Cost of Ignorance is Greater Than The Cost of Insurance

This post has been written by our guest contributor Tarun Bachhawat, with help from the Fintuned Editorial team.

“If you live each day as if it were your last, someday you will most certainly be right” – Steve Jobs

When I sat down to write an article on insurance policies (just because I recently bought one) a strange but hard-hitting thought donned upon me. I wondered how to tell people about the significance of insurance, the tax benefit people get from paying premiums etc. A second later, I rubbished all the thoughts.

WANT TO KNOW WHY? Because I realized something – buying an insurance policy is the simplest of decisions one has to take and whether you like it or not, it is absolutely naive to ignore it. Think about it. When questions like – “What will happen to my family when I am not there”, “What if I meet with an unfortunate accident” etc. come to your head, how can you ignore taking an insurance policy??

life-insurance

Honestly, you don’t need articles or someone like me to tell you about the significance of purchasing insurance. You just need to have compassion and common sense. That’s it.

But, there is a problem…

Continue reading “Cost of Ignorance is Greater Than The Cost of Insurance”

A Policy Without Politics

This post has been contributed by guest author Milan Jha, with assistance from Fintuned editorial team.

Three years back when Raghuram Govinda Rajan took the divine but immensely challenging role of RBI’s governor, he was hailed as the poster boy of Banking, the sexiest figure in Banking among other such sizzling titles. As a matter of fact, this article by Shobhaa De back in 2013 clearly highlighted the eye-catching attractiveness of our deserving RBI governor. Tales aside, Raghuram Rajan has been successful in exceeding expectations of stakeholders. As with any central bank, Raghuram has achieved this stellar performance by making use of his magic wand.

“The Monetary Policy”

inflation-cartoon

Continue reading “A Policy Without Politics”

Small Lessons To Make Your Life Larger & Wiser!

This post has been contributed by Tarun Bachhawat, our guest contributor, with help from the Fintuned Editorial team.

Just yesterday, I was watching the latest commercial from the stable of Royal Stag featuring the Bollywood A-guy Ranveer Singh. Basically, the punchline of that advert conveys the message that the culmination of small moments make your life large and one should strive for the same. Steering past that interesting life lesson, the reason my post begins with this annotation is because I could not think of a better introduction to the post.

Royal-stag-keep-perfecting

I assume that after reading the above paragraph, your instant question would be, “How does this relate to money management or finance in general, at all?”

Truth be told, you aren’t wrong in asking that question. The reason that I started with a synopsis of this commercial is because while watching this ad I was reminded of a short but insightful conversation with my father that turned out to be the best investment advice ever.

How did it play out?

One morning my dad saw my wallet that had some papers, money and my credit cards and said, “Do you carry everything in this one wallet?”  I simply replied, “Yes.” Post this answer, the conversation played out somewhat like this:

Dad: What if you are pick pocketed?

Me: That is sheer bad luck. There is nothing one can do about it.

Dad [Smiling]: There is a difference between hard luck and being foolish at your own will.

This remark did irritate me slightly.

Dad [Noticing the change in my expression]: Have you ever noticed how I keep my cash?

Me: Yes you keep some in your shirt, some in your right pant pocket and some in your inside pocket.

Dad [Smiling again]: Good. Have you ever thought why I do this? It is because if I am pick pocketed then I don’t have to worry as I will have some money in a different pocket which will help me reach home safely.

Honestly, that was a cool and helpful advice. Post this, he went on to share some more insights which I have shared below.

#1 Diversification is the key. Whether it be as big as managing your money portfolio or something as small as carrying your money, some assortment is important. In case of investments, you have to ensure that you try to cover considerable number of options, as per your risk appetite.

#2 Distance of pocket is directly related to the nature of your expenses

As my dad’s shirt pocket is the closest, it meets his daily expense requirements like travel, paying for a small snack in the evening etc. Similarly, the liquid amount in your bank account or hard cash has to be on you to meet you low-magnitude expenses.

The pocket in your trousers represents the requirement for short term plans like going for a short trip, buying a good watch or phone among other things. Finally, the inside (secret) pocket where my dad keeps a major chunk of his money is most difficult to access and he generally avoids taking out money from this pocket. As he mentions, this money generally represents savings for your long term requirements like marriage, education etc.

#3 Saving the best for the last: – Limit the use of credit cards

To be absolutely clear, my father is not at all against the use of credit cards and for myself, I have a couple of cards that are used to purchase tickets or pay online fee, pay taxes etc. That being said, he is against spending a portion of the money that you haven’t earned and on things you might not require. So the basic idea is to avoid spending money on luxuries that you have not earned or by taking money on credit from the bank.

Conclusion

In my brief but absolutely helpful conversation with my father, I learnt amazing money lessons that you might find in text books/lectures/seminars but don’t care to implement the same in a disciplined manner. I sincerely hope that my learning has made good sense to you and in case you have any doubts/suggestions for me, please feel free to reach out.

Cheers.

Because Wealth Is a Matter Of Choice, Not Chance.

This post has been contributed by our guest contributor Mohit Arya with help from the Fintuned Editorial team.Most people fail to realize that in life, it’s not how much money you make. It is how much money you keep,” writes Robert Kiyosaki in the personal-finance classic, “Rich Dad Poor Dad.” scrooge-mcduck

On this note, I am glad to share my first post on how a salaried people should aim at creating wealth. Let me clear it first. Putting money in savings account giving you 4% or 6% return does not count as an INVESTMENT, at least a smart investment. The interest you get is too nominal to make your dreams come true.

Continue reading “Because Wealth Is a Matter Of Choice, Not Chance.”

Is Filing Your IT Return a Pain? Well, One Aspect Solved.

In our journey of associating with people to help them out with a myriad of money management queries, the frequent ones have been related to maintenance of documents and submission of same while dealing with regulatory requirements.

Documentation

So, as a starter from our side we thought of compiling a quick list of documents that are required while filing your tax return. Take a stab at it:

1. PAN Number Verify it online with I.T department by going through this link : https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html
2. Form 16 – for Salaried  A statement issued by your employer which has details of your Salary, the taxable salary amount after various perks and allowances, the TDS deducted by your employer, the deductions you have claimed and the overall tax due.
3. Documents rcomeelated to Interest Income
  • Bank statement/passbook for interest on savings account.
  • Interest income statement for fixed deposits.
  • Debentures yielding interest
  • TDS certificate issued by banks and others, in case tax has been deducted on your interest income
4. Form 26AS It reflects all the Income Tax received by the I.T. Department with respect to you. This is a tax credit statement which shows TDS payments, voluntary tax payments made by you. Form 26AS should match all tour TDS certificates. Link to view Form 26AS : https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html?nextPage=taxCred
5. Sec 80C investment documents
  • Your contribution to PF, NSC, ELSS, ULIP, RGESS etc.
  • Your children’s school fees
  • Life insurance premium payment
  • Stamp-duty and registration charges
  • Principal repayment on your home loan

Maximum deduction can be claimed up to Rs. 1.5 lakh

6. Sec 80D Medical Documents ·   Premium receipt for medical insurance premium paid for self, family and dependent parents.
7. Sec 80G – Charitable donation statements ·   Receipt issue by the charitable organisation

·   Pan number of the charitable organisation

8. Interest paid on a housing loan Interest on housing loan is eligible for tax saving up to Rs 2.5 lakh. This is for a self-occupied house.
9. Stock Trading Statement The stock trades that were made during the year may attract Capital Gain tax.
10. If there is income residential property ·    Housing Loan repayment certificate

·    Municipal Corporation Tax Receipt

 

 

Everything There Is To Know About HRA

An exhaustive FAQ with respect to HRA that everyone needs to keep handy.

  1. What is HRA?

HRA or House Rent Allowance is a grant provided by employer to employee to meet the cost of living in a rented house at the employer’s work location. Such HRA forms parts of the salary that employee receives from employer every month.

  1. What is the tax exemption available in relation to HRA?

Least of the following is exempted:

  •  Actual HRA received from the employer
  •  Rent paid – 10% of the salary
  •  50% of Salary, in case the employee resides in metro cities, otherwise 40% of salary
  1. I stay with my parents/relatives. Can I take HRA benefit?

Of course, you can! However, this is only possible if you have entered into an agreement with them and actually make the payment every month, preferably by cheque.

*Quick tip*: Avoid claiming tax benefits on rent payments made to the spouse as the arrangement can be characterized as a sham transaction, say experts.

  1. Can I pay rent by cash?

Yes, you can. However, it is advisable to make bank transfers or cheque payments for future references.

  1. How does HRA flow back to the owner/parents?

Owner/Parent will taxed for the rental income after a 30% deduction.  If they are retired and do not derive any significant taxable income, the rent would be tax free in their hands.

*Quick tip*: It gets better if the property is jointly owned by both parents. Then you can divide the rent two-ways so that the tax liability gets split between the two individuals.

*Quick tip*: If their income exceeds the basic exemption limit, you can help them save tax by investing in their name under Section 80C options

  1. Can I claim HRA and Home loan deduction at the same time?

Yes, only where you are staying and paying rent as well. One of the cases this is frequently seen is where home is bought are in 2 different cities.

  1. I am a self-employed person, Can I claim HRA?

No, as you are not receiving a formal salary. However, you can claim a deduction under section 80GG of the Income Tax Act for the rent incurred on the residence.

  1. What is considered as an evidence that I am paying rent?

Rent agreement or rent receipts is the proof. Please note that you will have to submit copies of rent receipts or rent agreement, depending on what your organisation stipulates.

  1. Is there any role of PAN card number here?

Yes, if rent paid by you is more than Rs. 1 lac per year, you need to submit pan card details of the owner. In case the owner do not have Pan Card, a declaration will do.

  1. Is there any particular format for rent receipt?

No particular format for rent receipt has been specified, but please ensure it mentions the following relevant information:

  • Amount of rent paid
  • Period/month
  • Mode of payment (Cheque/Cash)
  • Your name
  • Landlord’s name
  • Landlord’s signature
  • Residential address
  • Date & Place
  • A revenue stamp of Rs 1 for payment (both cash/cheque) exceeding Rs 5,000

If there are any further doubts that you may have, please reach out to us.

Cheers,

Mihir

Picking a Stock? It is Your Call.

Your smartphone, your job, your house etc. are all significant decisions that you made on your own accord. Sure, you had all the help in the world but the final call was taken by you. Do you agree?

However, when it comes to stock selection we heavily rely on someone (might be the broker, accountant or even that friend who is a DJ and might have minimal idea on picking companies). A very dear friend of mine who is a long-time contributor to famed investment websites in the US keeps telling me this “In the US, people read and then make their choice in most cases. However, in most cases in India, we readily invest in a company (you would want to time the market, wouldn’t you?) and then read, if time permits.

To be honest, I do not have statistics to prove it but even with a minimal sample of people we have seen this at play. However, we love to talk more about the solution than the problem and the simple solution here is “to initiate and cherish the idea of incessant reading so that we can become graduate to becoming better investors and not just stock market participants.

How do we do that?

As Travis Kalanick mentioned today at the Startup India Conference, problem solvers are innovators and innovation alone is the key to tackling a challenge. The Indian Equity markets have undergone a massive change with the oncoming of discount brokers like Zerodha, RKSV and others. Almost exclusively, this disruptive force has altered and continues to change the landscape of stock market broking in India. Owing to a lean model of operations, they have thought people to research on their own and place their bets with complete onus.

In that respect, we have also initiated a small but definitely notable exercise here at Fintuned. Just last week, we commenced the publication of research reports on Indian companies. When we started, the reports contained an explicit recommendation on the strategy to be adopted for that particular stock. However, we have changed that.

Since our last report, we have decided to release a complete SWOT analysis of the company without any word on the strategy. So, our idea is to foster knowledge and opinion about the stock but not the decision. Any reader who goes through the SWOT analysis will only have to study a lot more to take a final call on her position in the stock. Therefore, our reports will only affirm facts but the home run will be hit by you.

It goes without saying that the final decision is always taken by the reader but rather than being a buy, sell, hold voice in her head, we prefer being a mere step in the entire process.

So, head straight to our research section and check out our latest release.

Cheers,

Mihir

There Is No Free Lunch, Is It?

This article has been contributed by Riddhi Kharkia, with inputs from the entire team.

Okay, so there is an ad that has been playing for long and if you are a big cricket buff (read: IPL devotee), you surely couldn’t have missed it (okay, have you made your guesses). Let me give it away to you because this post wouldn’t begin without the name of the brand behind these advertisements. The ad that I am talking about is “Freecharge”. To be honest, the series of ads conceptualized by Freecharge have brilliantly summarized the significance of this service/brand.

Now, you must be definitely wondering—how on Earth is the Freecharge ad related to money management or this blog. Since it is no quiz and unfortunately you would not be getting points for figuring out the connect, let me give this away as well. Basically, seeing this ad, I thought of citing the incomes that are “free” of “charge” by the Government of India. So, you know what we mean by Freecharge 😉

Coming straight to it, tax is payable on all incomes earned in India by an Indian resident. However, there are some exceptions to this rule and certain categories of income have been specifically exempted from tax. Such incomes are known as Tax-free incomes.

Here, we are presenting the most common tax-free incomes that every tax payer should be aware of. The joy of tax-free income is beyond measure.

  Income Details
1. Interest on Savings Bank Account –   Tax free up to Rs. 10,000
2. Long-term Capital Gain on Sale of Shares/Mutual Funds – Wholly exempted from tax- Shares/Mutual Funds should be held for minimum 12 months

– Security transaction Tax (STT) must be paid while purchasing

3. Interest  or any payment received on PPF/PF –   Wholly exempted from tax
4. Dividends from Shares /Income from Mutual Funds –   Wholly exempted from tax-   Dividend must be received from Domestic company only
5. Educational Scholarships –   Wholly exempt from tax, in the hands of the person who receives it-   Not necessarily a government-financed scholarship
6. Amount received through Will or Inheritance –   Wholly exempted  from tax-   But when the amount is invested, only the income earned on that amount is taxable
7. Amounts received by way of Gift on Marriage –   Wholly exempted  from tax-   Gift can be anything and from any person
8. Money received from your EPF account –   Wholly exempted from tax, provided money is taken out after 5 years of continuous service
9. Money got under Voluntary retirement Scheme (VRS) –   Tax free up to Rs, 5,00,000-   Employees of Public sector companies or an authority established under a Central or State govt are also eligible
10. Leave Travel Allowance (LTA) received from the employer – Tax free up to the amount of bills of travelling provided
11.  Maturity or Claim or Surrender amount received by Life Insurance Company – 100% tax-free provided the premium paid did not exceed 20% of the sum assured.

Well this is it!

If you are aware of some income that we might have missed out in the list, then please mail us/comment on this article and we promise to make the change.

Thank you for your patience.

Cheers.