Till date, all my posts on life insurance plan were focused on why we should avail life insurance plan. At the same time, it is a fact that same shoe doesn't fit all. In certain cases, a life insurance plan might not be required. To clarify that in this post, life insurance plan means term insurance plan. Normally "Insurance" in India means "Life Insurance" only :) but traditional plans like money back policy, endowment plans etc. From a personal finance perspective and as a thumb rule, if you buy any financial product then you should ask 5W's i.e. What, Why, When, Where and Who/m. The ... Read More
Provident Funds – Types, Tax Benefits and Most Common Queries
Provident Funds is one of the most loosely defined terms used by the taxpayer. At the macro level, except PPF, rest all types of provident funds are perceived as one and the same only. There are no efforts to educate the readers regarding the same. The tax treatment of different types of provident funds is different. For an investor/employee, the understanding of the types of provident funds is critical and important. Last week, one of my readers posted a query on withdrawal of provident fund. He worked in an organization from 1993 till 2013 as a blue-collar employee. He had to leave the ... Read More
Leave Encashment – How it is taxed in the hands of the Employee
In layman terms, Leave Encashment means to avail salary in lieu of accumulated leaves. In any organization, Leave Encashment is one of the major incentives for employees not to avail leaves :). I was one such employee who believed in the accumulation of leaves. In all my previous organizations, i accumulated at least 80% to 90% of the total leave eligibility. Normally the Leave Encashment policy of the organization allows you to encash the leave at basic salary. If your salary structure is tax friendly i.e. fully loaded with perquisites and allowances. In such cases, basic salary is less than ... Read More
How to Claim Tax Refund of Excess Tax Paid by the Taxpayer
To claim Tax Refund of excess tax paid by the taxpayer is both easy and difficult. It is easy if you claim tax refund at the time of filing of Income tax Return i.e. ITR. For example, the last date of filing of Income Tax Return for FY 2015-16 or AY 2016-17 is 31st July 2016. The tax refund for excess tax paid by me for FY 2015-16 can be claimed at the time of filing of ITR i.e. on or before 31st July 2016. In fact, the system automatically calculates the Tax Due and Tax Paid. Any excess amount is shown as a tax refund in the ITR and can be claimed provided all other details are correct. ... Read More
Lower Interest Rate Cycle – Are You Ready for these 5 Changes
Lower Interest Rate is an alien concept for India. Typically, India as a country is "high interest rate" country. The reason being we are Savers rather Spenders. Because of this reason, we expect "high" interest rate on Savings and willing to pay "higher" interest rate on Loans. As i shared in my previous posts, the saving rate in India is one of the highest in the world i.e. 30%. In my post, Small Savings Schemes i explained how a cut in interest rates will help consumption cycle. Basically, the objective is to reduce savings and increase spending. The interest rate in growth-oriented ... Read More
Personal Lending to Family or Friends – 10 Tips to Safeguard
Personal Lending and Borrowing is very common and deep-rooted in the Indian Society. We double up as a borrower and lender depending on the situation/circumstances. With economic prosperity and ease of borrowing, personal lending has subdued but still very popular in small cities and towns. The people prefer to borrow from a known person rather than from a bank or financial institution. In many cases, it is compulsion because of low CIBIL Score or under reporting of income in ITR. It means an individual cannot avail credit facility from the bank or financial institution. Though not 100% ... Read More
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