This includes reviewing your income and expenses to ensure that you are not spending more than you earn. Can you create new cash flow from your investments? How can you save money (for short term goals, medium term goals or long term goals)?
Are you paying the least amount of interest possible given your situation? Can you reduce the amount of interest that you are paying? Can you pay off your debts earlier? Can you consolidate your debts? What debts should you pay off first? Should you pay down your mortgage or contribute to an RRSP?
What rate of return do you need to meet your goals? Are your current investments achieving that return? Do you need to take risk with your investments? Do you want a higher return? How do you get a higher return while minimizing the risk? What asset allocation should you have? What investments should you use to implement that asset mix?
How much do you need to save to be able to retire? Are you on track for meeting that goal? Should you start your pension early? When can you get Old Age Security? Will it be clawed back? Should you draw from RRSPs or non-registered funds first?
How much do you need to save to (help) pay for your children's (or grandchildren's) education? What is the most tax effective way of saving for children's education. Should you use an RESP or an informal trust of capital gains producing investments?
Do you need insurance (life, disability, critical illness, long term care)? If so, how much and what kind of insurance? Who should own the insurance (you, your company, your spouse or children)?
What size of estate do you want to leave? How do you get it to your beneficiaries as quickly and as easily as possible? Will there be enough in the estate to pay the taxes? Can you reduce the taxes that you pay on your death? Can you reduce the taxes for your heirs?
A great starting point for determining how much you can invest is to do a quick budget. Write down all of your income and subtract your expenses. If the amount left over is smaller than you would like, go over your expenses to see if there are any areas that you can cut back in order to obtain long term advantages.
Financial planning is the process of managing your funds to achieve your desired goals in the required time frame. It involves analyzing your existing financial position, expected future cash flows, inflation and identified financial objectives to develop a comprehensive financial planning roadmap. This is aimed at making available the right amounts of funds at the right time in the future.
A financial plan helps drive your financial decisions to a defined goal. It helps you determine how much to save today for the future you planned for, how much returns to expect on your savings and where to invest your savings to ensure you get the returns you desire.
There are various kinds of needs, some of which are listed below -:
Once you have determined how much you wish to invest, you need to decide where to invest. There are various investment options available depending on your risk – return profile. The various products available are:
Every individual has their own risk taking capacity. Your risk-return profile is your level of risk tolerance. A high risk venture is normally associated with high returns. You could be one of the following three risk-return profiles or somewhere in between them:
A financial plan can tell you what is required to achieve your goals, but it can not ensure you attain them. There are many circumstances beyond your control such as inflation, recession, political changes, your individual circumstances etc, which might hamper the achievement of planned results.
Once you have identified the amount that can be invested, you need to know how much of those funds to put in the various kinds of investment options available.
Today, there is a wide array of investment options to choose from. The selection depends on your needs, profile and your individual circumstances
After investing, you need to ensure that you are getting the desired results from your investments . At regular intervals you need to track the performance of your investments.
For instance, in case you have invested in a mutual fund scheme, then the total value of your investments will be the product of the total units you have and the NAV of the units. The difference between this value and the amount you have originally invested will give you the returns on your investment.
Insurance planning is an integral part of financial planning. An insurance plan takes care of the unforeseeable demands on your finances. For instance, an unfortunate illness requiring a surgery can be covered under a medical insurance plan and you need not dig into your savings and other investments to pay for it. In effect, insurance helps to keep your financial plan on track.
Insurance protects oneself, one’s family and assets from the financial consequences of unforeseen events. A classic insurance policy, i.e. a term plan, provides financial assistance to your family when you are not around. In addition, modern day policies have evolved to help you to build up your corpus of wealth, plan for retirement, protect your house and personal belongings, reimburse medical expenses, hospitals bills, etc.
The value of the cover that you opt for should depend on your need for protection. If you are applying for asset insurance, the value should ideally cover the cost of replacing your asset. Similarly, the final payout of a term plan should compensate your family for the financial loss that they will face in case of your demise. If you go in for ULIPs, endowment or money back policies, these should fall in with your overall financial plan and enable you to receive funds when you expect to use them.
At times, it is not possible for one policy to fulfill all your requirements. In such cases, you can purchase a combination of plans which will meet your needs.
Yes. The premium that you pay on your insurance policy is mainly dependant on your age and the tenure of the policy. The younger you are, the lower your insurance premium amount is. Moreover, in the case of policies that double up as investment vehicles, you benefit from the power of compounding, if you begin investing early
No body can predict illnesses or accidents. These health hazards and hospitalization can cost you dearly in terms of medical bills and leave you with a major financial burden. To enable you to cope with such situations, insurance companies have launched health insurance plans. Health insurance takes care of your hospitalization and medication expenses. It could also provide financial support to you and your family.
For those who have a basic salary of up to INR 6500, contributing to the EPF is mandatory. Contributions are voluntary for those whose basic salary exceeds INR 6,500.
However it is strongly recommended to make such contributions to avail of the various benefits an EPF Account has in store.
At such times, the PF balance could be transferred from one employer to another. The existing balance would continue to stay, with fresh contributions made by the new employer.
When you quit your job, PF could be withdrawn. You need to provide a declaration that you do not intend to work for the next six months.
Employee Provident Fund (EPF) and Public Provident Fund (PPF) are long term investment instruments for retirement. However a lot of people are confused between these two. We clarify all your doubts.
As per the new 2012 rules issued recently, The EPFO has made amendments to the way in which employee and employer contribution would be calculated hereon.
For employees, this amendment is particularly important as it impacts his/her take home salary and income tax liability as well.
An employee’s monthly contribution would go into the following 3 schemes as per EPF Act, 1952.
Most companies calculate ‘salary’ as: Basic + DA. Some calculate: Basic + DA + Allowances that are ordinarily necessarily and uniformly paid to employees.
The EPFO has made recent amendments to the way in which employee and employer contribution would be calculated hereon. For employees, this amendment is particularly important as it impacts his/her take home salary and income tax liability as well.
Employees drawing Basic of more than INR 6,500 per month:
Assume Employee’s basic at INR 8,000 per month.
Employer can calculate his contribution in 3 ways as below:NEED TO MAKE ADD
Method varies from company to company. Do check with your employer on what method they have employed.
The Central Government revises EPF interest rates every year depending upon the revenues made by EPFO on its earlier years’ deposits.
For FY 2016-17, the EPF interest rate is 8.50% p.a.
Employee Provident Fund (EPF) members can now access their account statements online atwww.epfindia.gov.in.
This facility is available only to active members who are currently contributing to their EPF accounts.
You can withdraw from your EPF account on the account your children’s education, marriage of self, children and siblings, purchase/construction of a house or any medical emergencies.
However, withdrawal is subject to certain conditions, non-compliance of which would result in penal interest:
Withdrawal from EPF Account for purchase/construction of a house is available only once in an individual’s entire working life. The minimum service period is 5 years and the maximum withdrawable amount is 36 times your total salary (for construction of property) and 24 times (for purchase of property).
Yes, you can. The additional contribution is called as ‘voluntary contribution’. But such additional contribution will not be matched by your employer.
All the same rules and interest rate will apply to your voluntary contribution regarding withdrawal, transfer, interest rate and so forth.
You can now know the District-Wise geographical jurisdiction of EPFO Office.
A document in which a person specifies the method to be applied in the management and distribution of his estate after his death.
A will is a legally binding document that identifies who should inherit a person's property after they die. Recipients often include a spouse, children, grandchildren or a charitable organization. Many wills also contain a provision that names a guardian to care for minor children. A person that makes a will is called a testator.
If a person dies without a will or another legal distribution device, a state's laws of intestate succession govern inheritance rights. Typically, a spouse (or in some states a domestic partner) and children are first in line to inherit a decedent's property. If the deceased did not have a spouse or children, close relatives like parents, siblings, and grandparents will inherit the property. If the decedent has no relatives that qualify under a state's intestate succession laws, the state receives the property.
If a parent of minor children dies without a will and the other parent is unable to provide care, the state determines who will become the guardian of the children and the property they inherit.
It depends on whether a state's law recognizes a handwritten will. In about half of the states, a person may create a handwritten will, also called a "holographic" will. Unlike typed and computer-printed wills, witnesses are unnecessary for holographic wills. Some states require that the testator handwrite the entire holographic will, including the provisions, the date, and the signature. Other states are more lenient -- the testator may use a fill-in-the-blank document if it contains handwritten portions, a signature, and a date.
Handwritten wills, however, may create complications. Many probate courts are hesitant to recognize the validity of these wills since they are difficult to verify.
When preparing a will, most states require the following elements:
The testator should adhere to the following guidelines when signing a will and selecting witnesses:
Yes. A will can name a "personal guardian" to care for minor children if both parents are deceased or if the surviving parent is unable to care for the children. The personal guardian will have legal guardianship over the minor children until they reach the age of 18.
In community property states, a spouse is legally entitled to half of the property acquired or earned during the marriage. While a married person may leave their half of the community property to someone other than their spouse, they may not dispose of the spouse's share of the community property.
In states where common law governs inheritance laws, a person may choose to disinherit a spouse through a will. However, common law states protect the surviving spouse from complete disinheritance by granting the right of the spouse to claim some portion of the deceased spouse's property by going to court.
A testator can change a will by preparing a new will or by adding an addition called a codicil. When changes are substantive, revoking a will and starting over may be easier. An express statement in the new will of the revocation of all prior wills legally revokes a will. Minor changes, such as the addition of a new provision or the removal of a beneficiary, are appropriate changes for a codicil. See also Changing a Will.
When you die, your Executors are responsible for; obtaining valuations of all your assets, paying outstanding liabilities (from your assets), collecting in all assets including possible selling your house and distributing the correct assets to your chosen beneficiaries.
Being an executor is an important role and it can often take many months, and sometimes years, to administer an estate in ful
Health insurance is a type of insurance coverage that protects an individual or a group of people against medical and surgical costs against payment of regular premiums.
Mounting healthcare and surgical costs are a major strain on household budgets. Like any other insurance, mediclaim or health insurance is the best possible protection you or your family may have against any medical (usually hospitalization or surgical) costs. Health insurance also makes medical help affordable for everyone.
Mediclaim or health insurance makes you eligible for tax benefits on premium paid under 80D of the Income Tax Act.
Given the current healthcare scenario, there is no right age to get medical insurance – the earlier, the better. Children can be added to either parent’s mediclaim policy. Many health insurance providers also have special plans for senior citizens and old age related health costs.
Most health insurance providers offer customized mediclaim or health plans. They are broadly of 4 types –
Accident-related medical costs are generally covered by all health insurance plans or may be taken as an add-on rider.
Health insurance costs vary depending on the following factors –
When a person signs up for a health insurance, the insurance company ascertains premium based on a number of criteria. Once determined, the company usually charges the same premium for that age group. The older a policy holder gets, the more the premium amount is. In the meantime, if there is a claim in any year, the premium may be hiked upon policy renewal. This is called load premium. The insurance company may sometimes offer a discount on premium, if no claim is registered for a number of years.
TPA refers to a Third Party Administrator or an entity separate from the insurer or the policy holder. A TPA processes medical claims and provides cashless services to the policy holder.
Mediclaim health insurance policies usually do not cover the following –
Most insurers do not cover non allopathic treatments. Do read the insurance offer document before taking the policy.
What will a health insurance policy pay for?>
A number of recent health insurance policies also cover outpatient treatment, though this is not covered by mediclaim policies in general. Also most health insurance policies cover critical illnesses such as cancer as an optional rider.
Generally most health insurance policies do not cover diagnostic expenses unless they are part of the hospitalization charges or incurred as part of the pre-hospitalization or post-hospitalization expenses.
Cashless hospitalization is a process by which a health insurance policy holder can seek admission to any hospital authorized by the insurance company and undergo medical treatment and/or surgery without paying directly for the treatment. The medical expenses as eligible will in this case be paid by the insurance company directly to the hospital.
Usually, an insurance company sends its policy holders a list of “cashless” hospitals in its panel each year. In case of a planned hospitalization, please consult the TPA/insurance company beforehand.
Planned hospitalization – Submit a written application with the TPA. Include doctor’s recommendation for hospitalization, medical records, and planned expenses. Once approval comes through go ahead with hospitalization. Notify TPA and make a claim through the hospital to avail cashless benefits.
Unplanned hospitalization/Accidents – Notify TPA within 24 hours of hospitalization. Submit a notification statement with name, policy number, and known medical details. The insurer is likely to clear your eligibility details within a day or two. Stake cashless claim through the hospital to avail cashless services or pay cash and stake claim with all bills and records at the completion of treatment.
Cumulative bonus is an addition to the sum assured provided by the insurance company without charging additional premium. It is provided for every year of the policy in which the holder does not register a claim.
The insurance complaints redressal system in India is a strong one. The Insurance Regulatory and Development Authority (IRDA) has implemented an Integrated Grievance Management System (IGMS) for insurance policy holders to register any complaints. When complaints raised with insurance companies are not addressed adequately and if a resolution is not reached these may be escalated to the IRDA’s Grievance Cell.
IRDA Grievance Call Centre (IGCC) toll free number- 155255 (voice call)
E-mail – email@example.com
It is a card that comes along with health insurance policy. Similar to the identity card, this card will allow you to avail cashless hospitalization
Usually children are not covered individually in a policy but can be covered by either of the parent in their own health policy.
No claim bonus (NCB) is a discount on the base premium if no claim on the health policy is made during the policy term. This bonus is usually given in the form of a discount or enhancement of sum assured. Some insurers also add to the total at a pre-defined rate. However, more commonly NCB is offered in the form of discount on the payable total. NCB is quite attractive for a healthy person who has bought health insurance policy for emergency situations. He/she doesn’t need to make small claims at regular intervals and thus, he can enjoy NCB. However, for a person who is suffering from chronic heart ailment, NCB is almost not applicable.
Yes, you can cancel your health insurance. A free look period of 15 days from the date of policy receipt is available to you to review terms and conditions of the policy. If you are not satisfied with the terms of the policy, then you may seek cancelation of it. In such an event, insurance company allows refund of expense done after adjusting underwriting costs, cost of pre-acceptance medical screening, etc.
After completing five years of continuous service with the same company, you are eligible to receive the gratuity benefit. Gratuity shall be payable to ‘you’ (employee) on the termination of your employment after rendering continuous service for not less than five years.
It is payable..
The condition of five years of continuous service is not applicable if employee’s service is terminated due to death or disablement. Your nominee or legal heir can receive your gratuity amount (in the event of death of the employee).
Temporary staff, contract workers etc., are all eligible (except ‘apprentice’) for the gratuity amount, as long as they are considered as employees of the organization.
This is one the most frequently asked question and there are various conflicting views available on this one.
In one of the court cases, Madras High Court has held that an employee who has completed 4 years and 240 working days in 5th year will be entitled for gratuity i.e. 4 years 10 months and 11 days.
This judgment may or may not be applicable to you (it depends on the place of your establishment). It is better to contact your HR (Human Resource) personnel to get more clarity regarding this point.
How to calculate my gratuity amount, is also one the Frequently asked questions. It is calculated based on simple formula as below; (This formula is applicable to all the employees who are covered under the Payment of Gratuity Act, 1972.)
Gratuity = Last drawn salary * 15/26 * No. of completed years of service
In the above gratuity calculation formula, the definition of ‘last drawn salary’ means, it comprises your Basic Salary + DA (Dearness Allowance if any).
How to treat number of months for the purpose of gratuity calculation after completion of 5 years? Any service which is in excess of 6 months is considered as one year. (Six months and above means even 1 day extra after six months, you are eligible for 1 year gratuity. This is applicable only if you have completed 5 years of service) (Also note that service period calculation is not dependent on ‘5 days or 6 days’ in a week work rule.)
For example – If you have put in 11 years and seven months in an organization, your service period will be taken to be 12 years. But if your service tenure is 11 years and five months, then for the purpose of this calculation your tenure will be taken to be 11 years only.
For non-government employees (private company employees), who are not covered under the Gratuity Act, the formula for the calculation of gratuity amount is as below;
Gratuity = Average salary * ½ * No. of years of service
In the above gratuity calculation formula, the definition of ‘Average salary’ means, it comprises, your Basic Salary + DA (Dearness Allowance) + commission (as a percentage of turnover achieved by you, if any). To compute ‘Average Salary,’ you have to consider the average of last 10 months salary (Basic + DA + Commission) preceding the month of your retirement/resignation.
Kindly note that in this case, your service period will not be rounded off to the nearest full year. For instance, if you have a total service of 21 years and 10 months, only 21 years will be considered in the calculation.
Yes, there is a ceiling of Rs 10 Lakh as the maximum gratuity amount that you can receive. As per the above calculations, if you are eligible to get more than Rs 10 Lakh as gratuity, your company is bound to pay only Rs 10 Lakh. (In case your company wants to pay more than 10 L then they can pay it as performance bonus or ex Gratia)
The ceiling of Rs. 10 lakh applies to the aggregate of gratuity received from one or more employers in the same or different years .
Latest update : The 7th CPC (Central Pay Commission) increased Gratuity Ceiling limit from Rs 10 Lakh to Rs 20 Lakh w.e.f 01-Jan-2016.
Latest News (25-02-2017) : The Central Govt has agreed to raise the ceiling limit of Gratuity amount for Private Sector (organized) employees also, from Rs 10 Lakh to Rs 20 Lakh. The Union Labor Ministry is expected to bring a formal amendment to the Payment of Gratuity Act to implement the change.0.
If you are not comfortable in calculating your gratuity due amount using the above formulas, there are lot of online gratuity calculators that are available. You may consider using the below ones;
ncalculators.comGratuity Benefit Amount online calculator
moneycontrol.comGratuity Benefit Amount online calculator moneycontrol
Yes, you can give your nomination by filling Form “F” at the time of joining your company (during new joinee formalities). Employee can nominate one or more members of his/her family to receive the gratuity amount in the event of the death of the employee.
Even if your company is not doing financially well, your company is bound to pay gratuity amount. They cannot cite their ‘financial losses’ as the reason for the refusal.
But, an employer can refuse to pay the gratuity amount, if the services of an employee have been terminated for his/her riotous or disorderly conduct or any other act of violence on his part, during his/her employment. Employers can also deduct the cost of damages (if any) from the gratuity amount.
Gratuity is considered as your retirement benefit and is tax exempted subject to certain conditions of Income Tax Act. For the intent of taxation on gratuity, employees are divided into two categories:
Government Employees & Private Sector Employees
Any gratuity amount received by an employee (Govt or Private employee) during his service is taxable. But when gratuity is received by the employee at the time of his retirement, death or superannuation then tax exemption rules for government employees differs from private employees.
In case of Government Employees the entire gratuity amount that he/she receives on retirement or on death is exempted from paying any Income tax.
In case of Private employees, they are divided as:
Private employees covered under the payment of Gratuity Act of 1972.
Private employees not covered under the payment of Gratuity Act of 1972.
In case, when private employees covered under the payment of Gratuity Act of 1972, any gratuity received is tax exempted to the extent of least of the following:
Statutory limit of Rs 10 lakh. (Maximum limit / Govt notified amount)
Last drawn salary * 15/26 * No. of completed years of service.(Refer FAQ 6 )
Actual Gratuity received by you.
If the gratuity exceeds the limit mentioned above, then it becomes taxable.
Example: Let us understand the above tax exemption rule with an example. Mr Sundaram receives Rs 9 Lakh as gratuity benefit from his employer. As per the Gratuity Act calculation, he is eligible to receive, let’s say Rs 5.5 Lakh. The maximum notified limit is Rs 10 Lakh. Out of these, Rs 5.5 Lakh is the least one. So, the tax exemption is limited to the extent of Rs 5.5 Lakh only. Mr Sundaram has to pay income tax on Rs 3.5 Lakh (Actual gratuity received – Tax exempted gratuity amount.)
For private employees not covered under the payment of Gratuity Act of 1972, any gratuity received is tax exempted to the extent least of the following:
Statutory limit of Rs.10 lakhs.
Gratuity = Average salary x ½ x No. of years of service. (Refer FAQ 7)
Actual gratuity received by you.
(Where the gratuity was received in any one or more earlier previous years also and any exemption was allowed for the same, then the exemption to be allowed during the year gets reduced to the extent of exemption already allowed, the overall limit being Rs. 10 Lakh.)
Gratuity received by you on your retirement (or) during your service period is taxable under the head “Salary.” It should be shown under the head of “Salaries” while computing your ITR. This is applicable for both Government as well as Private employees.
Whereas, gratuity received by the legal heir (or) nominee is not taxable if the gratuity becomes due/sanctioned after the death of the employee. If the gratuity amount becomes due and paid before the death of the employee then it is taxable under the head ‘Income from Other Sources.’ The nominee / legal heir has to show it in ITR (Income Tax Returns).
So, gratuity benefit amount is not fully exempted from income tax. Be extra cautious while calculating the tax exemption limit that is applicable on your gratuity amount. Do check if you have to pay taxes when you receive your gratuity. Kindly share your comments.
– Persons who hold civil posts under Central Government/State Government and are governed by any other Act or Rules providing for payment of gratuity Exemption
– Govt may exempt any establishment, if its employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits provided under the Payment of Gratuity Act
– Wage means basic salary and includes dearness allowance
– It does not include HRA/bonus/commission/overtime/other allowances
– Gratuity of an employee whose services have been terminated for any act, wilful omission or negligence causing any damage/loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of damage/loss so caused
– Gratuity may be partially/wholly forfeited if services have been terminated for riotous/disorderly conduct or act of violence of employee, offence involving moral turpitude committed in the course of employment
– However, the employee shall be given an opportunity of being heard before such Forfeiture.
Family includes the following:
– His/her spouse
– His/her children whether married/unmarried
– His/her dependent parents
– His/her dependent parents of spouse
– Widow & children of her/his predeceased son, if any
– An employee who is eligible for payment of gratuity shall send an application to the employer within 30 days from the date it becomes payable
– Where the date of superannuation or retirement is known, employee may apply to the employer before 30 days of date of superannuation/retirement
– A nominee of an employee shall apply within 30 days from the date gratuity becomes payable to him/her
– A legal heir shall apply within 1 year from the date gratuity becomes payable to him/her
– Application filed after expiry of specified period may be entertained by the employer, if there is sufficient cause for delay Determination of amount of Gratuity & Payment by employer
– The employer shall determine the amount as soon as it becomes payable and give notice to the person to whom it is payable
– Notice is also to be given to CA specifying the amount of gratuity so determined irrespective of the fact whether an application has been made or not by the concerned
– The employer shall arrange to pay gratuity within 30 days from the date it becomes payable to person to whom it is payable Payment of interest by employer in case of delay in payment
– If gratuity is not paid within 30 days, the employer shall pay simple interest at the rate notified
– The interest shall be payable from the date on which the gratuity becomes payable to the date on which it is paid
– No such interest shall be payable if delay in payment is due to default of employee and employer has obtained permission in writing from the CA for delayed payment Dispute
– If there is dispute as to the amount payable or admissibility of claim or person entitled to receive gratuity, the employer shall deposit such amount as the employer admits to be payable, with the CA
– Employer/employee whoever is raising the dispute may make application to the CA for deciding the dispute
– CA shall after inquiry and giving reasonable opportunity of being heard to the parties, determine the matters in dispute. If amount is payable to the employee, he shall direct the employer to pay such amount as reduced by the amount already deposited by the employer
– CA shall pay the amount deposited by the employer, to the person entitled thereto Application to the Controlling Authority for direction
– If any employer
— Refuses to accept nomination or application for payment of gratuity
— Issues notice specifying the amount which is considered by the applicant to be less than what is payable or rejecting eligibility of payment of gratuity
— Having received an application, fails to issue any notice within 15 days, the claimant employee/nominee/legal heir, may within 90 days apply to the CA for issuing a direction. CA may accept application after 90 days on sufficient cause shown by the applicant
– Any person aggrieved by an order of CA may within 60 days (extendable by a further period of 60 days on sufficient cause) of receipt of order, prefer an appeal to the Central/State Government or such other authority as may be specified
– No appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant deposits such amount with the appellant authority
– Central/State Government or appellant authority, after giving parties a reasonable opportunity of being heard, confirm, modify or reverse the decision of the CA Recovery of Gratuity
– If the amount is not paid by the employer within the prescribed time, to the person entitled thereto, the latter shall make an application to the CA
– CA shall issue a certificate for the amount to the collector
– The collector shall recover the amount with compound interest (@15%) as arrears of land revenue and pay the same to the person entitled thereto
– Before issuing the certificate to collector, the CA shall give employer a reasonable opportunity of showing cause against the issue of such certificate Protection of Gratuity
– No gratuity payable shall be liable for attachment in execution of any decree/order of any court
– However, gratuity payable to heirs of an employee on his/her death is attachable
Some illnesses do mean you qualify for an enhanced annuity rate. These are called “enhanced” and "impaired" annuities. Providers will often relate any illness to your life expectancy and if the illness may cause a reduction in your life expectancy when compared to the average, some specialist providers may offer more income than is available from a standard annuity.
If you smoke cigarettes, cigars or tobacco regularly, you need to disclose this when requesting a quotation as this may qualify you to an 'enhanced' annuity rate. Because your life expectancy may be reduced when compared to the average, some specialist providers may offer more income than is available from a standard annuity.
It is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income is communicated to the Income tax department after the end of the Financial year. Different forms are prescribed for filing of returns for different persons and Nature of income earned.
You should choose a return form according to your status i.e., individual/ firm/ company, etc and nature of income as explained below:
|ITR1||For Individuals having Income from Salary/ Pension/ family pension & Interest|
|ITR2||For Individuals and HUFs not having Income from Business or Profession|
|ITR3||For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship|
|ITR4||For individuals & HUFs having income from a proprietary business or profession|
|ITR5||For firms, AOPs and BOIs|
|ITR6||For Companies other than companies claiming exemption under section 11|
|ITR7||For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)|
|ITRV||Where the data of the Return of Income/Fringe Benefits in Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-7 is transmitted electronically without digital signature|
The new return form numbering 1 to 8 is annexure less. Hence no documents are required to be attached.
It is not necessary to be physically present while filing your Return of Income in India. However, where it is not possible for you to obtain a digital signature or sign the Return, you can authorize any person by way of a Power of Attorney to file your return. A copy of the Power of Attorney should be enclosed with the return.
No. On the contrary by not filing your return in spite of having taxable income, you will be laying yourself open to the penal and prosecution provisions under the Income Tax Law.
Filing of return is your constitutional duty and earns for you the dignity of consciously contributing to the development of the nation. This apart, your IT returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits etc.
Also, even where your income is below the taxable limit but taxes have been deducted from certain receipts of income earned by you, it is necessary to file Return of Income for claiming the refund of such taxes deducted.
If you have sustained a loss in the financial year, which you propose to carry forward to the subsequent year for adjustment against its positive income, you must make a claim of loss by filing your return before the due date of filing of Return of Income. Failure to file Return of Income may result in loss of availability of carry forward of losses to subsequent years.
The due dates are as follows:
|Companies & their Directors||30th September|
|Other business entities, other than companies, if their accounts are auditable & their working partners||30th September|
|In all other case||31st July|
For example, for Financial Year 2012-13, the due date of filing returns of income/loss is July 31, 2013 or September 30, 2013.
GST stands for Goods and Service Tax. It is an imposed-on sale, manufacturing and usage of goods and services. Goods and Service Tax is applied on services and goods at a national level with a purpose of achieving overall economic growth. GST is particularly designed to replace the indirect taxes imposed on goods and services by the Centre and States.
(i) Taxes currently levied and collected by the Centre:
ii) State taxes that would be subsumed under the GST are:
It is a tax levied by the Government of India on the income of every person. The provisions governing the Income-tax Law are given in the Income-tax Act, 1961. Income Tax Charged on person whose Income exceed the Basic Slab Limit.
No, on the contrary by not filing your return inspite of having taxable income, you will be liable to the penalty and prosecution provisions under the Income-tax Act.
If you have sustained a loss in the financial year, which you propose to carry forward to the subsequent year for adjustment against subsequent year(s) positive income, you must make a claim of loss by filing your return before the due date.
Income-tax is levied on the annual income of a person. The year under the Income-tax Law is the period starting from 1st April and ending on 31st March of next calendar year. The Income-tax Law classifies the year as (1) Previous year, and (2) Assessment year.
The year in which income is earned is called as previous year and the year in which the income is charged to tax is called as assessment year.
e.g., Income earned during the period of 1st April, 2015 to 31st March, 2016 is treated as income of the previous year 2015-16. Income of the previous year 2015-16 will be charged to tax in the next year, i.e., in the assessment year 2016-17.
Self – Assessment Tax or Advance Tax is to be deposited to the credit of Government by using the challan prescribed in this behalf, i.e., ITNS 280. The Challan can be downloaded from www.incometaxindia.gov.in Tax can be paid in the designated banks through two modes, viz., physical mode, i.e., cash/cheque or e-payment mode.
You can also check your tax credit by viewing your Form 26AS from your e-filing account at www.incometaxindiaefiling.gov.in
No, you are thereafter responsible for ensuring that the tax credits are available in your tax credit statement and TDS/TCS certificates received by you and that full particulars of income and tax payment are submitted to the Income-tax Department in the form of Return of Income which is to be filed before the due date prescribed in this regard.
Yes, you can claim relief in respect of income which is charged to tax both in India as well as abroad. Relief is either granted as per the provisions of double taxation avoidance agreement entered into with that country (if any) by the Government of India or by allowing relief as per section 91 of the Act in respect of tax paid in the foreign country.
Profession means exploitation of one’s skills and knowledge independently. Profession includes vocation. Some examples are legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, artists, writers, etc.
All the books of account and related documents should be kept at the main place of business, i.e., where the business or profession is generally carried on. These documents should be preserved for a minimum of six years.
Return Form can be filed with the Income-tax Department in any of the following ways, -
ITR return forms are attachment less forms and, hence, the taxpayer is not required to attach any document (like proof of investment, TDS certificates, etc.) along with the return of income (whether filed manually or filed electronically). However, these documents should be retained by the taxpayer and should be produced before the tax authorities when demanded in situations like assessment, inquiry, etc.
Income-tax Department has established an independent portal for e-filing of return of income. The taxpayers can log on to www.incometaxindiaefiling.gov.in for e-filing the return of income.
The Income-tax Department has provided free e-filing utility (i.e., software) to generate e-return and furnishing of return electronically. The e-filing utility provided by Department is simple, easy to use and also contains instructions on how to use it. By using the e-filing utility, the taxpayers can easily file their returns of income. Utility can be downloaded from www.incometaxindiaefiling.gov.in
In case of queries on e-filing of return, the taxpayer can contact 1800 4250 0025.
E-payment is the process of electronic payment of tax (i.e., by net banking or SBI’s debit/credit card) and e-filing is the process of electronically furnishing of return of income. Using the e-payment and e-filing facility, the taxpayer can discharge his obligations of payment of tax and furnishing of return easily and quickly.
Yes, if you have not furnished the return within the due date, you will have to pay interest on tax due & Late Filling Fees.
Yes, if one could not file the return of income on or before the prescribed due date, then he can file a belated return. A belated return can be filed at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. A belated return attracts interest and penalty .
E.g., In case of income earned during FY 2016-17, the belated return can be filed up to 31st March, 2018.
The excess tax can be claimed as refund by filing your Income-tax return. It will be refunded to you by crediting it in your bank account through ECS transfer. The department has been making efforts to settle refund claims at the earliest.
Original return can be revised under section 139(5) within a period of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier if person furnished original return on or before the due (till assessment year 2016-17). In assessment year 2017-18, any original return (which is furnished on or before or after due date) can be revised within a period of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier.
From the assessment year 2018-19 return of income can be revised (original return is filed on or before due date or after due date) at any time during the assessment year or before the assessment made whichever is earlier.
If original return has filed in paper format or manually, then technically it cannot be revised by online mode or electronically.
If a person is furnished original return and finds any mistake, omission or any wrong statement, then return should revised within prescribed time limit.
Yes, since legal proceedings under the Income-tax Act can be initiated up to four or six years (as the case may be) prior to the current financial year, you must maintain such documents at least for this period. However, in certain cases the proceedings can be initiated even after 6 years, hence, it is advised to preserve the copy of return as long as possible. Further, after introduction of the e-filing facility, it is very easy and simple to maintain the copy of return of income.
Yes, it can be claimed if you are otherwise eligible to claim the same.
Amounts paid as advance tax and withheld in the form of TDS or collected in the form of TCS will take the character of your tax due only on completion of self-assessment of your income. This self-assessment is intimated to the Department by way of filing of the return of income. Only then the Government assumes rights over the taxes paid by you. Filing of return is critical for this process and, hence, has been made mandatory. Failure will attract levy of penalty.
Generally whatever is received by an employee from an employer in cash, kind or as a facility [perquisite] is considered as salary.
Allowances are fixed periodic amounts, apart from salary, which are paid by an employer for the purpose of meeting some particular requirements of the employee. E.g., Tiffin allowance, transport allowance, uniform allowance, etc.
There are generally three types of allowances for the purpose of Income-tax Act - taxable allowances, fully exempted allowances and partially exempted allowances.
Yes, these are in the nature of perquisites and should be valued as per the rules prescribed in this behalf.
Yes, you will have to pay self-assessment tax and file the return of income.
Form 16 is a certificate of TDS. In your case it will not apply. However, your employer can issue a salary statement.
No, it is taxable as income from other sources.
In the hands of a Government employee Gratuity and PF receipts on retirement are exempt from tax. In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed in this regard and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of not less than 5 years.
Yes. However, the benefit of spread over of income to the years to which it relates to can be availed for lower incidence of tax. This is called as relief u/s 89 of the Income-tax Act.
Yes, if you are a Government employee or an employee of a PSU or company or co-operative society or local authority or university or institution or association or body. In such a case you need to furnish Form No. 10E to your employer.
Yes but only to the extent of Rs. 2 lakh, however, losses other than losses under the head ‘Income from house property’ cannot be set-off while determining the TDS from salary.
It is taxable if received while in service. Leave encashment received at the time of retirement is exempt in the hands of the Government employee. In the hands of non-Government employee leave encashment will be exempt subject to the limit prescribed in this behalf under the Income-tax Law.
Rental income in the hands of owner is charged to tax under the head “Income from house property”. Rental income of a person other than the owner cannot be charged to tax under the head “Income from house property”. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be in the hands of Tenant.
To tax the rental income under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building, rental income will be charged to tax under the head “Income from house property”.
Rental income from property is charged to tax under the head "Income from house property in the hands of the owner of the property". If a person receiving the rent is not the owner of the property, then rental income is not charged to tax under the head "Income from house property" (E.g. Rent received by tenant from sub-letting). In the following cases a person may not be the registered owner of the property, but he will be treated as the owner (i.e., deemed owner) of the property and rental income from property will be charged to tax in his hands:
Yes, if the loan is taken for purchase, construction, repair, renewal or reconstruction of the house. If the loan is taken for personal or other purposes then the interest on such loan cannot be claimed as deduction.
Yes, if the share of each co-owner is ascertainable.
A self-occupied property means a property which is occupied throughout the year by the taxpayer for his residence.
No, for the purpose of Income-tax Law you can claim only one property as self occupied property and other property will be deemed to be let-out property. It is your choice which is to be treated as self occupied.
In the case of self-occupied property, deduction under section 24(b) cannot exceed Rs.2,00,000
At times a property may be let-out for some time during the year and is self-occupied for the remaining period (i.e., let-out as well as self occupied during the year). For the purpose of computation of income chargeable to tax under the head "Income from house property", such a property will be treated as let-out throughout the year and income will be computed accordingly.
However, while computing the taxable income in case of such a property, actual rent will be considered only for the let-out period.
The calculation will have to be made separately for each of the properties.
The amount received on account of arrears of rent (not charged to tax earlier) will be charged to tax after deducting a sum equal to 30% of such arrears. It is charged to tax in the year in which it is received. Such amount is charged to tax whether or not the taxpayer owns the property in the year of receipt.
Any profit or gain arising from transfer of a capital asset during the year is charged to tax under the head “Capital Gains”.
Any capital asset held by a person for a period of more than 36 months immediately preceding the date of its transfer will be treated as long-term capital asset. However, in respect of certain assets like shares (equity or preference) which are listed in a recognized stock exchange in India, units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 36 months.
Yes. Ask the expert how
Amount of TDS, TCS, Advance Tax & Self-assessment tax paid will be reflected on this 26AS facility, hence you can reconcile with certificate issued by deductor.
Yes, to avoid the further income tax notices or avoid any other non-compliances
You may loose on the part of refund or end up paying higher taxes or may result into mismatch of income hence it is an invitation to any notice from Income Tax department.
Your ROI including tax credit should match with 26AS, if it doen’t matching then you have to contact to respective deductor for amount of difference, this difference may due to any of the following reason
There are following cases in which you may receive income tax notices
You have to contact Tax Expert of Financial Hospital for further compliances & action to be taken on notice.
Compliance to each & every notice of Income tax department is mandatory, if you failed to comply within time limit mentioned in the notice may attract penalty under income tax law.