Advisory

Right to Information A common man’s right to demand information from the Government

The RTI (Right to Information) Act was enforced to empower people. Introduced in 2005, the Act aims to bring accountability and transparency in the working of the Government. An initiative by the Ministry of Personnel, Public Grievances and Pensions, the Act gives every citizen the ‘right to information’ and also the right to get a timely response. Read on to know the process and understand the Act.

WORDS: SANGEETA SINHA

The Right to Information (RTI) was introduced to empower citizens so that they become better equipped to keep vigil on Government activities. It gives all citizens access to information under the control of public authorities and this helps promote transparency and accountability in the working of every public authority.
The Act extends to the whole of India except Jammu & Kashmir. It gives every citizen the right to seek information from a public authority and the right to get a response within 30 days. It covers all constitutional authorities, the executive, legislature and judiciary and is one of the most powerful laws of the country.
Filing an RTI is a simple process and every citizen should know the process. The application can be written in English, Hindi or the official language of the state he/she resides in.
It is important to have clarity on your query while filing such petitions; ask specific and clear questions. Give your complete contact details so that you get the RTI response on your mailing address. Keep a photocopy of your application and send the original through post or you can even submit it to the Public Information Officer (PIO) in person.

Acknowledgement slip
Make sure you receive an acknowledgement slip in case you submit the form in person. If you plan to send by post, it is a good idea to send it by registered mail so that you have an acknowledgement slip on the courier.
The Act is simple and people-friendly to the extent that even an illiterate person can file an RTI. He can tell his requirement and the concerned person is obliged to write it down and read it to him before processing it furthert.
And if you wish to do it online, some departments have the facility for filing an online RTI. Also there are various independent websites that help you file online RTI.
All central and state government agencies come under the purview of the Act. You can demand any information related to Municipal Corporations, Government universities, schools, Provident Fund department and other similar agencies.
The list is exhaustive and RTI has huge scope. The Government is obliged to even give information related to telephone bills of ministers, money spent on foreign trips, money spent by your representative to improve your constituency and much more. You have the right to information because it is your money which you pay in the form of taxes each year.
However, few organisations are exempt from RTI due to security reasons; those related to the country’s defence like the CRPF, BSF, RAW etc. Also, courts have disallowed release of any information that relates to a foreign government or any information that would affect the safety of any individual.
But one point is clear – any information which cannot be denied to an MP or state legislator cannot be denied to any citizen.

RTI for personal/community issues
Often, we are bothered with problems related to our tax refund, pension release, withdrawal of PF, release of Aadhar card, issuance of documents related to driving license, passport, property and similar other issues.
If you are not getting any answers or you are not satisfied by the response of officials, you can get them through an RTI. Filing an RTI will guarantee an official response within 30 days of your filing. And then based on the response you can take your case further.

Similarly you can even raise issues related to your area or community. If any government property is not maintained then you have the right to question and get a response.
Issues like bad road conditions, potholes and bad water supply all are covered under RTI. You also have the right to know how your representative spent the funds allocated to him/her for the development of your constituency.

There is a small amount which you will require to pay along with your application. For central government departments one needs to pay ₹10 with every RTI application. For public authorities under the state governments, the rates may vary. In addition to the application fees, there is also a fee for the information to be delivered (depending on format/number of pages).
It is important that citizens use RTI to turn India into a great democracy. Our duty doesn’t end by just voting; it requires us to be more vigilant and take an active role in the running of our government machinery.
The government is making efforts to make the system more transparent and giving citizens the right to question and get response.

Refusal of application
It is not necessary that every RTI gets accepted. Sometimes you may not get the information or your RTI application itself is not accepted. There are options you can explore in case this happens.
You have the right to know why your request was rejected and also the details of whom you can approach to appeal against this refusal. You are also entitled to know how much time you have to file this appeal.
If you don’t get a satisfactory answer or you have a complaint with the way in which the PIO handled your RTI application, you can file a complaint with the Central or State Information Commission. They have a duty under this Act to inquire into your complaint.
Your application may be rejected for the following reasons –
 If it has not been completed properly
 It is not precise as to what specific information you need
 The information you have requested is covered by an exemption

advisory

The application can also be partially rejected, if some of the information in the documents you requested is sensitive and falls under an exemption.
 If you do not receive a decision from the PIO within 30 days, you can file an appeal against the decision before an officer who is senior to the presiding officer
 You need to file this appeal within 30 days. This time period may be extended if the officer feels that the delay is justified
 If you are not satisfied with the first appeal decision, you can make a second appeal within 90 days to the Central Information Commission or the State Information Commission by following the suggested format for the second appeal

Daily penalty
A daily penalty of ₹250 can be imposed on the PIO for withholding information or providing wrong information. This has to be paid until the information is provided. However, the total amount of the penalty should not exceed ₹ 25,000. But before doing this, the PIO is given a chance to present his/her case.

You have the right to know why your request was rejected and also the details of whom you can approach to appeal against this refusal. You are also entitled to know how much time you have to file this appeal./span>

RTI
You are empowered to:
 Ask for any information
 Take copies of any Government documents
 Inspect any Government documents
 Take material of any Government work
It can help you in the following ways:
 Expedite pending issues
 Expose corruption
 Use it in the court
Section 2 (f) of the Act: “Information” means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force.
Section 2 (j) of the Act: “Right to Information” means the right to information accessible under this Act which is held by or under the control of any public authority and includes the right to:
 Inspection of work, documents, records
 Taking notes, extracts, or certified copies of documents or records
 Taking certified samples of material
 Obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device
Section 2 (i) of the Act: “Record” includes any:
 Document, manuscript and file
 Microfilm, microfiche and facsimile copy of a document
 Reproduction of image or images embodied in such microfilm (whether enlarged or not)
 Other material produced by a computer or any other device

Online bank fraud – your rights

With India going digital and more people opting for online transactions, cybercrime hazards are also increasing. A major part of the population has smart phones and easy access to Internet, but lack of education and awareness make them easy victims to cybercrime. The need of the hour is awareness and education about cyber security. Also it is important that you know your rights in case of any fraud. Read on to know more:

WORDS: SANGEETA SINHA

BEFORE we learn about our rights, let us first understand what can go wrong. Online fraud is on the rise and it happens in many ways.

TO GIVE A FEW EXAMPLES:
• Often in restaurants or shops we give our cards (debit or credit), which can be cloned
• Fake calls are another common thing where the caller pretends to be from a bank and then extracts your card or PIN or OTP number
• Fake e-mails with virus attachments steal financial information from your computer
• Phishing emails link you to sites that steal your login details
• Scams that promise to transfer money into your account
There are many more such cybercrimes
happening every day. Now what can we
do about this?
Most importantly, we need to be alert about all transactions happening in our accounts. As a bank customer, you have full right to receive SMS notification/email alerts regarding any transaction happening in your account.
Banks must ask their customers to mandatorily register for SMS alerts so that in case of any illegal transaction, the bank and customer can be notified immediately and corrective action taken.
One needs to be alert and careful so that such frauds do not happen to us. But in spite of all the alertness, things can go wrong. What should you do then and what are your rights?

We checked with Nyaaya (https://nyaaya.in/) to understand the rights of a consumer in case of online fraud. Nyaaya is a legal-tech initiative explaining India’s laws.
Ideated by Rohini Nilekani and created by the Vidhi Centre for Legal Policy, Nyaaya is committed to providing you with clear, actionable information about Indian laws in simple language so you can protect yourself, assert your rights and seek proper justice.

CONTACT YOUR BANK
If you see any suspicious transaction in your account, you need to contact your bank immediately. This may sound basic, but often in panic, customers react in different ways and forget to take the initial action fast.
Most banks have dedicated staff for this purpose. In case of card fraud, the relevant contact details are found on the backside of your card as well as the website of the bank.
Call the bank immediately, lodge a complaint and don’t forget to note your complaint number. You will need the number for follow-up of your case.
The Code of Bank’s Commitment to Customers (CBCC) enacted by the Banking Codes and Standards Board of India (BCSBI) mandates each bank branch to display the name of the official responsible for addressing customer grievances, says an expert from the field.
If your complaint is unresolved at the branch level, you may approach the Regional / Zonal Manager/ Principal Nodal Officer (PNO) at the address displayed at the branch.
Specifically for ATMs, telephone numbers of help desks/relevant contact persons of the banks that own ATMs are also displayed at every ATM machine for the customer to be able to lodge a complaint/seek redressal for any issue while operating the ATM.
The bank usually responds to your complaint within 30 days of receiving the complaint. They will also let you know if more time is needed to investigate the matter or if more action is needed from your end.

NEXT MOVE – BANKING OMBUDSMAN
What happens if you are not satisfied with the resolution? You can escalate the matter by approaching the Banking Ombudsman established by the Reserve Bank of India (RBI) under the Banking Ombudsman Scheme, 2006.
The details of the Banking Ombudsman under whose jurisdiction the branch falls is supposed to be displayed by each bank and you can lodge your complaint with that particular ombudsman.
But this is the second step you take if you are not satisfied with the resolution given by your bank. Now again if you are not happy with the decision of the ombudsman, you can approach the appellate authority against the decision – the deputy governor, RBI.

online-fraud

The Code of Bank’s Commitment to Customers (CBCC) enacted by the Banking Codes and Standards Board of India (BCSBI) mandates each bank branch to display the name of the official responsible for addressing customer grievances, says an expert from the field.

TIPS
– Actively check your last login activity
– Do not click on links which you are not sure of
– Stay away from applications within social media platforms. Many games are designed by hackers to get your personal details
– Be careful of phishing emails; phishing is the fraudulent practice of sending emails to extract your personal information
– Always download applications from official Play Stores/App Stores
– Use VPNs (Virtual Private Networks) while doing online banking and other critical transactions. A VPN is a network technology that creates a secure connection over a public network
– Use reputed antivirus mechanisms
– Resetting your phone is not enough; hackers can still recover data. Do military grade formatting and use services like file shredder.
– If any application you are using shows more data consumption than usual, it is time to get alert
– Keep your phone password protected; enable encryption service if available on your phone
– Never reveal personal financial information (PIN, internet banking passwords etc.) to anyone, including those who claim to be authorised representatives of the bank
– Use unique passwords and avoid using personally identifiable information like birth dates
– Enable One Time Password (OTP) for all online transactions, and subscribe to mobile and email alerts for notification of transactions
– Change your internet banking password on a regular basis
– Always follow bank instructions and avoid carrying out transactions on public computers. If they must be used, make sure you log out of your account and delete browsing history after finishing the transaction

This appeal must be made within 30 days of the ombudsman’s decision. If you file a case in court, such as the Consumer Ccurt, you cannot approach the ombudsman while the case is going on. You also have the option to file the compliant with the cybercrime cell/police station.
File a case with the relevant consumer forum.
The consumer forum is present at the district, state and national level. You can file a case there depending on two factors: the amount of money you lost and location of your loss.
You can file the complaint in the place where the money was lost, or where the opposite party (that is the bank) carries on its business.
For loss of up to Rs 20 lakh, you can approach the district forum; for loss from Rs 20 lakh to Rs 1 crore, you can approach the state commission and for any loss exceeding Rs 1 crore, you can approach the national commission.

You should approach consumer forums only when you feel that the bank has been negligent and has not given you proper service.
You can also file a complaint with the Secretary of the Department of Information Technology of the respective state/union territory.
The Ministry of Electronics & Information Technology has mandated that the Secretary of Department of IT of each state shall act as the ‘Adjudicating Officer’ to decide any disputes/violations arising under the Information Technology Act, 2000.
If you are not satisfied with the order passed by the Adjudicating Officer, you may file an appeal with the Cyber Appellate Tribunal (CAT) within 25 days. The CAT is supposed to take a decision within 6 months – unfortunately, it has not been functioning properly and is not an effective remedy says our expert.

Writing a will

Money is crucial for survival and it will be crucial for your loved ones too even when you are not there. But it is not necessary that your wealth will get passed to your loved ones automatically unless you have willed so. That is the reason it is important to make a will during your lifetime. Read on to understand the basic and simple process of making a will.

WORDS: SANGEETA SINHA

Before we understand the basic process of making a will, let us first know what will happen if we do not leave a will behind for our family and loved ones. Nothing gets transferred automatically. Even to your spouse who may not get the wealth if you have not willed so.
In order to regulate your assets and property after death, it is always advisable to leave a will, irrespective of your religion. A ‘will’ is an intent of a person as to what he/she has decided should be done with properties, movable or immovable, after that person’s death.
A will is a legal document that clearly sets out your wishes for how your assets or property are to be distributed after your death. Having a clear, legally valid and up-to-date will is the best way to help ensure that your assets are protected and distributed according to your wishes.

Making a will
Anybody can make a will at any time, provided the person is above 18 years and is of sound mind. You can will all your assets and property provided you have complete ownership. All you need is a piece of paper where you write your will.

advisor_one
advisory

You will need to sign the will or put your thumb impression in the presence of two witnesses. Both the witnesses also need to sign or put a thumb impression in your presence. Anyone can be a witness to your will – including the executor.
Now who is an executor? An executor is the person whom you assign the duty of carrying out your instructions after your death. Anybody above 18 years with a sound mind can be your executor.
However, if you have missed appointing an executor in your will, the court will appoint an administrator to execute your will. In case the executor appointed by you is incapable of carrying out the execution or is incapable of carrying out the job, in that scenario also the court will appoint an administrator.
Once your will is ready with signatures it becomes a valid legal document and getting it registered is not mandatory. However, if you wish to get it registered, do it personally or through an authorised agent. You will need to present the will before the registrar for its registration.
Generally, you do not have to pay stamp duty on wills but you will have to pay registration fees; the fees and procedure are different for different states.

Will and nomination
Often people confuse between will and nomination. They are two different things, explains Sumeysh, a lawyer working in Delhi. According to law, a nominee is a trustee and not the owner of the assets. In other words, he is only a caretaker of your assets.
The nominee will only hold your asset as a trustee and will be legally bound to transfer it to the legal heirs. To give an illustration: if a man nominates his father as a nominee for his life insurance and at the same time if his will says something contrary then his father will have to part with the insurance money.
Basically, in legal proceedings, will supersedes nomination, says Sumeysh. The best way to avoid complication and ambiguity is to write a clear will, which supersedes everything else. It supersedes not only nomination but Indian Succession Acts like the Hindu Succession Act.
The fact is that if a will supersedes nomination then one can only make a will. But it is advisable to do both, says Sumeysh. Nomination ensures smooth transfer of funds to the nominee, while the will ensures smooth transfer of funds/assets to the legal heir. Though a nominee and the person in whose favour you make a will can be different persons, it is advisable to name the same person in both places so that the possibility of any legal dispute in the future can be avoided.
Sumeysh explains this through a simple illustration. Raju has six toffees. He wants to hand them over to his sister, Ranjini. However, Ranjini is out for her dance classes and will come home after two hours. Raju has to go out to play cricket. So he gives the toffees to his mother and tells her that these toffees are for Ranjini and have to be given to her.
In the above, Raju is the original owner, toffees are the property, the mother is the nominee and Ranjini is the heir. As the nominee, the mother has the right to receive and hold the toffees, but she cannot eat or sell them. She is obligated to hand it over to Ranjini.
Types of wills
Conditional – The will is made to take effect on the occurrence of a condition
Joint – Written by two or more persons, such wills come into effect after the death of all testators
Mutual – Two individuals can write a mutual will giving their wealth to the other in case of their death. Mutual wills are also known as reciprocal. The will and its revocation is possible during the lifetime of either testator. Where joint will is a single document of two persons, mutual wills are separate for two persons
Concurrent – Written by individuals who have properties in more than one country. Separate wills are written
Sham – Wills are considered void if a person writes one for some hidden objective
Privileged – These are a special category of wills made by a soldier or an airman or a mariner, when he is in actual service and is engaged in actual warfare. A privileged will can be made as soon as orders are received that a person is to be posted in an operational area. It is usually written down but can even be an oral declaration before two witnesses present at the same time

The registration of a will does not fall under the category of compulsorily registrable document, says Pratap Shankar, an advocate of the Supreme Court of India and co-founder and partner of New Delhi based law firm Legal Consultus, our expert.
However, it is always advisable to have the will registered for many reasons; firstly, it vindicates the intention of the person, who is making the will, which may be taken into

account in case dispute lands up in the court of law. And secondly, in case the original will is lost, probate may easily be obtained of a certified copy of the same, he adds.
A will can be changed as many times during a life time as you desire even if it has been registered. For making changes in a registered will you may apply directly or through an agent to the registrar.
Ideally, if you are making substantive changes to a will in

order to convey your wishes properly, you should execute a codicil, which is a written statement that supplements or modifies an existing will. It must be executed in the same manner as that of the original will. And lastly if you want to cancel your will you have that option too. Make another will or destroy the earlier will.
So go ahead and make your will and of course if you wish you can always withdraw or change it anytime you wish.

GST aims for economic growth

Designed to replace indirect taxes imposed on goods and services by the Centre and States, GST aims to achieve overall economic growth. However, many are still not sure about how exactly it will translate for them. Read on to understand the basics of GST.

WORDS: SANGEETA SINHA

IMPLEMENTED from July 1, 2017, GST is an umbrella tax levied on goods and services across India. It replaces all Central as well as State taxes like Central Excise Duty, Service Tax, Additional Duties of Excise & Customs, Special Additional Duty of Customs, and surcharges on supply of goods and services. It also replaces State taxes such as VAT, taxes on advertisements, lotteries, betting and gambling. One of the big tax reforms in India, GST impacts not only businesses but also a common man’s budget.

PURPOSE OF GST
The main purpose of launching GST was to eliminate excessive taxation and to simplify tax hurdles for the entire economy. Different VAT laws in different states were a problem especially during interstate transactions; one needed to comply with 3 different taxes – excise, VAT, and service tax.
The main purpose of GST is to simplify the system for taxpayers by unifying taxes applicable to consumers and suppliers alike. GST brings uniform taxation across the country and allows full tax credit from the procurement of inputs and capital goods which can later be set off against GST output liability.
GST will help in removing ambiguity as the different kinds of taxes applicable to different commodities and services in different states will be uniform across the country depending on the category under which they fall. Government passed four bills to implement GST – Goods and Services Tax Bill, Integrated GST Bill, Compensation GST Bill, and Union Territory GST Bill.

GST REGISTRATION
Registration is mandatory for any entity that engages in the supply of goods and services and whose turnover exceeds Rs 20 lakh within India. Registration is a simple procedure which can be done from your home. You need to login to
www.gst.gov.in and follow the procedure to complete your registration.
People who do not pay GST are liable to a penalty of 10% of the tax amount, subject to a minimum of Rs.10,000. Offenders who deliberately evade paying taxes will be levied with a penalty of 100% of the tax amount. However, genuine errors will attract a penalty of 10% of the tax due. Most of the commodities and services that are subject to GST have been categorised under four tax slabs, viz. 5%, 12%, 18%, and 28%.

BENEFITS OF GST
Elimination of Multiple Taxes – The biggest benefit of GST is an elimination of multiple indirect taxes.
Reduce inflation – For a common man, GST applicability means the elimination of double charging in the system. The prices of FMCG products are expected to reduce.
Healthy business – One tax concept will check unhealthy competition among states and this will help interstate business.
Less Documentation – Tax compliance, filing returns, tax payment etc will be simple due to one tax system.

advisory_one
advisory
COMPOSITION SCHEME
GST has been a welcome step for big businesses in India, but the small ones and startups are facing problems in introducing it and getting acquainted with the compliances. Hence the Composition scheme introduced by the GST Council is a welcome step as individuals have to pay tax at a minimum rate based on their turnover. We spoke to BinitaSengupta, a Fellow member of the Institute of Chartered Accountants of India with over 17 years of professional experience in Audit, Income tax & Corporate Tax laws. She is currently practicing and providing consultancy services with special emphasis on Income tax, corporate matters and GST.
Composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs1.5 crore and who pay a flat rate of tax regardless of what they manufacture, provide as a service or trade they carry on.
• It is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.
• Composition scheme is levied only for businesses dealing in goods. It is not applicable to any professional providing any kind of service.
• The composition dealer is not eligible to issue a tax invoice and hence cannot collect the tax from the recipient. So he will have to pay tax from his own pocket and will thus be a cost to him.
• He can issue a bill of supply in lieu of tax invoice.
• The composition dealer will not be eligible to claim input tax credit on purchases made by him. As such, he is not expected to maintain detailed records. So, the amount of GST paid at the time of purchase will be a cost to the dealer.
• The composition dealer will not be expected to file monthly returns, but instead will have to file a return for every quarter, and an annual return after the end of financial year.
• The quarterly return GSTR-4 by 18th of the month after the end of the quarter and an annual return GSTR-9A by 31st December of next financial yearhas to be filed.
• The composition dealer can enter into a transaction with an unregistered dealer but the moment he enters into such a transaction, Reverse Charge Mechanism (RCM) shall be triggered and the composition dealer will be required to pay appropriate GST on that.
• The composition dealer cannot make Inter-state sales i.e. sales outside the state he is registered as a dealer. In case the dealer makes an inter-state sale then he will lose his position as a composition dealer and will have to be registered as a normal dealer.
• For the purpose of composition, aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all taxable supplies, exempt supplies and exports made by all persons with same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess. So the turnover of all businesses under same PAN will be clubbed to calculate the limit.
The following chart explains the rate of tax on turnover applicable for composition dealers:
The Composition Scheme has its share of benefits as well as some shortcomings. In order to opt for this scheme, a small businessman has to make a cost-benefit analysis of his business before taking his decision. The benefits may include
1. saving compliance cost
2. saving on the hassle of filing 3 returns every month
and the disadvantages are:
1. input tax credit cannot be claimed and
2. paying tax on his annual turnover from his own pocket, which again is a heavy cost burden.

Home Loan

If you are getting ready to apply for a home loan and are new to it, then you must read on to understand some basic yet important concepts……

WORDS: SANGEETA SINHA

advisoryl

IF finding the perfect home to buy is important, it is equally so to find the right home loan. If you wish to get a home loan, a little planning in advance will help you in more ways than one. Start by doing some good market research. Check out the eligibility criteria, rate of interest (both fixed and floating), repay option, balance transfer etc. of different banks, both private and government. A good home loan should give you the lowest interest rates throughout the loan tenure and should also give you the option of part payment or balance transfer.
It is a long-term investment so make sure that you have the finances in place to pay the EMIs. Though home loans are easy to get these days, most banks sanction only 85 per cent of the property value. This means you will have to arrange for the balance amount which you will need to pay as down payment. Planning and saving in advance will help you make a bigger down payment which in turn will lower your EMI’s monthly.
Once you are through with the down payment, you then need to make sure that your EMIs are affordable. Paying huge EMIs can be a burden on your monthly budget if not managed properly.
If you choose a longer tenure your EMI may decrease but overall you end up paying more interest; a shorter loan tenure makes you loan-free faster with low interest. Interest is calculated on the principal amount and therefore a quick repayment of the principal amount leads to lower absolute interest payout.
Paying more than the regular EMI can also help reduce your principal outstanding which in turn will reduce your interest. It is a good idea to keep a watch out for lower interest rate offers and if you find one you can always re-finance your loan by switching. However, switching a loan may add processing fees so keep that in mind. Keeping all points in mind go for the EMI amount that you can afford.

Fixed or Floating
Theoretically if you expect the interest rates to fall you can opt for floating rates while if you expect it to rise then fixed is a better option. But markets fluctuate and we are not always sure of the trend. Both fixed and floating have their pros and cons. Based on your personal requirement choose your plan and if you are unable to decide, opt for a combination loan which is part fixed and part floating. You can switch between a fixed and floating rate at a nominal fee
With a fixed rate the interest doesn’t change with market fluctuations and you pay fixed equal installments over the entire period of the loan. This definitely gives a sense of certainty but this security comes with a price; fixed interest rates are usually 1-2.5 percentage points higher than the floating rate home loan. Also if for any reason the interest rate decreases, the fixed rate home loan doesn’t get the benefit of reduced rates.
The rate of interest with floating loan scheme varies with market conditions but they are cheaper than the fixed rates. It has a drawback of uncertainty due to the uneven nature of EMIs. It may get difficult to budget as the EMIs may increase. So it is up to you to decide what option suits you best. Do your homework well before signing on the dotted line.

Loan Pre-payment
Home loan prepayment is early repayment of a home loan by a borrower which can be done in part or even full. Home Loan Prepayment is a good idea because it helps you save the interest money. So if you have excess cash it is always a better option to repay the loan.

Check with your bank for any pre-payment penalty. Some banks do take penalty charges if you repay your loan earlier and close your account. However, the Reserve Bank of India has said that banks should stop charging a penalty to customers who decide to prepay and close the loan account. But this applies to only floating loans and not the fixed ones. So if you have excess cash, check with your bank about the pre-payment penalty and get rid of your loan and in the process save money you would have paid as interest.

CIBIL score
It is important to maintain a good CIBIL score if you wish to get your home loan processed smoothly and fast. High CIBIL score gets you a loan without any issue while with a low score you may find it difficult to get your loan processed and sometimes you may even be charged high rate of interest.
People with low CIBIL score are considered risky by banks. It is important that you pay all your dues on time and improve your score. The first thing banks check as soon as you submit your loan application is your CIBIL score. Though there is no cut-off, generally a CIBIL score of 750 and above is considered good.
It is a good idea to ensure that your credit history and personal details are in order before applying for a home loan. You can purchase your credit report yourself, online at the CIBIL site, by paying a nominal amount of Rs.470.
If your loan gets rejected by any bank due to low CIBIL score it is better to try and improve your score rather than applying in different banks; their checking on your rating may not work in your favour.

Home Loan Balance Transfer
Balance transfer of a loan is often done by customers for reduced interest rates; the entire unpaid principal loan amount is transferred to another bank for a lower rate of interest. Your original bank gets the unpaid amount back and you start paying the EMI to the new bank that took up your loan.
But it is important that you do a proper cost benefit analysis before transferring your loan. Lot of points have to be checked like the difference between the interest rates offered by the two banks, the amount of the loan left unpaid and the tenure remaining. Don’t forget to add the processing fees also which the bank will charge.
You may also think of resetting your home loan with your existing bank itself. You can write to your bank to get the resetting done. Banks often agree to it as they want to retain their customer.

Terms simplified
Collateral – Your property acts as a security for the lender. In case you are unable to repay, the bank can legally takeover your property.
Tenure of Loan – Tenure is the length of contract and it can range between 10 and 25 years based on your income and age.

advisorylone

Down Payment – It is the money you pay before taking the loan. You don’t get 100% loan, some amount you will require to pay upfront. It is a good idea to save some money for this as this will reduce your loan liability.
Equated Monthly Installments (EMIs) – This is the monthly repayment which includes both the principal and the interest.
Rate of Interest – It is either fixed or floating. Fixed one remains same throughout the tenure of loan while floating changes depending on market conditions.
Co-applicant – A co-applicant is the co-borrower of the loan who can also claim income tax benefits on the home loan along with the borrower.
Guarantor – A guarantor is liable to repayment if there is a default by the borrower.

Best Tax Saving Instrument plans

If you have still not done tax planning for the current financial year, you need to move fast. With March 31 approaching, last minute hurry may lead to wrong decisions

WORDS: SANGEETA SINHA

Most of us start planning for investing in tax saving instruments at the last moment. As the financial year approaches closure end we rush to tax consultants. Sometimes in the rush we end up making wrong decisions and often miss out on smart investments. It is always a good idea to plan your investments a little early so that you have ample time to research and make wise decisions.
Another advantage of planning early is that it helps you in managing your finances as you can invest in a staggered manner. There are many schemes like Public Provident Fund (PPF) or National Pension System (NPS) which allow 12 transactions a year.

Often when we rush for last minute investments our focus simply remains on tax saving and in the process we miss out on other important aspects of investment. Ideally one needs to look for investment plans which offer maximum tax savings with minimum risk.

Section 80 C
Before we discuss some of the good tax saving plans, we need to understand section 80 C of Income Tax Act as most tax saving plans work as per this section. It allows deduction up to Rs 1.5 lakh.
Investments like ELSS (Equity Linked Saving Scheme),

Life Insurance, PPF, National Savings Certificate (NSC), bonds etc can be used to save tax under this section. The deduction you make towards these investments is tax deductible. It doesn’t matter if you invest in one or more of the above investments, the deduction will stop as soon as it reaches its limit of Rs 1.5 lakh.

Tax saving plans
There are several options and you need to devise your own plan based on your requirement and income. You will need to pick the plan which suits you.

hand-white-finger

ELSS – Specially designed for tax saving purposes, this equity based tax saving option has the advantage of a short term lock-in period of 3 years. The investment in an ELSS can also be made through a SIP (Systematic Investment Plan) wherein you invest a small fixed amount every month instead of paying a large amount altogether.
Being a market linked product they are high risk but also offer the potential of high returns. For tax purposes, returns from an ELSS are tax free; long-term capital gains from equity funds are exempt from tax. You can claim up to Rs. 1.5 lakh of your ELSS as a deduction from your gross total income in a financial year under Sec 80C of the Income Tax Act.

ULIP (Unit Linked Insurance Plan) – This investment product comes with life insurance as well. ULIPs offer tax benefits at the time of investment as well as on maturity and it also provides life cover to the person taking the policy.
Money invested in ULIP can be claimed as deduction. However it is important that you pay your premiums and keep your plan alive to avail tax benefits. If the ULIP is discontinued before 2 years, tax benefits u/s 80C will not be allowed. Any deduction allowed in the previous years will be added back to your income in the year in which ULIP is closed.

Tax free bonds - A bond is a fixed income instrument carrying a coupon rate of interest and is issued for a fixed tenure. As the name suggests, interest earned from tax-free bonds is exempt from tax.

PPF– A Long term saving scheme issued by the Central Government, this is good for investors who look for assured earnings. Under section 80C, the contribution made towards PPF is tax deductible and interest earned and received at the maturity is absolutely tax free.
With a lock-in period of 15 years this option may not be suitable for those looking for a short term tax-saving investment but the tax free status gives it a distinct advantage over fixed deposits. You can withdraw a certain amount from PPF after the fifth year without any prepayment penalty.

NSC – Similar to PPF, this is also risk-free with guaranteed returns and saves tax under section 80C. With NSC, no tax is deducted at source and it is the responsibility of the certificate holder to declare the income so that appropriate income tax can be calculated and charged. In case of bank FDs the tax that is due to be paid on the returns earned is deducted at source by the banks but needs declaration.

Life insurance premium – This comes with dual benefit; gives life cover plus the premium you pay on a life

hand-white-finger-1

insurance plan is deductible from your total income under section 80 C. The proceeds of a life insurance policy, whether the maturity amount or the sum assured, are exempt under Section 10(10D) of the Act.

NPS - It is one of the few tax saving investments options that let the investor surpass the Rs 1.5 lakh limit of deduction set by section 80C. The percentage of basic salary (up to a max of 10%) that your employer contributes towards your NPS is tax deductible. An additional Rs 50,000 can also be invested in NPS for tax deductions under Section 80CCD(1B).
One also needs to keep in mind that on maturity one has to compulsorily invest 40 per cent of the accumulated corpus in annuity which gets locked in for lifetime and is also entirely taxable. Some pension plans don’t have such restrictions; enquire and understand all the pros and cons before you invest.

Senior Citizens’ Saving Scheme (SCSS) - This offers regular income apart from giving tax benefits too. Anybody over 60 can invest in this government backed scheme. The tenure of the scheme is 5 years, which is extendable by another 3 with an investment limit of Rs 15 lakh and gives 8.6% per annum. Investment in SCSS qualifies for deduction under Section 80C of the Income-tax (I-T) Act.

Sukanya Samridhi Scheme (SSS) – This is a small deposit scheme for the girl child launched as a part of the ‘Beti Bachao Beti Padhao’ campaign. An SSS account can be opened any time after the birth of a girl till she turns 10, with a minimum deposit of Rs 1,000. The account has an annual cap of Rs 1.5 lakh and the interest is tax free.
The account can be opened for up to two daughters, but the combined limit is Rs 1.5 lakh in a year. Accounts can be opened in any post office or designated banks.

Payment of children’s tuition fees - The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of up to Rs 1.5 lakh. The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only.

Repayment of home loan - The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C. This deduction is also applicable on stamp duty, registration fees and transfer expenses.

BEYOND SECTION 80 C – EXPERT ADVISE

We spoke to Binita Sengupta, a fellow member of the Institute of Chartered Accountants of India with over 17 years of professional experience in Audit, Income tax & Corporate Tax laws. She is currently practicing and providing consultancy services with special emphasis on Income tax, corporate matters and GST. She gives us insight on tax savings which can be done beyond section 80 C

Apart from section 80 C, certain other sections of income tax also allow you to save tax over and above the 80C limit of Rs 1.5 lakh.

Tax saving on house rent allowance – House rent allowance, commonly known as HRA, is a major chunk of a salaried individual’s total pay. Under Section 10 (13A) of the Income Tax Act, you can save tax on the rent you pay to your landlord. However, you get partial tax benefit on the rent you pay.

The amount that is allowed for exemption under HRA is calculated as the minimum of:

i) Rent paid annually minus 10 per cent of basic salary plus dearness allowance
ii) Actual HRA received
iii) 40 per cent of basic and dearness allowance (50 per cent in case of metro cities).

Your HRA allowance will be taxable if you are not paying any rent or you stay in your own house. But those who stay with their parents can also claim HRA benefits by paying rent to their parents.

Health Insurance – Premiums paid for health insurance for self, spouse, children, and parents qualify for deduction under Section 80D. One can claim deduction of Rs. 25,000, if he is below 60 years of age, and Rs. 30,000 if above 60, towards medical insurance premium paid for self, spouse and children.

Under this section, additional deduction of Rs. 25,000 is available if one buys medical insurance for parents. This deduction can go up to Rs. 30,000 per year if parents are above 60. So the total deduction you get under Section 80D is up to Rs 60,000. This is in addition to Rs. 1.5 lakh deductions you avail under Section 80C.

Medical allowance – Medical reimbursement is an arrangement under which employers reimburse the portion of the health expenses incurred by the employee.

The Income Tax act allows exemption of up to Rs.15,000 on medical reimbursements paid by employer.

Expenditure on the health of disabled person Section (80DD) - If a taxpayer has dependent parents, spouse, children or siblings who are differently-abled, then he can claim deductions up to Rs. 75,000 for expenses on their maintenance and medical treatment under this section. If the disability is severe in nature, then the deduction can increase to Rs 1.25 lakh.

Deduction under Section 80DDB - Under this section, one can claim deduction of Rs. 40,000 for medical treatment of specified disease or ailment for self and dependents. The deduction can go up to Rs. 60,000 if the taxpayer is above 60 and if he is above 80, then the deduction amount is up to Rs. 80,000. The diseases have been specified in Rule 11DD. To claim this benefit a certificate in form 10 I is to be furnished by the taxpayer from any registered doctor.

Deductions under Section 80CCD (1B) - Under this section, one can get tax benefits on investments up to Rs 50,000 in NPS tier 1 account. This is over and above the Rs 1.5 lakh limit under Section 80C. An individual in highest tax bracket can save Rs. 15,450 by investing Rs. 50,000 in NPS under Section 80CCD(1B).

Deduction under Section 80E - If you have taken an education loan for yourself, spouse or children, then the interest paid on the loan qualify for tax benefit under Section 80E. The best thing here is that there is no upper limit on the amount of deduction. But the criterion is that the loan must have been taken from a financial institution or approved charitable institution and for full-time higher education.

Deduction of interest on housing loan (Section 24B) – If you have taken a housing loan, then the interest you pay on it qualify for tax benefit under Section 24B. Interest paid up to Rs 2 lakh in a financial year on housing loan is allowed as deduction from your income. If you have taken a home improvement loan, then interest up to Rs 30,000 will be allowed as deduction under this section.

binita_1

Deduction under Section 80EE – Reintroduced in Union Budget 2016, an additional deduction of Rs. 50,000 is available under this section, which is over and above the limit of Section
24B on interest paid on home loans if a person is buying a house for the first time.

But there are conditions to avail this benefit:
a) The cost of the property must be below Rs 50 lakh
b) The loan amount must be less than equal to Rs 35 lakh.
c) The property must be bought after April 1, 2016.

Donation to specified institutions (80GGA) – If you have donated to an institution carrying on scientific research or to a university or college which is approved by the government, then the amount contributed would be eligible for deduction under this section. The mode of payment cannot be cash; any mode other than cash can be claimed for deduction.

Donations to social causes: You are entitled to tax benefits under section 80 G if you make any donations for social cause. Make sure that the organisations you donate to are covered under this scheme.

In addition to the above, one must not miss out the dates of payment of TDS & advance Tax. TDS liability arising out of any payments made during a month is to be paid before the 7th of the following month.