Personal Finance, IT, Economy, Global factors, bla, bla, bla

Petrol Prices

noreply@blogger.com (Shyam) — Mon, 25 Oct 2010 00:03:00 +0530

Sometime back, had a necessity to find out a month before petrol price and got the below links from Indian Oil.

How is Gratuity of an employee calculated?

noreply@blogger.com (Shyam) — Mon, 11 Oct 2010 01:02:00 +0530

Is there a formula to calculate gratuity?
Yes, there is one.
Indian laws suggest that an employee should be given gratuity for long term service. Gratuity is calculated by the formula,
G = (15/26)* N* (Monthly basic + Monthly DA)
where,
G - Gratuity
N - No of yrs of completed service (rounded)
DA - Dearness Allowance
15/26 - 26 stands here with the assumption there are 26 working days in a month while 15 stands for calculating 15 days of last drawn salary.

In a sense, one can assume the formula as Gratuity is 15 days of Basic + DA for every year of employment. Where, one day salary is calculated by dividing the monthly salary by 26days. If you find this statement confusing, stick to the above stated formula itself as they are all the same.

For an employee earning a basic + DA of Rs.20k per month and has worked more than 240 days for 7 continuous years,
Gratuity = (15/26)*7*20000

No. of years is calculated if an employee has completed more than 240 days in the respective years during service. If an employee has completed 7 years in a service but only in 6 years has attended more than 240 days then,
Gratuity = (15/26)*6*20000

N is the No. of years of service in which he/she has attended more than 240 days

Who is eligible for getting Gratuity paid?
The employee who have worked for at least a minimum of 5 years* in the organization is eligible for the gratuity when the term of employment ceases. Completion of continuous service of five years is not necessary where the termination of employment is due to death of disablement.

Maximum cap on Gratuity?
Yes, there is a limitation how much an employee can get gratuity. The maximum amount of Gratuity an employee can receive is Rs.3,50,000.

Employee gets different basic and DA during the term with an employer. Which amount gets counted for calculation purpose?
The last drawn 15 days salary. For example, you get your first year Basic and DA as Rs.8000/month and at the end of 7th year and during leaving the employment the Basic, DA combo is Rs.25000/month. Then Rs.25000 is the amount taken into consideration in the above formula.

Since the number of years is rounded, if an employee works with an organization for 4 years and 6 months does he/she become eligible for Gratuity?
NO.
After 5 years and up to 6 months should be counted as previous year and after 6 months to be counted as next year. Yes, rounding is allowed, but not for 4 years and 6 months. Rounding of months to years is allowed only after 5th year. However technically, if an employee has worked for minimum 4 years and 8 months with at least 240 days of no absence in the fifth year(the 8 months period) then the employee is eligible for gratuity.

Some examples below(years of service - no. of yrs for gratuity calculation):
5 years 2 months - 5 years
5 years 6 months - 6 years
4 years 7 months - Not Applicable
4 years 8 months** - 5 years
* Assumption that employee has worked at least for 240 days on all years of service.
** - Minimum period required for Gratuity applicability on satisfying the above assumption.

So effectively(with the assumption true), an employee who works for minimum 4 years and 8 months with an organization is eligible for gratuity as per Indian laws.

How to get Gratuity?
If gratuity is applicable, employee has to make an application in Form-I to his employer within 30 days from the date of gratuity becomes payable. Major organizations do get the required signature in this form on proper cease of employment with an employee.

Section 80CCF of Income Tax Act

noreply@blogger.com (Shyam) — Sun, 10 Oct 2010 12:14:00 +0530

Recently came across one Infrastructure Bond which claimed tax benefits from a new IT section 80CCF. This was the first time I heard this section and hence this post. 80CCF is a new IT section added in the financial year 2010-11 which allows deduction in respect of subscription to long-term infrastructure bonds.

Below is the information I got from Indian Income tax site.

The following section 80CCF shall be inserted after section 80CCE by the Finance Act, 2010, w.e.f. 1-4-2011 :

Deduction in respect of subscription to long-term infrastructure bonds.

80CCF. In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011, as subscription to long-term infrastructure bonds as may, for the purposes of this section, be notified by the Central Government.

The Central Government have specified bonds to be issued by:

Industrial Finance Corporation of India
Life Insurance Corporation of India
Infrastructure Development Finance Company Limited
a Non-Banking Finance Company classified as an infrastructure finance company by the Reserve Bank of India; as “Long-term Infrastructure Bond” for the purpose of section 80CCF of the Income Tax Act, 1961.

The good news is that, this deduction under 80CCF of IT Act is over and above the existing overall limit of tax deduction on savings of up to Rs.1 lakh under section 80C, 80CCC and 80CCD of the Act. This means we can save tax of amounts Rs. 2000(for those in 10% tax bracket), Rs.4000(for those in 20% tax bracket) and Rs.6000(for those in 30% tax bracket) above the already existing Section 80Cxxx limits. Though I am not an expert, I would still say this is a good move by Finance Ministry to encourage investors to participate in Infrastructure growth of our country.

Security against loss of credit cards and convenience of blocking them at once

noreply@blogger.com (Shyam) — Mon, 28 Sep 2009 10:25:00 +0530

Credit cards provide us a wide range of flexibility and options which have made these cards an integral part of middle class and upper middle class people in India. With the convenience, also comes the vulnerability of credit card misuse through frauds and theft. Most people who hold credit card in India hold more than one and when they lose it or misplace it they seldom realize often noticing they have lost their card only on seeing monthly statements.

Consider a situation where you are running for your flight and in the neck moment find that you have lost your wallet with few credit and debit cards. The options for you are to call all the credit card customer care lines and intimate them to block your card. But it is not as easy as you say. First you must remember your credit card number, your card end date, some banks even ask for last 2 transactions, the day which you lost the card and few more questions to verify your personal identity before blocking the card. Not to forget that you must also remember the customer care numbers of respective banks. All this process will surely make you sweat before you block all your cards and show a sigh of relief that it is not misused or will not be misused further. If there were any transactions made by misuse between the time one lost the card and blocked it the customer will have to bear the charges. Not to mention that you would have also lost your flight or may not be able to make the payment that you intended to while carrying the credit cards. The same process has to be followed for debit cards though the risk of misuse is little less as most of the debit cards ask for PIN verification. Thanks to RBI’s directive that from 1st August for all online transactions IPIN is mandatory so that way, misuse may not happen. But RBI has mandated only for Indian sites and misuse in International sites is always possible.

What if we have the convenience of just calling one number and blocking all the credit cards and if we get replacement cards just by making that one call. Sounds simple isn’t it?

Thanks to CPP which exactly does this.

What is CPP?
CPP Card Protection is India’s first 24-hour Card Protection service for use in the event of card loss, theft and related fraud. One free call to CPP ensures that all the registered cards are cancelled immediately; and not only those we also get emergency travel and hotel assistance. We can now protect all the credit, debit, ATM, membership or loyalty cards & also valuable documents including passport, driving license, insurance policies.
CPP Assistance Services, India is part of the CPP group, a pioneer and a world leader in the emerging assistance services market. CPP launched card protection in Asia as far back as 2004, starting with Hong Kong, followed by Singapore, Malaysia and now from early 2009 in India.

Buying a CPP Card Protection Membership

Call 6000-4000 (prefix city code if calling from a mobile)
Choose your preferred plan
Make payment (through MasterCard or Visa)
You will get welcome kit after a week
Register cards for which you need membership
You can send filled registration mail to CPP office in Delhi, or call 6000-4000 to register
Membership valid for one year

Reporting a Loss and Making a Claim

Call 6000-4000 as soon as you realize that you have lost a card and notify them
To make a claim, ask for a claim form and submit it with all necessary bills in original. claims should be sent not later than 28 days from date of reporting card loss
In case of further problems, call 6000-4000

Courtesy: money.outlookindia.com (Above 2 subtitles)

Is this service Free?
Of course, a big ‘NO’. No service comes free of cost especially which involves financial transactions and protection. Minimal charges are applicable for this service. This should be just treated like a Term Life Insurance. The chances of meeting with an accident in a short term are very less but yet we pay premium in a Term Life Insurance for the financial cover and security it provides. CPP should be taken the same way as in business no one gives a free meal. With a host of benefits available at less than Rs. 3 to 4 a day, a complete peace of mind is assured.

What are the plans available?
The best option is to call CPP and get the information. You could also visit CPP’s website www.cppindia.com and find even more details not just about the rate but also about the wide range of services CPP provides.

This is not a marketing effort for CPP and is just an effort to let you know the options and convenience of blocking all credit cards at once in case the need arises.

All about Tax Refund

noreply@blogger.com (Shyam) — Wed, 15 Apr 2009 21:39:00 +0530

What is Tax Refund?
Tax refund is the amount paid back by government to a tax payer who has paid excess amount of Income Tax.

Are all taxpayers eligible for IT refund?
No. As mentioned above, only tax payers who have paid excess tax can get IT refund.

How one pays excess tax?
For an individual earning salary from his employer, and when employer does a TDS and the TDS amount is greater than the actual tax to be paid by the individual.

Can I get back the excess tax paid?
Of course yes, As mentioned above, government pays back the excess tax.

How do I get a refund? / What makes me eligible for a refund?
The refund amount is calculated when an individual files his IT returns. Just tax filing will make the individual eligible for tax refund if he/she has paid excess tax.

Is it true that if tax returns are not filed within time, I will not get refund
No, this is not true. It is not mandatory to file returns on time to get a refund if eligible. But the later you file the later it is going to take to get refund.

How long will it take for tax refund?
In ideal cases the amount will be refunded within 12 months time. Though it is dependent upon lot of factors like refund amount, whether there is a change in jurisdiction, time of tax filing(the earlier you submit the earlier you receive refund for a particular FY)

Will IT department give me interest for the refund amount?
Yes and No.
Yes, if the tax refund amount is greater than 10% of the actual IT to be paid. No, the tax refund amount is less than 10% of actual IT to be paid.

How will I receive the refund amount?
In major towns and cities tax department credits the amount directly through ECS. So it is essential to maintain the same bacnk account if you are eligible for a refund. I nother locations tax department sends the refund order with your bank account mentioned in the back side of the refund order. Refund order is similar to a cheque sent by tax department. The refund order can be deposited to any of your bank account after signing on the backside of the refund order.

What if refund amount is not received?
If tax refund amount is not received within 12 months from the date of filing the tax return below are the options to do:

Visit the tax return office and follow up.Write a letter to Income Tax officer along with the photocopies of acknowledgement of tax return.
If not redressed, then write a letter to the jurisdictional Chief Commissioner of the Income Tax with a copy to the Grievance Cell and the concerned Income Tax Officer. Also enclose copies of previous written communication to IT department.
If still not redressed file a RTI online at: http://www.rtiindia.org/forum/10393-income-tax-return-refund.html
Alternatively you can consult a Auditor and ask him to follow up on your refund amount. The procedure is the same and yes of course you will have to pay his/her consultation charges.

Tax Exemption on Medical Expenses

noreply@blogger.com (Shyam) — Sat, 21 Mar 2009 19:16:00 +0530

Can tax benefits be availed for medical expenses incurred? What are the various sections of Income Tax act and how to avail the benefits.

Section 80D of Income Tax Act:
Medical Insurance premium for self, spouse, children and parents are eligible for exemption under section 80D up to a maximum of Rs.15000 for individuals and Rs.20000 for senior citizens.

Section 80 DD of Income Tax act:
Deduction under this section is available to an individual who:

Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependant; or
Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependant. An annuity or a lump sum amount is paid to the dependant or to a nominee for the benefit of the dependant in the event of the death of the individual depositing the money, from the said scheme,

A deduction of Rs 50,000 is available. Where the dependent is with a severe disability, a deduction of Rs 75,000 is allowed.

To claim the tax benefit under Section 80DD, the dependent person means a person having any disability of not less than 40%, as per section 2(i) of the Persons with Disability Act, 1995.
Section 80DD deduction is available only towards medical treatment of dependents with specified disabilities.

Section 80DDB of Income Tax act:

An individual, resident in India spending any amount for the medical treatment of specified diseases affecting him or his spouse, children, parents, brothers and sisters and who are dependant on him, will be eligible for a deduction of the amount actually spent or Rs 40,000, whichever is less.
For any amount spent on the treatment of a dependent senior citizen an individual is eligible for a deduction of the amount spent or Rs 60,000, whichever is less is available.

Section 80DDB allows deduction of expenses on medical treatment of specified ailments prescribed under Rule 11DD of the Income Tax Rules.
The list of diseases/ ailments falling under this section:

Neurological diseases where the disability level has been certified to be of 40% and above. These include: Dementia, Dystonia, Musculorum Deformans, Motor Neuron Disease, Ataxia, ChoreaHemiballismus, Aphasia Parkinson's Disease
Malignant cancer
Full blown Acquired Immuno Deficiency Syndrome, (AIDS)
Chronic renal failure
Hematological disorders. These include: Hemophilia and Thalassaemia

Is NRE remittance taxable?

noreply@blogger.com (Shyam) — Sat, 21 Mar 2009 18:47:00 +0530

Is it possible to avoid taxes by remitting to NRE account instead of salary account?
Remitting into any type of account makes no difference in tax exemption.
Is NRE remittance taxable?
Yes if you are resident and ordinarily resident in India. If you are a NRI then you claim tax exemptions.

So now one wonders who is a resident and who is an ordinary resident and who is a non-resident.

Under section 6 of the Income Tax Act, an individual is resident in India if he is in India for 182 days(182 days if he leaves India to takes up employment outside India if he is a citizen of India or being outside India comes to India on visit if he is a citizen of India or a person of Indian origin) or more in the previous year, or he is in India for 60 days or more in the previous year and for 365 days or more in the four years preceding the previous year. He/She is a resident but not ordinarily resident if he satisfies any of the following conditions: He is non-resident in nine out of the 10 years preceding the previous year; he is in India for 729 days or less in the seven years preceding the previous year; if an individual is resident but is not resident but not ordinarily resident then he/she would be resident and ordinarily resident.

For a resident and ordinarily resident in India (decided based upon the above) the income earned by way of salary outside India will also be taxable in India. If there is a Double Taxation Avoidance Agreement between India and a foreign country in which one earns salary, claim benefit can be claimed under the agreement. If there is no such agreement, benefit can be obtained by way of credit of the tax paid in the foreign country on such salary income in India. The credit will be the lower of the tax paid on such doubly taxed income in that other country or the tax payable on the same in India.

From the taxation point of view, it will not make any difference whether one remits his/her earnings into a NRE account or into a regular savings bank account.

Tax rebate on Principal amount of an Education Loan?

noreply@blogger.com (Shyam) — Sat, 21 Mar 2009 12:14:00 +0530

Most of us know that the interest paid on an Education Loan can be used for availing tax benefits. But the Principal of an Education Loan can also be used effectively for tax rebate which many tax payers evade without realizing.

Tax Rebate on Interest Paid on an Education Loan:
As per Section 80 (E) of Income Tax Act 1961, as amended by Finance Act 2006, any individual availing education loan for his own study from a recognized financial institution can have the entire interest amount deducted from his/her taxable income.
Conditions for availing the benefits of Section 80 (E):

The benefit is available only to individual assesses and for their own education.
The purpose of loan should be to pursue higher education i.e., full time studies in graduate or post graduate course.
The loan should have been taken from any bank, notified financial institution or an approved charitable institution.
Only the interest amount is eligible to be deducted and not the principal.
If the above conditions are satisfied, the entire amount paid by way of interest is deductible from income under Section 80 (E) .
This deduction is available for next seven succeeding years (or until the interest is being paid) from the initial financial year from which the assessee starts paying the interest on loan.
The deductions under Section 80 (E) are over and above the deductions under section 80C.

Tax Rebate on Principal Paid on an Education Loan:

Tuition fees are tax deductible under Section 80C but not the principal of education loan. No that's not the case for education loans taken for the studies of children.

Tuition fee of children paid out of the borrowed funds, are eligible under Section 80C because the Section no longer insists on the prescribed format of payment being made out of taxable income.
But if the education loan is taken for education of self or spouse, the principal would fall on the other side of tax rebate as Section 80C allows tuition fees only for children.

Tax Credits available in the Annual Tax Statement for A.Y.2008-09

noreply@blogger.com (Shyam) — Fri, 20 Mar 2009 23:57:00 +0530

The Income Tax Department (ITD) has started transmitting the Annual Tax Statement of taxpayers as a part of its citizen centric exercise. The object is to give tax payers feedback regarding the tax credits as reported by the tax deductors/collectors besides showing taxes deposited by way of self assessment tax, advance tax etc.

This statement is also relied upon by the ITD while giving tax credit at the time of processing of the Income Tax returns.

The procedure for creation of this Annual Tax Statement is in accordance with section 203 AA of the I.T. Act, 1961 or the second provision to sub section (5) of section 206C of the I.T. Act, 1961.2. The purpose of undertaking this exercise is to ensure that the tax credit available is complete, correct and up to date.

The tax credit reflected in such statement may increase or decrease in case the deductor revises the information/updates the information or files the TDS returns after finalization of Form 26AS (Annual Tax Statement).3.

In case of missing entries or entries against which 'unmatched' is indicated, you are advised to contact your deductor immediately and ascertain whether the deductor has either

i) erred in quoting the correct PAN or not quoted your PAN; or

ii) not filed the TDS return; or

iii) has not paid the required TDS to Government account.

3.1 In such a case, you may approach the deductor and persuade the deductor to rectify the deficiencies. Kindly note that the tax statement will be the basis for giving you tax credits. Hence, absence of tax credit will bind the Officer to adhere to the tax credit available.

4. Tax Credits appearing in the Annual Tax Statement are on the basis of the details given by the deductor in the TDS/TCS statement filed by him. The same should be verified before claiming tax credit and only the amount which pertains to you should be claimed.

5. From the current financial year onwards you can also view your tax credits by undertaking a one time registration. Detailed procedure for registration is available at http://www.incometaxindia.gov.in/ and http://www.tin-nsdl.com/.

6. To open the statement, a password is set in the format of DDMMYYYY. For example, if your date of birth / incorporation is January 1, 1985 then the password will be 01011985.

6.1 The date of birth / incorporation should be same as furnished to the Department and available in the Income Tax Department PAN master (as printed on the PAN card).

7. For queries on the issue one may contact TIN Call Centre at Tel.: 91-20-2721 8080 Fax: 91-20-2721 8081 Email: reply@nsdl.co.in Further communication on this matter could be sent on reply@nsdl.co.in

Start your own Online Business

noreply@blogger.com (Shyam) — Sat, 1 Nov 2008 11:52:00 +0530

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Balance Transfer on Credit Cards

noreply@blogger.com (Shyam) — Sat, 13 Sep 2008 18:48:00 +0530

How can I reduce paying huge interests on my credit card?

What is Credit Card Balance Transfer?

How do I get out of my credit card debts?

There are lot of credit card holders but unfortunately not many of them know the features and pits and falls of using a credit card.

As many Credit card companies give their customers a huge sum of credit limit the temptations to spend without money increases. Since the credit cards are delivered with a label of 40 days to 55 days interest free usage customers are often tempted to spend and increase their debts if not planned properly. When the customer cannot pay the Total Credit Outstanding they fall prey to the huge interest rates of Credit card companies.

The credit card interest rates are as high ranging around 35% to 42%. Compare that to a personal loan where interest rates lie just around 13% to 24%. So how do you get out of the huge interest rates of Credit cards? The best way is to apply for a personal loan and pay your Credit card bills when you have a huge sum to be paid to Credit cards.

But not everyone is eligible for a Personal Loan especially when you don't maintain Bank accounts properly or/and already have number of loans. But when getting a Personal loan is not possible or the card outstanding is not so high to apply for a personal loan and you have two or more credit cards Balance Transfer is the best option.

Below is the step-by-step procedure to apply for a Balance Transfer (BT):

1) First list down the credit card outstanding on all your cards. For example: Credit Card “A” – Rs.24500 and Credit Card “B” – Rs. 12500 and Credit Card “C” – Rs.1800 and Credit Card “D” – Rs.200.

2) Plan clearly how much amount you will have to pay your credit card bills. Lets say if you can pay Rs. 5000 and for the above credit card outstanding lets pay wisely.

3) Pay Rs.200 on your credit card “D” outstanding immediately. Check the Credit card limit of your card “D”. Typically you may have 70% to 80% of your credit card limit for BT.

4) Pay Rs.1800 on your Credit Card “C”. Now the balance outstanding of your card will look like below: Credit Card “A” – Rs.24500 and Credit Card “B” – Rs. 12500. Together you have Rs. 37000 as outstanding where as you can pay Rs.3000 (Rs.5000 you had minus Rs.200 and Rs.1800 paid for Credit Card “D” and “C” respectively).

5) Plan your repayment capacities. Credit card companies offer BT options as below:
· 0% interest rate Balance Transfer with maximum of 2.5% processing fee for a period of 90 days
· 0.99% interest rate Balance Transfer with maximum of 2.5% processing fee
* - These rates and duration vary for each card company

6) Based upon your repayment capacity you can chose the plan from above. And most banks do not levy additional charges for pre-closure of Balance Transfer.

7) Let’s say you can pay Rs.10000 every month then 0% interest rate for 90 days is the best option for you. Lets apply for Rs. 12500 for your Credit Card “B” and Rs.21500 for your credit card “A”. You can pay Rs.3000(you already have) for your credit card “A”.

8) Apply for a BT as planned above through online (if you have online access to your Credit card account) or call your customer care by phone and apply for BT. You may be required to provide your Credit card end date of your other card along with the card number to which Balance Transfer is applied. Read the “Terms & Conditions” document clearly. If applied through phone the customer care executive will clearly explain the details.

9) Within 5 days to 15 days you will receive a DD/Cashier order to your mailing address drawn in favor of your Credit Card as applied. This DD/Cashier Order will mostly be Pay at Par so you wont have to worry about the city you reside.

10) Drop these DD/Cashier Order in the required Credit Card Payment channels well at least a week before the last day to avoid any issues. ( In this case drop the payment by 84th day).

11) In both the cases you have to make the minimum repayment amount (5% of card outstanding) each month to avoid financial charges.

12) In this case, before the 90th day pay make sure you have paid your BT outstanding including the processing fee and service charges applied. Otherwise you will be again levied with huge financial charges.

Tips for Hassle-Free BT Usage:

1) Don't make any purchases on your credit card when you have a BT running in your card as most banks apply financial charges on using your card in BT phase.

2) All payments made will be for your BT amount. Only after 100% clearance of BT amount your payments ill be credit to other transactions you have made. So BE CAUTIOUS.

3) Make the minimum payments promptly again to avoid financial charges.

4) Close your Balance Transfer outstanding within the stipulated time else you will be charged with high interest rates for the entire BT period. For example if you make a payment on 92nd day of your 90 days 0% interest BT, interest will be levied for the entire 92 day period.

5) If you feel you cannot make entire payment before the BT period apply for another BT from any other credit card to the bank which you have already have a BT running. Some banks ask for other card bank statement to approve BT. In such a case your BT request may not get approved.

6) All BT approvals are at the sole discretion of your credit card companies.