Our article Pradhan Mantri Suraksha Bima Yojana,Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojna gives an overview of the Pradhan Mantri Suraksha Bima Yojana,Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojna. There were many questions, some repeated, which were asked like List of Banks which are offering these schemes, does nominee have to pay premium, if we many saving bank accounts then can we enrol for multiple times. We have tried to collect answers to those questions here.

Who will provide the insurance ?

The scheme would be offered through LIC and other Life Insurance companies in collaboration with participating Banks. The Insurance policy will be a group insurance policy. Group Insurance policy is one of the insurance policies where large number of people are covered under the single policy, it is issued to insure the life or health of a specific group of people, the contract which is formed for the group insurance policy is called as a Master group insurance contract.  An example of group insurance is the Health insurance provided by the various companies to their employee as a part of employee benefit scheme.

To save administrative costs, there is often a Master Policy Holder who will retain the documentation on behalf of the members, and may deal with the members on behalf of the insurer. Participating Banks will be the Master policy holders. A simple and subscriber friendly administration & claim settlement process shall be finalized by  chosen insurance company in consultation with the participating bank.

What will be the role of the insurance company and the Bank?

The scheme will be administered by LIC or any other Life Insurance company which is willing to offer such a product in partnership with the bank. Participating banks will be free to tie up with any such life insurance company for implementing the scheme for their subscribers. For example HDFC Bank has tied up with LIC for Pradhan Mantri Suraksha Bima Yojana  and United Insurance for Pradhan Mantri Jeevan Jyoti Bima Yojana

Responsibility of the Bank will be to recover the premium, as per the option, from the account holders on or before the due date through auto-debit process and transfer the amount due to the insurance company. Enrollment form / Auto-debit authorization / Consent cum Declaration form, as required, shall be obtained and retained by the participating bank.

In case of claim, insurance company may seek submission of the same. Insurance Company also reserve the right to call for these documents at any point of time.

Will this cover be in addition to cover under any other insurance scheme the subscriber may be covered under?

Yes. It is over and above any other covers that you have. So if you have any personal accident or life insurance policy you can claim from that policy and this one. Please note that insurance cover for PBJJBY & PMSBY will be for 2 lakh only.

Can one subscribe to both Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY) policy?

Yes one can enrol for both Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY).

If one enrols for  Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)  and pays all the due premiums then if death happens through natural or accident till  subscriber is 55 years of age nominee will get 2 lakh.

If one enrols for Pradhan Mantri Suraksha Bima Yojana (PMSBY)  and pays all the due premiums then if death happens ,due to accident ,only till 70 years of age nominee will get 2 lakh. Incase of natural death nominee will not get 2 lakh. In case of Disability of both eyes, both hands, both legs or one eye and one limb due to accident one will get Rs 2 lakhs. And  for  Disability of one eye or one limb  one will get Rs 1 lakh

If one has many saving bank accounts, can one get multiple insurance policies? In case of multiple saving bank accounts held by an individual in one or different banks, the person would be eligible to join the scheme through one savings bank account only. So You can have one type of insurance policy per saving bank account.So with same saving bank account you can take 1 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & 1 Pradhan Mantri Suraksha Bima Yojana (PMSBY). One can also take Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) from 1 saving bank account  & Pradhan Mantri Suraksha Bima Yojana (PMSBY) from other saving bank account.

But one cannot enrol for more than 1 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) or  Pradhan Mantri Suraksha Bima Yojana (PMSBY) policy. In case one buys Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) Pradhan Mantri Suraksha Bima Yojana (PMSBY)  covered through more than one account and premium is received by insurance company , insurance cover will be restricted to Rs. 2 Lakh and the premium shall be liable to be forfeited.

Consent cum declaration form of the scheme says.

I declare that I am not insured under Pradhan Mantri Suraksha Bima Yojana under any other Savings Bank Account. In case the same is found to exist, premium shall stand forfeited and no claims would be paid.

Can one transfer the Bima Yojna from one bank to another bank?

Say one enrols for scheme in one bank account but then has to close his bank account  Will it be possible for one to transfer from one bank account to another? We could not find any details wrt to transfer of scheme and  that closure of bank account will terminate the cover. So we think it is not possible to transfer the scheme but one can close the saving bank account and open another one and enrol for scheme in the new bank account, if it provides. If you don’t do it in May when the premium will be auto debited You would have to pay premium two times one with old account and one with new account.

What does nearest birthday mean?

To calculate age and hence premium which depends on age, Life insurance companies use actual date or nearest birthday. Nearest Birthday Age calculates your life insurance age based on your nearest birthday, which could be either your last birthday or your next.  Here’s how it works.

If your date of birth is Apr 15,1960 and you are enrolling on Apr 16 2015 then as per your nearest birthday , your age is 2015-1960 = 55 years . This is similar to actual age.

Butt nearest birthday on Nov 21,2015 would be 56 years i.e 2015-1960+1 as you would nearer to your 56th birthday than 55th birthday. So after 6 months from your birthdate you have to take your add 1 more to your current age.

Till when can one enrol in these policies?

Initially on launch for the cover period from 1st June 2015 to 31st May 2016 subscribers are expected to enroll and give their auto-debit option by 31st May 2015, extendible up to 31st August 2015. Enrolment after 31 Aug 2015 will be possible prospectively on payment of full annual payment and submission of a self-certificate of good health.

Can eligible individuals who fail to join the scheme in the initial year join in subsequent years?

Yes, on payment of premium through auto-debit and submission of a self-certificate of good health. New eligible entrants in future years can also join accordingly.

Can individuals who leave the scheme rejoin?

Individuals who exit the scheme at any point may re-join the scheme in future years by paying the annual premium and submitting a self declaration of good health.

What happens when one dies does nominee have to pay the premiums?

No the nominee would NOT have to pay remaining premium. Like any other insurance policy, when the subscriber to Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) or Pradhan Mantri Suraksha Bima Yojana (PMSBY) passes away but has paid all the due premiums till then, his nominee will get the assurance cover i,e 2 lakh if conditions are met. For example nominee cannot claim Pradhan Mantri Suraksha Bima Yojna if one passes away via natural death.

When can the assurance on life of the member terminate?

The assurance on the life of the member shall terminate / be restricted accordingly on any of the following events:

• On attaining age 55 years (age near birth day), subject to annual renewal up to that date (entry, however, will not be possible beyond the age of 50 years).
• Closure of account with the Bank or insufficiency of balance to keep the insurance in force.

How will one claim the insurance on death of subscriber?

If the subscriber passes away then nominee has to inform the bank branch from which policy was taken. On receipt of death intimation, the servicing bank branch shall send the Claim form , Death Certificate, Discharge form and Certificate of Insurance from the nominated Beneficiary to Insurance company. On admission of the claim, the claim amount will be paid to the bank account of the nominee with intimation to the designated branch of the Bank . In case of requirements or claim is not accepted, the same will be intimated to designated branch of the Bank. Please inform the nominee of the paper work.

Links to Claim form for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) from jansuraksha.gov.in are here English(pdf format) and Hindi(pdf).

Links to Claim form for Pradhan Mantri Suraksha Bima Yojana (PMSBY) from jansuraksha.gov.in are here English(pdf format) and Hindi(pdf).

Should one subscribe to Pradhan Mantri Suraksha Bima Yojana (PMSBY)  scheme?

For 12 Rs per annum it does not require much thinking. If one enrols at age of 18 and does not claim it till age of 70 the total premium he would have paid is 12*52(70-18) = 624 Rs for a cover of 2 lakh. State Bank of India Savings Bank Account holders can enrol for  Personal Accident Insurance cover issued by SBI General Policy  Two variants are available:

• Cover of Rs. 2 lac for an annual premium of Rs. 100
• Cover of Rs. 4 lac for an annual premium of Rs. 200

Should one subscribe to  Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)?

It depends. The insurance for Pradhan Mantri Jeevan Jyoti Bima Yojana  is till 55 years only and that too for 2 lakh.  Your insurance cover  depends on how much your family needs when you are not around and one should take it for at least till you retire. Remember that premium of life insurance increases if you subscribe to it at later age. In LIC , HDFC eTerm plan minimum sum assured is Rs 25 lakh. For organised sector like maids, drivers etc who don’t enrol for any insurance plan it is an option worth taking.  Whether it suits you , you need to take a call. But if earn more than 2  lakh this should not be the only life insurance cover you have. Our article  Checklist for buying Life Insurance Policy might be of help to you.

SMS from bank &  Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) or Pradhan Mantri Suraksha Bima Yojana (PMSBY) ?

Those who have bank account with banks like ICICI Bank, HDFC Bank would have got SMS similar to one given below.

Dear Customer, Get Rs 2 lac Accident Cover with Pradhan Mantri Suraksha Bima Yojna for an annual premium of Rs 12. To subscribe SMS PMSBY Y to 5676712 from your registered mobile number. Premium amount will be debited from Your HDFC Bank Savings Account. For T & C & other details click here

Please note, that if subscribe to scheme through SMS, Nomination details as updated in the bank account will be taken. In case the customer is interested in updating details which are different from those in the Bank account, the customer is requested to contact the nearest branch for subscribing the policy. No separate intimation shall be provided for the same. The customer response received through their registered mobile number shall be considered as consent for auto debit from there savings bank account. By giving his/her consent to the scheme via sms based subscription / email based subscription / consent form, the customer agrees to abide by the terms & conditions of the scheme & to conveying his personal details as required, regarding his admission into the Pradhan Mantri Jeevan Jyoti Bima Yojana/Pradhan Mantri Suraksha Bima Yojana  to HDFC . He also agrees that all information shared by him will form the basis of admission to the above scheme and that if any information be found untrue, his membership to the scheme shall be treated as cancelled.

How do one find which Insurance company is tied up with the bank?

It would be mentioned in Terms and Condition and also in Consent-cum-declaration form. Either or both of the sentences given below tell which Insurance company has the bank tied up with

Name of Insurance company for PMJJBY and PMSBY

How is the response to the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY)?

You can track the response to the schemes by going to jansuraksha.gov.in/REPORTS.aspx. Excerpt from report of 11 May 2015 is given below

Summary Reports of PMJJBY, PMSBY & APY

List of Banks offering the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Insurance companies providing Insuance for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY) are National Insurance, United India Insurance, ICICI Lombard, Cholamandalam MS, New India Assurance, Universal Sompo, Bajaj Allianz, Reliance General Insurance. We shall be updating the tables as more information becomes available.

Pradhan Mantri Suraksha Bima Yojana

PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA (PMJJBY)

Related Articles:

• Pradhan Mantri Suraksha Bima Yojana,Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojna
• Atal Pension Yojna
• Saving For Retirement : Pension Plans,NPS,EPF,PPF
• Discontinue Life Insurance Policy: Surrender,Paid Up,Loan
• Investing:Think about Liquidity,Safety,Returns,Risk,Tax

Hope these helped to clarify questions regarding the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY). Did you subscribe to the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY)? Why or Why not?

Mobile App is the way going forward. There are many financial Apps but most of the Apps are developed specific to countries like US, UK and Canada etc. Apps specific to India are very very less, mostly are from the banks. Indian Post office schemes are ignored completely. Most of the Apps display the maturity amount of the schemes. But, they don’t give you monthly or yearly schedule. Financial Calculator India, by RK Labs, available on Google Play Store tries to fill the gap . It is exclusively for the people of India with the schemes available for Indian Banks, Post Office, Mutual Funds, etc. Our article covers the rising App culture in India, Financial Apps for India and then gives an overview of Financial Calculator India, by RK Labs , which helps people take informed decision about their finance thereby saving them a lot of time, money, effort, etc.

Apps and India

The new India,Facebook, Youtube,WhatsApp generation, is using the Internet  through the mobile. Accessing internet on mobile is more chat and app driven and very rarely does one use the browser.

Myntra, the country’s largest fashion retail portal, closed down its website on May 15th Friday and moved to an app-only platform.  The company says that 95 percent of Internet traffic comes through mobile, and 70 percent sales are generated through smartphones. So even if desktop users abandon the website, they aren’t really losing too much.  Many of us, the desktop generation, find the move to be a little ludicrous.

Indian Railways launched its ticket booking app for Android, Windows phones.On a pilot basis, the paperless ticketing system in unreserved segment will cover 15 stations in the suburban section of Southern Railway. Developed by Centre for Railway Information Systems (CRIS) “utsonmobile” – the paperless unreserved ticketing feature in mobile application aims to eliminate the need for printing of unreserved tickets. More than one crore passenger travel daily in unreserved segment and railways uses 1200 metric ton paper every year for printing unreserved tickets,

Some of the Apps on Finances on Android or Apple are given below

• ICICI Bank iMobile: Mobile banking application for regular consumers (Android),  ICICI Bank Mobile Banking – iMobile (Apple )
• Mobile Trading ICICIDirect.com: App for ICICI Direct users
• HDFC Bank MobileBanking (Android) HDFC Bank MobileBanking (Apple)
• State Bank Anywhere(Android), State Bank Anywhere (Apple)
• State Bank Kahin Bhi (Android): Mobile banking app in Hindi
• LICMobile (Android): Mobile app for Life Insurance Corporation of India customers
• Reliance Mutual Fund (Android),Reliance MutualFund (Apple) Mobile app for Reliance Mutual Fund
• NSE Mobile Trading  (Android),NSE Mobile Trading (Apple) NSE Mobile Trading system provides an application suite featuring comprehensive trading and market monitoring platform
• My Tax India (Apple)
• Business Today (Android)
• Money View: Financial Planning organizes your financial summary by analyzing SMS sent by your bank and billers to your phone.

For list of Android Apps for India one can checkout www.androidos.in and iTune for Apple Apps or AppBrain. Top Finance Apps on Google PlayStore

App Financial Calculator of India

A financial calculator exclusively for the people of India with the schemes available in Indian Banks, Post Office, Mutual Funds, etc. This App provides the following calculators for both Android Mobile Phones and Tablets. It can be downloaded from https://play.google.com/store/apps/details?id=com.rkayapps.financeindia. It has been developed by RK Labs

Bank Calculators:

• Loan (EMI) Calculator
• Fixed Deposit – TDR Calculator
• Fixed Deposit – STDR Calculator
• Recurring Deposit (RD) Calculator

Bank & Post Office Calculators:

• Public Provident Fund (PPF) Calculator
•  Sukanya Samriddhi Account (SSA) Calculator

Post Office Calculators:

• Monthly Income Scheme (MIS) Calculator
• Recurring Deposit (RD) Calculator
• Time Deposit (TD) Calculator
• Senior Citizens Savings Scheme (SCSS) Calculator
• National Savings Certificate (NSC) Calculator
• Kisan Vikas Patra (KVP) Calculator

Mutual Funds Calculators:

• Systematic Investment Plan (SIP) Calculator

General Purpose Calculators:

• Simple Interest Calculator
• Compound Interest Calculator

Some images from the app are given below

Finance App for India

For Sukanya Samriddhi Account

App : Sukanya Samriddhi Account (SSA) Calculator

Calculator for Fixed Deposit, SIP

App for Bank Deposit, SIP in India

Advantages of the App Financial Calculator of India

There are heaps of financial calculator Apps on Apple App Store and Google Play Store. What’s special with this App? However,

• Most of the Apps are developed specific to countries like US, UK and Canada
• Most of the Apps are generic and developed to be used by all the country people
• The Apps specific to India are very very less
• Indian Post office schemes were ignored completely
• The Apps developed by Indian developers addresses schemes like EMI, Fixed Deposit and Recurring Deposit schemes. However, they made them generic and doesn’t stand specific to any financial institution
• Most of the Apps display the maturity amount of the schemes. But, they don’t give you monthly or yearly schedule. So, you have no way of knowing how your investments are growing
• There are heaps of EMI calculators available and it shows that people have more debts than investments
• Millions of Apps in the App Store doesn’t mean that people have got all the required financial tools

RK Apps has done these detailed analysis and found that there is a gap and it needs to be filled. That’s why they came up with Financial Calculator India App to address the above mentioned concerns.

About RK Apps

The founders of RK Apps are IT Professionals, (worked for and ) working for major IT companies in India and Australia. RK Apps has a passion for finance and finance related tools. Also, RK Apps wants to make people’ life financially healthy. To accomplish this passion, RK Apps has developed and published many finance related Android Apps on Google Play Store. These tools help people take informed decision about their finance thereby saving them a lot of time, money, effort, etc.

Related Articles:

• Sukanya Samriddhi Calculator
• Employee Provident Fund Calculator
• Quiz: Do you know your finances
• Calculate Returns on Investments
• Understanding Ex Showroom Price and On Road Price of Vehicle
• Understanding Public Provident Fund, PPF

Do you think Apps are the future? Will desktop just go away? Which are the popular Apps that you use? Have you used the financial Apps ? Have you used your Bank App on your SmartPhones? Why or Why not?

This article covers the Tax rates on Mutual Funds for the financial year 2014-15 or Assessment Year (AY) 2015-16. This would be useful for filing Income Tax return which needs to be filled by 31 Jul 2015 if you have Mutual Funds. Our article Tax and Mutual Funds covers in detail are Mutual Funds tax free or taxed, what are taxes associated with Mutual Funds,what factors affect tax on Mutual Funds,What are Capital Gain? Our article Income Tax for AY  2015-16: Tax slabs, ITR Forms covers the filing of Income Tax Return.

Overview of Mutual Funds and Tax

Tax on Mutual Funds depend on the type of Mutual Funds, type of Investor and type of Income earned from Mutual Funds. The image below gives an overview

Tax on Mutual Funds

Tax and Dividends on Mutual Funds

Dividends are paid during the time one is invested in the fund. Dividends are tax free in hands of investor and is exempt income but still has to be shown in Income Tax return. The Mutual Fund pays Dividend Distribution Tax based on type of fund. Dividends are not guaranteed and the mutual fund is not under any obligation to announce a dividend. Dividend amount or when it will be declared is also not fixed.  The amount of dividend that is declared will be reduced from the Net Asset Value (NAV). Tax Implications on Dividend are given in table below. 

* Securities transaction tax (STT) will be deducted on equity funds at the time of redemption/ switch to the other schemes/ sale of units.

** With effect from 1 October 2014, for the purpose of determining the tax payable, the amount of distributed income has to be increased to such amount as would, after reduction of tax from such increased amount, be equal to the income distributed by the Mutual Fund.

Capital Gains and Mutual Funds. 

Capital gains come into play when one redeems the Mutual Fund Units. The capital gains could be either long term capital gain or short term capital gain. For Systematic Investment Plan or SIP  every investment has to be considered  separately and time period calculation has to be done from the date of SIP investment. Our article Basics of Capital Gain explains Capital Gain in detail. Our article Cost Inflation Index,Indexation and Long Term Capital Gains explains how to use indexation for Long term capital Gains. Our Capital Gain Calculator can be used to find Capital Gains.

• Long Term Capital Gain  In equity oriented mutual funds, any holding over a period of 1 year is considered as long term. So if you have a gain on your investment in a mutual fund scheme that you have held for over 1 year, it will be classified as Long Term Capital Gain. In non equity Mutual funds,after 10 Aug 2014, period of holding of 3 years to be classified as Long term.
• Short Term Capital Gain  For Equity Oriented schemes holding period is less than 1 year. For non equity oriented schemes there was change in Aug 2014.
  • Before Aug 2014 If your holding in a non equity oriented mutual fund scheme is less than 1 year i.e. if you withdraw your investment in a mutual fund scheme before 1 year, after making a profit, then the profit will be considered as Short Term Capital Gain)
  • After Aug 2014 If your holding in a non equity oriented mutual fund scheme is less than 3 years i.e. if you withdraw your investment in a mutual fund scheme before 3 years, after making a profit, then the profit will be considered as Short Term Capital Gain)
• Education Cess at 3% will continue to apply on tax plus surcharge.
• Surcharge is levied on the individuals or companies if the income exceeds some limit. For example For FY 2014-15 :
  • Surcharge is levied at the rate of 5% for domestic companies having total income exceeding INR 1 crore but not exceeding INR 10 crores.
  • Surcharge at the rate of 10% to be levied if the total income of the domestic company exceeds INR 10 crore.
  • In case of Individuals / HUFs / Firms / AOP / BOI having total income exceeding INR 1 crore, surcharge to be levied at the rate of 10%.

Mutual Funds Long Term Capital Gains

Short Term Capital Gain Tax and Mutual Funds

Mutual Funds and Short Term Capital Gains

Mutual Funds, TDS & NRI

On Short term/ long term capital gain, tax will be deducted (TDS) at the time of redemption of units in case of NRI investors only. Rate of deduction for FY 2014-15 is given below. Our article NRI : TDS,Tax and Income Tax Return explains who is NRI,Tax and TDS on various kinds of income for NRI, example bank accounts,fixed deposits,mutual funds,stocks etc. How to use DTAA? When should NRI file Income Tax Return?

TDS on Mutual Funds for NRI

Securities Transaction Tax or STT

STT or Securities Transaction Tax

Surcharge at 12% to be levied in case of individual/ HUF unit holders where their income exceeds Rs 1 crore.

Dividend Stripping: The loss due to sale of units in the schemes (where dividend is tax free) will not be available for set off to the extent of tax free dividend declared; if units are: (A) bought within three months priorto the record date fixed for dividend declaration; and (B) sold within nine months after the record date fixed for dividend declaration.

Bonus Stripping: The loss due to sale of original units in the schemes, where bonus units are issued, will not be available for set off; if original units are: (A) bought within three months prior to the record date fixed for allotment of bonus units; and (B) sold within nine months after the record date fixed for allotment of bonus units. However, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such unsold bonus units.

Related Articles:

• Tax and Mutual Funds
• Growth and Dividend Option in Mutual Funds
• Mutual Funds : Why Indians don’t invest
• Returns of Stock Market, Gold, Real Estate,Fixed Deposit
• Capital Gain Calculator
• Income Tax for AY 2015-16: Tax slabs, ITR Forms

Hope it helped you understand the Tax Rates on Mutual Funds for FY 2014-15.

“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes,”  Benjamin Franklin, one of the founding fathers of the United State of America,wrote in a 1789 letter . Benjamin Franklin is on the 100 dollar US note. Are Mutual Funds tax free or taxed, what are taxes associated with Mutual Funds,what factors affect tax on Mutual Funds,What are Capital Gain? This article explores Tax and Mutual Fund in depth. For tax rates on Mutual Funds in FY 2014-15/AY 2015-16 you can read Mutual Funds and Tax Rates for FY 2014-15.

Tax and Type of Mutual Funds

Tax on Mutual Funds depend on the type of Mutual Funds. There are various kinds of Mutual Funds such as Equity Funds(Large Cap,Mid Cap), Balanced Funds,Sector Funds, Debt Funds, Gold Funds , Exchange Traded Funds etc. For tax purposes Mutual funds are divided into two categories Equity Funds and Non Equity Funds.

• The Mutual Funds where equity holding is more than 65% of the total portfolio are categorized as Equity Funds. Securities Transaction Tax (STT) is levied on redemption of Equity Mutual Funds irrespective of the holding period
• Other Mutual Funds come under Non Equity category Examples: Debt Funds,Liquid Funds, Fund of Funds (mutual funds which invests in other funds), International funds (funds which have more than 35% exposure to international equities)
• Exchange Traded Funds (ETF) are treated as equity or non equity fund depending upon the underlying security. If it invests in domestic equity it will be equity fund, otherwise non equity.

Mutual Funds Tax and type of Investor: Individual,Company,NRI

Your Tax Status is also important to determine the tax implication on your investment in a mutual fund. The various kinds of investors in Mutual Funds are

• Resident Individual
• Hindu Undivided Family (HUF)
• Partnership Firm / Association of Person (AoP) / Body of Individual (BoI)
• Domestic Company
• Non Resident Indian (NRI)

Income earned from Mutual Funds ividends, Capital Gain and Mutual Funds

In mutual funds, you can earn income in the form of dividends and capital gains.

• Dividend are paid during the time one is invested in the fund. Dividends are tax free in hands of investor and is exempt income but still has to be shown in Income Tax return. The Mutual Fund pays Dividend Distribution Tax based on type of fund. Dividend is discussed in detail here.
• Capital gains come into play when one redeems the Mutual Fund Units.  If one sells an asset such as bonds,  shares, mutual fund units, property etc, one must pay tax on the profit earned from it. This profit is called Capital Gains. The tax paid on this amount of capital gains is called Capital Gains Tax. Conversely, if you make a loss on sale of assets, you incur a Capital Loss. Gains, which arise from the transfer of capital assets, are subject to tax under the Income-tax Act.  For the purpose of Income Tax, income is classified under the following heads: Salary, Income from house property, Profits and gains of business or profession, Capital gains,Income from other sources. Capital Gains can be further classified as Long Term Capital Gain and Short Term Capital Gain.  depending on type of asset and  period of holdingOur post Income tax overview deals in detail on what is the type of income and calculation of Income tax. Capital Gains from Mutual Funds come under category of Income from Capital Gains. 

Mutual funds usually offer three options to investors: Growth, Dividend payout and Dividend reinvestment.    Our article Growth and Dividend Option in Mutual Funds discusses it in detail but an overview is given below

Dividends and Mutual Funds

Typically dividend is associated with stocks. A dividend is a portion of a company’s earnings that is returned to shareholders. But with Mutual Funds dividends are different. A mutual fund does not declare dividend from its own pocket but dividend  is drawn from the Net Asset Value or NAV. If the  fund has an NAV of 50 and declares a 20% dividend ( 2 on a face value of 10), the NAV will fall to 48 after paying the dividend. The amount of dividend that is declared will be reduced from the Net Asset Value (NAV), so effectively your net wealth does not change. So basically Dividend in a mutual fund is your own money coming back to you.

Under dividend option, the mutual fund will pay you from the profits made by the scheme at periodic intervals .  However, these dividends are not guaranteed and the mutual fund is not under any obligation to announce a dividend. Dividend amount or when it will be declared is also not fixed.

Dividends are not taxable at the hands of investors, well not directly, but Mutual Fund companies have to pay Dividend distribution tax or DDT based on type of schemes,such as non equity based schemes, and the NAV will come down that much. For example if you hold a fund with an NAV of Rs. 22, and it pay out Rs. 2 per unit as dividend, it will pay a DDT of Rs. 0.5 (25% of dividend) and the NAV will fall down to Rs. 9.5. For individual investors, the DDT is 28.32 per cent (inclusive of surcharge)..

Dividend Payout & Dividend Reinvestment

• Dividend Payout Option: Dividend is paid out to the investor. NAV  of Mutual Fund is reduced. 
• Dividend Reinvestment Option:
  • Under this option, the dividend is not paid to the investor but is used to buy more units of the scheme on his behalf.In dividend reinvestment option too  instead of giving profit  as cash, they are allotted to you as units at the prevailing NAV. Hence, indirectly, by adding more units, you simply stay invested in the fund. Conceptually, the dividend reinvestment option is the same as growth option for all equity funds.
  • As with dividend payout, the NAV of the scheme falls after the dividend is paid.
  • Though the dividend reinvestment option does not effectively make any difference in the value of the investment, Please note that reinvested dividend is treated as a new  investment. This means in the case of tax-planning funds, ELSS  a fresh lock-in period comes into effect .  So in Jan 2015 AMFI, the governing body of Mutual Funds asked the Mutual Funds not to  give Dividend Reinvestment option under the equity-linked savings schemes (ELSS).

Though Dividends are not taxable in hands of investors they need to be shown in the Income Tax Return Form as Exempt Income. Our article Exempt Income and Income Tax Return explains it in detail

Growth option of Mutual Funds

• Under the growth option, the Mutual Fund does not pay any dividend, but continues to grow.You will not get any payout in between,  However, the NAV may fluctuate depending on how the markets behave from time to time.
• You will get your returns only on selling the units.  
• Tax  liability arises only when you decide to redeem your holdings and depends on the period for which you remain invested in that scheme and is classified into Long Term capital gain/

What is Long Term Capital Gain & Short Term Capital Gain?

There are 2 types of capital gains Short Term Capital Gain and Long Term Capital Gain, based on how long the asset was held. Immovable property and unlisted shares become long-term assets when held for more than 36 months; in case of listed shares, the period of holding is just 12 months for the categorisation. Our article Basics of Capital Gain explains Capital Gain in detail. Our article Cost Inflation Index,Indexation and Long Term Capital Gains explains how to use indexation for Long term capital Gains.

Table below lists the Capital gain tax based on Type of assets and Time of holding, indexation used or not for an Individual. There have been slight changes in Aug 2014 when for long term capital gain holding period for debt mutual funds and Fixed Maturity Plans(FMP) was increased from 1 year to 3 years and calculation of Tax without indexation at the rate of 10% was removed. Our Capital Gain Calculator can be used to find Capital Gains on different kind of assets. Our article Redeeming Mutual Funds : Check Exit Load,Taxes talks about things one need to consider when one redeems Mutual Funds.

SIP,Lump Sum and Mutual Fund Tax

Systematic Investment Plan or SIP  is when a regular sum of money is invested each month on a fixed date. This gives various benefits including that of regular investment as well as rupee cost averaging and hence experts and financial planners prefer this route. This however often leads to some confusion when it comes to calculating the tax on the gains earned on the investment.

In  a lump sum investment buying of mutual funds happen on a single day and selling of mutual funds on other day.  Period of holding is time between sale date and purchase date. So if Mr Verma bought mutual fund units on 1 st June 2013 and sold it on 12 May 2015 his period of holding of Mutual fund was 710 days. If he had invested in Equity Mutual Fund this would be long term capital gain. If Mr Verma had bought non-equity debt mutual funds then as it is less than 3 years it is short term capital gain.

For tax purposes, units of mutual funds schemes should be considered as separately date-stamped. That is, every unit will carry a date of allocation that would be the exact date of net asset value (NAV) allocation for that unit. This means that for the purpose of the calculation of the time period for investments through SIPs  every investment has to be considered  seperately and time period calculation has to be done from the date of SIP investment. When it comes to the Systematic Investment Plan one has to look at the individual cost for each of the transactions and then this will have to be compared to the sale price to arrive at the final capital gains that have actually been earned.

For example, An investor,Mr Sharma, started a SIP in equity fund from the 5th of  April 2014  for an year. If he sells on 20 May 2015 then

• On 20 May 2015 only two investment, one made in 5th Apr and one made in 5th May have completed 1 year. For these two investments as it is equity fund and 12 months are over, long term capital gain will come into play and Mr Sharma does not have pay any tax. For non-equity funds 3 years are required for calculation of long term capital gains.
• Rest of monthly investments from Jun 2014 to Apr 2015 have not completed the year. So for these investments , short term capital gain will apply. For For non-equity funds 3 years are required for calculation of long term capital gains.
• Please note that NAV of each instalment will be different. While on Selling, Selling price would be NAV for all instalments sold on the same date

Capital Loss and Mutual Funds.

What if I sell a fund that is performing badly?If you sell your holding within a one year period /3 year period for non equity funds and you make a loss, this is a short-term capital loss.  You can set off this loss against any other short or long-term capital gains that you make. But if you make a long-term capital loss on an equity fund, for instance, you cannot avail the set off as the gain itself is originally exempt from tax.

TDS and Mutual Funds

 There is no TDS or Tax Deduction at Source for Domestic Investors on redeeming any Mutual Fund. But TDS is applicable to NRI investors. Our article NRI : TDS,Tax and Income Tax Return explains who is NRI,Tax and TDS on various kinds of income for NRI, example bank accounts,fixed deposits,mutual funds,stocks etc. How to use DTAA? When should NRI file Income Tax Return?

Surcharge, Education Cess and Mutual Funds Tax

Surcharge is levied on the individuals or companies if the income exceeds some limit. For example For FY 2014-15

• Surcharge is levied at the rate of 5% for domestic companies having total income exceeding INR 1 crore but not exceeding INR 10 crores.
• Surcharge at the rate of 10% to be levied if the total income of the domestic company exceeds INR 10 crore.
• In case of Individuals / HUFs / Firms / AOP / BOI having total income exceeding INR 1 crore, surcharge to be levied at the rate of 10%.

Secondary and Higher Education cess is levied at the rate of 3% calculated on tax payable plus applicable surcharge

Related Articles:

• Investing in Equities: Stocks vs Mutual Funds
• Investing in Mutual Funds for Beginner
• TDS, Form 26AS and TRACE
• Understanding Form 16: Part I
• Income Tax for Beginner, Income Tax For Beginner – Part II
• Mutual Funds and Tax Rates for FY 2014-15.

Hope it helped you to understand taxes on Mutual Funds? Do you go for Dividend option or Growth option of Mutual Funds.

For an Employee whose employer is making EPFO Contribution Universal Account number or UAN number is allotted. This article answers frequently asked questions like What is UAN number , What is Member Id and how does it differ from UAN number, What is registration of UAN number, How is UAN number allotted, What happens to UAN number when one changes job, Change of Job and UAN number,Request for this Member ID is already under process, What if two UAN numbers were allotted to someone, Mismatch in UAN and Member ID.

What is UAN number?

UAN is Universal Account Number. The UAN is a 12-digit  number allotted to employee who is contributing to EPF. Universal number is a big step towards shifting the EPF services to online platform and making it more user-friendly.  Please note that The universal account number remains same through the lifetime of an employee. It does not change with the change in jobs. 

What is importance of UAN number ?

Once you have the UAN number and you register it then you can check many details . Benefit Of Registration of UAN  at UAN Member e-Sewa Portal are as follows:

• You can download the updated EPF passbook. The passbook will tell you the EPF balance broken into Employee Contribution(EE) and Employer Contribution (ER). Also deduction fro Employee Pension Scheme (EPS). Sample passbook is shown below.
• You can link your previous PF accounts (before Oct 2014) which are not linked to UAN number.
• You can upload KYC data.
• You can change mobile no and email address.
• In Future You can apply for the online PF transfer through UAN itself. Currently it’s a separate process done through Online Transfer Claim Portal (OTCP). Going forward plans are that when employee changes job and new Member ID is allotted then transfer of old Member Ids would be done automatically.

What is Member ID? 

Employer submits the EPF(Employee Provident Fund) money to the EPFO (Employee Provident Fund Office)  on behalf of the employee. This includes both the employee contribution, employer contribution, Employee Pension scheme. Member Id or Member Identification Numbers is the number given by EPFO to allow the employer to submit EPF money of employee. It’s like Employer opens an EPF account for its employee and contributes to that account every month. Member ID is the account number of employee in the EPFO. When the employee changes the job then the new employer will open a new account number for it’s employee in EPFO. So a new Member ID will be allotted to employee. Member ID is same as PF number earlier. So you would have as many Member ID’s as the number of employers contributing on your behalf to EPFO. 

Member ID or PF Account Number is in the format given below. PF Account Number may not have Extension code. Ex: For someone who works in Bangalore the code can be BG/BNG/012345//789.

EPFO Office Code/Establishment Code(Max. 7 Digits)/Extension(Max. 3 digits)/Account Number (Max 7 digit)

How does Member ID differ from UAN number?

An employee will have one UAN or Universal Account number, which as the name implies will remain the same. It will maintain all your Member Ids.  Its like you can have multiple Saving Bank account but all these are tied to your one Permanent Account Number or PAN. So when you change your job and the new employer, if contributing to EPF, gives you a new Member ID. This new Member ID has to be linked to your UAN number.

• If the employee does not have a UAN number, probably because it’s his first job or he was working before Jan 2014 when UAN number process started. Then employer will request the EPFO to generate the UAN number for its employee along with Member ID.
• For an employee who already has a UAN number the employer will submit the request to EPFO to generate new Member ID for the employee and link it to the UAN number of the employee by filling Form 11.

How is UAN number allotted?

• The EPFO will allot employers the universal numbers of all employees for which employer makes EPF contribution.
  • If the employee does not have a UAN number, probably because it’s his first job or he was working before Jan 2014 before  UAN number process started. Then employer will request the EPFO to generate the UAN number for its employee along with Member ID.
  • For an employee who already has a UAN number the employer will submit the request to EPFO to generate new Member ID for the employee and link it to the UAN number of the employee by submitting Form 11 filled by new employee.
• The employer would then give the number to its employees, who need to provide their KYC (know-your-customer) details to the employer.
• The KYC details of employees would then be updated online on the EPFO website by the employer.
• An employee can also upload the scanned copy of the KYC document through the EPFO website once you are done with the UAN-based registration. However, your employer has to digitally verify your KYC details.

Every UAN will be linked to one or more Member Ids upto maximum of 10. It would help to track the EPF contribution throughout the entire career.

How to check status of UAN Number Online

Visit EPFO Portal (http://uanmembers.epfoservices.in) and check the Check UAN Status(http://uanmembers.epfoservices.in/check_uan_status.php).

You can use the link EPFO:Check UAN Status to verify whether UAN is allotted to you or not.

On Checking status I get Request for this Member ID is already under process. What does it mean?

When one checks the UAN status one might see message similar to Request for UAN for this Member Id ABC is already under process.(through ECR) since last 45 days. 

This means that the UAN process for Member ID is processing and your UAN number will soon be generated. How soon, is anyone’s guess,It can take around 2 months, but With EPFO embracing technology it would become faster as time progresses.

What is registration of UAN number?

To see the details Once you receive the Universal account number or UAN from your employer, you have to log on to the official website http://uanmembers.epfoservices.in. Click on Activate UAN Based Registration and enter your UAN, mobile number and member ID. Once you are registered you can download your UAN card, EPF passbook, link earlier PF Member Ids etc. Our article UAN or Universal Account Number and Registration of UAN explains the process in detail.

On trying to Activate UAN I get message Mismatch in UAN and Member ID? What does it mean?

When one tries to activate the UAN one might see message similar to Mismatch in UAN and Member ID .  

It means that the Member Id being used for Activation of UAN number and Member ID associated with UAN number does not match. It may be due to incorrect filling of Member Id.  Member ID or PF Account Number is in the format given below.

EPFO Office Code/Establishment Code(Max. 7 Digits)/Extension(Max. 3 digits)/Account Number (Max 7 digit)

Some tips while entering Member Id

• Please select  checkbox near I have Read and Understood the Instructions. (marked in Red colour in image below) to see the form
• By Selecting State and Office EPFO Office Code automatically gets filled. In case your office has multiple branches Your state may not be where you work but where your main office is situated. For example for a company with head office in Noida and  branches in Pune & Bangalore. The EPF for all employees might be done at one place where the first office is situated, Noida in our example. Then even for employees in Pune and Bangalore the State to be selected is Uttar Pradesh and Office Noida.
• If your PF number does not have Extension Code leave it blank.

Activation of UAN Based Registration

What about KYC and UAN?

KYC is an acronym for Know your Customer or Know your client. It refers to due diligence activities that financial institutions and other regulated companies(LPG,telephone) must perform to ascertain relevant information from their clients for the purpose of doing business with them. Our article Know Your Customer or KYC talks about KYC in detal.

Basic purpose of KYC is to verify that you are what you are claiming to be. So your UAN number also needs KYC. KYC status is reflected in UAN card.  There are two ways that KYC for UAN can be done

• Your employer asks you for KYC document and uploads it on your behalf.
• You upload scanned copy of KYC documents and employer approves it. It can be done by going to the Profile menu and selecting Update KYC Information in the Member Portal. The uploaded KYC document by the member will be approved by employer till then status of KYC will be shown as Pending.  Yu need to scan the KYC document first and save it as .jpg/.gif/.png/.pdf. The size of scanned document should not exceed 300kb.  multiple KYC documents out of the 8 specified KYC documents can be uploaded.

Following documents can be used for KYC:

• National Population Register
• AADHAAR
• Permanent Account Number
• Bank Account Number
• Passport
• Driving License
• Election Card
• Ration Card

What is UAN Card? 

UAN Card  as the name implies shows the Universal Account Number and provides details related to UAN number. Its just like PAN card. Though it’s usage is still not clear.

• Front portion of the UAN Card displays : UAN, Name, Father’s/Husband’s Name, Member-ID, (as available in the EPFO member database) Photo and KYC. If KYC of this member is uploaded by the employer, it will reflect on the front side of the UAN card by displaying Yes in front of KYC else if will reflect No 
• Back side of the  UAN card displays latest five Member-IDs linked with this UAN alongwith helpdesk no. and email-id.

Front part of UAN Card

Back part of UAN Card

Change of Job and UAN number

What to do when one changes job. If  Universal Account Number (UAN)  s  already allotted then one is required to provide the same on joining new establishment to enable the employer to in-turn mark the new allotted Member Identification Number (Member Id) to the already allotted Universal Identification Number (UAN). This is done by Filling the  epf-NewForm-11-with-instructions(epf)  which replaces the old Form 11 and Form 13. The EPF circular of 2 Jan 2015 can be found here. Part of Form which refer to Previous Employment details and Declaration by previous employer are given below.

EPF Form 11 Previous Employment

EPF Form 11 Declaration by Previous Employer

One can download the filled copy of the Form 11 from UAN website after login by Selecting Forms->Declaration Form  and filling Date of exit of Previous Employment as shown in image below.

EPF Form 11 downloaded from UAN website

Filled EPF Form 11 from UAN website

What if two UAN numbers were allotted to someone?

Yes there have been many cases when two UAN numbers were allotted to the same person. This was due to less awareness of the UAN number and during job change the new employer did not ask for UAN number or previous employer’s PF details. In such a case a person can have two UAN numbers associated in addition to two member IDs. In such a case, you are suggested to immediately report the matter either to your employer or through email to uanepf@epfindia.gov.in by mentioning your current and previous UANs. After due verification the previous UAN allotted to you will be blocked and Current UAN will be active. Later you will be required to submit your Claim to get transfer of service and fund to new UAN.  How much time this would take we couldn’t find out. If readers can share their experiences with us it would be beneficial to others.

What is linking of Previous Member Id and UAN? Can one transfer claim through UAN

If you have only one UAN number but many Member Ids then you can link your previous member IDs with the present UAN number. This is useful when one needs to link one’s earlier PF account before UAN came into picture. Linking is the first step. Then one needs to transfer the earlier account . You can do so from UAN portal itself but it takes you to http://memberclaims.epfoservices.in/. Process of transferring is explained in our article Transfer EPF account online : OTCP

EPF File Transfer Claim

Name or Father’s or Spouse Name name or Date of Birth is not correct in UAN

EPFO has made a provision for change the name of EPF members. Members who wish to get their name/Fathers name/Date of Birth to be changed in the EPF Database can apply for the same through their employer along with supporting documents. One can read EPF Circular for change in name  and  EPF Circular for change in birthday

Supporting Documents for change in Name/Father’s Name/Spouse Name may be one of following documents

1. PAN Card 2. Voter’s ID Card 3. Passport 4. Driving License 5. ESIC Identity Card 6. Aadhaar Card 7. Bank Passbook Copy/Post office Passbook 8. Ration Card 9. Any school or education related certificate 10.Certificates issued by the Registrar of Births and Deaths 11. Certificate based on the service records of the Central/State Government organisation 12. Copy of electricity/water/telephone bill in the name of claimant 13. Letter from recognised Public Authority or public servant verifying the identify and residence.

Supporting Documents for change in Birthday may be one of following documents

1.Birth certificate issued by the Registrar of Births and Deaths 2. Education certificate/School record/leaving certificate 3. Passport. 4. Any other reliable document issued by a government department; but NO affidavit or court order merely based on member’s declaration only. 5. Certificate based on the service records of the Central/State Government organisation

References :  User Manual for UAN website  ,   UAN website 

Related Articles:

• What are EPF,Pension and Insurance Changes from1 Sep 2014
• Basics of Employee Provident Fund: EPF, EPS, EDLIS
• Understanding Employee Pension Scheme or EPS
• Voluntary Provident Fund, Difference between EPF and PPF
• Tax on EPF withdrawal
• Transfer EPF account online : OTCP 
• Articles related to Salaried on EPF, Variable Pay, ESOP,NPS,  Income Tax, MBA, Changing jobs

“My prepaid mobile connection bill is rising and rising”, complained my colleague, Iti, at the lunch table. “Why don’t you switch to postpaid connection, I use prepaid connection and it is value for money”, replied Raj, another colleague and we had a discussion on . This article is a result of the discussion and research and answers questions on what is prepaid connection, what is postpaid connection, Which is popular – prepaid or postpaid, Comparison of Prepaid vs Postpaid Mobile connection, When does having prepaid mobile connection makes sense, When does postpaid mobile connection makes sense, How to reduce your expenditure on prepaid plans, how to Switch from prepaid to postpaid or post paid to prepaid.

What is prepaid mobile connection?

A prepaid mobile connection is one for which you first pay ie prepay for the mobile services (calling, texting, browsing) and then use till the amount you paid for is exhausted. Once you exhaust your limit then you cannot use the mobile services further. You then need to prepay again.

You can buy only the talk time or host of other services involving internet pack, minutes, SMS, calls. Example of  prepaid connection from Airtel:

• Buying an Airtel Rs 200 full talktime will allow you to make calls for Rs 200 , all your money goes into getting talking minutes.
• Buying an Airtel  3G Data Benefits for Rs 9 validity 1 days will allow you data browing upto 25MB for 1 day.
• Buying an Airtel Rs 396 plan will give you 500 minutes of talking time, 1000 SMS Airto Airtel both National and Local. 3GB of Data 3G/2G for 30 days.

What is postpaid mobile connection?

The postpaid mobile connection is one for which user  first uses services of mobile network and then pays according to their use of mobile services at the end of their billing cycle. Typically, the customer’s contract specifies a limit of minutes, text messages etc., and the customer will be billed at a flat rate for any usage equal to or less than that limit. Any usage above that limit incurs extra charge.s

An example of postpaid plan : Vodaphone’s Talk STD 299 at 50P  is Monthly Rental 299,Activation Fee 99, Security Deposit 200, Free Local & STD for 299 Minutes and Usage charges after exhausting 299 minutes are Vodafone to Local Vodafone 50 p/min, Vodafone to Other Mobile (Local) 50 p/min,Vodafone to STD phones 50 p/min, Local SMS charges Re 1/SMS, Data 2G charges 4P /10KB

After 2015 Spectrum Auction, which companies are providing mobile services in which places in India is covered in Pan India 2015 spectrum holding data sheet

Compare Prepaid vs Postpaid Mobile connection

The comparison between Prepaid and Postpaid is given below:

Which is popular – prepaid or  postpaid?

More than three-quarters of the world’s mobile connections are still pre-paid. Data from  Digital, Social & Mobile Worldwide in 2015 is given below. Click on image to enlarge

Prepaid Postpaid Mobile connections in world

A majority of mobile phone users in developed countries like US, UK and Australia post paid plans rather than prepaid services. For ex in US  a customer can buy a handset  from the mobile service provider which  involves either a monthly instalment or a lump sum discounted down payment over and above the monthly plan charges. In countries like India and China, most smartphone and feature phone users prefer prepaid mobile services over postpaid connections.  Indian mobile operators have begun to woo consumers with top of the line smartphones like Apple’s iPhone by giving contract based connections.  Market research has indicated that sub Rs. 10,000 low cost android devices continue to account for a majority of smartphone sales in India.

When does having  prepaid mobile connection makes sense?

For people who have very low mobile phone usage, the prepaid connection is a clear winner.

Mobile users who are on a tight budget will definitely prefer prepaid over postpaid connection as there is no monthly rental. The simple flexibility of ‘recharging only when you want and what you can afford’ lures mobile users who don’t wish to spend a lot of money on mobile phone service.

Additionally, users today also have access to many different ways to recharge including via online portals or net banking.

Another advantage of using prepaid mobile services is the fact that sim cards can be bought over the counter from many shops.

When does postpaid mobile connection makes sense?

For people who have a medium to high mobile phone usage, a postpaid connection definitely seems to be the way to go. For example one uses mobile phone for about 30 minutes of outgoing calls daily, If it is done on a regular prepaid connection at either 50p per minute or 1p per second, it would cost somewhere in the range of Rs. 450 to Rs. 540 per month. On the other hand, if  one uses  Rs. 399 monthly postpaid connection from Air, you would have already been provided with 800 minutes of free local talktime. That’s already 200 minutes or more than 3 hours of talktime on top of your daily 30 minute doze of outgoing chit chat on your mobile phone.

Postpaid users also have the choice of getting their own numbers. Additionally and unlike prepaid, outgoing won’t be barred once you reach a certain amount.

How to reduce your expenditure on prepaid plans?

If you have abnormally high usage of particular services like SMS, internet usage, STD calls, International calls/SMS or continuous calls to just one number, then you should look for offers like  SMS pack, Data pack, Group Pack etc. Some of the packs are given below . Remember All packs have a fixed validity.  To recharge, you can either goto a local mobile shop or get  top up vouchers. You can also topup from the mobile operator’s website using your credit card or go to websites like freecharge or paytm

• Full talk time: All recharges and mobile plans are subject to government taxes. For example Rs 100 charge will get you talk time worth Rs 84. The rest is all taxes . There are full talk time topups also available. In this you get full money in your phone.
• Local Calling Packs: Buying thus pack that will make your outgoing local calls cheap. For example, 1 paisa per second OR 50 paisa per minute. Normally the charge is 1Rupee per minute. So with the local pack, your local calls get cheaper.
• Outstation Calling Pack:  It will make your outstation calls cheaper just like the local calling pack.
• Roaming Pack:  In India each states issue a separate license to mobile operators and the cost of the license is different for each state. This means that there is a different calling rate for each state. The moment you step out of the state from where you bought the connection, you are technically on roaming services. The cost of roaming is higher. Even the incoming calls that are free in the state that you connection belongs to, start getting charged. In order to avoid the extra cost of receiving and making calls while on roaming, you need to buy a roaming pack.
• Data Packs: There are many kinds ex 2G data packs, 3G data packs, 4G data packs. Depending upon the speed and the data usage you can choose the appropriate plan.

An example of the sample plan is given below, you can check out for Full talktime plans, 2G Data plan, 3G Data plan, Roaming, Top Up plans etc.

Prepaid mobile plans

Switch from prepaid to postpaid or post paid to prepaid

Do also explore switch from prepaid to postpaid or postpaid to prepaid. You can check out suggested plans at your mobile service provider website or explore options like  switchme.in or mobile tariffs on compareindia.ibnlive.com

Note your number does not change when you move from prepaid to postpaid connection. If you are not happy with the switch you can change back again after some time for example for Airtel you need to use postpaid connection for at least 3 months.

Steps to switch from prepaid to post paid  or post paid to prepaid connection of same airtel service provider.

Approach customer care center with Documents : Submit your address proof, identity proof and photo in the customer care center after which they will give you a migration form to fill. Now you need to choose a postpaid plan of your choice. The security deposit you are liable to pay depends on the plan you choose. Usually a new SIM is handed to you.

Verification : The service provider will conduct a verification. They sent a person at home to confirm your address and identity.

Activation of new SIM : Activation of the new SIM card may take up to 48-72 hours, after which, your migration will be complete. Your old SIM will stop working, then you need to put in your new SIM,call the given number to activate and after some time (30 mins) your new connection will be on.

Interested readers can read Nielsen survey – Mobile Youth Around the World (2010), Nielsen Research: Mobile consumer report 2013

Related articles:

•  When you loose your mobile : What to do?
• What are Mobile Wallets or Digital Wallets
• JAM Trinity: Jan Dhan Yojana, Aadhaar and Mobile number
• What is Mobile Banking?
• What does Your Mobile Phone Say About You?
• Financial Apps for India
• What do we want from Bank : Is Social Banking the way to go?

The world has become a giant, globally connected village where everyone is connected (throughFacebook, WhatsApp) and all the information is just a click away. Mobile has now become a necessary, one doesn’t leave the house without mobile (for some it’s the last thing they see before going to sleep and first thing after getting up). As we use mobile more and more, we need to think about how much are we spending on the mobile connections and if it’s possible to bring the cost of using the mobile down. Do you track the cost you incur on your mobile connection? How did you decide the mobile connection plan? Did you change your plan from prepaid to postpaid or from postpaid to prepaid? Was it worth it? Did you face any problem?

Permanent Account Number (PAN)  issued  by the Income Tax Department enables the department to link all financial transactions of the person with the department. This article gives an overview of PAN, What is PAN, Why is it needed, Who should apply for PAN,What is PAN Card, Understanding the PAN number, How to verify PAN, How to apply for PAN, What is difference between PAN number of Minor and NRI.

What is PAN?

PAN, or permanent account number, is a unique 10-digit alphanumeric identity,in the form of a laminated card, allotted to each taxpayer by the Income Tax Department.

• PAN enables the department to link all financial transactions, such as tax payments, TDS or TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, etc, of the person with the Income Tax department. The primary objective of PAN is to use a universal identification key to track financial transactions  to prevent tax evasion.
• It also serves as an identity proof(Proof of Identity),a  document for opening a new bank account, a new landline telephone connection or a mobile phone SIM card.
• It is PERMANENT for your life and will not change with change of your address or marital status.
• One can have only one PAN.  A penalty of Rs. 10,000  is liable to be imposed under section 272B of the Income-tax Act, 1961 for having more than one PAN. If a person has been allotted more than one PAN then he should immediately surrender the additional PAN card(s).
• It needs to be surrendered after death of the person.

What is the primary objective of PAN?

Quoting the PAN is mandatory when filing Income Tax returns, tax deduction at source, or any other communication with Income Tax Department. PAN is also steadily becoming a mandatory document for opening a new bank account, a new landline telephone connection / a mobile phone SIM card, purchase of foreign currency, bank deposits above Rs. 50,000, purchase and sale of immovable properties, vehicles etc.

Who should apply for PAN?

Short answer Anybody who files income tax returns i.e

• Anybody who earns a taxable income in India, including foreign nationals who pay taxes in India.
• Anybody who runs a business (be it retail, services or consultancy) that had total sales, turnover or gross receipt exceeding Rs 5 lakh in the previous financial year

Long answer, PAN is needed for

• For payment of direct taxes
• To file income tax returns
• One needs to give PAN of Landlord to claim HRA if rent is more than Rs 1 lakh per annum of Rs 8,333 per month. Earlier the limit was Rs. 1,80,000 p.a or Rs. 15,000 per month.
• To avoid deduction of tax at higher rate than due
• To enter into specific transaction such as:
  • Sale or purchase of immovable property valued at Rs 5 lakh or more
  • Sale or purchase of a vehicle other than a two wheeler
  • Payment to hotels or restaurants an amount exceeding Rs 25,000 at any one time
  • Payment in cash an amount exceeding Rs 25,000 in connection with travel to any foreign country
  • Payment of an amount of Rs 50,000 or more to the Reserve Bank of India or company or institution for acquiring bonds or debentures or shares
  •  Any mutual fund purchase
  • Deposit exceeding Rs 50,000 with any single banking institution in 24 hours.
  • Payment exceeding Rs 5 lakh for purchase of Gold bullion and jewellery

How did PAN evolve in India?

• Prior to 1972, a tax-payer (assessee) of the Income tax Department was identified by a number called General Index Register Number (GIR No.).
• Permanent Account Number (old series) was introduced in 1972.
• Allotment of Permanent Account Number was made statutory  under section 139A of the Income-tax Act, 1961 with effect from 1st April, 1976.
• It was allotted manually till 1985. Blocks of Permanent Account Number were allotted to each Commissioner of Income-tax Charge by the Board. The Commissioners of Income-tax made the allotment of Permanent Account Numbers to assessees under various Assessing Officers in his charge from within the Block of PAN allotted to him. This series was abandoned in 1995.
• Allotment of current series of PAN was started in 1995 after studying the system of identification number initiated in U.K. (National Insurance Number), USA (Social Security Number), Spain (Fiscal Identification Number), Australia (Tax File Number) etc.

What is PAN Card?

PAN card is a card issued by the Indian Income Tax Department,bearing a 10 digit alpha numeric permanent account number or PAN  under section 139A of the Income Tax Act, 1961. PAN cards are issued by the I-T department, but the front-end of the process has been outsourced to UTI Technology Services Ltd and the National Securities Depository Ltd(NSDL) since July 2003. It is a unique ID . Nowadays, the PAN card is available in a plastic credit card shape, rectangular piece as shown in image below.

Front of PAN Card

PAN cards issued before 2001 were black & white and printed on laminated plain paper with black and white photograph. Those cards are still valid. However, people who wish to do so can apply for the new plastic variant, bearing the same PAN, upon on payment of fee. For obtaining the tamper proof PAN card an application will have to be made in the form for Request For New PAN Card Or/ And Changes In PAN Data to IT PAN Service Center or TIN Facilitation Center, in which existing PAN will have to be indicated and old PAN card surrendered.

Earlier PAN Card

What does PAN Card contain?

Details for Individuals, as shown in image above are as follows:

• PAN
• Name
• Date of Birth
• Father’s Name
• Photograph and
• Signature of PAN holder

Details for Other Taxpayers

• PAN
• Name and
• Date of Incorporation or Formation

Decoding the PAN number

PAN contains ten characters (alphanumeric).  A typical PAN has 5 characters followed by 4 numbers and then a character ex:  AXRPD1234K.

Fifth character: The fifth character represents the first alphabet of your last name or surname. For instance, somebody with the name Anil Kishore Gupta will have G as the fifth character on his PAN as his last name’s first alphabet is G. However, if you happen to change your surname after marriage or due to any other reason, your PAN card number will remain unchanged.

It is useful to check the fourth character and fifth character of your PAN as they represent your status and surname. In case of any discrepancy, it should be immediately brought to the notice of the issuing authority

How to Verify the PAN?

One can know or verify the Permanent Account Number (PAN through Income tax website at https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html

Verify your PAN

You enter the date of Birth, Surname along with Captcha code,numbers code. If the details provided in the system are correct and match with the database of the Income-tax Department, the Permanent Account Number linked with the respective details will be displayed along with the name and jurisdiction of the PAN holder. The status of the PAN, i.e., whether active or not will also be displayed, as shown in image below

Know your PAN

How to Apply for PAN ?

PAN cards are issued by the I-T department, but the front-end of the process has been outsourced to UTI Technology Services Ltd and the National Securities Depository Ltd(NSDL) since July 2003. One can apply for PAN either online i.e. through internet or offline.  Supporting documents, self attested are required. For List of documents refer to http://www.incometaxindia.gov.in/Documents/documents-required-for-pan.pdf (pdf)

Overview of Process of applying for PAN Card

• One can apply for PAN either online i.e. through internet or offline.
  • Online application can be made either through the portal of NSDL (http://tin.tin.nsdl.com/pan/index.html) or portal of UTITSL (http://www.myutiitsl.com/PANONLINE/).   In Online mode  once the application and payment is accepted, the applicant is required to send the supporting documents through courier/post to NSDL/UTIITSL
  • Offline  PAN Card Application Form 49A for manual submission
  • Form 49AA : This form is also used for application of New PAN Card but this form can be used by NRIs, entities incorporated outside India and unincorporated entities formed outside India.
• The charges for applying for PAN online have been increased from 16/1/2014 to Rs. 105 (including service tax) for Indian communication address and Rs. 971 (including service tax) for foreign communication address.Payment of application fee can be made through credit/debit card or net-banking.
• Individual applicants should affix two recent colour photographs with white background (size 3.5 cm x 2.5 cm) in the space provided on the form. The photographs should not be stapled or clipped to the form. The clarity of image on PAN card will depend on the quality and clarity of photograph affixed on the form.
• AO code (Area Code, AO Type, Range Code and AO Number)of the Jurisdictional Assessing Officer must be filled up by the applicant. You can obtain it from https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourJurisdictionLink.html. Our article How to find Jurisdictional Assessing Officer : Income Tax covers it in detail.
• Applicant will receive 15 digit  acknowledgement containing a unique number on acceptance of this form. This acknowledgement number can be used for tracking the status of the application
• It generally takes a week for getting the Permanent Account Number and round about 15-20 days for getting the physical card, which is delivered through Post at the mentioned address .
• One can also track the status of his/her/its application at the website.

Do you need to apply for a PAN when you move or transfer from one city to another?

Permanent Account Number (PAN), as the name suggests, is a permanent number and does not change during lifetime of PAN holder. Changing the address or city, though, may change the Assessing Officer. Such changes must, therefore, be intimated to nearest IT PAN Service Center or TIN Facilitation Center for required correction in PAN databases of the Income Tax department. These requests will have to be made in a form for Request For New PAN Card Or/ And Changes In PAN Data  (pdf)

PAN for minor

Yes PAN Card can be applied for minor, less than 18 year of age. Aahna’,10-day-old Rajkot girl is youngest PAN card holder. PAN Card for child is needed

• If minor is earning income applying his skill then his income will not be clubbed with that of parent and he would have to file income tax return and thus have a PAN card.
• If you make investments in the name of minor child
• If you make him your child a nominee for your investments,

Minor’s PAN is similar to that of adult with slight variations given below

• Process of applying for PAN of Minor is same as that of the adult.
• PAN Card issued to Minor does not have the Minor’s photo or signature. Hence when minor becomes adult PAN Card needs to be updated.
• To update PAN for minor one has to apply for correction in data of PAN Card and furnish photo and update his signature with the income tax authorities.  The procedure for the same is to apply for it on a PAN request form.

PAN for NRI

PAN Card is required by an NRI

•  If he has got a taxable income in India.
• Any NRI  cannot do the share trading by depository or broker if he does not have PAN.
• For  investing in Mutual Funds
• To purchase some land or other property in India then also it is mandatory to have PAN card issued by Government of India

Process of Applying for PAN for NRI is similar to Individual with NRI required to fill Form 49AA

Correction of PAN data

One can submit the request for change in PAN data for following by filling in form  for Request For New PAN Card Or/ And Changes In PAN Data  (pdf)

On Losing PAN Card

If one loses the PAN Card The first and foremost thing you need to is, lodge the complaint to nearest police station and and take the acknowledgement/complaint copy. It ensures that your PAN Card should not get misused, though You can get duplicate PAN Card without FIR .Then you need to apply for duplicate PAN card. A new PAN card bearing the same PAN number will be issued to the applicant. The applicant may also choose to make corrections if any.  Request For New PAN Card Or/ And Changes In PAN Data   Our article When you loose your wallet,Credit Card, PAN Card, Driving License covers it in detail.

Surrendering of PAN after death

When a person passes away and has PAN card, the PAN card needs to be surrendered. Process for surrendering PAN is to  Submit death certificate along with letter for surrender of PAN Card to the last jurisdictional Income tax Officer where one has bee assessed by the kin of the deceased. The letter must contain details such as your name, contact details, details of the PAN card to be retained, details of the duplicate PAN card(s) which you need to surrender, etc. Our article  Income Tax Return of Deceased discusses it in detail

What if your Form 16 or TDS certificate has the wrong PAN?
Your PAN number is associated with financial transactions such as Form 16 for your salary, Form 16A for Fixed Deposits. This can be verified through Form 26AS. If the PAN number is not correctly mentioned in these documents then you need to get it corrected. Ask your employer or TDS provider to issue a revised certificate with the correct PAN number. If this can’t be done quickly, you can approach the assessing officer of your area. After due verification by the TDS issuer, you will be given credit for the tax paid. Our article TDS, Form 26AS and TRACE covers it detail

Contact for PAN

Contact the Aaykar Sampark Kendra (ASK) at 0124-2438000 (or 95124-2438000 from NCR) or visit the www.incometaxindia.gov.in and go to know your PAN

Official webpage for PAN  on IncomeTaxIndia website, http://www.incometaxindia.gov.in/Pages/pan.aspx

Related articles:

• Form 26AS on TRACES
• Changing Name:What to do?
• Transactions reported to Income Tax Department
• Aadhaar : What is Aadhaar, How to enrol,Check Aadhaar status,Download e Aadhaar

Roti, Kapda aur Makaan is the basic need of every individual and we all dream of having a home. But homes are expensive and Home Loans can make dream of owning a house a reality. Home Loan is offered to individuals who wish to purchase or construct a house. The property is mortgaged to the lender as a security till the repayment of the loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it.  This article covers the term associated with home loans. We suggest our readers to read the lending institutions website to familiarise with the Home Loan Terminology  and get Overview of Home Loan .

Down payment or Margin

Because houses are expensive, home buyers typically pay  a percentage % of the total value of a home. The remaining price is covered by a bank or other financial institutions through a mortgage or home loan. The amount that a home buyer pays is called as down payment or Margin. For example if you plan to purchase a property worth 80 lakhs, and the bank can fund up to 80% of total amount, which is 64 lakhs. You will have to pay remaining 16 lakhs.  In Jul 2010, RBI set a ceiling limit on home loans to  80% of the property value. But  in case of small value housing loans, up to Rs 20 lakh, home loan lending institutions can provide loans up to 90% of the property value, as such loans are part of priority sector advances.  Please note Down payments usually do not include costs such as registration charges, stamp duty costs etc.

Loan to Value Ratio

LTV (Loan to Value) ratio is loan amount divided by the agreement value of the property for example, if the value of the property is Rs 40,00,000 and the lender is giving you a loan of Rs 28,00,000, the LTV is 70%.

What is Resale Property

Resale means you are not buying an apartment in a building under construction, or a ready flat, directly from the builder.  Instead, you are buying a flat from the owner. While buying resale property, one should make sure that it has clear marketable property title , it has  record of all previous owners of property and the reseller has undisputed ownership. One should also check for the existing loan on the property and be aware of the amount that is to be paid to the society at the time of transfer of ownership

What is Freehold Property? What is Leasehold property?

A freehold property means that you own the land it is built on and also the house. For apartments, ownership of the plot is shared jointly with the other owners of the respective flats within the building in proportion with the ratio of the area owned of the consolidated built-up area. In a freehold property. You can live there for as long as you desire. You have the right to make alterations to the house or redo some parts of the house though You might have to take permission from authorities if you have to make structural changes.

If you purchase a leasehold property, then you have the right to live in a property for a predefined period of time. One is not the owner of the property or the land it is situated upon and has to pay ground rent to the owner or the leaseholder. Once the defined period in the lease expires, the ownership of the property is given back to the land owner. Mostly leases are roughly given for period of 99 years, It is possible to extend the leasehold to up to 999 years and one can also purchase the leasehold property by paying a price for it.. Before buying a leasehold property, find out how long the lease is.

What is Pre-Approved Property?

A pre-approved property means that the banks or financial institutions like DHFL, ICICI Bank, PNB Housing  have verified all legal and technical documents of the project.So a buyer, does not need to get the legal verification done again,. Just because the project has been pre approved does not mean you will get assured loan from that bank which has approved the project, each home loan request is assessed individually. It is also not necessary to take home loan from the banks which has pre approved the project.

What is Disbursement of Home Loan?

Disbursement means payment or release of the loan amount by lender to borrower. Usually, banks disburse the loan amount once all the submitted documents have been verified and the down payments have been paid. Most banks charge a loan disbursement fee which is added the principal amount when loan is granted.

• Full disbursement: means bank pays the full loan amount to seller in one go.
• Partial disbursement: means that the payment is done in stages. Usually when one buys an under construction property, then the bank will disburse payments as the construction progresses. For example, payment will be made after completion of every floor ex: of completion of first floor, 15% of the payment will be made.

Interest: What is EMI, Fixed and Floating Rate

When you take the loan you have to pay interest on it.  Equated Monthly Instalment (EMI) is the amount payable to the Lending institution every month till the Loan is paid back in full. The EMI consists of Principal and Interest. During the early part of loan tenure the most of EMIs are used to service the interest and principal is served in the later parts of loan tenure. Our article Understanding Loans explains EMI in detail.

Amortization schedule is a table that gives details of the periodic principal and interest payments on a loan and the amount outstanding at any point of time.

Interest can be Fixed or Floating.

• In Fixed Rate Loan rate of interest is fixed either for the entire tenure of the loan(called as  pure fixed loan ) or a part of the tenure of the loan. In pure fixed loan, the EMI remains same irrespective of the conditions prevailing in the market Mostly banks offer Fixed rate for a fixed period and then review the rate at end of the specified period.  So banks introduce reset clause in their fixed home loan to effect a change in the interest rate at a future date. The banks have the discretion to increase or decrease the interest rates in case the market rates of interest increases or decreases. So such fixed rate loan are not fixed in the strict sense of the word.
• Floating rate means interest rate on loan is not fixed, it varies with the market conditions over the period of loan. Floating interest rate home loans are tied up to a base rate plus a spread or margin. Banks are not permitted to lend below base rate, if the base rate varies the floating interest rate also varies. Banks  usually keep the EMI constant adjusting the tenure of the loan.  For each bank there is only base rate but Base rate differs from bank to bank, as bank arrives at the calculation after considering factors such as cost of funds etc. The Base Rate system replaced the BPLR system from July 1, 2010.

What is Pre-EMI?

When you purchase an under-construction property, the lending institution may link the disbursal of home loan to the construction stages of the property. In such cases, you will either be asked to pay pre-EMI OR given an option to choose between pre-EMI and full EMI payments. Pre-EMI is just the interest portion on the disbursed loan amount that you pay until the full disbursal is done. The EMI payments start after the pre-EMI phase. Some banks allow you to pay full EMI even when the disbursal is being done in stages, called as EMI under construction option,  you will start paying EMI from the beginning of construction, but your interest amount will be calculated based on the amount disbursed to the builder and the rest of the amount will be counted towards principal. i.e., EMI remains the same.

Offer letter

Once the loan is sanctioned, you will get an offer letter stating a number of details ex: Loan amount, Rate of interest, Fixed/ flexible rate of interest, Tenure of the loan,EMI amount and Any other conditions of the loan.

Home Loan Eligibility Criteria

Home loan eligibility depends up on various factors some of which are given below. The lender will consider all these factors along with your credit history to determine how much loan you will be eligible for.

• Income : Your income determines the amount of home loan you are eligible for. Banks generally keep the EMI to income ratio at 0.45 to 0.50.
• Tenure of the loan : The longer tenure you opt for, the more is your home loan eligibility.
• Interest rate offered : If your interest rates are on a lower side, then the loan eligibility will be higher and vice versa.
• Existing loans: In case you have any existing loans, then the loan eligibility amount will come down to keep the EMI to income ratio around 0.50.

What is the process of applying for a Home Loan?

I read this article ,  THE UNDERAGE OPTIMIST – Scored low in exams? Some life lessons from a 76 percenter  and it struck a chord somewhere, so sharing with my readers. I also shared it with my friends whose sons and daughters , especially those who are in 12th . Also an interesting video by Vir Das on your marks.

Interesting video ON YOUR MARKS – Vir Das’ Message for Kids with Exam results

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• Books on money for children
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• Review of movie One Idiot by IDFC

Marks are important as they make life easier, got good marks, next step is kind of decided. But they are not be-all , end-all of life. They open the door but what one does after door opens depends on attitude and ability to try and learn new things.  What do you say? Do you think that marks are important? How have your relationship been with marks? How has it defined you or people around you? What do you say to your children on what’s important in life?

The government has announced gold monetization scheme that aims to cut down gold imports in the country. This article explains the Gold Monetization Scheme , why the Government wants it, How the scheme works, did the Gold Monetization schemes announced earlier worked.

What is Gold Monetization Scheme?

The Union Finance Minister ,Arun Jaitley, in Budget 2015 announced several steps for monetizing gold. These are as follows:

• Gold Deposit Scheme –Gold Monetisation Scheme or  Gold Deposit Scheme. This scheme will replace the existing Gold Deposit and Gold Metal Loan Schemes.
• Sovereign Gold Bond – a Sovereign Gold Bond, as an alternative to purchasing metal gold.
• Gold coins with Ashok Chakra – Government will introduce Indian Gold Coin, which will carry the Ashok Chakra on its face.

Why were the Gold Monetization Schemes announced?

Indians are among the world’s largest consumers of gold, importing at least $34.3 billion worth of the precious metal for the fiscal year ended March 31, 2015 . India imports as much as 800-1000 tonnes of gold each year. Though stocks of gold in India are estimated to be over 20,000 tonnes, mostly this gold is neither traded, nor monetized.

The gold monetization scheme aims to encourage Indians to vest the gold in their possession with banks and earn interest on it.

Do Indians love Gold?

Yes . Indians adore gold. Newly wed brides are given enough jewellery to break their necks. Peasants store their pitiful savings in trinkets and tycoons with broken balance-sheets offer gold at temples in return for redemption. As per Karvy Wealth Report of 2014, Comparison of how Indians invest compared to rest of World is given below.

Individual Wealth-India versus World

Why do Indians love Gold?

From rural Indian housewives and the 27-year-old wannabe bride to those who generate black money, gold is not merely a store of value or an international currency -– it’s part of a way of life, a showing-off of wealth, status, position, etc, besides its safe haven status in time of need. For centuries certain Indian festivals have been the time for splurging on gold. Festivals such as Akshay Trithiya and Dhanteras are considered auspicious times to buy the precious metal. Proponents of modern finance consider gold as an archaic investment c. Modern finance with its sophisticated tools,everything is a click away, is used to make savvy investments these days. But millions of Indians don’t understand yields and much of the financial jargon.They don’t understand how to invest like Buffett or others and make more money.

What they do understand is that they have to buy gold and pass it on to their children. They do understand gold will have some value in dire times. They do understand that gold is a traditional unit of value and will always remain so. And so they will keep buying, even if it’s just a little. And it’s easy to buy and sell gold. Opening a bank account in India is difficult. Gold, on the other hand, is widely accepted without any documentation. It is also a fine way to store wealth without paying tax—along with property,. The only thing that might keep Indians from gold is if the metal is abundantly available and if there’s a prolonged slump in its price.

Indians invest primarily in Fixed Deposits, Equity, Saving Deposits and very less in Mutual Funds.

where Indians invest

What is the Timeline of Gold Monetization Scheme?

• Announcement was made in Budget 2015.
• The government put out a draft on 19 May for comment.
• The last date for submitting comments on the draft was 2 June. You can see the comments at https://mygov.in/group-issue/share-your-views-draft-gold-monetization-scheme/

How will the Gold Monetization Scheme works?

• One visits the  purity testing centres which will tell the approximate amount of pure gold. Our article Understanding Gold:Purity,Color,Hallmark explains purity of Gold in detail.
• If one agrees to the amount as valued by the centre, one will have to fill up a bank/KYC form and give consent for melting the gold.
• The purity centre will then clean the dirt, studs, etc from the ornaments. The studs will be handed-over to the customer the jewellery will be melted.
• If one decides to take back the gold, one can do so in form of gold bars after paying a nominal fee.
• If  one agrees to deposit the gold  a certificate by the collection centre certifying the amount and purity of the deposited gold will be given.
• With this certificate, one opens a Gold saving account and credit the quantity of gold into this account for a period of 1 year and renew thereafter.
• The bank will pay an interest after 30/60 days of opening of the Gold Savings Account. Both principal and interest to be paid to the depositors of gold, will be valued in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms
• On maturity, one will have the option of redemption either in cash or in gold.
• One will get exemption from Capital Gains Tax, Wealth tax and Income Tax, etc.

Has such Gold Monetization Scheme been introduced earlier and what happened?

Morarji Desai in 1960s launched the various acts related to Gold.

• In 1962 the border dispute with China accentuated the FX reserves.  Morarji Desai, then finance minister of India, came out with Gold Control Act 1962. It recalled all gold loans given by banks and banned forward trading in gold.
• In 1963 production of gold jewellery above 14 carat fineness was banned.
• The gold bond scheme was launched with tax immunity for unaccounted wealth in 1965.

All these steps failed to yield results. Morarji Desai finally launched Gold Control Act 1968. It prohibited citizens from owning gold in bars and coin form. Goldsmiths were not allowed to own more than 100 grams of gold for jewellery making. Licensed dealers were not supposed to own more than 2 kg of gold depending upon the number of artisans employed by them. They were banned from trading with each other.

Morarji Desai believed that Indians will respond positively to his steps and stop consuming gold. What happened thereafter was unexpected. Demand for gold remained firm. Gold smuggling became the order of the day accounting between 30-70% of actual imports as per unofficial estimates.

SBI had launched the Gold Deposit scheme (GDS) earlier in November, 1999, but was discontinued. The scheme was re-launched in 2009. However, the scheme is available only at 50+ selected branches of SBI. When the gold deposit scheme was launched in 1999, the target was to mop up around 100 tonnes but the goal is yet to be achieved despite the plan undergoing changes, resulting in a marginal increase in rates on offer.

• Eligibility :Any Resident Indian of the following categories: Individuals, singly or jointly (as Former or Survivor), HUFs,Trusts, Companies
• Minimum Quantity : 500 gms (gross) (No upper limit for deposit)
• Period of deposit: 3 yrs,4 yrs or 5 yrs
• Rate of Interest & Payment : The current interest rates w. e f. 01.09.2010 are: 0.75% p.a. for 3 years, 1.00% for 4 years and 1.00% for 5 years. Interest is calculated in Gold currency (XAU) and paid in equivalent rupees. Interest rate is subject to change. Option for Interest Payment: Non-Cumulative (on 31st March) every year or Cumulative (On Maturity)
• Acceptance of gold : Gold i.e. Gold bars, Coins, Jewellery etc. will be accepted in scrap form only.
• How to Apply : Customers to submit Application Form, Identification Proof, Address Proof and Inventory Form. Provisional Receipt issued at the time of acceptance of gold.
• Issue of Gold Deposit Certificate :Gold Deposit Certificate will be issued by Nodal Branch (i.e. Bullion Branch, Mumbai) after the gold is melted, assayed and minted at India Govt. Mint (IGM). The certificate will be issued for pure gold contents (i.e. in 999 fineness). Multiple certificates (max 5) can be issued. Gold Deposit Certificate (GDC) will be sent to the depositor within 90 days from the deposit of gold.

Has Gold Monetization scheme worked somewhere?

Yes in USA. The US followed silver or gold or a bimetallic standard since 1785. During the Great Depression the US needed to print more dollars to reflate their economy. To print more dollars, the US needed more gold which was in short supply. Any buying by the US would have pushed gold prices higher. Franklin Roosevelt, president of the US in 1933, issued an executive order no. 6102 prohibiting private holding of gold. Not only he banned fresh purchases but also ordered Americans to give away their private holding to government at below-market prices. After a lot of hue and cry, he raised the purchase price to market levels. He created enough deterrent in the form of severe penalty of $10,000 (in 1933) or ten years in jail. Americans responded positively partly by patriotism and partly by the fear of the law.

Do you think Government Gold Monetization Scheme will work? Will you invest in Gold Monetization Scheme? Do you buy Gold? Why do Indians love Gold?

“The phone costs 10,000 Rs and the display to change it costs 3000 Rs. It just doesn’t make sense. Do I get it changed or buy a new phone?” asked Suresh.  ” I would change my screen as my iPhone is expensive”, said Aryan.  ”Isn’t there some insurance that covers it?, laughed Sarita.  Yes there is. Today you can either get your smartphone or tablet insured over the counter or buy policy online. These policies cover the cost of things that are not covered under the one-year manufacturing warranty, including damage and theft. This article talks about mobile phone insurance. Please note We are not associated with any of the above mentioned mobile insurance companies.

What is mobile phone insurance?

Mobile phone insurance is the insurance of your mobile phone to cover up the incidents like theft, loss,damage etc. It compensates the cost of the smartphone as per the terms and conditions of insurance. Insurance has to be bought at the time of purchasing a mobile device. The premium depends on the cost of the phone.

Mobile Insurance plans usually have a limited tenure. For ex, Biscoot offers insurance for new handsets only and covers for just one year from the date of purchase.  At best, you may get a two-year insurance policy, as is offered by Gadgetcops and Warrantyasia.

Similar to mobile insurance is also gadget insurance like laptop, tablets, consumer electronics. Our article When you lose your mobile : What to do? talks about what to do when you lose you mobile?

Isn’t warranty or extended warranty enough?

A typical smartphone ships with a one-year warranty from the handset maker and after that tenure expires, the customer is on his/her own. Typical terms of warranty are given below.One can, at times extend the warranty by paying extra.  called as the Extended Warranty. Please note that the warranty should be bought within three days of buying the handset. There is no warranty beyond the second year.

Extended warranty can be purchased for proper repairs and ensure functional condition of the smartphone after the handset maker’s warranty expires. Every company offers and adheres to different terms and conditions in the extended warranty.  For a Rs 40,000 phone  the cost of extended warranty  is less than 10000 Rs and this could be as low as Rs 300 for a phone costing Rs 10,000-15,000.

So if you buy an expensive phone, then to protect your self from loss of phone due to theft,accident etc one should go for mobile insurance. It’s not very expensive. Generally mobile insurance policy premium is calculated at about Rs 15 to Rs. 20 per Rs.1 000 of the amount indemnified. So For a premium smartphone costing Rs 45,000 the premium can range between Rs. 675 to Rs. 900. You cannot replace the phone but at least financial loss can be minimised.

What are typical terms of Warranty?

If you look at terms of Warranty it seems to favour the manufacturer. Some of warranty terms are as follows:

• The warranty card is not duly filled and mailed back / submitted to the nearest Authorised Service Centre of the company within 2 weeks of purchase.
• The completed warranty card is not presented to the service engineer at the time of repairs being undertaken / requested.
• The product purchased is not used according to instructions given in the INSTRUCTION MANUAL, as determined by the authorised service centre / company personnel.
• Site (premises where the product is kept) conditions that do not confirm to the recommended operating conditions of the machine/unit.
• Warranty does not cover user manuals or any third party software, settings, content, data or links, whether included/downloaded in product.
• Warranty does not cover normal wear and tear (including, without limitation, wear and tear of camera lenses, batteries or displays).
• Warranty does not cover defects or alleged defects caused by the fact that the product was used with, or connected to, a product, accessories, software and/or service not manufactured, supplied or authorised by <company> or was used otherwise than for its intended use, Defects can be caused by viruses from your or from third party’s unauthorised access to services, other accounts, computer systems or networks. This unauthorised access can take place through hacking, password-mining or through a variety of means.

What is the cost associated with mobile repair?

From onsitego.com some of the cost associated with repair of mobile parts for a phone around 22,000 are given below.

Cost of mobile phone repairs

What does mobile phone insurance cover?

Typically, mobile phone insurance plans covers

• Accidental physical damage to the device,
• Failure due to liquid/fluid spilling and entering the phone’s internal circuit,
• Burglary: theft and housebreak-in,
• lightening and explosion,
• Act of God perils and
• Damage or theft during riots/strikes.

Many of them offer Pick up and Drop facilities available for repair of phones.

However before you take the plunge for insuring your phone, make sure you read the terms and conditions of the insurance service provider. For example Theft of a mobile from an unattended vehicle is not covered under mobile insurance.

What does the mobile insurance does not cover i.e what are the exclusions of mobile insurance?

Conditions vary from insurance company to insurance company. Usually the cover is not applicable for

• The wear and tear,  climatic condition or gradual deterioration,
• Inherent defect or from any process of cleaning, repairing or maintenance.
• Battery, charger and memory card-related complaints,
• Intentional damage to the handset for ex If the insured overcharges, overloads and does any sort of experimentation imposing any abnormal conditions for the mobile phone
• Loss or damage of unattended device or lent on hire or loan to a third party including friends and relatives.,
• Loss or damage due to poor maintenance and pet bites
• Loss or damage during war, nuclear perils, and flood or from any water-borne craft
• Loss of mobile phone due to the negligence of the insured

Also, companies may have a 48-72 hours of waiting period for the policyholder to be registered with the insurance company. So, claims made before this period may not be entertained.

So I will get the full amount if I buy mobile insurance?

No you will rarely get full amount of your mobile or any other asset for that matter ex Car.The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation.

When you file a claim, your mobile insurer will employ a rather complex formula to ascertain the amount payable. This formula factors in depreciation, leaving you to pay a fraction of the overall costs. Typically 10% of the purchase price for 90-day-old handsets, 25% for 91-180-day-old phones and 50% for phone that are more than six months old.

There is also a standard clause of 5% co-payment in most mobile phone policies, which has to be borne by the insured. Sometimes this may be as high as 10%.  Co payment is a flat fee you pay toward services such as health insurance or mobile insurance.  This is your initial payment for service, no matter what your visit is for.

Usually You can claim more than once limited to the cost of gadget .

What is the premium associated with the mobile insurance?

To give you an idea Premium for mobile phones from some companies  is as follows Ref : Economic Times(May 2015)

Premiums for mobile phones

How to claim mobile insurance?

 To file a claim, you need to retain the purchase invoice of the mobile phone and know the serial number of the phone. For loss of theft of phone you would first need to file an FIR within the first 24 hours after the loss or theft. File for the claim within 48 hours with the claim intimation and FIR. You will also need to attach the original price invoice and other details.

Where can one buy mobile insurance?

Insurance has to be bought at the time of purchasing a mobile device. The premium will depend on the cost of the phone.

Some of the insurance companies which offer insurance covers for mobile phones in India:

• New India Assurance Company
• National Insurance Company
• Oriental Insurance Company
• Bajaj Allianz

Some third-party service providers such as

• Gadgetcops : via  Iffco Tokio insurance, New India Assurance
•  InfyShield
• WarrantyBazaar
• Onsite 
• AppsDaily
• SyskaGadgets :provides . Quickheal, YourMovies & Games
• Biscoot : New India Assurance

Disclaimer: We are not associated with any of the above mentioned mobile insurance companies. Please conduct your due research before choosing any insurance provider for your gadget.

Related Articles:

• What does Your Mobile Phone Say About You?
• What is Mobile Banking?
• Financial Apps for India
• PostPaid Mobile Connection and Prepaid Mobile Connection: Comparison, Switching between Prepaid and Postpaid
• JAM Trinity: Jan Dhan Yojana, Aadhaar and Mobile number
• When you lose your mobile : What to do?

Do you think mobile insurance makes sense? Have you ever taken mobile insurance? If you have did you claim it, How was the experience? Would you recommend to take mobile insurance?

Today…

“And they lived happily ever after..“,said Satvik as he closed the story book and looked at his youngest grand-daughter Nisha. “GrandPa tell a different story which does not end with marriage..It’s so boring to listen about them “. “Dumbo they are fairy tales not real life. Real life is not a bed of roses, right GrandPa,” said Vrishti, the older one. Without waiting for the answer she continued “I have so much to do..Maths, Physics, and that English Assignment that Maam gave. We are drowning in work..How will I become doctor if I have to write that stupid English Assignment”

“A dream without a goal is a wish. A Goal without a Plan is just a dream“, said Satvik. “You need to have a goal, plan for it and then start working on it..” Kal ko Khoobsurat banana hai tu aaj se shuru karo.” “Aap bhi..Mauka milta nahin hai ki shuru ho jaate hain..” said Grandmother ,Neha,as she walked in the room. “Girls I have got your favourite dessert Gulab Jamun.”  ”Dadi you should come often or rather stay with us, we love your Gulab Jamun..but you keep on travelling the world..” Yes it was my dream to travel the world, since I read the book around the World in 80 days when I was your age and your Grandpa made my dream come true.” Satvik said “Not I but we. It’s God blessing but we had to plan to make your Dadi’s dream and our other dreams come true. Nisha let me tell your story which starts from marriage and it is not they lived happily ever after”

35 years ago…

“Money is almost gone and half a month is still left,” said Neha to Satvik. “And we have those tax saving investments to work. We both work in good organization, enjoy our life but money seems to slip through our fingers faster than sand. What do we do? ” replied Satvik  ”Why are we in this situation? We have to think and also how to avoid it? If we go like this how will we have the life we want and we don’t even have kids”. Both Satvik and Neha were lost in their own thoughts. They have had a good life, good school, engineering degree, got job in MNC as soon as they passed out, got married,work hard, partied harder ..so how did they land in this situation and important question is how to come out of it. Suddenly Neha jumped “Lets ask your father Satvik, he will surely help us to find the missing piece of our financial life”

Without wasting any time Satvik called his father , Rajesh Sharma.  After satisfying his father that everything is fine, he explained to his father the situation.  ”So what’s your financial plan? What’s your net worth” asked his father. “My plan is to work hard and enjoy life”, said Satvik.  ”That’s your wish Satvik, I am asking about your plan?”, said Mr Sharma. ”  ”That’s my plan”, replied Satvik. “So where are you going this vacation. Anything zeroed in or still looking at Seychelles, Paris, Switzerland?” asked Mr Sharma.  Satvik and Neha looked at each other wondering why is Mr Sharma talking about their vacation plan. Neha replied “We have zeroed on to Singapore.” Mr Sharma replied, “That good to hear. So you have decided your flight tickets, hotels and your sight seeing itinerary”. Satvik replied “Yes Papa I have those 5 days fully planned. But I want to ask about is my financial situation” Mr Sharma , answered “Always putting cart before the horse. I am also talking of the same thing. For a 5 day trip you have a plan but for your life your don’t have one. Before a person builds a house, he or she usually calls in an architect to draw up the plans. Could you imagine what could happen if someone just called in some people and began to build a house without a plan? Well, that is what happens to many people’s financial houses” “If you are failing to plan, you are planning to fail,” Neha quipped.

“Well said Neha, Meri bahu se kuch sikh” said Mr Sharma between his laughs. “Planning is bringing the future into the present so that you can do something about it now. A plan is like a road map, it shows the final destination and usually the way to get there” The rules of money don’t change from class VI to age 60. The relative heaviness or lightness of the journey through life depends on how clearly monetary goals are articulated. Just like Seven steps of vows there are seven steps of financial freedom are , as articulated in Monica Halan (editor of  Livemint), book  A Family’s Guide To Seven Steps To Financial Freedom by Monica Halan

Step 1: Find the Bearings : Your current financial status Calculate your net worth
Step 2: Protect the Present :Insuring your assets and income
Step 3: Identify the Dreams :setting your goals
Step 4: Choose the Route : risk profiling and asset allocation
Step 5: Put It All Together : Making your own plan
Step 6: Begin the Journey : Implementing your plan
Step 7: Review the Progress :monitoring your plan

“Thank You  Papaji. Satvik shall start our current financial status” ,said Neha. “No..you cannot let Satvik look into it alone. For better or for worse, good times and in bad, in sickness and in health you have agreed to honour and love him. As this affects your future happiness you have equal stake in it and should take responsibility also. How will he know about your dreams, what you want in life  I love this Advertisement in which the couple are talking about their dreams and planning for Happiness . If you plan then you will have Long and Happy Life, Kal Khoobsurat Hona Hi Hai.

The other thing that I liked about this advertisement was there Long and Happy Scrap Book. A goal without a plan is just a wish. I totally believe in power of writing and when I have written down somehow…” Neha chirped in  ”Itni shidaat se main tumhe paane ki koshish ki hai,hi har zaare ne mujhe tumse milane ki saazish ki hai” I loved that dialogue in Om Shanti Om. “Kehte hain ki …… Agar kisi cheez ko dil se chaaho to puri kayanat usey tumse milane ki koshish mein lag jaati hai.”

“My Shahrukh Khan fan, picture abhi baaki hai,” replied Rajesh. “You need to write down what you want, plan for it .  Infact there is a book Think and Grow Rich  by 1937 Napoleon Hill, personal development and self-help book.  ”But Writing about goals? It’s boring!” complained Satvik. “There are few success practices more important that articulating your most closely held goals and then reviewing them daily. And guess what? Most people don’t spend more than an hour a year doing this. There are 4 big reasons for you to set goals: Focus, Measurement, Alignment and Inspiration. If you don’t know where to go, young man how will you reach there..Remember what Cheshire Cat answered to Alice in Wonderland”

Rajesh continued “You should setting three kinds of goals: emergency funds (three to six months of essential bills) one- to five-year goals, such as for a down payment or a trip, and then long term goals, kids education, marriage, retirement. Both of you should also be on the same page , you need to talk about many things  career, travel, kids and finances. A few factors that play into financial issues for couples are Money Issues in Marriage : Your, Mine and Ours. Not understanding how each spouse uses or manages money. Not knowing their habits is your spouse a big spender? Not being honest about debts. And if you want to come together financially then you have to: have open communication about your finances (financial transparency), share information credit card and bank statements, establish goals and a budget, and meet frequently to discuss finances. Be equally responsible for your financial life.

“Papa this is all theory, sounds good but how to do it?” asked Satvik. “Good question son. To prepare financially for a long and happy life use The Money Book. ”

Money book

The Money book

• It would be one stop for all your financial information. Your insurance,(life, health,motor), your bank details(Accounts,Lockers,Demat Account,Credit Card), Your Loans(Home loan, Auto loan), your investments(FD,Mutual Finds, PPF,EPF, Others..) It would help you to stay organised as it will have all your information in one place
• It would be your legacy book : So your family don’t have to go through the inconvenience of searching for documents and whom to contact,

Key people of your financial life

Money Book and investments

Basically it will help you to plan your life, a  Well Planned Life for a beautiful tomorrow.

Today…

“It seems that we had this conversation yesterday. How fast the time has flown . It has been hard work, we had to give up partying, buying new mobile every 6 months, going to mall for every sale, maxxing our credit card limit but we didn’t have regrets for we knew where we wanted to go” said Neha as she looked at Satvik.  ”That’s what I call a Happy Real Love story. Time for bed”. “So If you want to achieve something in life than write down, my princesses,” said Satvik.

Related Articles:

• Investing in name of Wife
• Oh you are only a housewife!
• Changing Name:What to do?
• Reliance : Dhirubhai Ambani,KokilaBen DhiruBhai Ambani
• Money Issues in Marriage : Your, Mine and Ours
• Beginner to Investing – Approaches, Plan, Psychology

So do you have a money book? How do you plan your financial life? Do you handle your finances jointly or alone?

Prime Minister Narendra Modi on July 1 will launch digital locker facility that will help citizens to digitally store their important documents like PAN card, passport, mark sheets and degree certificates.  It  is linked to the Aadhar number. This article talks about What is Digital Locker, how does it differs from Google docs or Drop Box, What are advantages of Digital Locker, How to register and use the Digital Locker.

What is Digital Locker?

Digital Locker or DigiLocker is a website or a portal by Government of India where you upload and store your documents like PAN Card,passport,mark sheets and degree  certificates. This locker will be linked to one’s Aadhaar number. You will be offered 10 MB space for all your documents  free of cost. Space will be later increased to 1 GB. So basically it is like a physical locker where you store your jewellery and documents but this locker is digitial i.e on website and will store digital information. Digital Locker can be accessed from https://digitallocker.gov.in/. Offical FAQ on Digital Locker 

Going forward the Government agencies will issue the documents in electronic form which will be uploaded on the website. For example The Central Board of Secondary Education(CBSE) is likely to start issuing mark sheets and certificates in digital format as well along with hard copies which can be stored by students in their digital lockers,(Ref : Economic Times)

Digital Locker is one of the key initiatives under the Digital India Programme. The website has been developed and is being maintained by MahaOnline Ltd, the joint venture between Maharashtra government and Tata Consultancy Services (TCS).

Aren’t such websites already existing?

Yes Free cloud storage like Google Drive and Dropbox also let you upload and store the documents, allows you create folders and categorise to make browsing easy.

There are private businesses like Kleeto.in that provide secure online storage for a fee ranging from 200 to 2,000. For a basic yearly subscription package of 200, Kleeto will securely store 15 documents of 5 pages each and an online storage of up to 50 MB. They will pick-up, scan, upload and keep the papers safe. When you need the originals, they will be sent to you within 2-3 days.

Private e-locker services are also available for some time now. ICICI bank has a similar e-locker service which customers can use by login in through their internet banking or ICICI Direct account login.

It’s worth noting that the Maharashtra government had started testing an Aadhaar-linked  e-locker service called Maha Digital Locker on a pilot basis, in November last year. The service claimed to allow users to fill up government forms with a single click.

So how does Digital Locker differ from other such websites?

Digital Locker offers much more than a place to store the documents.

• You can upload scanned copies of your documents, like in other websites. But these scanned documents which, if required, can be digitally signed thus making the e-document at par with the original one .
• Going forward the locker will be  repository or store house of all your government issued e-documents.These electronic e-documents will be uploaded by issuers, government departments or agencies such as CBSE, registrar office, income tax department .
• The documents you upload can be shared via email, the e-documents from governments agencies viewed by an authorised list of requestors such as a bank, university , the passport office or the transport department.

However, with other websites cyber law and jurisdiction is a concern.  When people upload their personal information into these websites they  have NO idea where the data is stored(somewhere in cloud), who else has access to the information. Or what polices these companies have in regards to what employees have access to customer data. Or what polices they have in regards to things like legal subpoenas and requests from law enforcement and governments.

If you store anything in DropBox or Google drive, you are governed under US regulations and there is no direct protection under the Information Technology(IT) Act.

Though Online free storage services are equally secure, however, the government’s locker is more secure primarily because the data gets stored within India and you are legally protected under the Information Technology Act, 2000 

 What all would Digital Locker contain?

Each user’s digital locker has the following sections as shown in image below

Digital locker Dashboard

• My Certificates: This section comprises of two sub sections:
  • Digital Documents: This contains the links or URI’s of the documents issued to the user by Govt. departments or other agencies.
  • Uploaded Documents: This subsection lists all the documents which are uploaded by the user. Each file to be uploaded should not be more than 1MB in size. Only pdf, jpg, jpeg, png, bmp and gif file types can be uploaded.
• My Profile: This section displays the complete profile of the user as available in the UIDAI database.
• Account Settings which allows you to Change password and link with Google and Facebook  as shown in image below

• Digital Locker account settings

Going forward their will be

• My Issuer: This section displays the issuers’ names and the number of documents issued to the user by the issuer.
• My Requester: This section displays the requesters’ names and the number of documents requested from the user by the requesters.
• Directories: This section displays the complete list of registered issuers and requesters along with their URLs.

 What is the purpose of Digital Locker?

Digital Locker is aimed at minimizing the usage of physical documents and enable sharing of e-documents across agencies.Digital Locker will reduce the administrative overhead of government departments and agencies created due to paper work. It will also make it easy for the residents to receive services by saving time and effort as their documents will now be available anytime, anywhere and can be shared electronically.  Objectives of Digital Locker are as follows:

• Enable digital empowerment of residents by providing them with Digital Locker on the cloud
• Enable e-Signing of documents and make them available electronically and online Minimize the use of physical documents
• Ensure authenticity of the e-documents and thereby eliminate usage of fake documents
• Secure access to Govt. issued documents through a web portal and mobile application for residents
• Reduce administrative overhead of Govt. departments and agencies and make it easy for the residents to receive services
• Anytime, anywhere access to the documents by the resident
• Open and interoperable standards based architecture to support a well-structured standard document format to support easy sharing of documents across departments and agencies
• Ensure privacy and authorized access to residents’ data.

Since when is Digital Locker available?

In Feb 2015 Digital Locker was launched in what is know as beta phase. It will be officially launched on 1 Jul 2015.

What is Beta Testing?

Beta testing is a term used in making a commercial product usually software. Betatesting also known as field testing for a product is done before the commercial release. Beta testing is the last stage of testing, and normally involves sending the product to beta test sites outside the company for real-world exposure or offering the product for a free trial download over the Internet. Advantage of Beta Testing is to have the opportunity to get your application into the hands of users prior to releasing it to the general public. The Users can install, test your application, and send feedback to you during this beta testing period.

Is Digital Locker safe?

The Digital locker uses the same security that all banks use for internet banking. They use your registered mobile number and email address to send you OTP,one time password. That is the only way you can gain access to digital locker.

How to register for Digital Locker?

To Sign-up or Register for the Digilocker you need to have a valid Aadhaar number registered with Aadhaar.

Please type your Aadhaar number in the text box against Enter Aadhaar Number. You will be given two options for user authentication. Use OTP and Use Fingerprint. OTP means One Time Password.

Register Digital Locker using Aadhaar

After clicking on Use OTP, an OTP (One Time Password) will be sent  to the mobile number and email-id registered with your Aadhaar as shown in image below.

Enter the OTP and click on Validate OTP button.

Digital Locker Wait for OTP

Once the OTP is validated the user is taken to set username or password page to complete sign up

Digital Locker Create User Id and Password

How to Sign In Digital Locker after Registration?

You can login using any of the three options shown in image below:

• your Aadhaar Number which requires OTP or Finger Print
• User Id and Password or
• Social Media

Digital Locker Sign in

How can I upload a document in my digital locker?

Upload documents facility is available under My Certificates section. Click on orange box (marked in red ) in image below

• You need to first select a document type (SSC Certificate, HSC Certificate, PAN card, Voter ID card, etc.) from a drop down list.
• Provide a name for the document
• Based on the document type selected, you need to fill in the other details relevant to the document.
• Choose the file from your local machine to be uploaded to digital locker.
• Each file to be uploaded should not be more than 1MB in size and only pdf, jpg, jpeg, png, bmp and gif file types are allowed
• Provide Description of the document (max 50 characters)
• Click Upload button. On successful upload, the document will be listed under Uploaded Documents subsection.

Digital Locker Upload Document

How can I share the e-documents in my digital locker?

For sharing your e-document , mentioned as URI under  Digital Documents subsection or under Uploaded Documents  subsection, you need to click on  Share link provided against the document you would like to share, as shown in image below, marked by red box.

Digital Locker Share document

A dialog box will pop up as shown in image below. Please enter the email address of the recipient in the dialog box and click ‘Share’ button.(You can enter multiple email address separated by semicolon( ex abc@gmail.com;ghj@yahoo.com)

Digital Locker : share with email ids

The document will be shared with the recipient via email.

The recipient will receive an email from ‘no-reply@digitallocker.gov.in’. The subject line of the email will mention the document name and document type. The email body will have the URI link of the document and the sender name and Aadhaar number.

Digital locker share email

Terms associated with Digital Locker

• An e-document is an electronic document issued to one or more individuals (Aadhaar holders) in appropriate formats (both as XML and printable) compliant to digital locker technical specifications. You may also upload govt. issued scanned documents and also digitally sign the same, if required.
• Repository is a Collection of e-Documents
• Issuer is an entity issuing e-documents to individuals in a standard format and making them electronically available e.g. CBSE, Registrar Office, Income Tax department, etc.
• Requester is an entity(person or organization) requesting secure access to a particular e-document stored
• Access Gateway provides a secure online mechanism for requesters to access e- documents from various repositories in real-time using e-Document URI (Uniform Resource Indicator). The gateway will identify the address of the repository where the e-Document is stored based on the URI and will fetch the e-Document from that repository. Please refer to the DigiLocker Technical specifications available on the portal for further information.
• A URI is a Uniform Resource Indicator generated by the issuer department, which is mandatory for every e-document of the digital locker system. This unique URI can be resolved to a full URL (Uniform Resource Locator) to access the actual document in appropriate repository. It’s like an address ex: http://digitallocker.gov.in/CandidateLocker/Share.ashx?type=NonURI&Hash=2614af2b9574c1109edf361f55d43008ca9a835f884d170ae

Important Info:

Digital Locker can be accessed from https://digitallocker.gov.in/. Offical FAQ on Digital Locker 

You may contact DigiLocker support team via email: support@digitallocker.gov.in

Related Articles:

• What is PAN Card ?
• Aadhaar : What is Aadhaar, How to enrol,Check Aadhaar status,Download e Aadhaar
• Bank Locker : Sizes,Opening a locker,Rent,Safety,Alternatives
• Digital India
• Form 26AS on TRACES
• Understanding Form 16: Tax on income

We think it’s a good initiative. Though we use Google docs and DropBox having a repository of all documents especially government related is great. Would you register for Digital Locker , Why or Why not? Did you face any problems while registering for Digital Locker?

There are 1000 of Mutual Funds in India. How to choose the Mutual Fund is difficult. Can one choose the mutual fund based on one’s investing type? Outlook money has come up with list of equity funds based on investor types. What are the various investor types?

Too Many Choices: A Problem That Can Paralyse

In the past ignorance was due to lack of easily available information or facts on which to base conclusions. For example, it was thought that the world was flat due to lack of observable and verifiable facts. And conclusion,faulty one as we know now, was If you sail too far, you will fall off the edge. A wrong fact results in wrong conclusions which results in wasted or damaging actions with real world negative outcomes. As relevant data could be collected, of course, humans changed their conclusions, so today we know the Earth is not flat, though World is.

Today, we end up ignorant, but for the opposite reasons. We never reach a point where we have just enough information to make informed decisions. We have way too much information that sounds relevant, no mechanisms in place to provide checks and balances on what information gets distributed, no way to confirm most of what we hear.  In his 2004 book, The Paradox of Choice  Why More is Less, American psychologist Barry Schwartz argues that eliminating consumer choices can greatly reduce anxiety for shoppers.

Have you seen a kid in an ice-cream parlour which offers many types of ice-creams. He has to make a choice,would chocolate chip or mango cream be better?  His fear, he says, is that whatever he selects, the other option would have been better. So Does more choice give more freedom or we end up spending so much time trying to make choices?

Overchoice, also referred to as choice overload, is a term describing a cognitive process in which people have a difficult time making a decision when faced with many options. The term was first introduced by Alvin Toffler in his 1970 book, Future Shock. The phenomenon of overchoice occurs when many equivalent choices are available. Making a decision becomes overwhelming due to the many potential outcomes and risks that may result from making the wrong choice. Having too many equally good options is mentally draining because each option must be weighed against alternatives to select the best one.

Too Many Mutual Funds 

With over 1000 schemes , finding mutual fund scheme to invest is an onerous task. With several hundreds of schemes on offer, mutual fund investors are spoilt for choice. There are large cap, small cap, equity, debt, gold, ETF, sector based funds such as tech, financial, retail or energy to commodities to foreign indexes. The sheer number of mutual fund schemes on offer  can intimidated anyone. It’s like the buffet in the marriage party which has everything from Chinese, Chaat to Mexican, Samajh hi nahin aata khaoon kya aur choodon kya? Bhai pet tu ek hi hai na. Googling “How to choose a mutual fund” gives me more than million results (that too in 0.25 seconds). One is overloaded with information about style of fund, benchmark returns,category returns, fund manager, size of fund,risk parameters, such as standard deviation and beta, parameters for risk-adjusted return, such as Sharpe ratio and Treynor ratio. One feels like one is drowning in information. Our article Rantings of a Mutual Fund Investor talks in a light humorous way of the decisions that  a  Mutual Fund Investor  faces Meri investing ki thinking mein itne ched ho gaye hai, itne ched ho gaye hai,ki hum to confuse ho gaye hain ! Kya kare kya na kare yeh sun lo mere bhai , Koi to bataa de iska Hal o mere bhai. 

Choosing Mutual Funds based on Investor Type

Outlook Money had come out with the list of best funds in 2000. They pruned list of the best funds resulting in the Outlook Money 50 or OLM 50 funds s offered a fair bit of choice, which was diligently updated each year. Realising  lesser-the-better  approach would work for a mutual fund investor resulted in birth of the Elite list in Jan 2015. The OLM Elite aims to concentrate investors attention on a sensible number of high quality funds.   The Elite list is perennial work in progress to ensure the reader has an updated and relevant list of funds to pick from. Outlook money will regularly scan the universe of funds for each category to not just recommend funds, but from time to time, also suggest exit from funds Please note that the list of Mutual Funds based on Investor type is an investment aid and does not constitute advice or a personalised recommendation to invest.

The Elite list solves the investor’s problem by categorising funds into groups that meet their investment needs. As a first step, Outlook Money defined four types of investors:

• The Beginner : New to investments and needs to experience investing with minimal risks. The funds recommended for a first-time investor are a Mix of tax-saving and balanced funds.
• The Safe player : Cautious with a 3-5-war investment time-frame :  They look for low risk which is why funds from the large and mid-cap categories find place here
• The Ultracool investor with a long-term aim : Moderate returns expectation and has a marginally more than five-year investment horizon
• The Adventurer : Seeks high returns and can tolerate higher degrees of fluctuation with returns. Mostly funds from the mid- and small-cap segments find place here for the high-risk-reward proposition.
• Each investor stereotype addresses a core investment need without being constrained by the number of funds to meet those needs. Each of these four categories has five hand-picked funds that each investor type can choose from.
• Every fund chosen has a minimum three-year history, with most having at least five-year history or more. Outllook Money says “We have adhered to the mutual fund disclaimer on past performance and brought in an element of quality based on our experience by speaking to fund managers to list funds that we think are most likely to outperform their peers in future.“

Funds  based on Investor Type

OLM Elite funds based on the Investor Type from Apr 2015 Edition of Outlook Money are as follows

Mutual Funds for Beginner

Mutual Fund for Safe Player

Mutual Funds for Safe Player

Mutual Funds for Ultra Cool 

Mutual Funds for Ultra Cool

Mutual Fund for Adventurer

Mutual Funds for Adventurer

Bemoneyaware take

 Often we just end up collecting and comparing information. We look for that 1-3% extra gain and lose on +10% gain.  Choose a fund with good pedigree, well managed and which has preferably seen many market cycles.  As Mr Amitabh Bachchan reminds us lines from his fathers book Madhushala

Dr Harivansh Rai Bachchan’s Madhushala

Related Articles:

• Why Mutual Funds in India are not popular
• How to Choose Mutual Fund : Ratings, Fund House,Size
• Growth and Dividend Option in Mutual Funds
• Investing in Equities: Stocks vs Mutual Funds
• Investing in Mutual Funds for Beginner

Do you think Choosing Mutual Fund by Investor Type is a good idea? How do you choose your mutual funds? Do you get swamped by lots of information?

Our article Which ITR Form to Fill covers different kinds of income tax return form,why there are so many forms and which one to fill.  But we still get many questions on which ITR Form to fill. So we came up this 10 min video which explains

• What is ITR or Income Tax return?
• Why are there different ITR forms?
• What are different types of incomes?
• How to choose which ITR form to fill?

Our article Income Tax for AY 2015-16: Tax slabs, ITR Forms covers information of filing income tax returns in detail

Articles to help you for filing Income Tax Return

• Income Tax Overview
• Income Tax Calculator
• Understanding Income Tax Slabs,Tax Slabs History
• Income Tax articles organized
  • Understanding Form 16: Part I,
  • Understanding Form 16 – Part 3
  • Viewing Form 26AS on TRACES
  • What to Verify in Form 26AS?
  • Income From Other Sources :Saving Bank Account, Fixed Deposit,RD and ITR
  • How to file Income Tax Return Online : Incometaxefiling,CA,efiling Websites
  • HRA Exemption,Calculation,Tax and Income Tax Return
  • Cost Inflation Index,Indexation and Long Term Capital Gains
  • Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund
• Filing on Income Tax
  • E-Filing of Income Tax Return,
  • E-filing : Excel File of Income Tax Return,
  •  Which ITR Form to Fill?
  • Filling ITR-1 : Bank Details, Exempt Income, TDS Details
  • Fill Excel ITR1 Form : Income, TDS, Advance Tax
  • Filling Individual ITR Form: Fields A1 to A22
  • How To Fill Salary Details in ITR2, ITR1
  • Fill Excel ITR1: 80G, Exempt Income,Calculation of Tax
  • How To Fill Salary Details in ITR2, ITR1
  • How to Fill ITR when you have multiple Form 16
  • Tax Exempt Allowances in Salary Schedule S in ITR2
  • Interest on Saving Bank Account : Tax, 80TTA
  • Exempt Income and Income Tax Return
  • Income from House Property and Income Tax Return
• After filing Income tax returns
  • Understanding Income Tax Notice under sec

Please share your thoughts, feedback. Whether such videos are helpful? Which kind of videos would our readers be interested in seeing?

Banking has always been a complicated process that involved rigid rules, detailed documentation, and complex procedures. Thankfully, technology has transformed modern banking into a convenient and easy affair. Customers are no longer required to make personal visits to the branch for carrying out basic tasks like depositing cash and cheques or withdrawing money from their account.

Wide Range of Banking Services in ATMs

The widespread usage of debit and credit cards has freed customers from the compulsion of visiting banks for withdrawing cash from their accounts. Today, banks have their own ATM networks spread all over the country. Apart from withdrawing cash, customers can enjoy instant access to a wide range of services like balance enquiries, cheque-related services including requests for a new cheque book, instructions for a stop payment, and enquiry about the status of cheques deposited into the account.

Further, ATMs allow account holders to execute intra-bank transfers instantly even outside official working hours. Today, a functional ATM has become a mini-branch that allows customers to execute a wide range of transactions without having to take time out of their busy schedules to visit the branch.

Convenience Banking through Cheque Deposit Kiosks

While ATMs may have made it easier to withdraw cash, individuals are often required to make personal visits to stand in long queues just to deposit cheques into their accounts. If you are a Kotak Bank account holder, you can take advantage of cheque deposit kiosks to avoid unnecessary documentation or delays.

Simply enter your account number, insert the cheque in the deposit slot, verify the accuracy of the scanned image and the captured cheque number, and complete the transaction in no time. You will get a receipt for the transaction and the transfer will be cleared on the same day itself. This is a much better option than waiting for the collection of the cheque from the ATM’s drop box for processing, which invariably results in a 2-3 day delay in the credit of the amount.

Combining automated cheque processing with computerized NEFT, RTGS, or IMPS transfers will help you enjoy convenient banking services without unnecessary wastage of time.

Cheque Deposit Kiosk

Instant Cash Deposit for Faster Banking

Finally, Kotak has made banking faster and more convenient with its instant cash deposit machines. One can deposit cash by swiping the debit card and providing the PIN or entering the account number. In both cases, the customer can proceed ahead after verifying the details and place the cash in the deposit slot.

The machine will count the notes, verify the deposit amount, and generate the proof of deposit. Further, the amount will be credited into beneficiary’s account instantly. Automation ensures that customers can deposit huge amounts without any delays.

Cash Deposit machine

There was a time when a visit to the bank used to take up the entire productive day of the individual. Today, even banking activities like depositing a cheque, which was impossible without a personal visit to the branch, can be done quickly with the help of convenient banking kiosks.

Related Articles:

• Number of ATM Transactions
• How to use ATM machine
• Third Party Fund Transfer : NEFT,RTGS
• Service Charges on Saving Accounts by Bank,QAB,MAB

About the author:

Rachita Kotian is an independent blogger and writing has been her passion for a long time. A literature major, she loves exploring the world of health, lifestyle, travel and finance. When she’s not writing, she’s most likely listening to music, cooking, surfing the web, or catching up on the latest flick.

This 10 minute video explains steps in filing ITR, ways to file ITR : Excel Utility, Java Utility or Online, Documents required and Form 26 AS. This video is based on our article E-Filing of Income Tax Return,

Video on Ways to File ITR , Steps to File ITR

Bemoneyaware’s video on Youtube  is at https://www.youtube.com/watch?v=6uPW-iavZPc

Summary of Video is given below

Steps In Filing Income Tax returns

To file on incometax department efiling website incometaxindiaefiling.gov.in steps are ”

1. Fill the form for which there are two options
   • File return offline : means you can download the form, fill it without being connected to internet and submit the form online.
   • File return online (which currently shows for filing only ITR 1,ITR4S) : means that you need to be connected to internet for filling the form as well as submitting it.
2. Choose whether you want to use digital signature while filing. A digital signature authenticates electronic documents in a similar manner a handwritten signature authenticates printed documents. This signature cannot be forged.
3. If you do not use digital signature the Income Tax receipt, called as ITR-V, needs to be printed and sent to Central Processing Unit (CPC) Banaglore within 120 days of filing return.

Steps in Filing ITR

When does one need to e file returns

E-Filing Returns is  compulsory for:

• Individuals earning over Rs 5 lakh a year. They are required to file their tax returns in the electronic format from AY 2013-14 (FY 2012-13) and subsequent assessment years.
• Individual/HUF, having total Income of Rupees 10 lakhs. It was made mandatory from AY 2012-2013((FY 2011-12) and subsequent assessment years.
• Individual/HUF /Firm auditable under section 44B of the IT Act, 1961. It was made mandatory for AY 2012-2013 and subsequent assessment years.
• All Companies

How to file returns using Excel or Java Utility

Which utility to choose depends on your familiarity and your ease of use with software such as Excel, Java or form based. Information to be filled is same in all. As Amitabh Bachchan says famous lines from his father’s Harivansh Rai Bachchan, raah pakaD tu ek chalaa-chal paa jaayega madhushaala .

Steps to file returns offline are :

1. Download the applicable ITR form which is zip file with Microsoft excel file or Java Utility also called as Return Preparation Software
2. Fill it offline
3. Generate a XML file and save it to your computer.
4. Logon to incometaxindiaefiling.gov.in (If you don’t have the Login you need to register )
5. Go to e-File->Income Tax Return and Upload your XML file (saved in step 3)
6. Choose whether you want to use Digital Signature or not
7. On successful upload acknowledgement details would be displayed.
8. If you did not use digital signature and  you did not meet requirements for Electronic Verification code ex : did not fill the Aadhaar the Income Tax receipt, ITR-V, needs to be printed out and sent to Central Processing Unit (CPC) Banaglore within 120 days of filing return.

Excel Utility for filing ITR

Java Utility

ITR Java Utility

Online

Those filing ITR1 or ITR 4S can file online after logging in to incometaxefiling.gov,in and selecting Quick e-File ITR ,as shown in image below (Click on image to enlarge)

File ITR Online

Documents required while filing ITR

As per income tax department documents required for filing ITR are shown in image below

ITR checklist for documents required

Various documents depending on Types of Income are shown below (Click on image to enlarge) and articles to help you understand

• Understanding Form 16 – Part 3
• Viewing Form 26AS on TRACES
• What to Verify in Form 26AS?

Documents required for filing ITR

Steps in Filing an ITR

Steps in filling an ITR are explained in articles  and shown in image given below

• Fill Excel ITR form : Personal Information,Filing Status or Filling Individual ITR Form: Fields A1 to A22
• How To Fill Salary Details in ITR2, ITR1
• HRA Exemption,Calculation,Tax and Income Tax Return
• Fill Excel ITR1: 80G, Exempt Income,Calculation of Tax
• Fill Excel ITR1 Form : Income, TDS, Advance Tax
• Filling ITR-1 : Bank Details, Exempt Income, TDS Details
• Tax Exempt Allowances in Salary Schedule S in ITR2
• Paying Income Tax Online, epayment: Challan 280

Steps in filing ITR

Please let us know your feedback on how are  the videos? Are videos helpful? What kind of information you prefer to see on bemoneyaware – text or video or both

In a country that adapts so easily to cellphones and online shopping, equity investing has not caught on like it should have . To investors, equity markets represent the incredulous. The returns are too high to trust; the operators too shrewd to identify with; the rules of thumb fail more than they succeed; and it seems too risky. What does it take to get more people interested?  The idea that a lot of money can be made by doing next to nothing should be debunked, wrote Uma Shashikant in  Why common investors need to enjoy the joys of equity

Uma Shashiskant’s columns and videos

Every Monday morning, I look forward to reading Uma Shashikant’s column in ET Wealth. That’s the first page I go to. And then I again re-read her column of last week which appeared in last ET Wealth in Times of India Finance page. She writes about varied concepts in simple terms such as How each of us can enable the simple earners around us to lead better live and steps that one can do. Begin your financial inclusion efforts with your maid today she urges. Every article of her not only lists the problem but also gives simple solution.

Investors focus on their need for commoditising money and seek the protection, defined benefit (sometimes entitlements) and promises from market players. They ask for assurances about what they will get, when and how. They seek protection of capital. They go by names, people and emotions than sticking to hard facts and numbers. The players in the markets respond to this need and package products accordingly . A poor 5% return product is sold as a plan that “secures” the child’s education since it would pay a fixed set of cash flows. Finance schemes are designed to show what you pay now and what you get later.  Wrote Uma in Lessons for a hoarder

The top issues: We are willing to fund the postgraduation, but our child wants to work and pay for it. We think our child should stay with us and save some money, but she is insisting on living on her own. We would like them to begin saving for a house, but they do not want to. We think a job with a big firm is good, but they want to work for a start-up. We like them to work, but they are bitten by the entrepreneurial bug. There is no question of “parental angst” when the “child” is 21 plus. But these questions are important for personal finance. Let the children decide

• You can read her articles on Times of India  
• Her interview on FreeFinCal
• Her Videos are available on Money Kraft website.  Money Kraft is an educational initiative of Centre for Investment Education and Learning Pvt Ltd (CIEL) . Money Kraft aims to empower investors and intermediaries to make better personal finance decisions. Her Video on Choosing between Dividend & Growth Options of a Mutual Fund: Investor Education Video by Moneykraft is given below for your reference. You can also watch  thevideo on Uma Shashikant – How to grow business through customer education – Part 1

About Uma Shashikant

Uma is a PhD in Finance and has been a trainer, researcher and consultant in the capital markets area since 1988. She worked at the UTI Institute of Capital Markets (Now IICM) for ten years, during which time she has trained a range of market participants from commonwealth ministers, bureaucrats, fund managers, analysts, bank officers, and employees of various organizations in the financial services sector. She was Vice-president (Knowledge Management) at Prudential ICICI AMC and Chief R&D Offic er at ING Investment Management before setting up CIEL. She had been involved in product development, process documentation, investor communication, distributor education, institutional sales and investment committee in these two mutual funds.

We personally look up to her as in the space of finance and investing we see relatively few women and especially those who have made a mark.

Strategic Personal Finance workshop  in Bangalore

On 26th July 2015 in Bangalore Dr. Uma Shashikant, Managing director, Centre for Investment Education and Learning (ciel.co.in and moneykraft.com) will be conducting a workshop on Strategic Personal Finance. Along with Prof Pattabiraman Murari ( Associate professor at IIT Madras), or pattu of  freefincal.com  No prior knowledge of personal finance is necessary. Register with your spouse, if possible. This is a chance to interact with and learn from one of the best teachers in the country.

The following aspects will be covered.
1. Taking charge of assets and funds.
2. Evaluating the impact of personal finance decisions
3. Maximising net worth – steps to financial freedom
4. Building a robust and diversified portfolio
5. Common mistakes investors make
6. Approach to equity investing
7. Approach to mutual fund investing (pattu, freefincal.com)

• Date: Sunday 26 Jul 2015
• Timings : 9 am to 4 pm
• Location: Senate Hall, The Infantry Hotel 66, Infantry Road, Behind Gem Plaza, Near Safina Plaza Bengaluru
• Cost : Rs 800

You can Register for the Workshop on “Strategic Personal Finance” at Bangalore, July 26th 2015

About Pattu’s and His workshops

M. Pattabiraman aka pattu is physicist working at IIT, Madras. He teaches undergraduate engineering physics and postgraduate physics students and works in experimental quantum optics. He has interest in personal finance calculations.  On his personal finance blog, FreeFinCal, he provides excel based calculators for financial planning free of cost . I attended one of workshops by pattu  and  facebook group Asan Ideas for Wealth run by Ashal Jauhari. Pattu had shared his presentations on Personal finance which is here for your reference

Related articles:

• Meet Personal Finance Blogger : Pattu of FreeFinCal
• An Interview: 20s and Money
• Journey to Wealth : Start Early
• Personal Finance and Scott Adams,Dilbert
• Personal Finance Books For Adults
• Review of movie One Idiot by IDFC

These days it’s good to see many workshops on finance being offered for common man, Jagoinvestor, P V Subramanyam of subramoney, Safe Niveshak, Pattu. Personal finance is slowly coming out and being talked about. I went to one of pattu’s workshop in Bangalore on Sunday morning and it was good to see many people had come. Have you attended any of the personal finance workshops? If yes how was the experience. Are you keen to attend personal finance workshops?

One of the biggest asset in finance is your earning power the ability to create the net cash flows which can repay the loans. You do not get a house loan, a car loan or a personal loan. What you get is a loan against your FORM 16, that you will be able to repay loan in future.  One of the profession which parents want their children to join is Engineering or IT,others being Medical, Lawyer,IAS. But  being an engineer now is so different from being an engineer 10 or 20 years back. Pink slip or getting laid off is now also happening in India. We’ll touch upon the challenges that IT is facing in India and try to seek answers to Are engineers facing a bleak future? We have also included an article by  former chairman of Microsoft India, Ravi Venkatesan, IT party is over. Now’s the time to reinvent or die.

IT Jobs 

Every parent whose child scores well in Science is hoping that the child gets into IIT or Medical. There are many coaching centres which have opened  up throughout India especially Kota in Rajasthan and online too, to prepare the child for IIT. Chetan’s Bhagat book Revolution 20-20 (pages 48-92) talks about coaching situation in Kota. You can read this at slideshare. An interesting debate on Quora Why do most Indians study engineering?

Since the 1990s there was rapid growth of India’s software development and Business Process Outsourcing (call center and back office). India’s IT and BPO (Business Process Outsourcing) sector reportedly employs up to 3.1 million persons directly and generates some $120 billion in revenue annually, including more than $70 billion in foreign revenue. However things have changed. More engineers, less employable engineers, weak demand in US, layoffs or pink slips are now associated with IT. 

India’s IT sector is increasingly being hammered by the world capitalist crisis, by anemic growth in the US and Europe and increasing competition from other countries with abundant cheap labour. Like many of India’s other industries, its IT sector is also being undermined by the deplorable state of public infrastructure, everything from the speed of transport and reliability of utilities to the low quality of the education provided by all but India’s premier universities and technical institutes. India’s IT and BPO sector has steadily lost business to other Asian countries, especially the Philippines, where salaries are even lower, as well as to Eastern Europe.

Indian economy is not growing at the same rate as the number of engineers.Engineering colleges have been springing up like wild mushrooms in India in the last few years. Their number has gone up from a not too modest 1,511 colleges in 2006-07 to an astoundingly high 3,345 in 2014-15.There is a mismatch in the aspirations of graduating engineers and their job readiness. 97% engineers aspire for a job in IT and core engineering. However, only 18.43% employable in IT & 7.49% in core engineering.  20-33% out of the 1.5 million engineering graduates passing out every year run the risk of not getting a job at all. For those who do, the entry-level salary is pathetically low, and has stagnated at that level for the last eight-nine years, though the prices of everything from groceries to vehicle fuel have shot up during the same period.

Two key industries which hire engineers in India- the IT and ITes and the manufacturing sector- are also hiring a lesser number of them than before. As against 76% of the 1,389 IIT Mumbai pass outs getting campus placements during the 2011-12 session, only a little above 66% out of the total 1,501 could find campus placements in 2012-13 The situation is grimmer for Tier II and Tier III colleges. The huge disparity between start out salary for top colleges and the not so highly sought after ones, which has already been highly pronounced, is expected to widen further.  Meet millions of India’s engineers – unemployed or stuck in unrelated jobs. Recently I read about Uber and Ola drivers earn up to Rs 1 lakh per month Many engineers becoming cab or auto drivers.

Job security is no longer associated with IT jobs. Layoffs is now part of every industry , especially one which is down. For example Nokia shut down it’s manufacturing factory in Chennai making 5000 people unemployed. With airlines criss airline staff got affected. In 2008 due to financial crisis people in financial industry were impacted. Pink slip is a something that many of those in IT might face in future. Mass Layoffs talks about it in detail. Kind of skills needed in the industry change with time. A decade ago needs for IT market were very different from the IT market today. Today there is high demand for jobs like data analysis, eCommerce which are high paying jobs (and high pressure too).  Our article Losing a Job : Why the Layoffs, Managing finances talks about financial moves to help you tide over the period.

IT party is over. Now’s the time to reinvent or die

Vyapam scam is making headlines these days. It is about irregularities and corruption in the Madhya Pradesh Professional Examination Board (MPPEB) or MP Vyavsayik Pareeksha Mandal, abbreviated in Hindi as Vyapam. Corrupt officials took money to compromise the examination and recruitment for several professional course including Pre-Engineering, Pre-Medical, MCA, Teaching etc.  Influential persons used their power to push for candidates, via several middlemen including mining baron and prime accused Sudhir Sharma, of their choice to be admitted to certain curses or recruited to certain posts. This article talks about 10,000 crore worth Vyapam Scam, it’s time line and did it happen due to flawed education system and  flawed societal values?

What is Vyapam Scam ?

Vyapam is Hindi shortform or acronym for Vyavsayik Pareeksha Mandal or the Madhya Pradesh Professional Examination Board (MPPEB) which  is a self-financed and autonomous body incorporated by the State government responsible for conducting several entrance tests in the state. These entrance exams are used for recruitment to government jobs and for admissions to educational institutes in the state. Karnataka Public Service Commission (KPSC) Scam, Haryana Teachers Recruitment scam are similar unearthed scams of the recent past.

How much is the Vyapam scam worth?

More than 2.5 million young people have been affected by the scandal if only the recruitment and entrance tests conducted in 2012 and 2013 being probed by the STF are taken into account.

Several gangs operated with the connivance of PEB officials to manipulate sitting arrangements in examination halls and to fill optical mark recognition answer-sheets. While the rate started from Rs 15 lakh for the PMT, it was more than Rs 50 lakh for admission in PG (Medical). Education minister Laxmikant Sharma’s former officer on special duty (OSD) OP Shukla  was charged with taking Rs 85 lakh from suspended officials of the PEB for getting candidates selected. Ref: Hindustan Times Two years on: Over 40 deaths and 2,000 arrests in Vyapam scam.

The scam is said to be worth over Rs 10,000 crore with powerful people ranging from politicians, bureaucrats, to influential doctors and mining barons allegedly involved. For reference the other financial scams are given below.

Was the scam unearthed recently?How was it unearthed?

No. Report about scam has been on since 2000 but gathered steam after 2009. No one knows how long the Professional Examination Board of Madhya Pradesh or Vyapam scam has been going on. Nearly 50 people have died since 2009, when the Vyapam scam was first unearthed. Subsequent interrogations and arrests uncovered the involvement of several politicians, bureaucrats, MPPEB officials, racket leaders, middlemen, candidates and their parents in the scam.

Cases of irregularities in these entrance tests had been reported since the mid-1990s, and the first FIR was filed in 2000. However, until 2009, such cases were not thought to be part of an organized ring. The man who first blew the whistle on the scam is Dr Anand Rai, a doctor at the regional health and family welfare training centre in Indore.

His first complaint was on July 5, 2009 when papers of an entrance exam were leaked. His second complaint was on July 15, 2009 was about impersonation. Others who were better qualified were appearing for candidates in the exams. Like it happened in the movie Munnabhai MBBS.  

When major complaints surfaced in the pre-medical test (PMT) in 2009, the state government established a committee to investigate the matter. The committee released its report in 2011, and over a hundred people were arrested by the police. By June 2015, more than 2000 people had been arrested in connection with the scam. These included the state’s ex-education minister Laxmikant Sharma and over a hundred other politicians. In July 2015, the Supreme Court of India issued an order to transfer the case to Central Bureau of Investigation.

Mystery shrouds over a number of deaths in Vyapam scam

Ever since the investigation began, a number of people directly or indirectly connected to the scam, died under mysterious circumstances. Between 2009 and 2015, more than a dozen people who had allegedly acted as middlemen in the scam died under mysterious circumstances.

In January 2012, mutilated body of Namrata Damor, whose name appeared in the list of students who had cleared PMT-2010 using unfair means, found dead near a railway track in Ujjain district. In January 2015, Ramendra Singh Bhadoria, a medical student who was accused of using unfair means to clear PMT, found hanging at his home in Gwalior.

In April 2015, the body of Vijay Singh Patel, a pharmacist who was released on bail after being arrested in the case, was found in a lodge run by a BJP MLA. Another accused Narendra Singh Tomar, who was lodged in Indore jail, died on the way to hospital after he complained of chest pain in June 2015.

The mystery deepens with every new death reported even as the probe agencies struggle to unravel it.On Monday (July 6), the body of Anamika Sikarwar,who secured the post through an exam conducted by the MPPEB, was found in a lake adjacent to the Police Training Academy in Sagar district headquarters. Her death came a day after the death of Dr Arun Sharma, dean of Netaji Subhas Chandra Bose Medical College in Jabalpur, who was assisting the investigators in the probe. Sharma was found dead at a Delhi hotel on Sunday.The charred body of D K Sakalle – who was inquiring into admissions of candidates for whom proxies allegedly appeared in the Pre-Medical Test – was found at his residence in July 2014. In Jul 2015 TV journalist Akshay Singh died under mysterious circumstances soon after he had interviewed parents of a girl found dead after her name cropped up in the admission and recruitment scandal.

The most high-profile death was that of Shailesh Yadav, son of Madhya Pradesh governor and Congress leader Ram Naresh Yadav. Shailesh, who was an accused in the contractual teachers’ recruitment, was found dead at Governor’s official residence in Lucknow in March 2015

Who are whistle blowers of the Vyapam Scam?

•  The man who first blew the whistle on the scam is Dr Anand Rai, a doctor at the regional health and family welfare training centre in Indore.Dr Anand Rai.
• Forensic expert Prashant Pandey said he became a whistleblower in July 2014, when he realised the special task force was relying on documents that seemed to have been tampered with.
• Gwalior-based social activist Ashish Chaturvedi claims to have disclosed the involvement of chief minister Shivraj Singh Chouhan’s relatives and seven others in the scam.

All whistleblowers claim that they fear for their lives.

Why did Vyapam Scam happen?

Why are people getting admission to various colleges by paying bribes or job aspirants who are tinkering with the recruitment tests. In 2011 the mad rush for a seat in a top Delhi University college forced at least 12 students to submit fake caste certificates to secure admission. As the result dates of various 12th board exams and various entrance exams approaches, the parents of the students who appeared in these exams are found contacting various brokers already for securing admissions into different engineering and medical colleges across India. This is especially true for students who are not very well off academically but their parents want to make them engineers or doctors in private institutions with their money.  In fact donations to medical colleges are much more expensive and may range from ten lakhs to fifty lakhs depending on the college. Fraudsters are in abundance in the admission industry.

Is this what Economist laureate, Amartya Sen means when he talks of growth: That having an uneducated and unhealthy working population is not only bad for human wellbeing but also detrimental to steady and sustained economic growth. Not a single industrialised nation in the world has got to where it has without investing in human capital, he says, not even an authoritarian state like China. Are people willing to be participate in such scams because of limited opportunities Is there is a Vyapam waiting to explode in almost every state?

TimeLine of Vyapam  Scam

• 2000-12: 55 cases of impersonation in exams filed across Madhya Pradesh
• Jul 7, 2013: Scam breaks ‘formally’ — Indore Crime Branch registers FIR after arresting 20 impersonators
• Jul 16, 2013: Jagdish Sagar arrested
• Aug 26, 2013: Special Task Force  (STF) takes over probe. Subsequent interrogations and arrests uncovered the involvement of several politicians, bureaucrats, MPPEB officials, racket leaders, middlemen, candidates and their parents in the scam.
• Oct 9, 2013: Results of 345 who took PMT three months earlier cancelled
• Dec 18, 2013: Ex-Higher Education Minister Laxmikant Sharma booked
• Dec 20, 2013: Uma Bharti, then BJP vice-president, demands CBI probe
• Jan 15, 2014: Shivraj Singh Chouhan tells Assembly that out of 1.47 lakh appointments made since 2007, 1,000 were found illegal; later revises figure to a little over 200. But no action has been initiated yet
• Nov 5, 2014: HC constitutes SIT
• Feb 16, 2014: Opposition Congress reveals information sourced from a “whistleblower”, alleging the STF was protecting Chouhan. Whistleblower, later identified as Prashant Pandey, an external cyber expert engaged by the STF, alleged that documents retrieved from the computer of Nitin Mohindra, Principal Analyst, Vyapam, had been tampered with, and 64 mentions of “CM” scrubbed out and replaced by other names
• Feb 20, 2015: Pandey moves Delhi High Court saying he “fears for his life”
• Apr 16, 2015: MP High Court gives ‘truth lab’ report and pen drive carrying retrieved original data to SIT, which asks STF to investigate the matter
• Apr 22, 2015: STF submits report on whistleblower’s allegation in sealed cover to MP High Court
• Apr 24, 2015: HC prima facie accepts STF report that says the material submitted by whistleblower is “fabricated and forged”
• Apr 26, 2015: Chouhan accuses Congress leader Digvijaya Singh of forgery
• Jun 29, 2015: SIT reports 23 deaths of accused and witnesses linked to the Vyapam scam. Congress cries foul; BJP says deaths due to natural causes, not linked to Vyapam
• Jul 7, 2015: After months of stonewalling, Chouhan relents, agrees to probe by the CBI.

TimeLine of Vyapam Scam from livemint.com in picture

TimeLine of Vyapam scam

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What do you think of Vyapam scam? Why did such scams happen? How to avoid such scams?