ provident fund account on or after 1 March 2013, you would need your Aadhaar number. In other words,

Aadhaar card will be part of the know-your-client (KYC) norms for opening a PF account. Even for existing members, the Aadhaar number will have to be provided in a time-bound manner. 

 

Aadhaar card

 

What should you do if you don’t have aadhaar yet?

New employees: In case a new employee does not have the Aadhaar number, she/he can provide the enrolment identification number. This enrolment identification would be converted into the Aadhaar number later on.

In case you don’t get the Aadhaar card before 1 March, but have enrolled for one, you can give the enrolment identification number to your employer. 

 

Existing employees: If you are already an employee in the organized sector, the deadline for providing Aadhaar is 30 June.As of now there is no clarity on the deadline for those who want to transfer their PF account from their old organization to the new one.

 

Pensioners: The Employees’ Provident Fund Organization (EPFO) will take the Aadhaar number from the bank you withdraw your pension from. However, you can also directly submit it in the EPFO office.

 

How to get an aadhaar number?

You will have to visit any Aadhaar enrolment centre to obtain this card with a proof of identity and a proof of address. You can find your nearest centre on the Unique Identification Authority of India (UIDAI) website (http://tinyurl.com/bypne9w). For those who don’t have access to any of the centres mentioned in the website, UIDAI officials will organize camps for those areas that are not easily accessible and it will be advertised on radios, televisions and newspapers. As of now, the government is accepting 18 types of proof of identity and 33 types of proof of address documents. You can see the list at http://tinyurl.com/b54zsoh.

Once you go to an enrolment centre, the person in charge will ask you to fill a form, which will require details such as your age and permanent account number. Once the form is filled, your eye biometric test, finger prints and photo will be taken.

You will get an acknowledgment slip with a temporary enrolment number and other details captured during enrolment immediately. However, it takes time to get the actual card. The waiting period is normally 60-90 days; sometimes it may take even longer.

NRIs take care! Uncle Sam has woken up

NRIs take care!  Uncle Sam has woken up

 

If media reports of early this month are any indication, a series of steps taken by the US Internal Revenue Service will have some impact on the flow of dollar funds from US-based NRIs and PIOs to commercial banks in India

The US government, nicknamed “Uncle Sam” after Samuel Wilson, who first supplied barrels of beef to the US army during the war of 1812, has been on a prowl to plug all loopholes on tax evasion possibly to shore up its revenues. Surprisingly, it has come out with Offshore Voluntary Disclosure Programs (OVDPs) three times during the last three years. The OVDP was first introduced in 2009, and followed by another offshore voluntary disclosure initiative in 2011 which was initially valid till 31 August 2011 but later extended till 9 September 2011 due to the Hurricane Irene that hit the US at that time.
 

The IRS (Internal Revenue Service) again introduced an open-ended OVDP in January 2012 on account of strong interest witnessed in the 2009 and 2011 programmes. According to the IRS, under this scheme it is offering people with undisclosed income from offshore accounts another opportunity to set right their past mistakes and get current with their tax returns. However, the 2012 OVDP has a higher penalty rate than the previous programmes but said to offer clear benefits to encourage all taxpayers in America to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution later.
 

As per the Bloomberg report dated 8 January 2013, a person of Indian origin (PIO) and a New Jersey client of HSBC Holdings Plc pleaded guilty to charges that he dis as much as $4.7 million through Swiss and Indian accounts not declared to the US Internal Revenue Service.
 

As per the reports, he will pay a sum of $2.37 million as taxes and penalty for failing to file reports required for foreign accounts. He is one of several HSBC clients charged with opening undeclared accounts through bank’s NRI division, which were marketed to US clients of Indian origin.
 

Another New Jersey PIO businessman pleaded guilty in April 2011 to conspiring with HSBC bankers to hide his Indian accounts from the IRS. Last August, federal jurors convicted a Milwaukee neuro-surgeon of Indian origin for filing a false tax return and failing to file a report of foreign bank and financial accounts related to HSBC accounts in India.
 

It is possible that many NRIs or PIOs residing in the US have invested their surplus funds in India or with different tax havens world-wide but they may have either innocently or unknowingly omitted to offer their overseas income to tax in the country of their residence. They might, therefore, unwittingly become victims of IRS’ aggressive tax recovery efforts. And to come out of this predicament, they should consult their own tax advisors about the applicability or otherwise of these changed regulations to their own residential status over there. If it applies to them, they should then consider the advisability or otherwise of voluntary disclosure permitted by US government. The present OVDP scheme is an open-ended scheme without any closure date, but may be closed any time as stated on the website www.irs.gov. Since the website was last updated on 29 August 2012, it is not clear whether the scheme is still in operation and the NRIs wishing to avail the benefit of the scheme should contact their financial/tax advisors and be guided accordingly.
 

IRS efforts yielding results
 

The Internal Revenue Service of the US has said that its offshore voluntary disclosure programmes have so far resulted in the collection of more than $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programmes. In addition, another 1,500 disclosures have been made under the new programme announced in January 2012. This voluntary disclosure programme is said to be a part of the wider effort by the IRS to stop offshore tax evasion and ensure tax compliance by all those Americans who have invested their surplus funds in tax-havens all over the world.
 

Though these rules are currently introduced in the United States of America, there is every possibility of its spreading to other countries as well and NRIs and PIOs living in different geographies should be wary of local regulations and be prepared to comply with them in the interest of peaceful living in the country which they have adopted as their permanent abode.

Prepaid SIP Investment Plan from Edelweiss Mutual Fund

Prepaid SIP Investment Plan from Edelweiss Mutual Fund

Under ‘Prepaid’ SIP, you won’t miss an opportunity to enter the markets whenever it falls beyond a certain predefined limit. i.e. you are able to get ‘timing’ into your investment. Only ‘Prepaid’ SIP helps you get the benefits of both “time” & “timing”.

 

How Does ‘Prepaid’ SIP work?

Step 1: Initial investment in Edelweiss Absolute Return Fund  which has low volatility and endeavors to capture NIFTY’s upside movement. 

Step 2: Decide on your investment amount:

25,000 50,000 1,00,000 2,50,000

Step 3: Switch will be triggered each time the NIFTY falls 1%, 2% or 3% from the previous NIFTY closures. Choose one of these triggers.

Step 4: 10% of initial investment amount in Edelweiss Absolute Return Fund will be switched to other designated Equity schemes of Edelweiss Mutual Fund, as decided by you.

Step 5: Designated Equity Schemes in which you can switch are:

Edelweiss Select Midcap Fund

Edelweiss Diversified Growth Equity Top 100 (E.D.G.E. Top 100) Fund

Edelweiss ELSS Fund. 

 

Benefits

Benefit 1: Initial investment in Edelweiss Absolute Return Fund (The ‘Zero Heart Attack’ Scheme) which has low volatility and endeavors to capture the NIFTY’s upside movement.

Benefit 2: Benefit of equity fund taxation.

Benefit 3: Switch money when market falls with a one-time auto instruction registered at the time of investment.

Benefit 4: No exit load while switching between designated equity funds. (refer addendum dated August 25, 2011)

To know more about Edelweiss Absolute Return Fund, please contact the Mutual Fund directly.

Note: This not an investment recommendation, please consult your Financial Advisor before investing. I am not an agent or representative of Edelwiess

The board game theory of life India is the birthplace of many modern board games

A watercolour painting of Shiv and Parvati playing chaupar.

It is a simple game involving five pebbles of medium size. We called it Anchangal (five stones), but it could well have been played with 10 or 11 stones. It took a little practice and there was scope for improvement. You started by throwing one pebble up in the air and picked up another pebble while it fell. Then you graduated to picking up two pebbles while one was in the air; then three and more. You could throw two pebbles up in the air and attempt to pick up an equal number. It took concentration and hand-eye coordination. It absorbed my friends and me for hours when we were children.

Most often, we played it on hot summer afternoons at my grandmother’s house when the adults slept. But the game, which required little more than a flat surface and five stones, could be played in railway compartments, waiting rooms and balconies. We spent a lot of time foraging for the right-sized pebbles and cowrie shells to add to the game’s toolkit.

An excellent website called Traditionalgames.in has a video clip showing how the game is played. Other websites devoted to traditional games conjecture that this simple game spread through the Silk Route to Turkey, Spain and Korea, where it is called Besh Dash, Payana and Gonggi, respectively. Having played it for years, I can attest that it does indeed improve eyesight, concentration and motor skills. In fact, I have restarted playing it now because it is—like doodling—a great stress buster and a harbinger of the elusive muse that only surfaces when you are distracted or in a Zen state of mind.

India is home to many of the world’s most ancient games, including Pachisi, which was exported to England, recreated into Ludo, and then returned to India to be played by many a child during the summer holidays. “Nowadays, Indian children play Ludo completely oblivious to the fact that it is a monstrous decomposition of their own fantastic board game,” said Irving Finkel in Time magazine in 2008. Finkel, who works at The British Museum, is an authority on board games, including the Royal Game of Ur, widely considered to be the oldest board game in existence.

India’s contribution to board games is extensive, as documented by Finkel, R. Vasantha and V. Balambal, all of whom are experts on the topic. In speeches and reports, Vasantha describes some of the more interesting indoor games such as Mancala, Tigers and Goats, and Single Track. Balambal, who specializes in the indoor games of Tamil Nadu, is mentioned in Levingston’s Board Game Blog (http://boardgameblog.wordpress.com/) along with Nirbed Ray and Amitabha Ghosh, who have edited a hard-to-find book called Sedentary Games of India, published by The Asiatic Society, Kolkata. Anyone interested in how board games were created, spread and played should read these blogs.

My favourite game used to be Snakes and Ladders, but now I find that it too is a monstrous translation of the original Indian version. In 1860, a Harvard dropout named Milton Bradley created a board game called The Checkered Game of Life or Life, as it was popularly called. In the game, the players simulated their travels through life with jobs, children, education and hurdles. The Game of Life was arguably America’s first parlour game, and certainly its most popular.

Bradley may have popularized the game but he borrowed its ideas from many an ancient culture, including India, where this checkerboard and the accompanying game were called by various names: jnana chaupar, gyan chaupar, and parama pada sopanam (steps to the highest place). Originating around 1200, this game had squares called houses and four players whose movements were dictated by the throw of dice. It was thought to be excellent preparation for the victories and vicissitudes of life with all its glorious vagaries. Players took on personas, and if they were virtuous, they climbed the ladder. Fortunes changed with the throw of a dice, which brought along winds of change. If you were unlucky, you were swallowed by a snake and had to go down several steps. But don’t fear, was the underlying message: After every snake came a ladder; after falling down, you would go up.

The main thing was to maintain equanimity because the game had no clear winner. All that mattered was to reach the top of the board and everyone would. The original game didn’t have the “winner-take-all” strategy that became part of its Western avatar. Rather, it was heavily imbued with the Hindu notion of maya or illusion that translated into ladders of success and snakes of failure, both of which were part of the game of life.

Traditional Indian games are being revived through companies such as Chennai-based Kreeda, Mysore-based Kreedaa Kaushalya and others. I became interested in ancient Indian board games after listening to Jill Lepore’s excellent lecture on “The Meaning of Life”. Say, you are an elementary schoolteacher and you want to teach your students the meaning of life with all its ups and downs, what do you do? Perhaps you should play Snakes and Ladders with them, not the modern version but the original Indian version.

Tax Benefits of Home loan in Joint names

Tax Benefits of Home loan in Joint names 

 

One of the most attractive benefits of taking a home loan is that they help you save tax, while you prepare to invest in a fixed asset. Acquiring a home loan makes you eligible for tax rebates under Section 80C and Section 24 of the Income tax regulations.

Highlights

o    Tax benefits get divided among co-applicants in case of a joint loan

o    The division takes place in the same proportion in which the asset is owned by each co-applicant

o    Each co-applicant can claim a maximum tax rebate of up to Rs. 1 lakh for principal repayment and Rs. 1.5 lakh for interest payment

o    The very first condition is the house property has to be bought by the individuals jointly, and this should be in their joint names.

o    The share of each holder should be clearly mentioned so that there is absolute clarity on the percentage ownership of each co-owner.

Tax benefits of Home Loan- Overall there are two types of tax benefits that are available on the repayment of a housing loan.

1.     Interest paid on  loan is eligible for a deduction up to Rs. 1.5 lakh per annum from the  income of the individual under Sec 24 when the property is self-occupied or it is one ownership property lying vacant.

2.     Repayment of Principal amount of Loan up to Rs. 1 lakh is eligible for deduction under Sec 80C.

The planning in the entire issue has to be done in such a manner that all the joint holders are able to take the tax benefit and no part of the total repayment goes waste.

Advantage for joint home loan takers-

Tax benefit

Joint holders can claim the maximum tax benefits individually. This means each holder can get atax rebate of Rs. 1 lakh for principal repayment under Sec 80C and Rs. 1.5 lakh for interest payment under Sec 24.

The tax benefits are applied according to the proportion of the loan taken by everyone involved in the joint loan. For e.g. if the ratio of ownership is 70%:30% then the loan amount of 50 L will be split as 35 L and 15 L respectively and interest/principal applicable to the respective amounts will be taken into account for each individual taking the loan. For claiming your tax, it is best to  procure  a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.

To get the best out of the tax savings, it is good to let the partner with the higher pay make a higher contribution towards the home loan resulting in a better tax benefit collectively. In the case of an earning couple, this would make most sense as other expenses can be manged with the income of the person making a lesser share towards the loan. This would help you optimize the benefits from the tax exemption on principal and interest repaid.

Increased Loan Amount Eligibility

If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan. In this case, the bank combines the incomes of both the applicants, and thus, can sanction a proportionately higher loan amount. Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.

Additional benefits:

o    In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.

o    If husband and wife jointly own a property reduces the succession issues.

So taking a joint home loan has the significant twin benefit of increasing your loan eligibility and maximizing your tax rebate. There is one rule banks insist on when you apply for a joint home loan, which is that all co-owners of the property should also be co-applicants but the reverse need not be true.

Under Construction house- Another aspect that needs to be remembered is if you are buying a house under construction that you can claim tax benefits only after the construction of the house is completed.

Joint structure- The term ‘joint benefit’ in a housing loan refers to a situation where more than one person takes and repays a home loan. Here, the co-applicants are family members, which include husband and wife or father and son or father and daughter or mother and son or mother and daughter as the case may be. In such a situation, tax benefits have to be divided between all co-applicants and hence known as joint benefits.

Joint account – The repayment of a joint loan has to be made from a joint account owned by the co-applicants. Each of them needs to contribute his/her share to the account. But there are times when this is not possible and in case the payment is being made from just one person’s account then there has to be a method whereby the other individual is contributing his/her share. This will ensure that the benefits are also available in an adequate manner and that there are conditions that are being fulfilled in the process.

Disadvantage of a home loan in joint names

1.  If you buy another house in future then as per Income Tax Act if a person has more than one house in his name, one of them will be treated as self-occupied, and another will be treated as let-out – even if it is not actually let out on rent. You would need to pay income tax on the rent received if this second house is actually rented out. But if it is not rented out, it is deemed as rented out, and you would have to pay income tax on an amount that you would have received as rent as per prevailing market rates.

2. You have to pay wealth tax on one of your house. As per Wealth tax Act only one house is exempt from Wealth Tax. You have to pay tax on one of the house of your choice but you can deduct loan amount against the house for which you taken loan while calculating taxable wealth.

When one should take Home Loan in Joint names:-  Take the home loan in joint names

o    If You need a higher loan amount then your eligibility in Individual capacity

o    The income tax savings by opting for a joint loan is significantly higher than a single-name loan

When one should take Home Loan in Joint names  -

o    You have enough loan eligibility as single applicant

o    The income tax savings by opting for a joint loan is not significantly higher than a single-name loan

o    You plan to purchase another house in near future

Note: This is just for the general information of the readers, please consult a Chartered Accountant for more details and guidance.  Errors and omission are expected

Pay a lower car insurance premium if you are married

Pay a lower car insurance premium if you are married

Factors like profession, gender and marital status, among many others, are now being used by insurers to determine the premium. ET shows how you can bring down your auto insurance premiums

Are you a doctor? Do you have a covered parking lot? Do you use your car sparingly? If your answers to these questions are yes, you may get a discount on the insurance premium on your car at the time of renewal. Faced with huge losses in their motor portfolio, general insurers are exploring various options to reduce the losses. Differential pricing is one of the options considered, which means premiums will go up if the insurer believes the incidence of claim is going to be higher or vice versa.

"Traditionally, car premiums were decided upon the basic factors i.e. engine capacity, age of the car and geographical zones. Over the last four years, insurers in India have started using several other 'asset-based' parameters – such as the type of fuel used in the car, effective anti-theft devices etc. Further, few insurers now are trying with 'demographic' parameters as well – these include the occupation of the insured, the age of the driver/insured etc.," says Sanjay Datta, chief, underwriting & claims, ICICI Lombard.

In fact, industry-watchers say your marital status and gender, too, could affect the premium figures. "In terms of demographic parameters, we have started taking into account the insured's age, gender, occupation and driving experience. Even marital status plays a role in influencing the premiums. For instance, married individuals in the age group of 32-60 are entitled to discounts as they are perceived to be more responsible drivers and we are thinking of using this as a rating parameter. They can also be counted upon to take good care of their vehicles. Discounts on the basis of such personal information can go up to 20%. Likewise, the loading on premium, too, can be as high as 20%," says Madhukar Sinha, national head, personal lines, Tata-AIG General.

However, the possibility of discount in one category being cancelled out due to loading in another cannot be ruled out. For instance, higher premium due to the fuel type may nullify the discount earned on account of occupation or age.

PROVIDE MORE INFORMATION IN THE PROPOSAL FORM

Simply put, the information you provide can swing the premium for you. For instance, Berkshire Insurance, which sells Bajaj Allianz's motor policies, offers a 5% discount to policyholders if they share personal information.

"We have started offering discounts in premiums to certain professions (like doctors, software professionals, those with desk jobs) and also on the basis of income brackets and gender. The discounts will be in the range of 5-7% on policies bought online," says Vijay Kumar, head, motor insurance at Bajaj Allianz.

You are also likely to score high on insurers' preference meter if you sparingly use your vehicle, as that would translate into fewer chances of making claims. This apart, you could be charged lower premiums if you park the car in a covered space. Again, the reason is lower possibility of claims. On the other hand, a car parked in the open is always at the risk of getting damaged.

BUY POLICIES ONLINE

If you are buying your policies through an intermediary, it is unlikely that s/he will encourage you to provide such details in the proposal form. Besides, going online has direct benefits, too. "One can save money on car insurance premiums by buying the insurance policy online. Some companies offer better rates for customers coming directly onto the company's website," says Datta.

PROTECT YOUR NO-CLAIM BONUS

Policyholders who have not made any claims in the previous year receive rewards in the form of noclaim bonus (NCB). On renewal, the cover could increase by up to 50%. Therefore, you need to make efforts to 'earn' this NCB. At a broader level, you can do so by following driving rules and taking adequate care of your car. Moreover, you can also retain the NCB by forgoing smaller claims.

"If the claim amount is not significant, it is better not to make a claim. You should look at getting the vehicle repaired at a garage that charges reasonable rates. You can negotiate hard to bring down the costs. If you avoid smaller claims, you stand to gain 20% in the first year and up to 50% in the subsequent years as NCB," says Kumar. Simply put, if the amount is lower than the NCB you are likely to accumulate, you'd be better off forgoing the claim. Also, remember, since the NCB is linked not to the vehicle or the policy but to the policyholder, it will be transferred to your new car, too.

"You should ensure that when you sell your old car and buy a new car in the same segment, you can claim NCB on the premium for the new car also. The savings in such a scenario can be significant as the premium for a new car is always high."

ASK FOR HIGHER  DEDUCTABLE

If you are confident of your driving abilities or are unlikely to use your car extensively during the year, you can explore this option. Here, the customer agrees to bear a part of the expenses before the company steps in to foot the rest of the bill.

"If the customer is confident of his/her driving skills and feels that s/he is not going to make a claim during the year, this is a good option. The deductible ranges from Rs 2,500 to Rs 7,500 and the savings in premium can be as high as 30%," says Kumar.

CHOOSE YOUR FUEL TYPE WISELY

While diesel cars have gained popularity due to lower cost of the fuel, the effect on premiums is just the opposite. Petrol cars attract lower premiums compared to diesel or CNG-run vehicles. Therefore, you need to bear this point in mind while deciding on the right vehicle.

 

INSTALL ANTI-THEFT DEVICES

"Further discounts can be availed by installing Automobile Research Association of India (ARAI) approved anti-theft devices in your car. This is another form of reward to the owner of the car for showing responsibility by installing such a device," says Datta. It is estimated that installation of such devices have brought down claims by up to 80%. "At the time of buying a car, ensure that it is fitted with a manufacturer-fitted anti-theft device. Devices procured later may not help much as the insurer will have to assess whether it is certified, which could result in hassles during policy issuance," adds Kumar.Source: Economic Times

Few tips to Prevent Income Tax Raids

Few tips to Prevent Income Tax Raids

One should not keep any unaccounted or undisclosed money, property or income popularly known as black money. If such a disclosure is made before its detection by the Income TaxDepartment, the chances of being trapped in a tax raid are minimized. A tax raid may also be conducted against a person in possession of undisclosed income or property not belonging to him but to someone else. It is therefore important for a person who is in possession or in custody of someone else’s jewellery or other valuables, etc. to ensure that they are duly accounted for.

DOES

1. Make correct disclosure of income and wealth in returns: One should make a full and true disclosure of one’s taxable & exempt income. Similarly, a person’s wealth should be properly disclosed to the Wealth Tax Officer.

2. Comply with summons or notices to prevent a tax raid: – It is absolutely necessary to fairly and properly comply with the summons. Wherever this is not possible, proper adjournment should be sought. Co-operation on the part of a person, whether he is an income tax assessee or not, will ensure prevention of a raid.

3. How to declare exempted or non-taxable income and wealth:- When the entire picture is placed before the Assessing Officer, there is little scope or raid on the grounds of possessing undisclosed income. In view of the relaxed wealth tax exemption limit, many will now be outside the wealth tax net, hence they may enclose their statement of wealth with the income tax return.

4. Preserve important vouchers and other documentary evidence for the acquisition of assets: – It is vital to preserve important vouchers and/or other documentary evidence as proof for their acquisition. This is necessary to prove the acquisition of such assets in case an inadvertentincome tax raid takes place and the assessee is called upon to prove the nature and source of acquisition.

5. How to prevent income tax raid on lockers & safe deposit vaults? :-The owner of a locker, should maintain a register recording its contents for disclosure if called upon by the income taxauthorities with custodian to get a declaration from the owner regarding the nature and source of the articles to satisfy.

DON’TS

o    Don’t introduce fresh capital over 10 lakhs.

o    Don’t introduce new unsecured loans exceed 25 lakhs.

o    Don’t investment more than 5 times Gross Receipts ( includes agricultural income).

o    Don’t sale property for lesser amount than Govt. Valuation.

o    Don’t pay Commission above Rs. 10 lakhs.

o    Don’t declare total income less than 20% of professional receipts.

o    Don’t declare profit less than 5% of receipts if you are a contractor who’s GC Receipts exceed Rs.1 Cr.

o    Don’t adopt project completion method if you are builder.

How to file a complaint against your bank

How to file a complaint against your bank

Laxmi Bhardarkar, an 81-year-old retired schoolteacher from Mumbai, feared phone calls till recently. It wasn't suprising considering that she had received nearly 1,500 threatening, abusive calls for over two months. Bhardarkar's fault? Her son had pending dues on his credit card, a transaction he had not even carried out. He had sent a letter to the bank, pointing out the error and refusing to pay.

After this, he had to go abroad for an official assignment, and while he was away, the bank appointed recovery agents, who started harassing his mother. The ordeal ended when the family contacted the police. The Bhardarkar family isn't alone in its predicament, nor is it the only grievance against banks. In 2011-12, 48,180 complaints were filed against public-sector banks alone. Here are the steps you need to take to redress your grievance.

Step 1: Complain to your bank

According to Adhil Shetty, CEO, Bankbazaar.com, nearly all banks have a grievance cell. "So a customer can visit the bank and meet the officials to sort out the issue," he says. Banks have a dedicated toll-free customer care number, which you can use to lodge your grievance and get a complaint ID. "You can also register a complaint on the bank's website," he adds.

KS Harikumar, head, operations, Federal Bank, explains that e-mails can also be sent to the service quality department in public-sector banks. "This is an exclusive unit dealing with customer grievances and headed by an executive of the rank of general manager. The complaints posted directly on the bank's website are also resolved by this department," he says. Harikumar adds that some banks have begun or are in the process of starting a real-time monitoring system for the complaints received centrally through the customer relationship management (CRM), which is set up in all branches.

Once the complaint is lodged, the customer needs to wait for 30 days for the bank to offer a solution or give a suitable reply.

Step 2: Approach the banking ombudsman

If your bank does not address your complaint within a month, you can approach the banking ombudsman. This is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in banking services, as per its scheme introduced in 1995. All scheduled commercial banks, regional rural banks and scheduled primary cooperative banks are covered under the scheme. So far, there are 15 ombudsmen, whose offices are located mostly in state capitals. Their addresses and contact details are available on the RBI website.

The ombudsman tries to effect a legally binding settlement between both the parties within a month. However, if a settlement is not possible, it will pass an award after allowing both the parties to present their cases to him.

Types of grievances

When the scheme was introduced, it addressed complaints such as non-payment or delayed payment of cheques and drafts, and services such as remittances. However, in the ensuing years, the scope has widened to include grievances related to plastic money, unfair banking practices, levying of service charges without prior intimation, transactions on the Internet banking platform, and the like. Deficiency in service with respect to loans and advances, say, delays in sanctioning/disbursing loans and non-acceptance of loan applications without a valid explanation, are also valid grounds for complaint. For a complete list of the types of complaints you can take up under this scheme, visit rbi.org.in/scripts/FAQView.aspx?Id=24.

Lodging a complaint

You have to file the complaint at the office of the ombudsman under whose jurisdiction your bank branch is located. The grievances relating to credit cards and other types of services with centralised operations are to be filed with the ombudsman in whose territorial jurisdiction the billing address of the customer is located.

You can put it down on a plain paper, send an e-mail, or

The ombudsman can reject a customer's complaint if he has not approached his bank for grievance redressal first, or if the subject is pending for disposal, or has already been dealt with at any other forum, such as a court of law or consumer court. Also, the complaint will not be considered if more than one year has passed since the customer has heard from the bank, or 13 months since the date of representation to the bank. Compensation limit

The scheme caps the amount of compensation that can be doled out to Rs 10 lakh or actual loss suffered, whichever is lower. The ombudsman may choose to award the compensation, not exceeding Rs 1 lakh, to the complainant for mental agony and harassment. However, so far, this has been limited to complaints regarding credit card operations.

Legal route

If you are not happy with the settlement offered by the ombudsman, you can file an appeal before the appellate authority within 30 days. The appellate authority in this case is the deputy governor of the RBI. Alternatively, you can approach consumer redressal forums, which take up bank-related complaints, or even the courts. Source: Economic Times

How to write a Digital Will

How to write a Digital Will

Where there’s a will, there’s less confusion for legal heirs. In fact, this piece of paper outlining the final allocation of one’s assets is a crucial step in financial planning. Legally speaking, all you need to do is jot down how you want to pass on your property after death, sign this piece of paper, and get it attested by two independent witnesses, who don’t stand to gain from your will.

However, in this golden age of technology, people are no longer settling for a simple penning of wills. Instead, they are increasingly opting for more stylish options, such as video-recorded and online wills. Says Sandeep Nerlekar, CEO and MD, Warmond Trustees & Executors: “People have started realising the importance of a will and no longer rely on the simple version. They want to make it safer, so these new variants have cropped up.”

However, no matter which option you choose, you need to have a physical copy of the will. “This is because India does not have a central agency that recognizes digitised signatures,” explains Rajesh Gupta, partner at SN Gupta &, a leading law firm.

Video-recorded will

In this case, the signing of the will by the testator and the two witnesses is recorded on a video camera. The will has to be prepared before the cameras start rolling; a mere recitation of the document’s contents is not accepted.

“When the execution process-where the will is duly signed by the trio involved-is recorded, it becomes difficult to question the genuineness of a will. So, getting a probate is comparatively easy,” says Richa Karpe, co-founder and ED, Altamount Capital. She adds, “Generally, the person who has been left out in the will challenges it on the grounds that it wasn’t executed properly. If the process is recorded on camera, this problem won’t arise.”

A probate is a copy of the will that is certified by a court and can be granted only to the executor appointed by the will. This is mandatory in case there is no will or if there is a problem with the existing one. However, given that a will becomes inviolate after it is probated (that is, nobody can file a law suit against it on the grounds that the testator was of unsound mind), the process is highly recommended by experts in any case.

Incidentally, Video-recorded wills are also accepted by the Indian courts. In October 2009, while deciding a 1985 case seeking the grant of a will, the Delhi High Court had ruled that video recording of a will is a legally admissible evidence.

Succession planning firms typically charge around 5,000 to record the execution of a will. As wills do not require the presence of a lawyer, you can choose to record the process for free on your personal camcorder, but then you’ll lose out on a key advantage of using professional firms, namely, safe custody of both your will and the video.

Several web portals and companies now allow you to make your will online. “The making of online wills is picking up as many people do not have the time to sit with a lawyer and discuss the will in detail,” says Nerlekar. Warmond Trustees & Executors, for instance, has introduced the InstaWILL service, where a customer gives instructions online and receives a customised will on e-mail within a week.

To make an online will, you’ll have to register on the website of the company. The portal will give you access to an application, which will help you draft the will. All you need to do is answer the questions and leave the drafting to them. An online will would cost you around Rs 10,000. Many websites abroad, such as the UK-based Q-Will and US-based legacywriter.com, also offer templates from which you can choose the one that suits your needs, while others offer a one-size-fits-all standard template. However, in India, this service has just picked up, so there are not many options in the market.

Once you fill in the relevant details, the service provider will e-mail a draft of your will, which you need to print and sign. You’ll subsequently have to get it attested by two witnesses. Some portals like warmond.co.in allow you to store a copy of the will on the Net and make changes without registering afresh. On the other hand, some portals simply allow you to upload and store a scanned copy of the will. This online option works best for someone who is very clear of how he wants to distribute his assets and does not require any guidance. Don’t  forget that you will still need to keep a physical copy of the will with you.

Digital will

Don’t confuse this with the online will. A digital will isn’t a process or an alternative to supplement the plain vanilla paper will. It is a special type of will that allow you to pass on your online ‘properties’, such as your social networking account or an e-mail account. “Just as you make a will for your financial assets, you can make one for your online accounts too,” says Nerlekar. This is becoming increasingly important because our accounts contain a lot of private information about us as well as that of our friends and families and, hence, pose a significant threat if hacked.

Most e-mail service providers and social networking companies have death policies that determine what will happen to your account on your death. For instance, Yahoo and Flickr permanently delete all your accounts and their contents on receiving a copy of your death certificate. What if you want to preserve your digital legacy? This is where a digital will comes in. “If you leave a digital will, the e-mail service provider will hand over your account details to the person named in the will,” says Nerlekar.

Though any law firm can help you make a digital will, you don’t necessarily need a lawyer for this process. You can also integrate your digital legacy with a standard will. However, take into account the death policy of your social networking site while drafting the will.

WHAT EVERY WILL SHOULD HAVE

No matter how you make your will, keep these things in mind:

1. Clearly mention the people to whom you wish to pass on your wealth. Don’t use nicknames or incomplete names.

2. If the property is quantifiable, such as cash, mention it clearly.

3. Where it cannot be quantified, give a clear description of the property.

4. The attesting witness or his spouse should not benefit from the will in any way.

5. Appoint an executor for your will. He is a person who will see that your directions are carried out in the manner stated in your will.

6. Though it’s not mandatory, have a probate for your will. It establishes the legal capacity of the person writing it.Source: Economic Times

What is National Savings Certificate?

What is National Savings Certificate?

National Savings Certificate is an Investment alternative developed by Government of India with an intention to induce persons to a saving habit and to develop National Savings. National Savings Certificate is issued through Post Offices; they are the nodal agency which makes it available to the common public.

National Saving Certificates in India is ranked as ‘highly secured’ in the class of Investments. It is an Investment’ which has Tax Advantage while (i) Investing, (ii) during the life and (iii) at the time of maturity of the Investment.

Investment limit

There is no Limit for Investment in NSC.

Tax treatment

Deposits  up to Rs.1 lakh  in NSC qualify for Deduction Section 80C of the Income Tax Act. Accrued interest on NSC also qualify for deduction u/s. for first five years.

NSC interest is taxable. However, as it is a cumulative scheme (e.g. interest is not paid to the investor but instead accumulates in the account), each year’s interest for the first 5 years is considered reinvested in the NSC. Since it is deemed reinvested, it qualifies for a fresh deduction under Sec 80C, thereby making it tax-free. Only the final year’s interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested, but is paid back to the investor along with the interest of the earlier years and the capital amount.

What you must ensure while filing tax return

To benefit from this feature of reinvested interest and its deduction, it is important to declare the accrued interest on NSC on a yearly basis in your tax return under the head “Income from Other Sources”. Under deductions, you will claim accrued interest for first five years  under Sec 80C as reinvested NSC interest. Both cancel each other out, making the interest in effect tax-free.

Non-Resident Cannot Invest

Non-Resident Indians are not eligible to purchase the National Savings Certificates.

Denominations in which certificates shall be issued

The National Savings Certificates (IX Issue) shall be issued in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000.

Can be Purchased Jointly and on behalf of minor

Types of Certificates and Issue thereof,—

(1)  The certificates shall be of the following types, namely:—

(a)  Single Holder Type certificates;

(b)  Joint ‘A’ Type Certificates; and

(c)  Joint ‘B’ Type Certificates;

(2)  (a)  A Single Holder Type certificate may be issued to an adult for himself or on behalf of a minor or to a minor;

(b)  A Joint A Type certificate may be issued jointly to two adults payable to both the holders jointly or to the survivor,

(c)  A Joint ‘B’ Type certificate may be issued jointly to two adults payable to either of the holders or to the survivor;

Where to Purchase

National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at most post offices in the country. This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.

Main Features of  NSC VIII Issue

o    Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.

o    No maximum limit for investment.

o    No Tax deduction at source.

o    Certificates can be kept as collateral security to get loan from banks.

o    Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of IncomeTax Act.

o    Trust and HUF cannot invest.

o    Rate of interest 8.60%.

o    Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 152.35 after 5 years.

Main Features of  NSC IX Issue

o    No maximum limit for investment.

o    INR. 100/- grows to INR 234.35 after 10 years.

o    Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.

o    A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.

o    Rate of interest 8.90%.

o    Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 238.87 after 10 years.

Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax – On retirement it will fetch you monthly pension as the NSC matures.