Mar 31, 2013

What to do if one can't pay the home loan emi

11:50 PM

Have his home is the biggest dream of the common man. Buying a property now days in not a child play. But financial institutes always ready to finance for a home. They take it as granted and the safest bet.

So taking home loan is not hard. But what if one is unable to pay the EMIs of that home loan. There may be some cases where people unable to pay the EMIs like some emergency or losing the jib etc.

Bank does not forfeit the property immediately like bouncing 2-3 EMIs but if that continue for six months, banks will take the property.

 What should one do if fall in the same situation where no option to pay the EMIs on time for a big period. There are some points which one must remember even taking a small loan because one needs to pay loan with interest always. These are some points which one must remember if falls in same situation. 

What is the rule?
Banks or financial institute does not want to attach one’s property and this is the last option left with them. They always want to negotiate. Banks need to enforce Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI) to recover non-performing assets (NPA).

Banks generally reminds the borrowers about the last payment or misses the EMI. They mail or phone you about this. After the three month default of non paying the EMI, bank will send a demand notice to the borrower asking him to pay the dues as soon as possible.
If the borrower doesn’t entertain the mail or phone by the bank and also doesn’t pay the dues, bank will send a legal notice through legal department. After the legal notice send to the borrower, bank will wait for the next three months before declaring it as Non performing assets(NPA).

After declaring the assets as Non performing assets, bank can start the process of recovering the property through the SARFAESI act. Even after acting this act, bank will give the borrower 2 months time notice to clear the dues.

It means it will take around 5 months from the first default when the bank send a notice to the borrower that it has valued the property from the valuer and the auction will take place on particular date. The auction date is also a month late from the notice date.

So the matter is simple. Banks are more keen to recover money from the borrower than from legal procedure and from auction because it is a very timely process and may take time as well as loss. Banks need to wait at least 6 months to start recovery proceedings to take the property as attached.

The borrower will get the notice from the debt recovery tribunal which is treated as the last stage for the borrower to save his assets from the auction.

What should the borrower do?

Attend the hearing set by the tribunal. This is the must do step for the borrower. In this case, one can get an agreement with the bank. Banks are more serious about track record, and if one has good record and one tells about his serious problem for not paying the debt, bank will offer some leeway to pay the dues.

Ask the bank to restructure the loan and taking consideration about the future source of income.

In case of default in the loan due to increase in the rate of interest, ask the bank to increase the tenure and keep the EMI at the same level.

Keep a record of all the loan and loan payment. This makes a good track record and all the credit revolves on the track record.

Problem matters most. If bank is satisfied with the problem and satisfied with the will of the borrower to pay the dues, bank may offer more time to pay the dues. But this offer matters with case to case.

Banks always try to get their money in the practical way. They even hear you in the case of auction date declared and return it to you if problem is genuine and borrower will pay the dues.
Keywords-home loan,house rent emi,home loan emi payment

Mar 30, 2013

Income tax benefits for children

11:30 PM

All income tax rules are not known by everyone as same as Mr. Gupta. When he submitted the proof of his investment in his office, he was surprised when get informed that he also get rebate on school fees of his children. He also has the receipt of school fees. He now tries to invest more and more to his children name to get more benefits.

There are many investment with the child name of this the assessee can get the deduction. However, most of them come into Section 80C of income tax act which has the tax deduction limit of Rs.1 lakh. These deductions are as under.

Tuition fees paid
A parent can claim deduction on school fees paid to any school, university, college or any other educational institute. The limit of deduction is Rs. 1 lakh under section 80C with deduction of insurance, ppf and pension etc. however, this deduction only be claimed of 2 dependent children to an educational institute with in India.

Interest on educational loan
Expenses on higher studies are too costly now days. If any loan is taken for higher studies of children, the entire interest amount is fully deductible under section 80E of income tax act. This deduction is valid up to eight years from the year in which interest is actually paid. This deduction can be claimed either by the parent or the child.

Health insurance premium
In case of health insurance of children, parent can claim a maximum deduction of Rs.15000 paid towards premium of health policy on the name of children.

Certain diseases
Section 80DDB allows some specified diseases on which the parents or the child can avail maximum deduction of Rs. 40000 if dependent child suffers from one of the specified diseases.  Some ailments on which tax benefits are available are as under.

Neurological diseases ( like Dementia, Dystonia Musculorum Deformans, motor neutron disease, ataxia, chorea, hemiballismus, Aphasia, Parkinson’s Disease), cancer, full blown acquired immune deficiency syndrome ( AIDS), Chronic renal failure, hemophilia and thalssaemia.

In the case of disable dependent, the parent can claim maximum deduction of Rs. 50000 a year in case of 40% disability and maximum of Rs. 1 lakh a year in case of 80% disability under section 80U of income tax act.  This deduction is offered by income tax department as lump-sum and it’s doesn’t matter how the assessee may spend this amount.

For claiming this deduction, the assessee must obtain a certificate of medical authority as the forms and style prescribed in income tax act.

Hostel allowance
Hostel allowance is deductible under income tax up to a maximum of 300 Rs per month maximum of 2 children only in case of expenses incurred in India.

Educational allowance
Rs. 100 per child with maximum of 2 children is exempted only in case of expenses incurred in India.
 Medical expenses

Deduction of Rs. 15000 per annum is allowed as reimbursement as medical expenses. This deduction can be claimed by self as well as two dependent children. One needs to produce original medical bills to avail this deduction.

Free/ Concessional Educational
Facility: Deduction to an extent of ₹ 1,000 per month is allowed provided the educational institution is maintained and owned by the employer or any other educational institution by reason of his being in employment of that employer.

Set a trust
One can save big taxes if set up a trust for children. In trust, the money cannot be claimed back by the donor. Any profits made through investment are the trust income and it cannot be clubbed on assessee income. Trust has its own purpose and it’s only liable to tax.

According to the gift rule in income tax in India, any gift received above RS. 50000 are taxed in the hands of recipient. This rule does not apply to relatives, occasion of marriage and under a will or inheritance. Gifts includes in cash or in kind.

However any income earned by assets gifted to the minor child is included in the income of donor for tax calculation purpose.

These are some points which one can keep in mind while making investment or preparing tax liability. However only the parent or the child can claim deduction and not both.

Mar 29, 2013

Income tax circular on application of profit split method

10:30 PM
Income tax circular on application of profit split method
Income tax department issued a circular on application of profit split method for calculation of profits. Income tax department has issued a circular no. 02/2013 dated 26 March 2013 about profit split method. Full circular is as under.

Circular No. 02 /2013
Sub: Circular on application of profit split method

It has been brought to the notice of CBDT that clarification is needed for selection of profit split method (PSM) as most appropriate method. The issue has been examined in CBDT. It’s hereby clarified that while selecting PSM as the most appropriate method, the following points may be kept in mind:

1. Since there is no correlation between cost incurred on R&D activities and return on an intangible developed through R&D activities, the use of transfer pricing methods [like Transactional Net Margin Method that seek to estimate the value of intangible based on cost of intangible development (R&D cost) plus a return, is generally discouraged.

2. Rule 10B (1)(d) of Income Tax Rules 1962 (the Rules) provides that profit split method(PSM) may be applicable mainly in international transactions involving transfer of unique intangibles or in multiple international transactions which are so interrelated that they cannot be evaluated separately for the purpose of determining the arm's length price of any one transaction. The PSM determines appropriate return on intangibles on the basis of relative contributions made by each associated enterprise.

3. Selection and application of PSM will depend upon following factors as prescribed under Rule 10C (2) of the Rules:

1- The nature and class of the international transaction;

2-The class or classes of associated enterprises entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprise;

3- The availability, coverage and reliability of data necessary for application of the method;

4- The degree of comparability existing between the international transaction and the uncontrolled transaction and between the enterprise entering into such transactions.

5- The extent to which reliable and accurate adjustments can be made to account for differences, if any, between the international transaction and the comparable uncontrolled transaction or between the enterprise entering into such transactions;

6- The nature, extent and reliability of assumptions required to be made in
Application of a method.

4. lt is evident from the above that Rule 10C (2) of the Rules stipulates availability, coverage and reliability of data necessary for the application of the method as one of the several factors in selection of most appropriate method. Accordingly, in a case, where the Transfer Pricing Officer (TPO) is of view that PSM cannot be applied to determine the arm's length price of international transactions involving intangibles due to no availability of information and reliable data required for application of the method, he must record reasons for non-applicability of PSM before considering TNMM or comparable uncontrolled price method (CUP) as most appropriate method depending upon facts and circumstances of the case.

5. Application of Profit Split Method requires information mainly about the taxpayer and associated enterprises. Section 92D of the lncome-tax Act, 1961 provides for maintenance of relevant information and documents by the taxpayer as prescribed under Rule 10D of the Rules. Therefore, there should be good and sufficient reason for no availability of such information with the taxpayer.

6. Depending upon facts and circumstances of the case, TPO may consider TNMM or CUP method as appropriate method by selecting comparables engaged in development of intangibles in same line of business and make upward adjustments taking into account transfer of intangibles without additional remuneration, location savings and location specific advantages.

The above may be brought to the notice of all concerned.  
(Batsala Jha Yadav) "
Central Board of Direct Taxes
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Income tax circular on identify development centres engaged in R&D

3:29 PM
Income tax circular on identify development centres engaged in R&D
Income tax department issued a circular on conditions relevant to identify development centers engaged in contract R&D service with insignificant risk. Income tax department issued a circular no. 03/2013 dated 26 March 2013 about this issue. Full circular is as under.

Subject- Circular on conditions relevant to identify development centers engaged in contract R&D services with insignificant risk

It has been brought to the notice of CBDT that there is divergence of views amongst the field officers and taxpayers regarding the functional profile of development centers engaged in contract R&D services for the purposes of transfer pricing audit. Moreover, while at times taxpayers have been insisting that they are contract R&D service providers with insignificant risk, the TPOs are treating them as full or significant risk-bearing entities and making transfer pricing adjustments accordingly. The issue has been examined in CBDT. lt is hereby clarified that a development centre in India may be treated as a contract R&D service provider with insignificant risk if the following conditions are cumulatively complied with.

1- Foreign principal performs most of the economically significant functions involved in research or product development cycle whereas Indian development centre would largely be involved in economically insignificant functions;

2- The principal provides funds/ capital and other economically significant assets including intangibles for research or product development and Indian development centre would not use any other economically significant assets including intangibles in research or product development;

3- Indian development centre works under direct supervision of foreign principal who not only has capability to control or supervise but also actually controls or supervises research or product development through its strategic decisions to perform core functions as well as monitor activities on regular basis;

4- Indian development centre does not assume or has no economically significant realized risks. lf a contract shows the principal to be controlling the risk but conduct shows that Indian development centre is doing so, then the contractual terms are notthe final determinant of actual activities. In the case of foreign principal being located in a country/ territory widely perceived as a low or no tax jurisdiction, it will be presumed that the foreign principal is not controlling the risk. However, the Indian development centre may rebut this presumption to the satisfaction of the revenue authorities; and

5- Indian development centre has no ownership right (legal or economic) on outcome of research which vests with foreign principal, and that it shall be evident from conduct of the parties.

The satisfaction of all the above mentioned conditions should be borne out by the conduct of the parties and not merely by the contractual terms'
The above may be brought to the notice of all concerned

Mar 28, 2013

Revision of interest rates on PPF and SCSS scheme

4:14 PM
Revision of interest rates on PPF and SCSS scheme
Reserve bank of India has revised rate of interest on Public provident fund scheme and Senior citizens saving scheme 2004. The new rate of interest will be applicable from 01 April 2013. RBI issued a note no. 5603 regarding rate of interest on ppf scheme and scss scheme. Full note is as under.

Public Provident Fund Scheme, 1968 (PPF, 1968) and
Senior Citizens Savings Scheme, 2004 (SCSS, 2004) - Revision of interest rates

Please refer to our circular RBI/2011-12/359 dated January 20, 2012 regarding interest rates on small savings schemes, wherein it was indicated that as per Government’s decision on revision of interest on small savings schemes, the interest rates on various small savings schemes for every financial year will be notified by the Government before April 01st of that year.

2. The Government of India has now vide their Office Memorandum (OM) No. 6-1/2011-NS.II (Pt.) dated March 25, 2013, advised the rate of interest on various small savings schemes for the financial year 2013-14. Accordingly, the rates of interest on PPF, 1968 and SCSS, 2004 for the financial year 2013-14, effective from April 01, 2013, on the basis of the interest compounding/payment built-in in the schemes, will be as under:
Rate of Interest w.e.f. 01.04.2012
Rate of Interest w.e.f. 01.04.2013
5 year SCSS, 2004
9.3% p.a
9.2% p.a
PPF, 1968
8.8% p.a
8.7% p.a

3. The contents of this circular may be brought to the notice of the branches of your bank operating the PPF, 1968 and SCSS, 2004 schemes. These should also be displayed on the notice boards of your branches for information of the PPF, 1968 & SCSS, 2004 subscribers.
Yours faithfully
(Sangeeta Lalwani)
General Manager
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Mar 22, 2013

Bank clearing operation on 29,30 and 31 March

5:05 PM
Bank clearing operation on 29,30 and 31 March
Reserve bank of India has issued a note no 1674 about clearing operation on 29, 30 and 31 March 2013. Full note is as under.

Clearing operations on March 29, 30 and 31, 2013
With a view to facilitate accounting of all the Government transactions for the current financial year (2012-2013) by March 31, 2013, it has been decided to conduct special clearing at all clearing houses across the country on March 29, 30 and 31, 2013 as detailed below:

Type of clearing
Presentation clearing
Return clearing
March 29, 2013 
Locations where the day is a holiday under Negotiable Instruments Act 1881-
One hour after the extended business hours keeping in view the operational convenience at the local center
Half an hour/One hour after the presentation clearing or as per the operational convenience at the local center.
A Special Clearing with same day return clearing

Locations where the day is a working day
Normal clearing operations as is followed on any normal working day
March 30, 2013 
Normal Clearing as followed on any working Saturday
In addition, a Special Clearing for credit to Government accounts only
One hour after the extended business hours keeping in view the operational convenience at the local center
Half an hour/One hour after the presentation clearing or as per the operational convenience at the local center
A Special Clearing for credit to Government accounts only.
One hour after the extended business hours keeping in view the operational convenience at the local center
Half an hour/One hour after the presentation clearing or as per the operational convenience at the local center

2. Agency banks doing Government business alone will be permitted to present instruments in the Special Clearing on other participating banks. Other member banks of the Clearing House (including the presenting banks) are required to keep their inward clearing processing infrastructure open during the Special Clearing hours and maintain sufficient balance in their clearing settlement account to meet settlement obligations arising out of the Special Clearing.

3. In this regard, a reference is invited to the circular issued by our Department of Government and Bank Accounts (DGBA.GAD.No. H.5486/ 42.01.029 / 2012-13 dated March 21, 2013) on ‘Annual Closing of Government Accounts - Transactions of Central / State Governments - Special Measures for the Current Financial Year (2012-13).

4. Member banks of Clearing Houses are advised to adhere to the instructions contained in this circular as well as the instructions received from the Regional offices of Reserve Bank of India and Presidents of respective Clearing Houses.

5. Member banks are also advised to be in readiness to participate in the Centralised Payment Systems (RTGS and NEFT) on March 29, 2013 and March 31, 2013. A separate broadcast message in this regard will be issued through the respective system.
Yours faithfully
(Vijay Chugh)
Chief General Manager

Mar 21, 2013

All about cibil report- Check before apply for a loan

11:30 PM
The government as well as banks is very strict now days for allowing a loan. Earlier people do some fraud in one bank and apply to another. But now day’s banks cannot pass the loan before checking the cibil report of the applicant for loan. In cibil report of every loan and credit card comes with all the details and outstanding balance if any. So one should check his/her cibil report before applying for a  loan, as there are no chances to pass a loan if cibil report is not good.

What is in cibil report
 Cibil report is the complete credit chart of a customer. It includes all the loans and credit card. It shows the bank name, branch, account type, date of open, sanctioned amount, current balance, overdue etc. of each and every loan one has taken.

How cibil gets this detail 
Cibil is the government company. One need to produce the id proof such as PAN card, Passport, Voter ID card etc. for taking a loan. With these documents cibil make the reports of all the loans taken with different banks and join together.

What is cibil score
Cibil department gives scoring as per the loan repaying ability, loan taken, overdue, time to clear overdue, any suit filed against the name etc. it’s about the full evidence of your credit worthiness. Based on the credit history, cibil gives the point in the range of 300-900 points. The higher points mean the great chances for approval of loans. As per the data 80% of the loans approved with a credit score is more than 750.

How to get a cibil report
One can get cibil report very easily. One need to fill a form online and pay the fees of 470 rupees to cibil and get the cibil report online in minutes. The procedure to get cibil report is as under.
- First go to the website.

- Click to the know your score order now.

- Then one need to order, first click on the i want to purchase my cibil Transunion score.

- Then fill the form down under.

- In the fourth column, help us to identify you, one need to give the id proof and address proof. One can give 1 id and one address proof for it. One need to give only numbers of id and address proof and not Xerox copy.

- One is advised to give at least one loan account number if any in the fifth Coolum.

- Then pay the cibil fees either by debit card, credit card or net banking.

- Then they will ask for additional details such like the month and year of loan taken. These questions come in KBC type like choose one in four options. 

- Upon authentication, an email will be send to the given email id with the cibil report.

- This report comes in pdf locked format. The password is suggested in the email.

What is negatives codes in cibil reports
- One or more trades with suit filed status in the past 24 months.

- One or more trades with restructured debt in the past 24 months.

- Several overdue accounts can be a concern to many lenders and can negatively affect your credit score. Timely payments in the future will help improve your score.

- Recent late payments may have a negative effect on your score. Timely payments in the future will help improve your score.

- Irregular payment history might be a risk factor to lenders. timely payments in the future will contribute to an improved score

If anybody is not satisfied with credit report as it shows some wrong information, one can raise dispute through online from the cibil site. One need to mention all the details and submit online form. It is completely free but there are two drawbacks.
- They only entertain the dispute if cibil report is taken by the customer not the bank.
- They will reply or change in cibil report in almost 30 days.

Sometimes there is an emergency to change the cibil report so oner can contact cibil from the phone numbers. The number are in the cibil website, contact us.
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Income tax refund set off against tax payable

10:28 PM
Income tax refund set off against tax payable

Please refer to the above mentioned subject.
2. As per Hon'ble Delhi High Court's Order dated 14-3-2013, the Department requires to follow the procedure prescribed u/s 245 before making any adjustment of refund payable by the CFC, Bengaluru. Accordingly, the assessee must be given an opportunity to file response or reply and the reply will be considered and examined by the Assessing Officer before any direction for adjustment is made. The process of issue of prior intimation and service thereof on the assessee will be as per the law. The assessee will be entitled to file their response before the Assessing Officer mentioned in the prior intimation. The Assessing Officer will thereafter examine the reply and communicate his findings to the CPC, Bangaluru, who will then process the refund and adjust the demand, if any payable.
2. The number of high refund cases where demand is outstanding and also intimation u/s 245 has been issued by the CPC, Bengaluru, pertaining to each CCIT(CCA) region is being forwarded as per the enclosed Annexure I. The detailed list is also available on i-Taxnet on the following path:
Resources -l Downloads - l DIT_SYSTEMS - l REFUND_ERETURNS_PROCESSING_CPC_AY2012_13 (File Name)
3. It is requested to issue directions to the Assessing Officers under respective charges to make compliance of the aforesaid order and communicate its findings on adjustable demand to CPC, Bengaluru, who will then process the refund and adjust the demand. The communication to CPC, Bengaluru, may also be give on its e-mail id:

Mar 20, 2013

How to keep cash at bank for better interest

11:30 PM

Keeping cash in hand is the necessity of every Indian as in case of any emergency or routine expenses. But the ratio of keeping cash in hand and keeping cash at bank is confusing as sometimes we need less cash in hand and sometime more. 

ATMs have also changed the game as one imagines cash at saving account is same as cash in hand due to liquidity. One can withdraw cash anytime from the ATM, so it is more or less treated as cash in hand more by youth.

One always needs to make a ratio of cash in hand and cash at bank. The reason is if more cash at bank, one has to suffer of cash scarcity in emergency and more cash in hand can lead to loss of interest.

Saving bank account doesn’t offer any great rate of interest. It may be 4-6% depending on banks. Some banks offer 6% rate of interest on the account balance more than 1 lakh rupees.

There is another plan which called flexi account. In this account one will get the same rate of interest as fixed deposit offer in the saving account balance. In Flexi account, the bank will give FDR rate of interest on the amount above the minimum requirement of the account. For example, if one has the saving bank account with ICICI bank and the balance is 40000 rupees. The minimum requirement is 10000, so one will get rate of interest of fixed deposit on 30000 rupees for the tenure of keeping money in the account. One can withdraw the money anytime as the money is in saving account only.

The drawback of this scheme is the tenure. Fixed deposit offers different rate of interest on different tenure and the minimum rate of interest on the less than 1 month tenure. It around 5%, so if one keeps the money less than 1 month, he will get less interest on flexi deposit than some banks offer on saving account.

Unfixed deposit
This is the latest and productive deposit offered by some banks. In this deposit, one will get the 1 year rate of interest of fixed deposit on the money provided in the account minimum of 7 days. The liquidity is the same as saving account as one can withdraw the money anytime.

This offer leads to a different type of competition among banks. Some are offering better rate of interest whereas some are offering better liquidity and offer to exit.

Like State bank of India offers 8-9% rate of interest on unfixed deposit.  Standard chartered bank offers 8% rate of interest on e-saver plus saving account with the condition of 3lakh rupees minimum requirement. ING vysya bank offers 9.25% on its FD plus deposit account on minimum balance of 100000 rupees. Some banks already offers 5.5-6% rate of interest on saving account but YES bank recently offering 7% rate of interest on saving account.

This competition is only benefit to the peoples of India. Happy banking.
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Mar 19, 2013

RBI cuts the bank rate and repo rate by 25 basis points

6:51 PM
RBI cuts the bank rate and repo rate by 25 basis points
Reserve bank of India cuts the bank rate and  repo rate by 25 basis points. Rbi announced the mid term monetary policy on 19 March 2013 and cuts the bank rate and repo rate by 25 basis points. Full note is as under.

Bank Rate
As announced in the Mid-Quarter Review of Monetary Policy 2012-13, the Bank Rate stands adjusted by 25 basis points from 8.75 per cent to 8.50 per cent with effect from March 19, 2013.

2. All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised as indicated in Annex.

3. Please acknowledge receipt.
Penal Interest Rates which are linked to the Bank Rate
Existing Rate
Revised Rate
(Effective from March 19, 2013)
Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls).
Bank Rate plus 3.0 percentage points (11.75 per cent) or Bank Rate plus 5.0 percentage points (13.75 per cent).
Bank Rate plus 3.0 percentage points (11.50 per cent) or Bank Rate plus 5.0 percentage points (13.50 per cent).
Liquidity Adjustment Facility – Repo and Reverse Repo 
and Marginal Standing Facility Rates

As announced today in the Mid-Quarter Review of the Monetary Policy 2012-13, it has been decided to reduce the Repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 7.75 per cent to 7.50 per cent with immediate effect.

2. Consequent to the change in the Repo rate, the Reverse Repo rate under the LAF and the Marginal Standing Facility (MSF) rate will stand automatically adjusted to 6.50 per cent and 8.50 per cent respectively with immediate effect.

3. All other terms and conditions of the current LAF and MSF schemes will remain unchanged.

4. Please acknowledge receipt.

Cricket IPL 2013 Schedule

6:13 PM

Indian premier league (IPL) is starting again. This is the 6 th version of IPL in 2013. There are some changes too in this format as 1 team Deccan Charges name changed to Sunrisers Hyderabad. This tournament is very popular in India and subcontinent.

In 2013, the tournament will start on 4 April and the Final will be played on 26 May. So it will last around 2 months. There are 9 teams which participate in this tournament and 76 matches will be played in IPL 2013. The teams which participate are as follows.

Mar 18, 2013

How to get interest on gold jewellery

11:30 PM

We Indians are very fond of gold and jewellery as not only for investment but people wears a lot of gold jewellery. We have the highest quantity of gold in the world. Still the demand is also high at the price of 30000/10gms. 

Recently gold gave better return compare to investing in equity or fixed deposits. But gold always in the lockers or in safe at home which do not fetch any return expecting the rise in prices. One is not getting any interest in this mode of investment compare to others.

One can wonder by reading that the surplus gold can give you the return. There is a new scheme which called gold deposit scheme. There are some features of this scheme which are as under.

Currently only SBI (State bank of India) offering gold deposit scheme in India, which is regulated by Reserve bank of India. However some jewelers also offer same kind of scheme but not trustworthy.

- In this scheme one can deposit gold with the bank. The gold may be either in coins, bars or jewellery.

- The period is the choice of the depositor. It may be 3 months to any time he wish to.

- After the term, one can take gold in bars with the same weight or take equitant cash as per market value of the gold.

- One will get modest interest on gold deposited with bank.

- Currently only 50 branches of SBI offering gold deposit scheme.

- The minimum weight of gold should be 500 gms.

There are two documents required for gold deposit scheme one is for address proof and second for ID proof with the recent photograph and gold which one want to deposit. The gold items will be weighted in your presence and a provisional receipt will be given by the bank. 

Gold deposit certificate will be issued after some days as bank will check the purity of the gold deposited. After checking, one will get the gold deposit certificate which indicates the actual purity, weight, tenure as well as interest rate offered on it.
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Old cheques validity is extended to 31 July 2013

7:14 PM
Old cheques validity is extended to  31 July 2013
Reserve bank of India has extended the CTS-2010 migration of cheque book to 31 July 2013. Earlier it was extended to 31 March 2013. RBI has issued a note no. 1622 dated 18 March 2013 regarding extension of last date of CTS-2010 cheque book. Full note is as under.

 Standardization and Enhancement of Security Features in Cheque Forms/Migrating to CTS 2010 standards
A reference is invited to our circular DPSS.CO.CHD.No. 955/04.07.05/2012-13 dated December 14, 2012. On a review of the progress made by banks so far in migration to CTS-2010 standard cheques and in consultation with a few banks and Indian Banks Association, it has been decided to put in place the following arrangements for clearing of residual non-CTS-2010 standard cheques beyond the cutoff date of March 31, 2013.
  1. All cheques issued by banks (including DDs / POs issued by banks) with effect from the date of this circular shall necessarily conform to CTS-2010 standard.
  2. Banks shall not charge their savings bank account customers for issuance of CTS-2010 standard cheques when they are issued for the first time. However, banks may continue to follow their existing policy regarding cheque book issuance for additional issuance of cheques, in adherence to their accepted Fair Practices Code.
  3. All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing houses [including the Cheque Truncation System (CTS) centers] for another four months up to July 31, 2013, subject to a review in June 2013.
  4. Cheque issuing banks shall make all efforts to withdraw the non-CTS-2010 Standard cheques in circulation before the extended timeline of July 31, 2013 by creating awareness among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site etc.
  5. A progress report in this regard to be submitted to this department in the format prescribed in the annex, enabling monitoring of the progress made by banks in respect of migration to CTS-2010 standard cheques.
  6. In addition, the bank-wise volume of inward clearing instruments processed in the Cheque Processing Centers will be monitored with respect to the CTS-2010 / non-CTS-2010 standard cheques presented on them.
  7. No fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted by lending banks in locations where the facility of ECS/RECS (Debit) is available. Lending banks shall make all efforts to convert existing PDCs in such locations into ECS/RECS (Debit) by obtaining fresh mandates from the borrowers.
2. The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).
3. Please acknowledge receipt and confirm compliance.
Yours faithfully,
(Vijay Chugh)
Chief General Manager
Encl: Annex
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Mar 17, 2013

Income tax forms form 15G and 15H with auto fill facility

11:30 PM
It is high time to give form 15G and 15H of income tax to the deductor of TDS on  your deposit. Form 15G and 15H are the declaration to the deductor that his/her income falls below the income tax taxable limit. Income tax has various acts in which tax is deducted even the assessee has income below the taxable limit. Section 197A of income tax act gives some relief as present various forms to avoid deducting TDS.

Finance Ministry clarification on tax residency certificate

9:20 PM
Finance Ministry clarification on tax residency certificate
Finance Ministry of India has given clarification on tax residency certificate. A press release has been issued dated 1 March 2013. Full press release is as under.

Concern has been expressed regarding the clause in the Finance Bill that amends Section 90 of the Income-tax Act that deals with Double Taxation Avoidance Agreements. Sub-section (4) of section 90 was introduced last year by Finance Act, 2012. That subsection requires an assessee to produce a Tax Residency Certificate (TRC) in order to claim the benefit under DTAA.

DTAAs recognize different kinds of income. The DTAAs stipulate that a resident of a contracting state will be entitled to the benefits of the DTAA.

In the explanatory memorandum to the Finance Act, 2012, it was stated that the Tax Residency Certificate containing prescribed particulars is a necessary but not sufficient condition for availing benefits of the DTAA. The same words are proposed to be introduced in the Income-tax Act as sub-section (5) of section 90. Hence, it will be clear that nothing new has been done this year which was not there already last year.

However, it has been pointed out that the language of the proposed sub-section (5) of section 90 could mean that the Tax Residency Certificate produced by a resident of a contracting state could be questioned by the Income Tax Authorities in India. The government wishes to make it clear that that is not the intention of the proposed subsection (5) of section 90. The Tax Residency Certificate produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident status.

In the case of Mauritius, circular no. 789, dated 13-4-2000 continues to be in force, pending ongoing discussions between India and Mauritius.

However, since a concern has been expressed about the language of sub-section (5) of section 90, this concern will be addressed suitably when the Finance Bill is taken up for consideration.

Mar 16, 2013

New rule in pension scheme

11:30 PM

There is a new rule for the new pension scheme subscribers. Now one can withdraw the lump sum money from the account while leaving the security plan. This new rule has changed the old rule of phased withdraw from the account. This rule has been come into the effect immediately.

This new rule has given the option of the subscribers to defer on lump sum withdrawn on the account which is 60% maximum at the time of exiting from the scheme.

The authority looked into the matter and changes the rule of phased WI drawl in NPS new pension scheme and allowed the subscribers to lump sum withdrawal.
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Income tax office will remain open on 30 and 31 March

5:28 PM
Income tax office will remain open on 30 and 31 March
The Financial Year 2012-13 closes on 31-3-2013. In view of holidays on 27th and 29th of March and thereafter, on 30th and 31st March, being Saturday and Sunday, it is directed that all the Income Tax Offices through out India shall remain open and the receipts counters shall also work during normal office hours on 30th and 31st of March 2013.

Mar 14, 2013

1% TDS on property over 50 lakh rule and issue

11:30 PM

Finance bill 2013 has proposed that 1% withholding tax will be deducted on purchase of any immovable property (except agriculture land) worth over Rs. 50 lakh. The idea behind levying this 1% TDS is to more and more property dealings coming in scenario of income tax department and nabs the black money in the real estate. 

A lot of peoples have booked the flats and houses already and believe to get in 2013. This 1% deduction will be applied on any dealing after 1 June 2013. This is a big headache not only 1% TDS but it requires a lot of paperwork as well as submit the return, deposit the tax amount.

As per the TDS rule in India, the deductor must have a tax deduction account number(TAN), file the tax return and issue tax deduction certificate(Form 16A) to the deductee. This means the buyer needs to have the TAN number, have to file return and issue form 16A to the seller. Also he needs to submit the tax amount in the accounts of income tax. 

There is also a complex issue. Generally the seller doesn’t entertain the taxes. So he may fix the condition to pay taxes to the buyer. This will lead to double problem with the buyer.

Around 5 lakhs homes and flats are expected to allot in the financial year 2013-14 according to property research firms.

There are some more issues in this 1% TDS on flats over 50 lakh. Finance bill 2013 doesn’t make any difference to ready property and under construction property. Also the buyer needs to deduct the TDS on the property amount and not on the balance payment. There is also not clarity in the issue of buying the property on loan or joint-name.

A large number of transactions in the property are based on EMI which may be 3-10 years and one need to pay the EMIs to the banks.  That means the buyer need to cut an amount in each EMI as TDS which don’t looks practically unless this responsibility shifted towards banks.

This is still a confusion law and hoping for some clarity as well as modification in the rule which is in finance bill 2013.
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Mar 13, 2013

How to save tax with change your pay structure

11:00 PM
How to save tax with change your pay structure

The budget of 2013 did not bring any good news for the tax payers. Everybody was hoping for increasing the threshold limit to pay income tax as well as some more tax relief in the income tax slabs. But nothing came. So if you are on package, you can reduce your tax liability even no change in tax slabs. If the employer can change your pay structure you can save a lot of tax. Here are some points where one can save income tax while on package of the company. 

1- Car
One is advised not to buy the car, instead ask to your company for leasing a car. Leased car is taxable but with very small amount like 1800-2400 Rs. per month. It depends on perk and the size of the car.
Like the value of the car is 8 Lakh and perk value is 28800(2400*12). One can save tax in 30% slab (800000 X 30%) = 2.4 lakh. 

2- Driver 
The same condition is with the driver too. Instead of hiring a driver, ask the company to arrange a driver for him. It is not worth paying a driver salary post-income tax income or disposable income. The perk value counts in this situation too which will be very beneficial.

3- Retirement
One can save for his retirement and save income tax. Ask your employer to invest in NPS for your behalf. As per income tax section 80CCD (2) of income tax act, up to 10% of the basic salary is deductible if invested in NPS.

4- Home Loan
One is advised to have a home loan. Home loan gives a full deduction on home loan interest paid and if the home is let out, only 70% of the rental income is taxable.

5- Professional courses
One can ask his employer to fund for the part or short time course in the year. Only perk value is 10% of the course and one can save a big tax amount on it.

6- Company gadgets
If any employer provides computer, laptop or any other gadgets for company as well as personal use, grab them. The perk value is only 10%.

7- Newspaper and telephone bill
They will be tax free and one needn’t to pay post income tax income on them if employer agrees to include in the compensation value. Perk value is zero in these items.

8- Food and gift coupons
These items can also bring down the income tax liability as perk value is zero but insignificant compare to others.
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