Voluntary Provident Fund

provident fund

Voluntary Provident Fund or VPF is most useful yet most neglected tax saving option. Financial Planners or Relationship Managers will not suggest this as there are no commissions, no targets and no incentives. This option is available only to salaried individuals who are member of EPF or Employee Provident Fund. Every month, 12% of basic salary is compulsory deduction towards contribution to EPF. Ref to EPF contribution, not many people are aware that EPF is eligible for dedcution u/s 80C and is part of overall capping of Rs 1.5 lakh u/s 80C. For example, if you are contributing Rs 50,000 every year as your / Employee Contribution towards EPF account then you should only worry about balance Rs 1 lakh to save tax u/s 80C. Interest Rate for Provident Fund account is declared every year by the Government of India and for current FY i.e. 2014-15 Interest Rate is 8.75%. The Interest Rate is market linked. It is 25 bps or 0.25% more than average 10 year G-Sec yield for the previous year. As … [Read more...]

7 Benefits of Sukanya Samriddhi Account

Sukanya Samriddhi Account

Sukanya Samriddhi Account is another welcome step from Govt of India. Honorable Prime Minister of India, Sh. Narendra Modi Ji launched Sukanya Samriddhi Account "A Small Savings Scheme" on 22nd January, 2015. It is part of "Beti Bachao - Beti Padhao" initiative of Government of India (GOI) also known as BBB. Despite sincere efforts from Govt of India, Sex ratio in India is still a grave concern and it shows the backwardness of the country. Its commendable that Govt of India is taking steps to change the mindset of people towards Girl Child. Recently i saw few TV ads of GOI with a message that if we have to make India a Safer Place for Women then we have to fix the gender imbalance. A deep social message delivered in most simplistic way. Sukanya Samriddhi Account is a step forward in this direction. I was quite disheartened when i observed that when so called "Financial Planners" flooded internet with comparison of Sukanya Samriddhi Account with other financial instruments. Most … [Read more...]

11 Tips to Prevent Identity Theft

identity theft

Identity Theft is one of the by-product of technological evolution. World was more secure when there was no internet, photocopier or scanner. Identity Theft can be disastrous for any individual. Recently one of my client's Home Loan was rejected because of low CIBIL Score. I advised her to pull out CIBIL Report. When i checked her CIBIL Report i found that Rs 200000 outstanding was written off against her credit card. She never applied for this credit card. The credit card was issued at her old Delhi address before she shifted to Mumbai. It was a clear case of Identity Theft. Worst part is that complete onus is on an individual to prove that he is victim of Identity Theft. In my future post i will discuss how to handle financial frauds due to Identity Theft. Normally on internet, the discussion on Identity Theft revolve around Online Identity Theft i.e. through internet. In my opinion, offline Identity Theft is more dangerous and easy to execute. Secondly, there is more organized … [Read more...]

Online Shopping – 11 Tips to Save Money

online shopping

Online shopping has caught the fancy of many Indians to save money. Infact many analysts are terming the year 2014 as "Breakthrough" year for Online shopping. Valuation of some of the top e-commerce companies surpassed valuation of mid-sized FMCG companies. Profitability of e-commerce companies is still a distant dream. In order to gain Market Share and Mind Share of the customer, offering Deep Discounts seems to be the survival tactics. In many cases, online products were sold at below manufacturing price. The funding received by these e-commerce players are being utilized to offer discounts for Online Shopping. Strategy is very simple to make customer habitual of Online Shopping. Discounts will not vanish from online channel reason being any savings from operational efficiency will be passed to the customers. Slowly Online Shopping discounts will be more realistic and Customers have to be innovative to get maximum discount from their purchase. In short, any discount offered is … [Read more...]

Home Furnishing – A Waste of Money?

Home Furnishing

Home Furnishing is one of the critical and final step to realize the dream of owning a home. Home Furnishing is aspirational in nature and there is no end to the amount being spent on the same. Marketers sell it as a dream package to convert your home to a premium property. It is highly profitable business as people don't bargain in this. Only condition is that the perceived value should be high. I have seen my clients bargaining hard for property deal for months but don't mind over spending savings from bargain on Home Furnishing. Common discussion while finalizing a property is around Home Furnishing only. For example, kitchen will be Italian modular kitchen with white marble or wardrobe will be of teak wood. Though the definition of Furnishing is "Furniture, Fittings, Decorative and Accessories such as curtains and carpets, for a home or room". In this post i am using it literally i.e. anything done to convert home in a livable condition i.e. modernize, decorate or furbish the … [Read more...]

Encumbrance Certificate

Encumbrance Certificate

Encumbrance certificate or most popularly known as EC is one of the most critical document for property purchase. In my post on Checklist of Property Documents i briefly discussed about EC but considering the importance of same, it deserves a separate post. Encumbrance Certificate certify that there are no dues on property both Mortgage and Legal & the title of the property is clear and marketable. It contain all the transactions in respect of the said property. Encumbrance is basically a Charge / Liability / Lien which is created on the property, which is held as a collateral or security against the debt that is not cleared / paid as on date. It contain records of last 13 / 30 years. If the property has come up recently then EC of relevant period will be issued. Usually EC is issued from the beginning of FY in which builder received commencement certificate. For example, if you builder received commencement certificate on 5th Nov, 2005 then EC of your flat/property will be issued … [Read more...]

Complete Guide to Bank Auction Process

Bank Auction

Bank Auction is bit tedious process. In my previous post, Bank Auctions - The Cheaper and Smarter way to buy your dream house i discussed some of the do's and don'ts related to Bank Auction. In this post, i will discuss the Bank Auction Process in detail. Currently Bank Auctions are hijacked by some agents. Agents charge hefty commission in this whole process. I never suggest to go through agents as the probability of cheating is high through agents. Specially in Mumbai, all my clients prefer to buy bank auction property through agent and willing to pay x% through cash during Bank Auction Process. Desire to buy a property at discount overlook the risk associated with it. As i always suggest that it is illegal to pay through cash in any property transaction. I request all my readers to directly participate in Bank Auction without any intermediaries. Infact recently banks launched e-auctions which is more transparent and convenient. Why Property is Auctioned? I know that you all know … [Read more...]

Low CIBIL Score – Check your Credit Utilization

Low CIBIL Score

Low CIBIL Score is now synonyms to Loan or Credit Credit Card Rejection. There is a common perception that Low CIBIL Score is only due to default or delay in payment of credit card bill or loan EMI. It is not 100% correct. Low CIBIL Score has very strong co-relation with overall credit eligibility. "Credit Eligibility" means max credit that a person can avail and "Credit Utilization" is actual credit availed. It is important to maintain a fine balance between credit eligibility, credit requirement & credit utilization. Optimum distribution of credit is essential depending on your current requirement. Currently if i don't need any loan or credit card in near future then it is beneficial for me to increase credit limit of my  credit card. If i utilize max 30% credit limit on m-o-m basis then it will help me to improve my CIBIL Score. Contrary If  i am planning to apply for Home Loan in 6 months time then i should start fine tuning my credit eligibility to free some credit limit and … [Read more...]

VAT and Service Tax – Under Construction Flat

under construction flat

Buying an under construction flat is most taxing for any buyer. In my post on Resale Flat or Under Construction Flat, Which is better? i discussed pros and cons of under construction flat. Builders attract buyers with attractive offers of Rs 2999* psf or Rs 3999* psf only. The "star" next to price point makes all the difference. A buyer is caught unaware of miscellaneous charges attached to under construction flat. Though with the time, things have changed and now reputed builders disclose most of the charges associated with under construction flat. Still small and unorganized builders which contribute max inventory keep customers in dark. Dream of owning a house is still a dream for many and in order to bring affordability factor, most of the additional charges are not disclosed to the end user. One such monster is VAT (Value Added Tax) and Service Tax levied on the under construction flats. For many of my clients this is the only souring point with the builder for under construction … [Read more...]

Should i apply for Pre-Approved Home Loan?

Pre-Approved Home Loan

In my opinion, Pre-Approved Home Loan is one of the least risky way of buying a property through Home Loan by a buyer. Obviously it require intelligent planning and execution. Later in the post, I will explain how Pre-Approved Home Loan mitigate certain risks. Every product has its own advantages and disadvantages therefore before making any decision it is advisable to understand the product in detail. I receive lot of queries from my clients on Pre-Approved Home Loan therefore i decided to write a separate post on this subject.  In my previous posts, i explained Pre-Approved Home Loan product in bits and pieces but this post is all about Pre-Approved Home Loans. What is Pre-Approved Home Loan? A Pre-Approved Home Loan is basically an intent or in-principal approval provided by Banks or Housing Finance companies to grant Home Loan to an individual on the basis of his Credit Profile / Credit Worthiness. In short, if potential borrower fulfill Home Loan eligibility conditions then an … [Read more...]