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TAX PROVISIONS FOR EXPATRIATE INDIANS

2012-01-31T19:39:00.002+04:00

The tax liability related to expatriates working outside the India would be determined based on their residential status. The following are the main categories of Non-Resident Indians as per Income Tax Act, 1961
1) Non-Resident Indian (NRI)
a) He/She is not in India for 182 days or more during the relevant previous year
b) He/She india for 60 days or more during the previous year and he/she is not in India for 365 days or more during the 4 years prior to the previous year
c) In the case of an individual on visit to India or a member of the crew of an Indian ship or a person leaving India for employment outside India, the requirement of stay in India of 60 days in condition 2 above is extended to 182 days.

2) Resident but not Ordinarily Resident (RNOR)

A NRI who has returned to India for good is covered under the provisions of section 6(6) of the Income-tax Act. He is given a special status of RESIDENT BUT NOT ORDINARILY RESIDENT (RNOR) if he satisfies one of the following conditions:
a) He is not a resident, as per the above provisions, for at least 9 out of 10 previous years prior to the previous year under consideration.
b) His stay in India during the 7 previous year prior to the previous year under consideration should not be 730 days or more

Tax Liabilities Thus according to condition in clause (a) a new comer to India would remain ‘not ordinarily resident’ in India for the first 9 years of his stay in India. Similarly, in case where a person who is resident in India goes abroad and ceases to be a resident in India for atleast 2 years, he shall, on his return, be treated as not ordinarily resident for the next 9 years. ies of each category of Individuals

Based on the residential status of payer, his/her tax liability will be as follows:-

a) Resident - All income of the previous year wherever accruing or arising or received by him including incomes deemed to have accrued or arisen.
b) Non-Resident Indian - All income accruing, arising to or deemed to have accrued or arisen or received in India.
c) Resident but not Ordinary Resident - All Income accruing or arising or deemed to have accrued or arisen or received in India. Moreover, all income earned outside India will also be included if the same is derived from a business or profession controlled or set up in India.

3) Special Provisions Relating to Non-Residents
Chapter XIIA of the Income Tax Act deals with special provisions relating to certain incomes of non-residents. Sec. 11 5D deals with special provisions regarding computation of investment income of NRIs. Section 11 5E relates to investments income and long term capital gains of NRIs, such income being taxed at concessional flat rates. As per section 11 5F, capital gain is not chargeable on transfer of foreign exchange assets under certain circumstances. The NRIs need not file their return of income if their total income consist only of investment income or long term capital gains or both and proper tax has been deducted from this income(Sec. 11 5G). Benefits under this chapter are available even after the assessee becomes a resident (Sec. 11 5H). The provisions of this chapter would not apply if the assessee so chooses (Sec. 115I).

4) DTAA -Double Taxation Avoidance Agreement
The Central Government acting under the authority of Law(Sec. 90) has entered into DTAAs with more than 80 countries. Such treaties serve the purpose of providing protection to the tax payers from double taxation. As per section 90(2), in relation to an assessee to whom any DTAA applies, the provisions of the Act shall apply only to the extent they are more beneficial to the assessee. The provisions of these DTAAs thus prevail over the statutory provisions. For availing the benefits under DTAA the NRIs need to complete certain formalities for example for getting the reduced rate of tax deduction from bank interest (NRO deposits), they need to submit certain declaration with their banks before the starting of the each financial year.

To avail benefit of lower rates of tax as per double taxation avoidance treaty entered in by India, NRIs need to submit the Residency Certificate issued by Tax Authorities of the country of his residence. These documents should be submitted to the designated bank branch at the time of opening the bank account or subsequently. New TDS rate shall be applied only after the acceptance of the Residency Certificate by the designated banker.

5) Indian Residents posted abroad for employment
Indian residents who have taken up employment in countries with which India has got DTAA are entitled to the benefit of the DTAA entered into by India with the country of employment. Accordingly, their tax liability is decided. Indian expatriates working abroad have been granted several special tax concessions under the Act. Professors, teachers and research workers working abroad in any university or any educational institutions are entitled to deduction of 75% of their foreign remuneration provided the same is brought into India in convertible foreign exchange within a period of 6 months from the end of the previous year or such extended time as may be allowed(Sec. 80-R). Similarly, in case of an Indian Citizen having received remuneration for services rendered outside India, 75% of his foreign remuneration is deductible from his taxable income provided such remuneration is brought to India in convertible foreign exchange within the time specified above (Sec. 80 RRA). From assessment year 2001-2002 onwards, there has been a change in the amount of deduction available under sections 80R/ 80RRA. For details, reference may be made to the sections concerned of the Income Tax Act. No deduction u/s 80R/80RRA shall be allowed in respect of A.Y. 2005-06 onwards. It may also be mentioned here that as per section 9(1)(iii) income chargeable under the head ‘Salary’ payable by the Government to a citizen of India for services rendered outside India is deemed to accrue or arise in India. However, allowances or perquisites paid or allowed outside India by the Govt. to a citizen of India for rendering services abroad is exempt from taxation u/s 10(7).

6) Income Tax Clearance Certificate
A resident Indian proceeding overseas for employment has to apply for an Income Tax Clearance Certificate on Form 31, as per Section 230 (I) of the Income Tax Act 1961. The Assessing Officer assessing the applicant’s form would provide Form 32 which authorises the application.. An expatriate before leaving the territory of India is required to obtain a tax clearance certificate from a competent authority stating that he does not have any outstanding tax liability. Such a certificate is necessary in case the continuous presence in India exceeds 120 days. An application is to be made in a prescribed form to the Income Tax Authority having jurisdiction for assessment of the expatriate to grant a tax clearance certificate. This is to be exchanged for final tax clearance certificate from the foreign section of the Income Tax Department. Tax Clearance certificate is valid for a period of 1 month from the date of issue and is necessary to get a confirmed booking from an airline or travel agency and may be required to be produced before the customs authorities at the airport
The following categories of persons are required to produce a tax clearance certificate from the concerned assessing officer prior to their departure:-
•persons who are not domiciled in India, and in whose case the stay in India has exceeded 120 days;
•persons of Indian or non-Indian domicile whose names have been communicated to the airlines/shipping Companies by the Income Tax authorities;
•persons who are domiciled in India at the time of their departure; but
i.intend to leave India as emigrants; or
ii.intend to proceed to another country on a work permit with the object of taking any employment or other occupation in that country; or
iii.in respect of whom circumstances exist, which in the opinion of the income tax authorities render it necessary for him to obtain the Tax Clearance Certificate.
7) Foreigners working in India can get one-time tax clearance: There are many foreign employees not domiciled in India. To save them the hassles of obtaining a tax clearance each and every time such employees travel abroad, there is a provision where they can get a onetime clearance certificate that covers a period of up-to five years. This type of one-time clearance is given in those cases where their employers give a guarantee in the prescribed form that if any tax is found due against the employee during the entire period of the contract of service plus two years the same shall be paid by the employer. Such a guarantee may also cover the tax liabilities of the spouse and dependents of the foreign employee.

8) Tax Exemption Certificate - Lower or Nil Rate of TDS:

The rate prescribed for TDS from NRI's income is the maximum rate of tax at which relevant Income is taxable in India. However, in majority of the cases of NRI, the actual tax liability is lower than this. However, the higher deduction of tax so made is generally not claimed as refund by filing Income Tax Returns In order to assist such a situation, the Income-tax Act has provided procedure under section 197 whereby a NRI can apply to the Assessing officer (in prescribed form) to issue specific certificate authorising the payer of income (who normally deducts tax at highest prescribed rate) to deduct tax at a lower rate or nil rate as the case may be. The NRI should estimate his income, tax liability and likely TDS and then apply for partial or complete Tax Exemption Certificate. The payer shall deduct tax in accordance with the certificate of the Assessing officer. Such a certificate would be binding on the payer.

Any NRI who has obtained Exemption Certificate needs to submit it to the Payer of the income who will follow the certificate and not deduct tax or may deduct at a lower rate as given.

IRFC Tax Free Bonds

2012-01-31T19:38:00.000+04:00

Fund raising through tax free bonds gained momentum as the Indian Railway Finance Corporation (IRFC) and HUDCO announced their plans to raise an aggregate of Rs 10,985 crore by way of tax free bonds and in all likelihood they are set to be fully subscribed.

NHAI had earlier come out with its tax-free bond to raise up to Rs 10,000 crore and was successfully subscribed. Sources close to the development say that the NHAI bond was oversubscribed 2.5 times i.e. subscribed for Rs 25,000 crore.

Non Resident Indians are also eligible to invest in these bonds on repatriation as well as non-repatriation basis. In my opinion this tax-free interest bonds provide an excellent investment opportunity as the coupon offered under both the series is quite attractive. Moreover, highest rating of AAA from CRISIL and ICRA, makes it a safe investment avenue. Since this is a long term investment for 10-15 years, you are guaranteed to get assured/fixed tax free return for the entire periods even if your tax status has been changed from non-resident to resident. It is true that NRE Term Deposits now a day’s offer tax free interest rates in the range of 8-9.50%, but once your tax status changed to resident, you will be liable to pay tax on the income generated from this NRE deposit. So it is highly recommended all NRIs should subscribe for this tax free bond. Those NRIs who have PIS account can apply these bonds online. For more details, please keep in touch with your share broker. Interest rates are at peak level; best time to invest in fixed income tax free instruments. Interest rate cycle has peaked out . Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012. The bond yields which have increased close to 9% levels have corrected significantly and show easing of pressure on rates. Indian Railway Finance Corporation Ltd•Issue period: 27 January 2012 to 10 February 2012.•Issue of Tax Free Secured Redeemable Non Convertible Bonds•Basis of allotment: On a first-come-first-serve basis within each category•The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of IT Act, 1961.•There will be no deduction of tax at source from the interest, which accrues to the bondholders on these bonds irrespective of the amount of the interest or the status of the investors.•Wealth Tax is not levied on investment in Bonds under section 2 (ea) of the Wealth -tax Act, 1957.Investment Opportunity:High post tax yield for triple A rated product
Tax free bond with yield of 8% – 8.30% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the rating agencies – Crisil, ICRA and CARE. The bonds would also be listed and tradable on NSE/BSE.Company Overview:•Financing arm of the Indian Railways•Notified as a Public Financial Institution under Section 4A of the Companies Act, 1956•Registered as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank of India•100% shareholding held by Government of India•Consistently profit making Public Sector UndertakingTerms of the Issue:Particulars Issue details
Face Value per Bond Rs 1,000
Tenor 10 years 15 years
Minimum Application Rs 10,000 (in multiples of Rs 5,000 thereafter) Rs 10,000 (in multiples of Rs 5,000 thereafter)
Interest Rate % p.a. (Category I & II) 8 8.10
Interest Rate % p.a. (Category III) 8.15 8.30
Frequency of Interest payment Annual Annual
Issuance Demat form or physical form Demat form or physical form
Interest on application % p.a. 8.00
Interest on refund % p.a 4.00

Issue Structure:
Category I Category II Category III
Upto 45% of Overall Issue Size* Upto 25% of Overall Issue Size* Upto 30% of Overall Issue Size*
QIB & Corporate Individuals & HUF applying for more than Rs. 5 Lakhs Individuals & HUF applying for upto Rs. 5 Lakhs
*on first come first serve basis to be determined on the basis of date of receipt of applications duly acknowledged by the Bankers to the Issue.

Important FAQ·

Is there a lock-in period for these bonds?

No, these bonds do not have any lock-in period. The bonds would be traded onto recognised stock exchange and thus can be purchased and sold at the prevailing market prices on the exchange. If one wishes to hold until maturity, then the redemption would be made by the issuer. ·

Is interest on these bonds Tax Free?

Yes, the interest which one will earn would be exempt from tax. · Will TDS be deducted from the interest payment?

These bonds are tax free and hence not subject to TDS. ·
Is demat account mandatory to invest in tax free bonds?

The bonds can be held either in demat or physical form. But if one wish to trade onto the exchange, then it can happen only via demat mode. · Are investments in these bonds eligible for deduction u/s 80C?

The sum invested in these bonds is not eligible for any deduction under section 80C, 80CCF or 54EC. Hence, no deduction benefit is avail while one invests money into these bonds. However, as mentioned earlier the interest which you enjoy will be fully exempt from tax, and therefore no TDS will apply as well. However, capital gains on these bonds are taxable like normal corporate bonds.

Thus, if the bonds are sold within one year of the date of purchase, the short-term capital gains arising would be subject to tax at slab rates. Similarly, if the capital gains are made after a holding period of one year, long term capital gains will be applicable at 20% with indexation benefit or 10% without any indexation benefit. · Can a minor apply to these bonds?

Yes, a minor can apply for these bonds, but only and only through a guardian. ·

Can one apply in joint names?

Yes, one may apply in a joint name. However, the demat account will also be required to be held in joint name and the order of applicant shall be the same as appearing in the demat account. Moreover, all payments will be made out in favour of the first applicant as well as all communications will be addressed to the first named applicant whose name appears in the application form and at the address mentioned therein. · Who will get the interest in case of joint application?

In case of joint application, interest will be accounted to the first holder only.
My demat account is in joint name, but I want to apply is a single name?

In case of a single application, demat account of the same single applicant would be necessary. Joint demat account would not do. · If I’m an NRI can I invest in these bonds?

Yes, NRIs are eligible to invest in these bonds.

Whether an applicant applying in the first day of opening of the issue is assured of allotment? The issue will remain open for at least 3 days. If the issue is over-subscribed within this period, the applicants will receive allotment on pro rata basis. Thus investors who have applied during this period will receive at least some allotment. If issue extends beyond 3 days, the applicant in first 3 days will receive full allotment.

In whose favour the cheque is to be made?

Cheques/Drafts have to be made in the favour of

“IRFC Tax Free Bonds – Escrow Account – Tranche I" - for Non NRI’s

“IRFC Tax Free Bonds – NRI Escrow Account – Tranche I" - for NRI’s

“IRFC Tax Free Bonds – FII Escrow Account – Tranche I" - for FII’s * The coupon rates of 8.15% p.a. and 8.30% p.a. shall be payable only to the original allottees under Category III for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively and shall not be payable to the transferees in case the Bonds are transferred or sold by the original allottees Please refer to the final prospectus for details.

In my opinion these tax-free interest bonds provide an excellent investment opportunity as the coupon offered under both the series is quite attractive. Moreover, highest rating of AAA from CRISIL and ICRA, makes it a safe investment avenue. Also the listing and trading of the bond (on BSE and NSE), facilitates a liquidity window to investors as one can exit even before the maturity / redemption date of these bonds, but as said earlier one need to hold these bonds in a demat mode. IRFC has smartly introduced the step-down feature which states that any buyer in the secondary market will only get non-retail (HNI and QIP) investor rate. The step-down feature is obviously to encourage serious investors to subscribe for the issue instead of trying to make a quick buck by swiftly selling it in the secondary market.Note: This is just for the general information of the readers; please refer the final prospects or take advice from your financial planner before investing http://irfc.nic.in/index1.asp?lang=1&linkid=64&lid=200

Free mobile calling application freephoo introduced in India

2012-01-19T16:19:00.001+04:00

freephoo application will enable users to make free calls from their iPhone, iPod touch, iPad and Android-based phones using the WiFi or 3G network

Sweden-based freephoo has launched its mobile VoIP (Voice over Internet protocol) application in India.
The application will enable users to make free calls from their iPhone, iPod touch, iPad and Android-based phones using the WiFi or 3G network. On downloading freephoo, consumers can use their mobile number and phonebook to make free calls to other freephoo users.

"freephoo allows its user to make calls to people not having freephoo through its premium services with which user can make low priced calls to both fixed and mobile phones," freephoo spokesperson explained.

Spokesperson added that freephoo is currently available for Apple and Android users, but the company is looking at expand its services to other mobile phones as well.

Tax Free Bond form HUDCO (Housing and Urban Development Corporation Ltd

2012-01-19T16:16:00.001+04:00

Those who missed the chance to get allotment in earlier tax free bond issues (NHAI, PFC) can apply for the forthcoming tax free bond to be issued by HUDCO. This is an advance intimation, which will enable you to prepare in advance to subscribe for this bond. Interest rates for the bonds are yet to be announced. I assume, the interest rates will be at par with the earlier tax free bonds.

Housing and Urban Development Corporation Limited (HUDCO) was established in 1970 as a wholly owned Government company with the objective to provide long term finance and undertake housing and urban infrastructure development programmers. HUDCO’s sustained performance and profitability earned them Mini-Ratna status conferred in FY 05. HUDCO had sanctioned loans of Rs.. 37,464 cr for housing and Rs. 84,906 cr for urban infrastructure on a cumulative basis up to Dec 2011.The Company has filed Draft Shelf Prospectus with SEBI on 11th January 201 and Issue of Tax Free Bonds expected to be launched by the end January 2012.Salient features of the proposed bond issue

1. The Bonds are issued in the form of tax-free, secured, redeemable, non-convertible Debentures and the interest on the Bonds will not form part of the total income.2. In case of over-subscription; allotment shall be on first cum first serve basis up to the date falling 1 day prior to the date of oversubscription and on proportionate basis on the date of oversubscription, in the manner specified in the Tranche Prospectus.3. CARE has assigned a rating of ‘CARE AA+’ to the Bonds. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Fitch has assigned a rating of ‘Fitch AA+ (ind)’ to the Bonds.4. The bonds are secured by way of floating first pari passu chargeon the present and future receivables of the company to the extent of amount mobilized under the issue. The security cover will be atleast 100% of the outstanding Bonds at any point in time.5. HUDCO shall pay [xx to be announced] % p.a. for Tranche 1 Bonds as interest on the Application amount retained. HUDCO shall also pay [xx to be announced ]% p.a. on refund of application amount. Such interest shall be paid along with the monies liable to be refunded.6. Bonds will be issued in Dematerialised form or physical form as specified by an Applicant in the Application Form. The bonds will be listed on NSE and BSE both and will be available in Demat form facilitating trading of these bonds.7. Investors can pledge or hypothecate these bonds to avail loans.

Tax Benefits1. The income by way of interest on these Bonds shall not form part of total income as per provisions under section 10 (15) (iv) (h) of I.T. Act, 1961;2. There shall be no deduction of tax at source from the interest, which accrues to the bondholders;3. As per provisions under section 2 (29A) of the I.T. Act, read with section 2 (42A) of the I.T. Act, a listed Bond is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer. Under section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being listed securities are subject to tax at the rate of 20% of capital gains calculated after reducing indexed cost of acquisition or 10% of capital gains without indexation of the cost of acquisition;

4. Wealth Taxis not levied on investment in Bond under section 2(ea) of the Wealth-tax Act, 1957

Top 10 Home Buying tips

2012-01-02T20:52:00.000+04:00

Top 10 Home Buying tips

1. Don’t buy home for short duration stay

If you are planning to buy a home for short duration stay for 2-3 years and if you can't commit to remaining in one place for at least few years, then owning a home is probably not for you. With the registration fees and other transaction costs of buying and selling a home, you may end up losing money if you sell within a short period even a rising real estate market. Suppose, if prices of properties are falling you may end up with huge loss. So before going to buy a house/apartment first decide how long you are going to reside there, if your answer is long term say above 5 years, go ahead and buy the house otherwise drop your idea.

2. Explore the possibility of availing a loan at a competitive rate

Since you most likely will need to get a loan to buy a house, you must make sure that you will be able get the loan as much as required for the full/part payment of the property value. Please note that, the interest rate varies from Bank to Banks and now after NBFCs started competitive rates, you have more choices. In this context, you should also check other fees such as processing fee, documentation fee, and any prepayment penalty associated with the home loan. At the same time do research on the best option that banks offer. Home loan is a huge amount and hence even a difference of 0.5% can make big difference in pay-outs. You should also get the maximum tax benefit from your home loan. See if you can make your spouse as co-applicant and avail the tax benefits. You will simply double the tax benefits if there are two co-applicants.

3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about 30-40% of your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford. This is one of the most crucial decisions. Know the amount of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offers.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.

There are a variety of public and private lenders who, if you qualify, offer low-interest loans that require a down payment of 10-20% of the value of the property you are planning to buy. In case you are unable to find source to this basic 10-20%, you may have to pay interest at higher rates.

5. Buy in a good location with all basic facilities

The most important part of a real estate piece is location. Even if you have to pay little extra, you should do it. The most important aspect of the right location is future prospect of big construction such as mall, IT Park, company, SEZ, airport, railway lines, or any other commercial space. Apart from this, the points to consider in any location are the following: Availability of civic amenities such as power, water, roads, calm environment, and closeness to main road, markets, shopping malls, schools, and hospitals etc, possibility of renting out your home if required. Good schools located nearby are an added advantage. In most areas, this advice applies even if you don't have school-age children; the reason is that, when it comes time to sell, you will realize that good schools and other basic facilities around are a top priority for many home buyers, thus helping to boost property values.

6. Do your homework before taking the decision

Do your home work before decided to buy a home and to ensure that the home you are planning to buy is suitable for your living at least for the coming 10-15 years and also have enough space to accommodate the expected increases in the number of family members. Also, ensue that the prices you are paying is worth to the facility provided.

7. Avail the service of a professional

Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the entire process.

8. Select a builder with good track records

Before buying an apartment, please check the credibility of the builder and also make sure that, the builder has delivered all his past projects within the time limit with specified quality. In case you observed any delay or failure form the part of the builder to deliver the project don’t buy apartment from that builder. You have to have long term view of your investment. The property should be stable enough to last 40-50 years so that if you want to sell it and buy another home, you should be able to do it without much hassle. This is where buying from a reputed builder becomes more important. At the same time, explore the possibilities of linking your loan disbursal based on the progress of the construction work instead of pre-determined specified timings.

9. Verification of Legal Documents

Always look for apartments which are pre-approved by the financial institutions. This will one way ensure that, the property title and other documents are verified and approved by the financial institutions and they are supposed to be in order in all respects. Also insist the builder to show you the original title document of the land. For your safety and to ensure that, all documents are in order, you need to engage a lawyer who can search and verify the title and associated documents before you buy the home. You should get everything in writing from the builder. The sale deed should be duly signed by both the buyer and the seller. You should also ensure that lay out plan, building plan, number of floors, and ownership documents are in order and builder has got necessary approval from the concerned Government authorities. You should take legal help from a lawyer if you do not understand any document. Apart from these documents, make sure to get the encumbrance certificates from the sub-registrar. The encumbrance certificate tells you the details of property dealings and other ownership transfer of the property for the last 30 years. All taxes (including land tax and panchayat/municipal/corporation tax) should have been paid on the property. You should get the proof of paying this tax from the builder; also verify the, the NOC certificate from water and electricity authorities.

10. Hire the service of an expert civil engineer

Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house/apartment is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road

What is DTAA (Double Taxation Avoidance Agreements)?

2012-01-01T08:51:00.000+04:00

Double Taxation Relief

The incidence of Double taxation occurs when an individual is required to pay tax more than one time for the same income he generated from a country different from his home country. Double taxation occurs mainly due to overlapping tax laws and regulations of the countries where an individual operates his business or employs. . Consistent with the practice adopted in most of the countries in the world that have taken to levy tax on income / capital, India has adopted the system under which Income Tax on residents is imposed on the "total world income" i.e. income earned anywhere in the world. Whereas a tax payer’s own country (referred to as home country) has a sovereign right to tax him, the source of income may be in some other country (referred to as host country) which country also claims a right to tax the income arising in that country. The result is that income arising to a resident out of India is subjected to tax in India as it is part of total world income and, also in host country which provides the source for that income.

India has entered into Avoidance of Double Taxation Agreement (DTAA) with 65 countries including countries like U.S.A., U.K., Japan, France, Germany, etc. The agreement provides relief from the double taxation in respect of incomes by providing exemption and also by providing credits for taxes paid in one of the countries. These treaties are based on the general principles laid down in the model draft of the Organization for Economic Cooperation and Development (OECD) with suitable modifications as agreed to by the other contracting countries. In case of countries with which India has double taxation avoidance agreements, the tax rates are determined by such agreements and vary between countries. Apart from providing ways and means to avoid double taxation of same income, the agreements generally provide for other matters of common interest of the two countries such as exchange of information, mutual assistance procedure for resolution of disputes and for mutual assistance in effecting recovery of taxes

Unilateral Relief

The Indian government provides relief from double taxation irrespective of whether there is a DTAA between India and the other country concerned, if
1.The person or company has been a resident of India in the previous year.
2.The same income must be accrued to and received by the tax payer outside India in the previous year.
3.The income should have been taxed in India and in another country with which there is no tax treaty.
4.The person or company has paid tax under the laws of the foreign country concerned.

How you can avoid paying Capital Gain Tax – Invest in NHAI’s 54EC Capital Gains Bonds

2011-12-26T17:03:00.001+04:00

Capital gain arising out of sale of Long term assets such as land, building etc can be invested in capital gain bonds issued by NHAI up to 50 lakh per annum within 6 month of the transfer of the capital long term asset. This investment is open for all assessee and only the capital gain amount to be invested not the whole of the net proceed from sale /transfer of the capital asset. Capital Gain Tax exemption is available under Section 54EC of the Income Tax Act.

The following table shows the full details
Credit Rating “AAA/Stable” by CRISIL and “ AAA(ind)(Affirmed)” by Fitch Ratings
Face Value Rs. 10000/- per Bond
Issue price Rs. 10000/- per Bond
Minimum application size One Bond of Rs. 10,000/-
Maximum application size Five Hundred Bonds of Rs. 10,000/- each (Rs. 50,00,000 ) subject to fulfillment of other conditions as specified in Income Tax Act.
Mode of Subscription 100% on application
Deemed Date of Allotment Last day of each month for application money cleared and credited in NHAI’s collection account
Transferability The Bond are non-transferable, non-negotiable and cannot be Offered as a security for any loan or advance
Maturity 3 years from Deemed Date of Allotment
Interest payment Annual
Coupon rate 6% annually
Redemption Bullet, at the time of Maturity after 3 years
Trustee Syndicate Bank, 6, Bhagwan Dass Road, New Delhi-01
Availability of the prospectus and application form Across the country with Union Bank of India/IDBI Bank and Selected Branches of other Bank as details in IM,NHAI Offices, Selected SEBI Registered Category-I Merchant Bankers
Bankers All the Branches of Union Bank of India/IDBI Bank & Selected branches of HDFC Bank, Canara Bank, Punjab National Bank & Syndicate Bank. For details of bank branches please refer Information Memorandum (IM).
Ceiling Rs.1900 Crore
Date of Allotment At the last day of every month
Date of Start 01.04.2011
Date of Closure 31.03.2012
Applicable Laws Income Tax Act 1961 and NHAI Act
Registrar M/s Beetal Finacial & Computer Services (P) Ltd, "Beetal House",3rd Floor, 99, Madangir,Behind Local Shopping Centre, New Delhi-110062 , ph. 011-29961281-83, Fax - 011-29961284,Email- nhaibonds@gmail.com
TDS No TDS from domestic investors

Donate u/c 80G of Income Tax Act, and get Tax Deduction

2011-12-10T20:29:00.001+04:00

Most of the tax payers are not much familiar with Section 80G of Income Tax Act. There are two aspects one you are helping the needy poor people and at the same time your tax liability will be reduced to the extent of amount you donated (in some cases). Section 80G of the Income Tax Act offers a tax deduction for donations to certain prescribed funds and charitable institutions. Any person or ‘assessee’ who makes an eligible donation is entitled to get tax deductions subject to certain conditions. This section does not restrict the deduction to individuals, companies or any specific category of taxpayer. The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to. Donations to certain institutions, the aggregate deduction is limited to 10% of the “Adjusted Gross Total Income”. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income. The Adjusted Gross Total in this case, is the gross total income minus long-term capital gain, short term capital gain and all deductions u/s 80C to 80U except any deduction under this section.

Only donation made to prescribed funds and institutions qualify for deduction: All donations are not eligible for tax benefits. Tax benefits can be claimed only on specific donations i.e. those made to prescribed funds and institutions.

The donation may be paid either out of taxable or exempted income.

Only donations made in cash or cheque are eligible for deductions Donations in kind do not entitle for any tax benefits. For example, during natural disasters such as floods, earthquake, and many organizations start campaigns for collecting clothes, blankets, food etc. Such donations will not fetch you any tax benefits.

a) Donation to Foreign Trust - Donations made to foreign trusts do not qualify for deduction under this section.

b) Donation to Political Parties – the assessee cannot claim deduction for donations made to political parties for any reason, including paying for brochures, souvenirs or pamphlets brought out by such parties.

c) For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction.

d) Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.

e) Donation made by NRI: - NRIs are also entitled to claim tax benefits against donations, subject to the donations being made to eligible institutions and funds

Donations with 100% deduction without any qualifying limit:

Prime Minister’s National Relief Fund

National Defence Fund

1. Prime Minister’s Armenia Earthquake Relief Fund

2. The National Foundation for Communal Harmony

3. Approved university or educational institution of national eminence

4. The Chief Minister’s Earthquake Relief Fund, Maharashtra

5. Donations made to Zila Saksharta Samitis.

6. The National Blood Transfusion Council or a State Blood Transfusion Council.

7. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.

Donations with 50% deduction without any qualifying limit.
1.Jawaharlal Nehru Memorial Fund
2.Prime Minister’s Drought Relief Fund
3.National Children’s Fund
4.Indira Gandhi Memorial Trust
5.The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income
1.Donations to the Government or a local authority for the purpose of promoting family planning.
2.Sums paid by a company to Indian Olympic Association

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income
1.Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.

In order to claim deduction, it is mandatory for the donor to furnish a proof of payment towards the eligible fund or institution. A stamped receipt is issued by the recipient trust in this regard, which must be attached by the assessee along with the income tax returns.

The receipt must include the following details.
•Name and address of the trust
•The name of the donor
•The amount donated, mentioned in words and figures
•The registration number of the trust, as given by the income tax department under section 80G, along with its validity period.

Tax benefits cannot be claimed without the above mentioned details and document.

Donations deducted from salary - Employees can claim deduction u/s 80G provided a certificate from the Employer is received in which employer states the fact that The Contribution was made out from employee’s salary account . .

There are many trusts in India engaged in charitable activities. In order to ensure that only contributions to genuine trusts entail a tax benefit, the government has brought in registration of trusts. Thus, before you donate, check to see, if the trust you are donating to is registered and has the tax exemption certificate, which is popularly known as the 80G certificate.

Direct Tax Code (DTC) to come into force from April,2012 – Finance Minister

2011-12-10T20:27:00.002+04:00

Finance Minister Pranab Mukherjee on Wednesday expressed the hope that the Direct Taxes Code ( DTC), which seeks to modernize tax laws in the country, will come into force from April 1, 2012.

Shri Mukherjee said that this conference addresses on important theme namely, “Tax and Inequality” which is a central concern for effective governance and just functioning of a modern welfare nation-state. He stated that the intricate relationship between growth and inequality poses challenges for the formulation of tax policy in both developed, as well as developing countries. Shri Mukherjee said that on the one hand, progressive tax policy is a means to address growing inequalities in incomes and wealth and on the other hand, it provides resources to address the structural issues in inequality and poverty. He said that it facilitates the implementation of public programmes and expenditure policies for capacity building of the less fortunate individuals and communities within countries. At the same time, tax policy has implications for incentivizing economic activity, savings, production or consumption, and hence growth. It is thus a vital instrument of public policy and has to be carefully used, the Minister said.

The Finance Minister said that the policy makers need to make difficult choices about how tax systems can best support growth and help in creating fair and equitable societies. He said that principles of horizontal and vertical equity are important if a tax system is to be seen as fair. Shri Mukherjee said that tax administration, which includes mechanisms to register taxpayers, collect revenue, enforce compliance and provide redress when required, also has a direct bearing on fairness of tax policy. The Minister said that a good tax policy if not administered properly may result in a distribution of the tax burden very different from that which would occur if the tax code was administered effectively.

Shri Pranab Mukherjee said that there is much that we can learn from each other’s tax systems, working experience and the best practices and there is also a need to collaborate and align and make our tax systems speak to each other as we get integrated and the cross-border economic transactions multiply. He stated that the deliberations in the conference would contribute to that process. Informed policy making leads to better tax policy and tax administration and better tax policy and effective tax administration leads to better lives for our citizens, he said.

The Finance Minister said that the issue of the tax reforms was at the heart of the process of economic reforms and liberalization that India embarked on in the early 1990s and we had come a long way since then. He said that the tax reforms though gradual have been systemic in scope, particularly when we consider the proposals currently awaiting implementation. The reforms have covered both the direct taxes as well as the indirect taxes. Shri Mukherjee said that the proposed Direct Taxes Code brings together the policy initiatives on the direct taxes and is slated to come into force from the next financial year. Similarly, he stated that we are moving towards an economy-wide generalized value added tax system of goods and service taxes at all levels in the country. The Finance Minister said that the tax reforms have been directed at:

· Simplification of tax system and its administration;

· Rationalization of tax rates;

· Broadening of tax base;

· Special focus on sunrise area of taxation like transfer pricing and international taxation;

· Strengthening tax information exchange network with countries/ jurisdiction;

· Improvement of tax administration;

· Better tax payer services and reduction in cost of compliance;

· Robust dispute resolution mechanism; and

· Focused enforcement on high net worth individual tax abuse practices and high revenue risk.

Shri Mukherjee said that an efficient tax system is a fundamental requirement for sustained development of any nation. Taxes underwrite the capacity of a nation to implement its development and welfare goals, he said. The Finance Minister said that it is a means to promote equity in the distribution of gains from economic growth in a country like India. He stated that we have adopted a progressive personal income tax to address the inequality and our progressive direct tax policy has resulted in a ten-fold increase in direct tax revenue from USD 8.62 billion in the fiscal year 1996-97 to US 87 billion in fiscal year 2010-11. The Finance Minister said that more importantly, the composition of our tax revenues has altered significantly in favour of direct taxes which now account nearly 60 per cent of our total tax revenues. We have tried to address the issue of gender inequality and old age vulnerabilities by providing some tax relief to women and old people, he said.

Shri Mukherjee said that tax evasion undermines the intended benefits of a progressive tax policy. He said that the problem is compounded by illicit outflow of money from emerging economies and developing countries. Global financial integrity has estimated such annual illicit outflows averaging between USD 725 to 810 billion from these countries. The Finance Minister said that the Indian Government has adopted a five pronged strategy to deal with issues of tax evasion and black money which includes:

· Joining the global crusade against black money;

· Creating an appropriate legislation framework;

· Setting up institution for dealing with illicit money;

· Developing systems for implementations; and

· Imparting skill to the manpower for effective action.

In his concluding remarks, Shri Mukherjee said that the strategy has started showing result. However, resolution of these issues requires international co- operation and alignment of tax systems for better cross-border compliance, he added. The Finance Minister said that the complexity of cross border transactions is on a rise and presents a serious challenge to tax administrators in practicing and bringing equality. The opacity of tax systems in some of the jurisdiction is adding to the challenges. There has been some movement on these issues in response to the initiative by G-20 but we need to pursue this to its logical end, he said.

Speaking on the occasion, China’s Vice Minister of Finance, Mr. Wang Jun said that at the crucial moment of world economic and social development, it is of great importance and significance for people from the world financial and tax communities to gather together, share their experience and wisdom to make their contributions to a more balanced global economy, more equitable international community and more harmonious human society.

Deputy Managing Director, IMF, Mr. Min Zhu said that the IMF had been focused on the issues of inequality and poverty for many years, across the range of their activities. He said that in its surveillance and program work, IMF has long highlighted, to give just one example, that the benefits of the huge fuel subsidies in many countries go overwhelmingly to the richest, and that there are better ways to help the poor.

Also present on the occasion were Minister of State for finance (Revenue), Shri S.S. Palanimanickam and Minister of State for Finance (Expenditure, Banking and Insurance), Shri Namo Narain Meena

The importance of Home insurance

2011-12-01T15:11:00.000+04:00

Home insurance is as important as Life Insurance … why?

Your home is perhaps your single largest investment in your life and your housing loan may be secured against it. If your home is uninsured and some damage was happened to it due to fire or other natural calamity, then not only have you lost your home and largest investment, but you are still faced with paying back the loan amount in full. We may not be able to afford a second home or even have the resources to rebuild our existing home in case of any loss. That’s where home insurance can be a very useful instrument to safeguard our belongings. Our home, its content and other risks associated with it can be made completely secure with a good home insurance policy. Clearly, not many people are faced with seeing their home burn down but damage and loss to your home can occur in many ways. Storms, gas explosion, vehicle accident and flood may spring to mind. But don’t forget that a thief will probably damage your house whilst gaining entry or might cause damage to your doors or decorations whilst searching your home. They may even try to steal all valuable items like jewellery, cash, electronic items etc. For many that would mean financial disaster. Home Insurance avoids such risks.

Of course since the home is a very costly affair forming almost 75% of our entire life time savings, it is indeed necessary that such a valuable asset as your own home be kept safe from all harm. Every homeowner knows how important it is to have a home insurance policy. Losing one's home or property to fires, floods, earthquakes and other natural and man-made disasters can be devastating. Since no homeowner can pinpoint exactly when something tragic or unavoidable will happen to his or her home and property, it is all the more reason to be prepared. A home insurance policy gives a homeowner some protection and sense of psychological relief. A good home insurance policy in place will protect you from disaster and other unfortunate events that may befall your home and property. Not only does home insurance protect you financially, it also protects you psychologically since having a good home insurance policy gives you peace of mind and sense of security.

The only way to ensure this to take out an insurance policy on your home whereby should disaster strike, the insurance policy gets into action to recreate your home or pay for the damages, whatever is stipulated in the contract or insurance policy between the insurance company and the homeowner. With an insurance policy in your pocket, all is safe. Yes, to a major extent it will be, but now you need to know that it is important to choose a good insurance company who can back you regarding your house in times of trouble. A good insurance company that take a reasonable premium and delivers great service and is accessible round-the-clock to take care of your queries before and after purchase of the insurance policy.

Home insurance covers the homeowner in case of total loss of home or property caused by a disaster. In short, home insurance protects a homeowner from damages caused by "acts of God." Check your home insurance policy and see if it covers your home under the "all risks" clause. In simple terms, the "all risks" clause means that as long as the policy is intact, it will cover your home and property in the policy in any circumstance, with the exception of those circumstances that are in the exclusion clause. To illustrate, under the "all risks" clause, your home is covered for damages caused by fires, earthquakes, theft, flood etc. If the policy doesn't include riot damage in its "all risks" clause, it means that your home insurance will not cover damages to your home caused by riot. The provisions for home insurance vary from insurance company to company.

Taking out an insurance policy on your possessions is always recommended. In the event of natural disasters, accidents, thefts and the like where you are not responsible for the damage or theft of your valuables, it is the insurance policy that can come to your rescue. That means you insure you goods to the value that you purchased them and pay a premium every year to the insurance company for a specified period and the insurance is there to take care of our goods, should the unexpected happen. To save and set by for the future in today's world is not all that easy because of the competition for jobs, the lack of employment, the rise in prices that double to our wages, etc. Hence it is indeed necessary that if we are to purchase something of great value like a vehicle or a home or precious jewelry, we look into insuring them for the future. In this way our money is seldom lost, even when damage or the unexpected strikes and leaves us seemingly empty of our valuables.

Householders or homeowners insurance, commonly known as home insurance, is the type of property insurance that covers private homes and various contents in it against a variety of risks. This insurance policy combines various insurance protections such as losses arising due to damage to one’s home and/ or its contents, loss of personal belongings or possessions of the homeowner and liability arising out of accidents that may happen at home. The policy document clearly lists down what will and what will not be paid in case of any unforeseen event. Broadly, the home insurance policy covers the building structure and contents, loss due to burglary/ theft, loss of jewellery or valuables, baggage loss, damage or loss of domestic and electrical appliances, damage to electronic equipments and other belongings like Pedal cycles, etc. You can also insure the contents of your home against loss due to burglary and /or housebreaking or any attempted burglary. Jewellery kept in Locked Safe within the Home premises can also be covered

The cost of home insurance usually depends on the cost one would incur to replace the house or its contents as covered under the policy and additional insured riders.

The policy is usually divided into various sections

· Fire and Allied Perils like lightning, Acts of God, riot and strike, etc

· Burglary and housebreaking including larceny and theft

· All risks

· Plate Glass

· Breakdown of domestic appliances or any accidental loss to them

· T.V. Sets, VCR, Audio system, Music Players, DVD players

· Pedal Cycles

· Baggage - either due to accident/ damage or while travelling

· Accident injury which causes death or total/ partial disablement

· Public/ Third Party Liability

If you own the building or house, you may purchase the householders' insurance policy for it. In case your tenants want to insure their belongings, they have to purchase a separate policy for their belongings.

Top Ten Tips for avoiding insurance claim rejection

2011-11-26T09:42:00.000+04:00

At some stage during our life, most of us will need to make an insurance claim or be involved in an insurance claim settlement. If you follow few simple steps and precautions on your part can ensure a smooth and hassle-free claim settlement and, thus, provide all the intended financial support to the family and loved one at the time when it is needed the most in your absence.
The purpose of this article is to provide you with insurance claim help and to educate you about the insurance claim process. You will learn the important parts of an insurance claim and what all the precautions you need to take to get a speedy insurance claim settlement without much difficulty. The life insurance settlement is how the beneficiary receives payment of the death benefit. If all information on the policy is correct and it is in force when the policyholder dies, a life insurance provider cannot deny a life insurance claim. Since they are contractually obligated to pay, the only thing they can do is to withhold the benefits you are entitled to by delaying payment. This is where the insurance company assesses your insurance claim and determines whether they will pay out as per the conditions specified in your insurance policy. It is extremely important that you are honest and accurate in your statements for all life insurance claims. If you misrepresent the truth in any way, this is considered fraud and your claim will automatically become void, leaving you without recourse or reimbursement for your loss.
1) First of all ensure to provide correct details at the time of filling up the insurance policy application A material misrepresentation/ providing of wrong information is any distortion of facts given to the insurance company by the policyholder. This could be anything from concealment of the truth like hiding your existing illness or providing incorrect date of birth or giving any wrong information such as income level, occupation, residential status (Resident Indian or Non-Resident India etc) at the time of applying for the insurance policy. In order for the insurance company to deny coverage, the material representation must cause a significant difference in the amount of risk sustained by the policyholder. However, many life insurance providers will cite a misrepresentation that has nothing to do with the assessed risks or cause of death to avoid payment. So ensure to provide correct details at the time of filling up the insurance policy application. Otherwise your loved one will suffer in your absence.

2) Nomination - Nomination is a right conferred on the holder of a Policy of Life Assurance on his own life to appoint a person/s to receive policy moneys in the event of the policy becoming a claim by the assured’s death. The Nominee does not get any other benefit except to receive the policy moneys on the death of the Life Assured. A nomination may be changed or cancelled by the life assured whenever he likes without the consent of the Nominee.
Ensure nomination exists in the policy for easy settlement of claims.
Please ensure to nominate someone you wish to pass on the benefits after your death. If the nominee dies during the tenure of the Policy, the Life Assured should nominate another person in place of the deceased Nominee under section 39 of the Insurance Act.
a) What happens if there is no nomination on death of the LA (Life Assured) or what happens if both the LA and the Nominee expires in the same event?
Such claim is considered as Open Title claim. In such an eventuality a “Succession Certificate" or “Probate of will” will have to be submitted by the Claimant. A Succession Certificate is issued on application by a competent court on the question of the right to the property of the deceased. The Succession Certificate should specifically provide for disbursement of policy monies. If, however, the deceased has left a will, a probate of the will is required along with the copy of the will.

b) What if there are two or more nominees, how will the Policy Monies be paid?

The claim will be paid to nominees according to the percentage declared in the proposal. A joint discharge will have to be given. Alternatively all the nominees can give a joint discharge for payment of claim benefits in favor of one nominee, in which case the claim proceeds would be made in the name of the designated nominee

3) Ensure your beneficiary designations and static details are updated with insurance companies on a regular basis. This would ensure prompt claim settlement in the unfortunate event of death of the Life Assured.
4) Pay premiums regularly - This would ensure that Policy is in force. A lapsed policy would mean no death benefits payable to the nominee. Also, if continuing premium payments is not possible due to any reason, the insured should inform the insurance company before the policy lapses. Most insurance companies take into account genuine circumstances and make necessary provisions like making the policy a paid-up policy to help the customer
5) Keep a record of all your insurance policies and make a file of it. Maintain record of the Insurance Agent/ Insurance Company with their address and contact particulars. Ideally share this information with your loved one and educate the loved one on the process to lodge a claim. It is the responsibility of the beneficiary to inform insurance company about the claim. Inform your beneficiary or immediate family members about the policy you have taken.
6)Keep your policy pack safely.
7)It is very important to read through the Proposal form and submit factual details at the proposal stage and provide genuine documents at the time of buying a policy. In order to ensure that your claim does not get rejected, please ensure the following: Ensure that you read and answer all the questions correctly and accurately to the best of your knowledge. Ensure that you have disclosed all material facts to the Company. In case of any doubt as to whether a fact is material or not, the fact should always be disclosed also ensure that all the documents submitted by you (E.g. Age Proof, Income Proof etc) along with the proposal form are genuine. Don’t leave this responsibility to the agent, after filling up the insurance proposal form, verify once again and ensure that, all details provided in the form is correct. In normal case people used to entrust this job with the Insurance agent and they will just sign.

8) Upon receipt of your policy document, please perform the following checks - Go through the copy of your signed proposal form enclosed along with the policy document, review and ensure that all the static and other details have been recorded correctly and accurately in the policy document, In case you come across any discrepancy, please take up with the insurance company and get discrepancies corrected immediately to avoid future complications.

9) Revival of lapsed policy – If the policy has lapsed, it can be revived during the life time of the life assured, so please ensure to revive the lapsed policy to avoid future complications.

10)Loss of Policy Document – The policy document is an evidence of the contract between the Insurer and the Insured. Hence the policy holder should preserve the Policy Certificate till the contracted amount is settled. Loss of Policy Document should be immediately intimated to the Insurance company and obtain duplicate documents as soon as possible.

Understand the difference between term life insurance and whole life insurance
All life insurance involves a contract between an insurance provider and the policyholder. Upon the policyholder’s death, the insurance company pays a sum of money to the policyholder’s family. After the period of contestability in a life insurance application has passed, the contract cannot be canceled by the insurance provider for any reason.
There are two main types of life insurance: Term life insurance provides an agreed-upon amount to the insured’s beneficiaries only if the policyholder dies during the length of time specified in the policy. In contrast, whole life insurance remains in force until the policyholder’s death.

How to calculate Wealth Tax

2011-11-18T15:47:00.001+04:00

Wealth tax is not a very important or high revenue tax in view of various exemptions. Wealth tax is a socialistic tax. It is not on income but payable only because a person is wealthy. Wealth tax is an annual tax like income tax. It is another type of direct tax by which tax is imposed on individuals coming within its purview. Pensioners, retired persons or senior citizens have not been accorded any special benefits under this Act. The valuation date for wealth tax computation is 31st March, The twelve months immediately before the computation date is considered as previous year for which wealth tax is calculated. Net wealth means taxable wealth. It means the amount by which the aggregate value of all assets (excluding exempted assets) belonging to the assessee on the valuation date including assets required to be included in the net wealth, is in excess of the aggregate value of all debts owed by the assessee on the valuation date which have been incurred in relation to the taxable assets. The wealth tax needs to be paid at the rate of one per cent (1%) of the amount by which net wealth exceeds Rs. 30 lakhs. No surcharge or education cess is payable.

The direct tax code (DTC) is expected to come into force with effect from 1 April, 2012. In it, there are lot of changes proposed and one among them is the enhancement of wealth tax exemption limit from the current Rs. 30 lakh to R. 1 crore, so everyone will, therefore, need to review their tax situation next year once the DTC comes into play.

The liability to pay tax in the case of an individual depends upon his residential status and nationality. Residential status is decided as per the provisions of the Income-tax Act

The scope of liability to wealth tax is as follows:
a.In the case of an individual who is a citizen of India and resident in India, a resident—HUF and company resident in India;
Wealth tax is chargeable on net wealth comprising of
i.All assets in India and outside India;
ii.All debts in India and outside India are deductible in computing the net wealth.
b.In the case of an individual who is a citizen of India but non-resident in India or not ordinarily resident in India, HUF, non-resident or not ordinarily resident in India and a company non-resident in India;
i.All assets in India except loan and debts interest whereon is exempt from income-tax under section 10 of the Income-tax Act are chargeable to tax.
ii.All debts in India are deductible in computing the net wealth.
iii.All assets and debts outside India are out of the scope of Wealth Tax Act.
c.In the case of an individual who is not a citizen of India whether resident, non-resident or not ordinarily resident in India:
Same as in (b):

The credit balance in a Non-resident (External) Account is exempt from wealth tax provided the depositor is a person resident outside India as defined in the Foreign Exchange Regulation.

Taxable assets under the Wealth Tax include

· Residential house or commercial building or Guest house

· Automobiles

· Jewellery, bullion, utensils of gold, silver, or other precious metals;

· Yachts, boats and aircraft;

· Urban land located within specified limits; and

· Cash in hand in excess of Rs.50, 000/-

Assets exempted from Wealth Tax

· Property held under a trust or other legal obligation for any public purpose of a charitable or religious nature in India subject to the satisfaction of the stipulated conditions;

· House occupied for the purpose of business or profession;

· One house or a part of house used for residential purpose;

· Property held under a trust

· Assets held as stock-in-trade in business;

· Urban land on which construction is not permissible;

· Co-parcenary interest in a Hindu Undivided Family (HUF);

· Certain specified government bonds;

· Resurgent India Bonds;

· NRI Bank Account Deposits and FCNR Deposits; and

· Assets belonging to Indian repatriate.

Deemed Assets
Assets as specified above and belonging to the non-resident are included in computing the net wealth. In some cases, certain assets which do not belong to the non-resident are included in his net wealth when they are held or are transferred with the intention to avoid wealth tax. These are referred to as deemed assets, which include:

· Assets transferred by one spouse to another;

· Assets held by a minor

· Assets transferred to a person or an association of persons;

· Assets transferred under revocable transfers;

· Assets transferred to close relatives;

· Interest of a partner in a partnership firm;

· Self-acquired property converted into joint family property;

· Gifts made by mere book entries; and other assets which would otherwise belong to the non-resident.

Wealth tax is levied on the ‘net wealth’ which means that from the aggregate of all assets (including deemed assets but excluding exempt assets) the value of debts owed on the valuation date shall be deducted subject to the satisfaction of the following two conditions viz. Only debts which are ‘owed’ on the valuation date are deductible.

Debts should have been incurred in relation to those assets which are included in the net wealth of the assessee

Every person is required to file a return of net wealth in form prescribed by Income Tax Authorities from time to time if his/her net wealth or net wealth of any other person in respect of which he is assessable under the Act on the valuation date is such an amount as to render ‘ him liable to wealth tax. The dates of filing the return are the same as under the Income-tax Act for filing returns. Where wealth tax is payable on the basis of return to be furnished

Why Retirement Planning is important?

2011-11-17T15:27:00.002+04:00

When we ask about the life after retirement, some people answer this very casually, they have not even thought about their life after retirement. This type attitude is not good; everybody must agree one fact that, retirement is a reality that will happen today to tomorrow. In any case, you can’t escape from this. Everyone grows old. It’s inevitable. The question is, will you be ready when retirement gets here? We all know it’s coming, but unfortunately, few of us are adequately prepared for its arrival. There are several things we can do to prepare for retiring, even if that important day is far away.

The relevant question here is, how you will live after your retirement ? What will be your main source of Income? Whether the money you saved is enough for the rest of your life? How you are going to fund for any unexpected contingencies? What sort of help you expect from your children?. The only one answer for all the above questions is to plan for retirement well in advance and start savings according to the plan and predefined asset allocation to achieve the retirement/financial goals.

When making your retirement plans you have to consider several things. First, why am I planning? What is your motivation, reason for planning? Also, what plans are out there? There are many paths to the same goal. Finally, of those paths, which one is right for you?

It's never too early to start saving and investing for a comfortable retirement, and those who wait until late in life face additional problems. The good news is that it's never too late to start putting money away for retirement. Even if you are nearing your retirement years, every rupee you put away is one more rupee that can work for you in your retirement years. You can enjoy a great retirement even if you start late, but it's important to control your risk and put away as much as possible in the intervening years.

Why should I plan?

You might be thinking, why should I think about retirement now? I’m young and fit, I can think about it later. This thinking can be a costly and financially dangerous mistake. Everyone should be looking to the future and planning for the day that they will no longer want or be able to work to earn a livelihood. The fact is, average life expectancy in the India is around 75-80 years. Most people will retire well before that age (most of the cases 55-60 years). So you need to plan in advance to find sufficient money to lead a comfortable life for another 20-25 years after retirement.

Furthermore, those individuals who think Government Pension Plans will be enough to take care their after their retirement life, they are fooling themselves. That program was never intended to and never will take the place of good planning, for employer or employee. There will always be a need to supplement this government program. Individuals who plan their retirement are able to supplement this base income with other sources that greatly improve income potential over the course of a retirement. Basically they need an inflation adjusted return. Nobody can predict the financial situation or inflation figures after 20-25 years. So we have to be extra cautious in all our retirement planning process, asset allocation, re-allocation or periodical review of resources according to the changes in the financial market, economic situation, return expectation, increase in the medical expenses, changes in inflation data and changes in the family situation, government taxes etc.

a) The first step in the retirement planning is to decide your retirement age i.e, at what age you wish to retire in other words how many years you have to work until you are ready to retire. The longer you have to save and invest before retiring, the better off you will be.

b) Review your budget carefully to get an idea of how much you are likely to spend in retirement. You need to consider so many aspects while reviewing your budget as discussed in the previous paragraph.

c) Prepare an estimate of your retirement benefits which you are going to receive from your employer as retirement benefits also the expected amount of monthly pension.

d) Estimate how much of a monthly shortfall you are likely to have between the retirement benefits you will receive and what you expect to spend in retirement. Before retiring, you should strive to save enough to meet that shortfall.

e) Use a retirement calculator to determine how much you will need in assets to generate the monthly income you expect to need in retirement. If you search in internet you can find free retirement calculators in various websites

f) Use the number of years until retirement as your guideline when choosing your investment mix. Never invest money in the stock market, Sector specific mutual fund schemes or similar risky financial instruments that you expect to need within the next three to five years. You might be some times forced to sell these investments at a loss, if the market is down at the time need the money. So avoid investment in risky assets for short term.

g) Invest money you expect to need within the next five years in safe investments, such as Mutual Fund schemes investing in bonds and government securities, government bond or other public sector company bonds, bank term deposits etc. Those money require after five years can be invested in direct stock market (selected performing stocks with expert advice), Equity based Mutual Fund Schemes, Company FDs, Commodities like Gold, Silver, Post Office Savings Schemes like, Post Office Monthly Income Schemes, National Savings Certifies, Public Provident Fund (PPF) etc. When you select Mutual Fund Schemes, select schemes having a minimum 3-5 years consistent performance track records and also avoid investing in NFO (New Fund Offers)

h) Keep sufficient money liquid in the savings bank accounts or other liquid schemes for contingency purposes.

i) Invest in good selected Retirement Insurance Plans. Before investing in a retirement plan, please find answer to the following questions; how flexible is the plan? How flexible do you need to plan to be? Looking at issues like early withdrawal of dividend or principal or the possibility of loans for hardship or other life events is essential when weighing the pros and cons of each plan. Retirement Plans offered by life insurance companies are bundled products, offering the benefits of both insurance and investment (I never recommend Insurance products for retirement planning) . A typical retirement plan has two phases.
The first is the accumulation phase, during which you pay premiums and the money accumulates through the tenure of the plan. The accumulated money is then invested in securities approved by the Insurance Regulatory and Development Authority (IRDA), the insurance regulator. These products are designed to protect the value of your principal while at the same time supposed to provide you with steady returns (don’t expect huge returns form insurance products). The accumulation stage is followed by the vesting age, which is the age when you start getting payouts from the investment. This can be selected by you. The vesting age in most plans is 40 to 70 years. The period when a person gets pension is also called the annuity phase. During this phase, in most of the plans there is an option to withdraw up to certain percentages of the accumulated amount in one go. The rest is paid as pension. In the immediate annuity option, a person can pay in lump-sum, instead of over the years, and start getting income immediately. The frequency of payments received can be monthly, quarterly, half-yearly or annually. Presently so many retirement plans are available in the market offered by almost all insurance companies. You have to be very careful in selecting the insurance company as well as the insurance plan. While selecting the insurance plans, please keep in mind that, this is a long term investment made out of your hard earned money. You can’t afford to lose it.

j) Avoid the temptation to maximize yield at the expense of safety. Nearing retirement, you do not have as much time as a younger person to make up market losses. Avoid reaching for yield in junk bond funds and similar risky investments

k) As you go through the decision making and planning process you need to keep your goals in the forefront and decide what is going to be the best way to get there. There are many retirement planning sites on the Internet with a wealth of knowledge to share. Some of these websites that charge for their services. A bit of savvy searching should lead you to a site to fit your needs and help you meet your goals.

We all want to be comfortable as we get older. No longer can we depend on employers to help us ensure that we will be financially stable as we age. We must take the initiative to make sure that we are taking care of our tomorrow by a bit of careful planning today.

In case you are not experienced enough to plan your retirement properly, it is recommend to take the help of an expert Financial Planner. He will definitely prepare a good retirement plan for you after carefully studying your financial situation and retirement goals.

How to get Income Tax Refund

2011-11-13T21:52:00.000+04:00

A tax refund is a refund on taxes when the tax liability or the amount of tax to be paid is less than the amount of taxes paid by the individual. However, you can also claim a tax refund in case the taxes were deducted because you did not declare your tax savings investments details to your employer or the bank deducted tax at source on Term Deposits where the interest income on a particular financial year exceeds Rs. 10,000.00 but you don’t have any other taxable income. For salaried individuals, it is possible that that the company deducted excess tax because you did not declare any of your tax savings investments to the employer. In such a case, a tax refund may be helpful. Towards the end of the financial year, most of us are dogged with the thoughts about filing investment declaration, filing tax returns and basically save as much money as possible from being deducted as tax. Once the formalities are completed, we think little about any tax refunds. Tax refunds are something that a few of us might get and a few of us might not. To be prepared it is prudent to know some basic information about tax refunds.

There is an incentive for taxpayers who file their income-tax returns electronically — they will get their refunds normaly within 1-2 months time. To speed up refunds and encourage electronic filing of tax returns, the Central Board of Direct Taxes has promised expeditious refunds. The wait for refunds in the case of physical tax returns may ranges between 5-10 months. CBDT want tax-payers to file electronically as that helps in faster processing of refunds. The verification of the paper tax returns filed is a tedious process that also delays tax refunds. This has become a bigger issue with the rising refunds. E-filing ensures that tax payers' information on income, taxes and refunds are uploaded in the tax system instantly and tax computations are processed on a real-time basis. Income-tax authorities send data to State Bank of India/other banks which in turn issues refund orders directly to tax-payers under the refund banker scheme. As notified by the Income Tax authorities, the small salaried tax-payers having annual income of Rs 5 lakh who will not be required to file tax returns if they do not have refund claims. Such tax-payers will not be required to file return unless they have tax refund.

If you do not want to wait for a long time to get your tax refund, you need to make sure that you do tax planning as early as possible. You need to assess your tax liability and if need be, take additional help from a tax expert. You also need to invest or save money according to the assessment of your tax liability. Finally, if you are a salaried individual, you need to declare your tax savings investments and other incomes details to your employer so that they can deduct the correct amount of tax from your salary.

To see whether you are eligible for a tax refund, you need to file your tax returns or check the Form-16 that you receive from your employer if you are a salaried individual.

The tax return will show the amount of refund (if any). In case if the tax return already shows that you are getting a tax refund you need not apply for it. The tax return cheque/refund order directly comes to the address mentioned on the Return of Income document filed with the Income Tax department. Tax refund can also be credited directly to your bank account which needs to be mentioned on the tax return. In a situation where you think that you forgot or did not have the proper documents to show the investments made, a Revised Return of Income needs to be submitted. The Income tax department has recently started an initiative where you can check your tax return status online.
Individual tax payers can track their income tax refund online using the following link https://tin.tin.nsdl.com/oltas/refundstatuslogin.html

Tax refund needs to be claimed with one year of the last day of assessment year.

If you do not receive your tax refund within a reasonable time (may vary from case to case) which normally is within a maximum of one year from the date of filing the tax return, you can either visit the tax department's office for the follow up of the refund or you can write a letter (along with the copy of acknowledgement of the tax return) to the concerned Income Tax Assessing Officer. If it is still not redressed then you may 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. This letter may be accompanied by the copies of previous letter/s written to the Income Tax Assessing Officer and a copy of the tax return filed. In case you have tax refund, it is recommended filing your tax returns electronically (E-filing) to avoid the delay in getting the refund orders

Rupee posts biggest single-day loss in 1-1/2 month

2011-11-09T18:58:00.000+04:00

The rupee posted its biggest single-day loss in a month and half on Wednesday, hurt by broad dollar gains against major currencies, while weak local shares bogged down by a Moody's downgrade of the banking system also added to the downward bias.

Traders said demand for dollars by a large corporate and for defence-related payments also weakened the unit.

The partially convertible rupee closed at 50.1750/1850 per dollar after hitting 50.1825, a level last seen on Oct. 21, and 1.4 percent weaker than its previous close of 49.4750/4850.

This is the rupee biggest one-day fall since a 2.5 percent decline on Sept. 21, which was its biggest fall in nearly three years.

"The equity markets turned negative and euro came off pushing the rupee lower," said N.S. Venkatesh, treasurer at state-owned IDBI Bank.

He expects the unit to trade in a range of 49.50 to 50.50 over the next couple of weeks.

The unit moved in the wide range of 49.3950- 50.1825 per dollar in the day, with traders cautious ahead of a market holiday on Thursday.

The main 30-share BSE index ended down 1.18 percent at 17,362.10 points -- its lowest close in two weeks.

Financials led the decline after ratings agency Moody's lowered its outlook on the country's banking system, citing slowing growth and concerns about asset quality.

The euro was at $1.3643, compared with $1.3770 when the rupee closed on Tuesday, while the index of the dollar against six major currencies was at 77.460 points versus 76.948 points.

The euro fell against the safe-haven U.S. dollar and Japanese yen on Wednesday as the euro zone's escalating debt crisis saw investors such as macro funds step up sales of the single currency after Italy's 10-year bond yield hit 7 percent.

"There was steady import-related dollar buying today by corporates, oil companies and defence firms," a dealer with a private bank said.

Oil is India's biggest import and refiners are the largest buyers of dollars in the local currency market.

Dealers said the rupee was likely to continue to weaken in the near term with the broad trend towards safe-haven assets including the dollar because of euro zone and trade deficit issues.

"A breach of the 50.20 level would push the rupee down to 50.50 with the next target then being 52.00," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

Trade deficit in October is seen at $19.6 billion, the highest in four years, the country's trade secretary said on Tuesday, citing provisional data. At this rate, the trade deficit for the year could breach $150 billion, Rahul Khullar said.

The one-month onshore forward premium was at 25.25 points from 24.75 points on Tuesday, the three-month was at 65.25 points from 65 and the one-year was at 167.75 points from 178.75.

One-month offshore non-deliverable forward contracts were quoted at 50.17, at par with the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange were at 50.35, on the United Stock Exchange they were at 50.3225, while on the MCX-SX they were at 50.3125. The total volume was at $3.64 billion.

How to calculate Gift Tax

2011-11-08T21:33:00.000+04:00

High value gifts were a safe mode to show one's love to others financially. But the tax authorities have made rules to tighten the provisions related to gifts. In fact the rule has become so strict to end the high value gifts people normally used to make to escape from paying tax. The rule thus effectively prevents money laundering in the in the name of high value gifts. Gift tax in India is regulated by the Gift Tax Act which was constituted on April 1, 1958. It came into effect in all parts of the country except Jammu and Kashmir. As per the Gift Act 1958, all gifts in excess of 25,000, in the form of cash, draft, check or others, received from one who doesn't have blood relations with the recipient, were taxable.
The change in the rule related to gifts says that the receiver has to pay tax for receiving any gift valued at Rs 50,000 and more. The 'any gift' clause means that not only cash but all gifts of any value. So if someone receives a gift of a house worth Rs 20 laky, then he/she is automatically in the highest income bracket and has to pay 30% + surcharge on value of the house as tax.
According to the law, individuals can receive gifts from the following sources:
• Relatives or Blood Relatives
• At the time of Marriage
• As inheritance
• In contemplation of death

Gifts Exempted from Tax
There is exemption for gifts received from certain people. The gifts that one receives from relatives on the occasion of marriage, the gifts receives from parents and grandparents, the gift received by a daughter-in-law from her parents-in-law, and gifts received by way of a will and inheritance are exempt. The gifts received by a son-in-law from his parent-in-law will be taxed.
A Non-Resident Indian can gift to his/her parents in India from their NRE (Non-Resident External) account without their parents suffering any tax.
The gifts received in the names of one's minor children will be clubbed with the parents' income for taxation purpose. Also the tax authorities alert in saying that, in case of both parents having income, clubbing will be done with that parent who is earning more. So one cannot hide under the cover of their minor children receiving the gifts.
Not only gifts, but any real estate deal done for values lower than the state governments fixed rates, will also be taxed. Here the tax will be charged on the difference between the state government's rate and purchase price. The tax needs to be paid by the buyer of the property.
Movable properties outside the country, unless the donor
a) Individual: is an Indian citizen, who is originally a resident of India, or
b) No-individuals resident of India during the year of gift
c) Out of balance gift by NRI (Non-Resident Indian) in his Non-resident account.
d) Foreign currency gift of convertible foreign exchange, remitted from overseas by an NRI to a resident relative.
e) Foreign exchange asset gifted by NRI to his/her relatives.
f) Special Bearer Bonds, 1991.
g) Saving certificates issued by the Central Government (notified as exempted).
h) Capital Investment Bonds up to ` 10, 00,000 per year.
i) Relief Bonds gifts by an original subscriber.
j) Gifts of Certain bonds from the NRI to his/her relatives, which are subscribed in foreign currency (specified by the Central Government).
k) Gift to government or any local authority.
l) Gifts to any charitable institutions.
m) Gifts to notified temples, churches, mosques, gurudwaras and other places of worship.
n) Gift to children for educational purpose (Reasonable amount).
o) Gifts by an employer to its employees in the form of bonus, gratuity or pension.
p) Gifts under will.
q) Gifts in contemplation of death.

Health Insurane Plan from SBI - Hospital Cash’

2011-11-07T13:13:00.002+04:00

SBI Life Insurance has recently launched a health insurance plan called ‘Hospital Cash’. It provides fixed daily allowance for every day of hospitalisation, irrespective of the hospital bill. The plan is also available online. In case the insured is admitted into an ICU, twice the amount of fixed daily allowance is allowed. The plan is available for a fixed policy term of three years and has flexibility of premium payment, including annual, half-yearly and quarterly. It is offered for sum assured (SA) of Rs2 lakh to Rs5 lakh. The fixed daily allowance can range from Rs2,000 to Rs5,000. The ICU benefit varies from Rs4,000 to Rs10,000. A mediclaim policy reimburses only the expenditure incurred on the treatment of an illness at a hospital. There are several other expenses which mediclaim policies do not reimburse—travel, attendant’s lodging, loss of income (for patient and/or attendant), pre-hospitalisation diagnostic tests, medicines, etc, that can run up to as much as 30%-40% of the total treatment cost. The Hospital Cash plan—no substitute for mediclaim—is a supplement for these extra expenses.

Hospitalisation due to pre-existing diseases is not covered for the first two years of policy. The benefit illustration specifies annual premium of Rs3,240 for a healthy 32-year-old opting for Rs3 lakh SA which means fixed allowance of Rs3,000 per day for hospitalisation, subject to a maximum of 100 days (renewable till the age of 75). By way of comparison, the Bajaj Allianz General Insurance Hospital Cash 60-day plan (renewable up to the age of 65) offers daily allowance of Rs2,500 on premium of Rs1,985, while Tata AIG General Insurance HealthCare Level 4–180-day plan (renewable up to the age of 54) offers daily allowance of Rs3,000 on premium of Rs4,086.

How to verify TDS -Form 26AS details online

2011-11-07T13:11:00.000+04:00

What is Form 26AS?
Form 26AS is a consolidated tax statement issued under Rule 31 AB of Income Tax Rules to PAN holders. This statement with respect to a financial year will include details of:
a) tax deducted at source (TDS);
b) tax collected at source (TCS); and
c) advance tax/self assessment tax/regular assessment tax etc. deposited in the bank by the taxpayers (PAN holders). Form 26AS details are available only from Financial Year 2005-06 onwards

It is the rule of Income Tax Act is to deduct tax at source (TDS) for certain type of income eg. In case the interest income earned on a bank deposit for a financial year exceeds Rs. 10,000.00, bank will deduct tax at source. In case your salary for a particular financial year is above the minimum taxable limit, your employer will deduct tax from your salary. When you deposit the advance tax or the self assessment tax with designated banks, Banks upload challan details to TIN (Tax Information Network) on a T+3 basis after the realization of the tax payment cheques .On the day after the bank uploads the details of self assessment/advance tax to TIN it will post these details into your Form 26AS. Actually we don’t know, whether the amount deducted as TDS is credited in Government Account (Income Tax). However, the Form 26AS will provide the complete details regarding the tax amount remitted to Government Account on your PAN. In case you do not find your tax deducted details in the Form 26AS, immediately you need to follow up with the bank or the employer or deductors. This could be because the bank has made error in data entry. You should take up the matter with your bank for rectification of amount or other details.

Every person/ entity that has deducted or collected tax at source is required to deposit the tax to the government account through a bank. Banks will upload this payment-related information to the TIN (Tax Information Network) a central system. These deductors are also required to file a quarterly statement to TIN giving the details of their TDS (Tax Deducted at Source)/TCS (Tax Collected at Soruc). The TIN central system will match the tax payment-related information in the statement with the tax receipt information from the banks. If both of these match TIN will create a comprehensive ledger for each PAN holder giving details of the tax deducted/collected on its basis by every deductor who has filed the statement.

How is Form 26AS useful for you

a) The credits available in the tax statement confirm that:
a) the tax deducted/collected by the deductor/collector has been deposited to the account of the government;
b) the deductor/collector has accurately filed the TDS/TCS statement giving details of the tax deducted/collected on your behalf;
c) bank has properly furnished the details of the tax deposited by you.

In future you will be able to use this consolidated tax statement (Form 26AS) as a proof of tax deducted/collected on your behalf and the tax directly paid by you along with your income tax return after the need for submission of TDS/TCS certificates and tax payment challans along with income tax returns has been dispensed with by the Income Tax Department (ITD). However as of now for claiming the credit for tax deducted/collected at source you may be required to enclose TDS/TCS certificates (Form 16/16A) issued to you by the deductor.

The following are the are the possible reasons for no credits in Form 26AS?
The possible reasons for no credit being displayed in your Form 26AS can be:
a) Deductor/collector has not filed his TDS/TCS statement;
b) You have not provided PAN to the deductor/collector;
c) You have provided incorrect PAN to the deductor/collector;
d) The deductor/collector has made an error in quoting your PAN in the TDS/TCS return;
e) The deductor/collector has not quoted your PAN;
f) The details of challan against which your TDS/TCS was deposited was wrongly quoted in the statement by the deductor or wrongly quoted in the challan details uploaded by the bank.

To rectify these errors you may request the deductor:
a) to file a TDS/TCS statement if it has not been filed;
b) to rectify the PAN using a PAN correction statement in the TDS/TCS statement that has been already uploaded if it has made an error in the PAN quoted;
c) to furnish a correction statement if the deductor had filed a TDS/TCS statement and had inadvertently missed providing your details or you had not given your PAN to him before he filed the TDS/TCS return;
d) to furnish a correction statement if the deductor had filed a TDS/TCS statement which had mistake in the challan details;
e) to take up with the bank to rectify any mistake in the amount in the challan details uploaded by the bank.

visit the web site https://www.tin-nsdl.com for more information.

2011-10-25T22:29:00.002+04:00

HAPPY DIWALI TO ALL FRIENDS

Etihad Airways offers 40% discount on fares

2011-05-08T21:20:00.000+04:00

Etihad Airways has slashed up to 40 per cent off its regular air fares for the month of May, the airline said in a statement on Sunday.

The Abu Dhabi-based carrier said the promotion, which applies only to economy class, was not linked to a slump in global oil prices nor was it a response to Emirates' decision earlier on Sunday to remove a fuel surcharge on all its airfares.

"Fuel prices remain volatile and we continue to monitor the situation closely to ensure we remain competitive," a spokesperson for Etihad said.

Commodity prices, including crude oil were sent tumbling last week, following the death of Al Qaida leader Osama Bin Laden.

"Last week we were recognised as the Middle East's Leading Airline at the region's World Travel Awards, so we are very excited to offer these sale fares to complement the win, designed to help all our UAE based customers choose their perfect holiday or short break during May," said Hareb Al Muhairi, Etihad Airways' vice president of UAE sales.

Skype operation returning to normal

2010-12-26T14:30:00.000+04:00

Skype on Friday said its services were returning to normal after the internet communications group experienced its biggest global outage in three years.

Tony Bates, Skype's chief executive, told customers via a blog and accompanying video that the engineers had identified the problem and stabilised the core instant messenger, audio and video services, which were running at about "90-plus per cent of what we'd typically see from a user load on a day like today".

Bates said the outage, which hit during a peak period for the online calls service on Wednesday, was caused by a "software issue" and not by a malicious attack.

Millions of people rely on Skype for calls to friends and family overseas over Christmas because it is cheaper than using landline and mobile networks. Skype provides free calls between users of its service, charging for outbound and inbound calls between landlines or mobile phones.

Bates apologised for the problems and promised Skype users calling credit vouchers as compensation. Pay as you go and pre-pay users are being offered a Skype voucher for 30 minutes of free calling to landlines anywhere in the world. Active subscribers are being offered a week's extra subscription service.

"It's been a tough 24 hours for many of you — and I'd like to thank you for your patience as we bring Skype back to normal," Bates said.

Stock market offering

The service failure comes ahead of Skype's planned stock market offering next year, which it postponed as it seeks to push harder into the competitive business telephony market. Skype, which is partly owned by Ebay, was completely offline for more than three hours on Wednesday evening, UK time.

At peak times, more than 25 million people use Skype simultaneously. Skype's 800 employees rely on their own service for internal communications too, forcing them back on to e-mail and traditional phones during the downtime.

Skype explained that the outage was caused by problems with the "supernodes" upon which it relies to route much of its traffic.

As a peer-to-peer service, Skype does not have a central exchange like a regular telephone network, instead it passes call information along a chain of users across the regular internet. Although Skype has some of its own dedicated servers, supernode functions can often be performed by regular users. Skype's engineers repurposed some of their servers that were running non-core functions, such as group video chat, to try and fix the problem.

The distributed nature of Skype's network removes a "single point of failure" which can affect traditional telephone exchanges, but also means that errors can be more widespread and difficult to fix.

Skype's last major outage, in August 2007, was caused by a different problem relating to a software update.

Fund managers face tough choices as year ends

2010-12-26T14:26:00.002+04:00

After a splendid run through much of 2010 Indian shares are panting for breath in the final lap of the eventful year, and a recovery in world equities could pose a challenge to fund managers on where to put their money in the New Year.

The near 15 per cent rise in the top-30 Sensex this year was largely driven by foreign portfolio inflows of $28.6 billion (Dh104.9 billion) during the period, but with the year winding down there has been net outflows as money managers take some profit off the table.

The widely-tracked Sensex has come off 4.9 per cent since reaching within 100 points of a record high in early November, and foreign institutional investments have dropped from almost $30 billion.

"It's going to be a bumpy ride in the next few weeks," said Biju Dominic who advises retail investors in Mumbai. "Inflation is rearing its head and this increases the risk of higher borrowing costs which will be a big dampener for consumer spending."

India's $1.3 trillion economy has been riding on robust domestic demand thanks to a burgeoning middle class of more than 300 million people that have been buying houses, cars, consumer goods and luxury items as never before.

However, soaring prices of foodstuffs — onion prices have leapt seven-fold from around Rs10-Rs12 (Dh0.80 to Dh0.96) a kilogramme to as high as Rs80 in a span of two to three weeks — have begun to pinch the family budget in a big way.

Embroiled in a series of corruption scandals, Prime Minister Manmohan Singh's coalition in New Delhi was caught napping as the price spiral was caused by hoarding after unseasonal rains damaged some crop. The government woke up too late and the initial comments from Farm Minister Sharad Pawar only helped traders to keep prices high.

With world oil prices rising above $91 a barrel, India, which imports over 70 per cent of its crude requirement, is under pressure to raise heavily subsidized retail prices of diesel and cooking gas.

Fuel prices

A ministerial meeting is scheduled on December 30 to take a call on the fuel prices, and if the government decides to raise prices it could accelerate inflation pressures as all goods in India are transported in trucks or railway wagons that run on diesel. "The macro headwinds are formidable," said equity strategist Roshen Seth. "If the government does not raise fuel prices it would bloat the subsidy burden and state refiners will be saddled with huge revenue losses." Higher fuel prices, however, would light a fire under inflation and the Reserve Bank of India (RBI) would raise interest rates sooner than later.

The food price index jumped an annual 12.13 per cent in the week ended December 11 from 9.46 per cent the week before, while the fuel price index climbed to 10.74 per cent from 10.67 per cent. The RBI's next scheduled policy meeting is on January 25. India's economy is on course to clock a growth of nine per cent or more in 2010-11, but it may find it hard to maintain the pace in the following year unless the government aggressively push reforms such as opening up the retail sector and boost farming in the nation of more than 1.2 billion people.

And, if the belief that US equities can rise about a fifth in 2011 — it was Goldman Sachs's Jim O'Neil who said last week he expected so — gathers momentum there could be a slowdown in money flows to emerging markets such as India.

"It is fair to say that we are somewhat more concerned about flows into the emerging markets," Alok Sama, president and founder of Baer Capital Partners Ltd, told CNBC-TV18.

He said O'Neil's expectations were based on an optimistic return to normalcy in the US, but the jury was still out on this. For India, he was more cautious than a few months ago.

The Sensex rose 1.1 per cent last week to 20,073.66, still way off 21,108.64 hit on November 5. "For this rally to be sustained, you need to see some real evidence of Indian mutual funds, in particular, stepping in and participating in a major way," Sama said.

The World Privacy Survey

2010-11-23T16:43:00.000+04:00

The World Privacy Survey

Will your Nominee get the money on your death ?

2010-10-27T14:11:00.000+04:00

Did you think that your nominee is the person, who will get all the money legally from your Life Insurance Policy and Mutual funds investments? Ha! That is exactly what you’d think if you aren’t aware of the legal aspects. We assume a lot of things which sounds like they’re obvious, but are not true from the legal point of view. Today, we’ll concentrate on nominations in financial products.

For whom are we earning? For whom are we investing? Who, do we want to leave all our wealth to, in case something happens to us? It might be your children, your spouse, parents, siblings etc., or just a subset of these. You also might want to exclude some people from your list fo beneficiaries!. So you think you will nominate person X in your Insurance policy, and when you are dead and gone, all the money goes to person X and he/she becomes the sole owner? You’re wrong, dude ! It doesn’t work that way. Let’s see how it actually does!

What is a nominee ?
According to law, a nominee is a trustee not the owner of the assets. In other words, he is only a caretaker of your assets. The nominee will only hold your money/asset as a trustee and will be legally bound to transfer it to the legal heirs. For most investments, a legal heir is entitled to the deceased’s assets. For instance, Section 39 of the Insurance Act says the appointed nominee will be paid, though he may not be the legal heir. The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money.

A legal heir will be the one whose is mentioned in the will. However, if a will is not made, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much. For example, if a man during his lifetime executes a will. In the will, he mentions his wife and children as legal heirs, then after his death, his wife and children are the legal owners of his assets. It is essential that one needs to execute a will. It is the ultimate source of truth and replaces the succession law. Nominee can also be one of the legal heirs.

Important

Mention the Full Name, Address, age, relationship to yourself of the nominee.
Do not write the nomination in favour of “wife” and “children” as a class. Give their specific names and particulars existing at that moment.
If the nominee is a minor, appoint a person who is a major as an appointee giving his full name, age, address and relationship to the nominee.
Why is the concept of nominee ?
So you might be wondering, if the nominee does not become the sole owner, why does such a concept of “nominee” exist at all? It’s pretty simple. When you die, you want to make sure that the Insurance company, Mutual fund or your shares should at least get out of the companies and go to someone you trust, and who can further help, in process of passing it to your legal heirs.

Otherwise, if a person dies and hasn’t nominated anyone, your legal heirs will have to go through the process of producing all kind of certificates like death certificates, proof of relation etc., not to mention that the whole process is really cumbersome! (For each legal entity! The insurance company, the mutual funds, for the shares, for the real estate..) . So, to simplify, if a nominee exists, these hassles don’t happen, since the company is bound to transfer all your money or assets to the nominee.The company the goes out of scene & then, it’s between nominee and legal heirs.

Example of Nomination
Ajay was 58 years old who died recently in an accident. As his children were settled, he wanted to make sure that his wife is the sole owner of all the monetary assets. This includes his insurance policy and mutual funds. So during his lifetime, he nominated his wife as a nominee in his term insurance policy and mutual funds investments. However, after Ajay’s death things didn’t turn up the way he wanted. The reason being Ajay did not leave a will. Though his wife was the nominee in all his movable assets, as per the law, his wife, along with children, were the legal heirs and all of them had equal right to Ajay’s assets.

One simple step which could have saved the situation was that Ajay should have made a will which clearly stated that only his wife was entitled to get all the money and not his children.

Nomination in Life Insurance
A policyholder can appoint multiple nominees and can also specify their shares in the policy proceeds. Nomination in life insurance has one limitation, as insurance policies are bought to secure your financial dependents, your first choice of nominee has to be your family members. In case you want to nominate a non-family member like a friend or third party, you will have to show/PROVE the insurance company that there is some insurable interest for the person. This happens because of a Clause called PRINCIPAL OF INSURABLE INTEREST in insurance. Note that provision of nomination in life insurance is related to Section 39 of the Insurance Act. Note that as per LIC website

Nomination is a right conferred on the holder of a Policy of Life Assurance on his own life to appoint a person/s to receive policy moneys in the event of the policy becoming a claim by the assured’s death. The Nominee does not get any other benefit except to receive the policy moneys on the death of the Life Assured. A nomination may be changed or cancelled by the life assured whenever he likes without the consent of the Nominee.
Make sure, you have a nominee for your policy for easy settlement of the claim, if you do not have any nominee mentioned in the policy, it can turn out to be a disaster for your dependents to get a claim.

Nomination in Mutual funds
In case of mutual funds, you can nominate up to three people, who can be registered at the time of purchasing the units. While filling in the application form, there is a provision to fill in the nomination details. Even a minor can be a nominee, provided the guardian is specified in the nomination form. You can also change nomination later by filling up a form which is available on the mutual fund company website. Nomination in mutual funds is at folio level and all units in the folio will be transferred to the nominee(s). If an investor makes a further investment in the same folio, the nomination is applicable to the new units also. A non-resident Indian can be a nominee, subject to the exchange control regulations in force from time to time.

Nomination in Shares
Quiz for you . Now you know what a nominee means and who actually gets the money. So if there is a husband H, with wife W and nephew N, and he has nominated his nephew N to be the nominee of his shares in demat account, who will have the legal right to own the shares after husband’s death? If you answer is wife, you are wrong in this case! In case of stocks, it does not work the usual way, if a will does not exist.

In the verdict, Justice Roshan Dalvi struck down a petition filed by Harsha Nitin Kokate, who was seeking permission to sell some shares held by her late husband. The Court noted that as she was not the nominee, she had no ownership rights over the shares. Ms KokaThe’s lawyer had argued that as she was the heir of her husband who had died intestate (without a will), she should have ownership rights of the shares, and be able to do anything with them as she wished. In this case, Ms Kokate’s husband had nominated his nephew in favour of the shares. Justice Dalvi however noted that under the provisions of the Companies Act and the Depositories Act, Acts which govern the transfer of shares, the role of a nominee was different.

“A reading of Section 109(A) of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights thereunder in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case.”

It means that if you have not written a will, anyone who has been nominated by you for your shares will be the ultimate owner of those stocks, The succession laws on inheritance will not be applicable but in case, you have made a will, that will be the source of truth.

Nomination in PPF
Let me give you some shock first. If you have Rs 10 lakh in your public provident fund (PPF) account and you have not nominated anyone for your PPF account, your legal heirs will get maximum of Rs1 lakh only! Yes, it’s so important to have a nominee, now you get it . You can nominate one or more persons as nominee in PPF. Form F can be used to change or cancel a nomination for PPF. Also note that you cannot nominate anyone if you open an account for a minor.

Nomination in Saving/Current/FD/RD Account in Banks
FD’s also come with nomination facility. While opening a new account, there is a column for nomination in the same form and you should fill it. You can nominate two persons with first and second option. Note that in case you have not done any nomination till now, you should request Form No DA-1 from your Bank which is used to assign a nominee in future. (Examples of ICICI Bank , HDFC Bank , Canara Bank) . In the same way to change/cancel the nomination you need to fill up Form no DA-2. Read about Corporate Fixed Deposits

As per a famous case, A Bench of Justices Aftab Alam and R M Lodha in an order said that the money lying deposited in the account of the original depositor should be distributed among the claimants in accordance with the Succession Act of the respective community and the nominee cannot claim any absolute right over it.

Section 45ZA(2)(Banking Regulation Act) merely put the nominee in the shoes of the depositor after his death and clothes him with the exclusive right to receive the money lying in the account.It gives him all the rights of the depositors so far as the depositors’s account is concerned. But it by no stretch of imagination make the nominee the owner of the money lying in the account,” the Bench observed.
Conclusion
Now you know! Taking Personal finance for granted can be fatal Just investing knowledge, isn’t enough to have a great financial life. You also need to be well versed with basic legal aspects and make sure you carry out all due arrangement . Nomination is one important aspect you should seriously consider, when checking for the financial products you have bought or plan to buy in future. Mistakes in Personal Finance

Its important to make sure that your loved one’s do not face legal issues and only say and think lovely thoughts about you when you are not around, rather than crib & grumble

SBI offers up to 9.5% in planned 1,000 crore bonds

2010-10-16T20:52:00.000+04:00

India’s largest lender SBI is selling bonds worth Rs 500 crore to retail and institutional investors with an option to retain oversubscription for another Rs 500 crore. The Rs 1,000 crore proposed to be raised will be part of the bank’s lower Tier-II bonds, which will help it enhance its capital adequacy ratio (CAR).

The issue offers investors two options – Series 1, having a maturity of 10 years with a coupon of 9.25% paid annually. It will have a call option after five years and one day with 0.5% additional step-up after five years, in case the call option is not exercised by SBI. Similarly, in case of Series 2, which will have a maturity of 15 years, it will provide a coupon of 9.5% annually .

It will have a call option after 10 years and one day with 0.5% additional step-up after 10 years if the call option is not exercised. This means that in case the call option is not exercised by SBI, the coupon on bonds shall be increased by 0.50% for the balance tenor of the bonds. The minimum investment in these bonds is Rs 10,000.

According to Arvind Konar, head of fixed income, Almondz Global Securities , “SBI is offering the bonds at very attractive rates to investors. We expect an oversubscription , considering the attractive rate at which it has priced the issue” He added that SBI was offering a higher return to retail investors as given its triple A rating, it can raise funds at around 8.6-8 .65%.

Investment bankers are also optimistic after the success of bond issues by earlier issuers , including Tata Capital, which is quoting at a premium in the secondary market .

The issue will be opening from October 18 to October 25, 2010, with an option to close earlier and /or to extend up to a period as may be determined by ECCB. There will not be any TDS since the bonds are listed on NSE and will be compulsorily issued in dematerialised form, so investors without demat a/c will not be eligible.

The interest received on these bonds will be treated as income from other sources and shall form a part of the total income of the assessee in that financial year in which they are received. There are no tax benefits for investing in these bonds.

Resident Indian individuals, HUF, partnership firms, corporates, banks, financial institutions, insurance companies, mutual funds, provident/superannuation/ gratuity/ pension fund, private/public religious / charitable trust, co-operative society can invest in these bonds.

Analysts feel that the interest rate is very attractive and due to adequate safety of the issue, it is expected to get good response . “Investors should allocate some portion of their investment portfolio in these bonds as the returns are much better than any other similar instrument. Also, it comes with high safety and has chances of higher interest rates in case of non-exercise of call option by the bank.

Since these bonds have a call option after five years and 10 years, if the bank fails to exercise the call option, the investor gains further as the interest rate will go up by 0.5%,” says Bajaj Capital chief operating officer Harish Sabharwal.