Advisory

Hola! It’s Time to File Your Returns HOPE YOUR FORM 16 IS IN PLACE

It’s that time of the year again when the tax man comes calling and it is time to file your annual tax returns. And for that you need a crucial document, namely the Form 16. Every year, we collect Form 16 from our employers and file our returns. But do we know why this is a very important document? Read on to know more…

WORDS: SANGEETA S

FORM 16 contains all the information you would need to file your returns. It is a TDS
certificate issued by the employer. When an employer pays salary to the employee, he is supposed to deduct a portion of the salary and pay directly to the Income tax Department. This is called TDS or Tax Deducted at Source. Form 16 is the TDS certificate that an employer issues to you
when TDS is deducted by them. It is mandatory for the employer to issue this certificate where the details of tax deducted and deposited is certified.

Know More – Form 16
It has 2 parts – Part A and Part B.

Part A has the following details –
1. TAN (tax deduction & collection account number) of the employer
2. PAN (permanent account number) details of both the employer and employee
3. The name and address of employer and employee
4. The assessment year and the period spent by you with the employer
5. For financial year 2018-19 the assessment year is 2019-20
6. Summary of tax deducted from your income and deposited to the government as per the quarterly TDS return filed by the employer
7. A monthly detail of TDS deducted and deposited

Part has the following details –
1. A consolidated detail of salary paid to you during the year
2. The breakup of your salary as well as detail of deduction claimed
by you under section 80 of the income tax act
3. Detailed breakup of exempted allowances under section 10
4. Deductions allowed under the income tax act (under chapter VIA)
5. Deductions under Chapter VIA include details of amounts claimed under Section 80C for EPF, PPF, NSC, life insurance premium or Section 80D for health insurance, Section 80G for donations made
6. It shows your total taxable income and tax deducted on such income

Deductions – Specific fields for deductions are mentioned below
1. Deduction for life insurance premium paid, contribution to PPF etc., under section 80C
2. Deduction for contribution to pension funds under section 80CCC
3. Deduction for employee’s contribution to pension scheme under section 80CCD(1)
4. Deduction for taxpayer’s self contribution to notified pension scheme under section 80CCD(1B)
5. Deduction for employer’s contribution to pension scheme under section 80CCD(2)
6. Deduction for health insurance premium paid under section 80D
7. Deduction for interest paid on loan taken for higher education under section 80E
8. Deduction for donations made under section 80G
9. Deduction for interest income on savings account under section 80TTA
Every employer is supposed to issue this certificate to their employees provided TDS has been deducted, which would clearly specify that the tax has been paid to the government. Non issuance of this certificate may call for the employer to pay penalty. In case you have more than one employer through the year then each of your employers will provide you a Form 16.

While it is the responsibility of the employer to issue you Form 16, it is your responsibility to pay tax and file returns if your income is above your taxable limits. If you have worked with different employers through the year make sure you add income from all of them irrespective of the fact whether they issued you a Form 16 or not.

FORM 16 -A
Form 16-A is also a TDS certificate but it is for TDS on Income other than salary. For example when bank deducts TDS on your income from Fixed Deposits then Form 16-A is issued. Also for other incomes like TDS deducted on insurance commission, rent receipts or any other income where TDS is deducted Form 16-A is issued.

FORM 26AS
All details on Form 16A are also available on Form 26AS. You can use Form 26AS to file your returns which is not possible with Form 16 as the details of Form 16 in 26AS are only the TDS deducted by the employer.

The basic difference between Form 16 and Form 26AS is that Form 26AS contains details of tax deducted at source

(TDS) for all the heads of income while Form 16 contains details of tax deducted at source (TDS) for the income from salary only. Form 26AS is provided on the Department’s site based on data submitted by all the Deductors while Form 16 is provided by your employer.

Both the documents are important because they contain all the details about income and hence become an essential document for ITR filing.
TDS deductions made available in form 16 and the 16A can be cross- verified using the actual in the 26AS Form. The amount in the forms 16 and 16 A should match up with the actual deposited account with the government furnished in the 26AS form.
Now whether you receive Form 16 or not the onus is on you to pay tax on your income and file your returns. If you don’t have Form 16 then check your payslips, bank statements, investments, loans and Form 26AS to file your returns. Form 26AS contains the details of all your tax deducted and tax paid. The Form 26 AS can be viewed / downloaded from the Income Tax Department’s online portal – www.incometaxindiaefiling.gov.in

Check-list
Form 16 is a base document issued by your employer and is not the final document or return. You must check whether all exemptions that you are entitled to have been added in the Form 16. Sometimes if you have worked with many employers there could be chances of wrong calculation. Calculate on your own and take
the exemptions while filing your returns. Even if your Form 16 is without any deductions you can still claim the deduction while filing your returns. So make sure all your data are correct.
Expert Views
Our expert for this story FCA BINITA SENGUPTA, Practising Chartered Accountant with 19 years of experience in the field and Partner in a firm having offices at Noida, Greater Noida & Varanasi explains about the new format for Form 16.
Form 16 or a Salary Certificate is a document or certificate, issued as per the Section 203 of the Income-Tax Act 1961 to a salaried individual in India by their respective employers on or before 15th June of next year. Form 16 is one of the most important document for income tax purpose for every salaried employee. This contains all details of Salary received and Tax deducted by the employer during the financial year. This tax needs to be deposited with the Government and the TDS return must be filed by the employer in order to reflect the same in the Form 16 as well as the Form 26AS of the employee.
The CBDT (Central Board of Direct Taxes) has recently notified a new format for Form 16 in order to remove some ambiguities in the old format of Form 16. During the last several years, many fraud cases have come to light regarding large income tax refunds claimed by many individuals. Now the revised format has the following features:
– The employer will have to specify the nature as well as amount of allowances which are exempt from tax. Similar details have also been asked for in this year’s income tax form ITR-1. The revised format provides a list of allowances such as Travel concession or assistance under section 10(5), house rent allowance under section 10(13A) and so on that are exempt under the Income Tax Act.
– In the new Form 24Q, it is mandatory to furnish the PAN of the lender in case any deduction has been claimed in respect of housing loan taken from a person other than a Financial Institution or the Employer. Earlier, it was optional.
– The new format will allow the tax department to view a detailed break-up of the income and tax breaks claimed by a salaried person.
– The new format requires the break-up of all the tax-related deductions under section 80C to 80U claimed from salary. The earlier Form-16 format specified the consolidated total amount of deductions that have been claimed as per chapter VI-A of the Income Tax Act by the employee from employer.
– If an employee has received salary from his ex-employer or other employer during the previous year and same has been reported to the current employer for TDS purposes, then separate reporting is required for such salary income in new Form 16.
Details required from Form 16 while filing your return
1. Allowances exempt under section 10
2. Breakup of deductions under Section 16
3. Taxable Salary
4. Income (or admissible loss) from house property reported by employee offered for TDS
5. Income under the head Other Sources offered for TDS
6. Breakup of Section 80C Deductions
7. Aggregate of Section 80C Deductions (Gross & Deductible Amount)
8. Tax Payable or Refund Due

Social Media Regulation

Recently TikTok was banned because of offensive content. However later the ban was lifted but it raised lot of controversy and debate on this and also on content on social media. The Internet and mobile association of India felt that such bans could affect the digital India initiative. Should such apps be banned or regulated.

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In this age of Internet, controlling content is getting difficult. Should the government regulate the content in social media? This is a big question.
Social media regulation is a debatable topic. With fake news, rumours, offensive content and propaganda in the social media it is felt that regulation is required. Though the Indian government has set guidelines where social media platforms have to remove any unlawful content within 24 hours that can affect the “sovereignty and integrity of India”, still plenty of propaganda keeps getting viral every hour. With millions of smart phone users and with the popularity of different apps which often carries offensive and vulgar content the regulation seems relevant.
India is a huge market for social media players but they have not been able to control the spread of fake news. With the recent elections in the country many measures were taken to control the spread of fake news and rumours; Facebook announced that it will start to show a disclaimer on all political ads in India that provides more information about who’s placing the ad, and an online searchable Ad Library for anyone to access.
Efforts are on to control the spread of information on social media. The black listing of Chinese applications that work on Android and iOS Smartphones by the Union Home Ministry of India is one move towards this direction. All defence officials have been advised to uninstall the applications listed as Chinese Spyware as they may be a threat to privacy and security.
Some of the blacklisted apps include Weibo, WeChat, SHAREit, Truecaller, UC News, UC Browser, BeautyPlus, NewsDog, VivaVideo- QU Video Inc, Parallel Space, APUS Browser, Perfect Corp, Virus Cleaner (Hi Security Lab), CM Browser, Mi Community, DU recorder, Vault-Hide, YouCam Makeup, Mi Store, CacheClear DU apps studio, DU Battery Saver, DU Cleaner, DU Privacy, 360 Security, DU Browser, Clean Master – Cheetah Mobile, Baidu Translate, Baidu Map, Wonder Camera, ES File Explorer, Photo Wonder, QQ International, QQ Music, QQ Mail, QQ Player, QQ NewsFeed, WeSync, QQ Security Centre, SelfieCity, Mail Master, Mi Video call-Xiaomi, QQ Launcher.

If you use any of these blacklisted apps be careful and keep track of government regulations. Experts warn that the content on many apps could be in violation of the country’s law. Moreover sometimes even the privacy policy is not available in local language and therefore users usually don’t understand the implications of using these apps.
Recent ban on the popular Chinese App Tiktok created lot of controversy however later the ban was withdrawn. The App developed by Chinese company ByteDance was launched in China in 2016 as Douyin and later after a year in the International market as Tiktok. The App allows users to create and upload short videos with special effects. Extremely popular app with more than 30 million users was banned by the court as the court believed that it had inappropriate content and encouraged pornography. The app was removed by Google and Apple stores. However people who had already downloaded the app continued using it. Later ByteDance challenged the court saying it had mechanism in place to regulate the content. The court later removed the ban on the grounds that if the regulatory mechanism was not found effective the company would attract contempt of court. Much to the relief of the large number of Tiktok fans the app is again open for downloading.
Reacting to the recent ban on Tiktok the association feels that instead of banning the app court could have asked the platform to remove the offending content. Banning any app is not the answer feels a regular Tiktok fan and user. What is required is regulation. Many use this app to express themselves and showcase their talent. It amounts to curtailing the rights of citizens of the country, the company contended. Another Tiktok fan feels government needs to focus on more important issues facing the nation rather than on these apps.

With so many social networks to keep track of, it can be a challenge for parents to keep track of all the information their kids are viewing. If the concern was the inappropriate content on Tiktok, in case of pubG the concern was the addictive nature of this game.

PubG PlayerUnknown’s Battlegrounds is an online multiplayer battle royale game developed and published by PUBG Corporation, a subsidiary of a South Korean video game company Bluehole. It has several million users around the globe.

The game was in news because of the adverse affects the online game caused to the players. Health of the players was of concern here and anxious parents want the game to be banned across India. The game was banned in Nepal which was later revoked. Even many Indian states were considering banning the game. In Rajkot, Gujarat, police had even arrested some students for playing PubG in public. Responding to the controversy PubG issued a statement promising to bring in features that will help promote healthy and balanced in-game environment.
Controlling content on Internet and social media can be a very difficult task. But regulation is definitely needed. According a legal expert any app which tends to disturb the mind of the child should not be encouraged at all. He further adds that, “We also need to protect the right of the users of such app by making them understand the pros and cons of such use”. As elders we also need to protect our children from falling prey to over use of any such apps which may adversely affect their upbringing and outlook in the society. As of now tiktok may have survived the legal challenge in India but little children and even adults need to understand the intricacies involved while using such apps and be careful.

It has to be a joint effort where citizens, government, activists, and even media need to work together and ensure that responsible content is shared on social media. The Internet and mobile associations are of the view that such arbitrary bans could hamper the growth of digital India. It would especially affect the social media platforms which allow citizens to express themselves. The association is aware of the problem of content moderation on user-generated content platforms and they are taking measures to control this problem.

Education Loan – Educations loans are simple provided you manage them well

Wish to pursue higher education – in your own country or abroad – in normal institution or premier…focus on your academics, the funds part can be easily managed with easy education loans. But be careful – if not managed well, the education loan can be a source of stress. Learn to manage your loan.

It is important to select the right education loan suiting your requirements; but before you think of that you need to have clarity about the course you want to pursue. The most important thing is to be sure about how well you will be able to use your course to make a career and earn money. Because end of the day, you will need money to pay back your loan. In simple words the course you pursue should be able to get you a job.
Now once you are sure about the course you want to pursue, next comes the choice of institution or university. It is crucial that you do an in-depth research on the country/institution you want to go. There have been cases when students have been denied access to countries because the universities they opted for were under scrutiny. Opting for the right institution will help you avoid unnecessary hassles. Also check on the placement the institution offers. The bank also checks on the credibility of the college and the course and also whether you will be able to secure job after the course.
Applying for an education loan is simple, though different banks have different policies but by and large the scenario remains common for all banks.
• To be eligible for education loan the student must have secured admission to a course.
• Since a student borrower has no credit history he/she is taken as creditworthy.
• A co-applicant is needed; a parent, siblings or even spouse can be a co-applicant.
• Usually for loan amount less than 5 lakhs no guarantor is needed.
• For higher amounts a third-party guarantor is needed; parents cannot be guarantors.
• For loans exceeding 7.5 lakhs you may be asked for collateral.
• And lastly the credit history of the co-applicant and guarantor should be good.

Loan Amount
It is important to decide on the loan amount you would require. Your education would include other costs as well apart from course fees. Many banks/financial institutions offer loan for full expenses; look out for such banks if you want all your expenses to be covered. Students planning to study abroad should check on the currency rate too.
The loan amount varies depending on institution, location, course fees etc. but generally as a norm banks offer loans up to Rs 7.5 lakh for courses in Indian colleges and up to Rs 20 lakh for studies abroad. According to an expert from the field the policy for loan amount varies; depending on your course and institute some banks offer higher loan amount. In fact for studies in premier institutes like IIM, IIT and AIIMS some banks offer loan up to 30 lakhs. And for studying in premier institutes in foreign countries banks offer even higher loan amount though you may have to make a down payment ranging between 5-20 per cent of loan amount. Many banks including SBI offer a fully collateralized loan up to Rs 1.5 crore for studies abroad. The loan is secured by movable or immovable security.

Interest
Compare the interest rates offered by different banks. Also check whether the interest amount will be invariable or will it change according to market trends.
Make sure you understand how the interest will be charged; daily reducing balance or quarterly reducing balance? Interest is normally charged on daily reducing balance but it is better to clarify with the lender; daily reducing balance is better as you pay only for what you owe on a day today basis says an expert from the field.

Some banks, for example SBI, offer a concessional rate of interest to girl students. Currently SBI offers a concession of 0.5% in interest to girl students, says an expert from the field. So check out the policies of different banks before you take the final call.
It is a good idea to start paying the interest portion of your loan immediately that is if your bank allows that. Banks usually give the option to service interest during studies or capitalize it and repay the whole amount later.
Under section 80E, interest paid on education loan is exempted from Income Tax, i.e. the entire amount is deducted from the income of the Parent/Spouse/ Student paying the interest.
You can also opt to take loan in installments so that you save on the interest. If you have to pay fees semester wise then it is better to take loan when required.

Repayment
Students are generally not required to pay back till they get employed. Repayment usually starts after the ‘moratorium period’, that is usually one year after end of your course or six months after the job whichever is earlier.

You may choose repayment period up to 10 years after study. Longer repayment tenure will keep your EMI low but at the same time you will have to pay more interest.

Default
Never default on your EMIs. Any default will spoil your and even your parent’s (co-borrower) credit score and you may have problems getting loans in future.

If you default on your EMI for more than 90 days, the bank classifies the loan as a non-performing asset. Your collateral may also be at risk in case of high loan amount.

You should always have plan B in place in case you are not able to secure a job.

Though banks have certain tenure extension policies but it may become difficult to convince. Extension is also allowed in case the student takes up higher studies immediately after completing the course or if the student is unable to complete the course on time for reasons beyond his/her control.

advisory
Vidya Lakshmi
Vidya Lakshmi is a first of its kind portal for students seeking education loan. This portal has been developed under the guidance of Department of Financial Services, (Ministry of Finance) , Department of Higher Education (Ministry of Human Resource Development) and Indian Banks Association (IBA).The portal has been developed and being maintained by NSDL e-Governance Infrastructure Limited. Students can view, apply and track the education loan applications to banks anytime, anywhere by accessing the portal. The portal also provides linkages to National Scholarship Portal.
Other Options
NBFC
You can also approach non-banking finance companies (NBFC) for your education loan especially if you want loan for some off-beat courses like art, music or say photography.
Scholarship
Education loan sanctioned by any bank remains independent of any scholarship. You are free to apply for any scholarship even after you have the loan sanctioned. The extra in the form of scholarship will help in reducing the loan burden.
Tips
• Look for banks offering best moratorium period and less interest.
• Opt for short tenure and higher EMI; that ways you save on interest.
• Make sure there are no penalties for prepayment or part payments.
• If possible keep paying interest during the moratorium period.
• Go for loans in installments so that you save on interest.
• Never default.

Buying a Travel Insurance before your Next Vacation

Buying a travel insurance is an insurance premium which you pay with the hope that you never get to use it. Whether you plan to travel abroad or within the country, if you take a travel insurance policy, it will definitely give you peace of mind and a sense of security. So don’t miss out on this important aspect during your upcoming travel planning and save yourself some sleepless nights and pockets full of money…

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Getting a well-covered travel insurance before your next vacation is as important as the trip itself as it covers your family and you against important unforeseen situations that you may face during your travel, especially if travelling overseas. Travel insurance typically covers two important aspects of any trip – any trip or travel inconveniences and medical emergencies.

For many of us in India, buying a travel insurance before our travel (unless mandated) is considered a useless expense and is often looked upon as an unnecessary hindrance. But one should realise that this insurance covers you against any travel adversities like last minute trip cancellation or delays, natural disasters or unforeseen political or terrorist situations at your destination, hospitalisation, sickness or loss/theft of documents etc.

For international travel, most travellers must ensure that they buy travel insurance, as most western countries mandates having a valid travel insurance at the time of visa application itself. Many countries have this as a pre-condition before anyone can visit their country. However, not many people opt for domestic travel insurance; it has not yet become a norm though it is always advisable to do the same for a smooth travel plan. Even though it is not mandatory, it is always a good idea to opt for travel insurance while travelling within the country as it saves the traveller from possible loss due to cancelled flights, loss of baggage and so on.

Though travel insurance covers health too but you need to keep this in mind that travel insurance is not a substitute for your health insurance taken in your home country. Travel insurance has a medical component that covers you against sudden illness, accident etc.; and the level of coverage will depend on your plan and provider.

In India, the market is flooded with travel insurance companies offering different plans. Now which plan is most suitable for you will depend on many factors, like your destination, the mode of travel, whether you are travelling alone or with family, the amount of valuables you are carrying and so on? However, you must buy an insurance policy that best fits the scope of the travellers such as having a higher health plan for seniors etc.

Insurance companies have different plans catering to different segments such as for senior citizens, students, women etc. If you are a frequent flyer, you even have the option of going for annual plan covering multiple trips. If it is your single annual trip, it is better to go for single trip insurance plan. Sometimes after doing all bookings like hotel, tickets, car etc. you may have to cancel your trip. There are plans where the insurer covers the trip cancellation charges. If you wish to avail this facility make sure your travel insurance covers the trip cancellation charges while buying the policy.

If you plan on adventure activities like ski diving, bungee jumping and other similar activities which have risk elements involved, you need to ask your insurance company to give you package covering any possible accidents in such activities. Mostly policies do not cover high risk adventure activities.

Hospitalisation and doctor costs are very high in western countries so while opting for a policy might feel like an unnecessary expense, do remember that in case of any eventuality, the cost borne by you will be many times higher. It is also prudent to inform the insurance company about any pre-existing medical conditions. You must also read and understand within the fine print about the list of diseases

covered under the travel insurance plan.If any member of the travel team has any pre-existing medical condition, make it a point to check and compare whether it is included in the policy. You can ask for separate cover paying additional cost.Read the document properly to understand all the minute details so that you do not miss out on any important clause. Some policies give you protection only for medical expenses incurred during travel while some may give you reimbursement for medical treatment continued in your home country. Be sure about the options and list of hospitals in the city or country you are visiting.

Make sure you are well aware about the claim procedure and company policies so that your claim is not rejected due to your ignorance or delay. Some policies require written report within a stipulated time along with documents. Check the exclusions so that you know what is approved and what is not. Also, check out the terms and conditions and exclusions, well before you sign the dotted line. Choose the plan with the least exclusions or the one which is best suited to your requirements.

And most important do not forget to check and ensure if your travel insurer is registered with the Insurance Regulatory and Development Authority of India (IRDAI).

Tips for Buying Travel Insurance
1. Plan to purchase your Travel Insurance much in advance and ensure that your insurance covers the entire period of your travel.
2. Fill in the proposal form completely and honestly after getting the necessary medical tests done and always carry a copy.
3. In case you need to extend the period of cover, plan for it before the cover expires.
4. Go through the policy document properly and completely and make a note of the contact details of the agency or hospital servicing the claims.
5. Do not only go by the words of travel agent; do your own research and make an informed choice.
6. Buy policy from a reputed company or a recognized agent.
Expert Inputs
Swetank Shantanu, a Partner with a New Delhi based law firm ‘Legal Consultus’, explains the concept of travel insurance.
Travel insurance indemnifies the travellers from an emergent situation viz. loss of health and also in some cases loss of goods and baggage. The concept of travel insurance is prevalent particularly in the form of protection from accidents and accidental deaths. However, the option of travel insurance with respect to loss of baggage and health lies with the travellers.
As far as the Indian Railways is concerned, the facility of free travel insurance provided by the Indian Railways which was introduced in September 1, 2018. Travellers booking tickets from the IRCTC website or mobile application will have two options: Opt-in or opt-out. The insurance provided by the Indian Railways to passengers travelling on a valid ticket covers risks during the train journey.
Though it is not legally or mandatorily required to have travel insurance in India but it is always advisable to have travel insurance for simple reason that it provides sense of security and peace of mind in case of sudden exigencies while travelling.
In case of deficiency of service, one can always approach the court of law. Insurance policies are contractual obligations between the respective Insurance Company and the passenger/traveller. Hence, the terms and conditions of the policy have to be adhered with strictly by both the passenger/traveller as well as the insurance company. The passenger/traveller may approach the respective Consumer Court under the Consumer Protection Act, 1986 for the redressal of his/her grievances against the insurance company. I may clarify here that it is the Insurance Company only that is responsible for policy issuance and claims settlement. So, going for travel insurance is the need of the time and that too carefully, after having done the homework.

A Demat Account: Meaning, Usage and Advantages

In simple words, a demat account is the account that holds shares and securities in electronic format. In India, it is mandatory for any investor to have a demat account if he is into stock trading. They can also be used for saving SIPs and Mutual Funds. Read on to learn more…

Words: Sangeeta S

For those who use demat accounts and do not know what it means – a ‘Dematerialised’ or ‘Demat’ account makes managing your finances simpler as all investments you make in shares, bonds, mutual funds, securities etc. are in one place and in electronic format. In India, the service is provided only by two depositories namely the National Securities Depositories Limited (NSDL) and the Central

Depository Services Limited (CDSL), and can be availed by the Bank you use as your trading account. What makes it even simpler is that you can access them from any part of the world and they are easy to manage too.
Though it is not mandatory to have a demat account for SIPs or Mutual Funds, having them all in one place

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definitely helps as it is widely accepted. Also, for online trading, it is essential and mandated to have a demat account. To invest in online trading, along with a demat account you will also need a trading account. It is through a trading account that you buy or sell shares, while a demat account is like a bank where you deposit your shares and sold shares are taken from. Some banks offer the facility of saving, demat as well as trading at one place.

Opening a trading account is simple; it can be done online through a broker. It is important that you select a good broker because expertise is crucial in stock market as rates change within minutes. It is a good idea to compare brokerage rates but it is advisable to go for brokers who provide good service rather than ones who charge you less. Once you decide on the broker contact them, fill up the forms, submit the necessary KYC documents and get ready to start trading in the stock market. After verification of your application you will be given your trading account details.

So with your trading and demat account in place you can easily do your trading. Make sure that you link your trading and demat accounts so that you avoid providing demat account details every time you trade. Process is simple, place your order (buying or selling) through your trading account, the stock exchange will process and verify your order and then the shares will be either debited or deposited in your demat account.

Though for your other investments like mutual funds and SIPs you don’t need to mandatorily have a demat account but if you wish you can consolidate all your investments at one place in demat account. Mutual fund investments can be done without a demat account; all you need is proper documents for KYC.

Some Tips for efficiently managing your Demat Account

– It is important that you have understood the terms and conditions of the demat agreement before opening an account. Often people give power of attorney (POA) to their broker which he/she can misuse

– Read all clauses properly before you give any POA or other instructions to your broker

– Always keep your DIS in safe custody; every broker has to provide their client with a pre-numbered booklet

– Check that your DIS book is in a serial order; in case of any missing page get it changed

– DIS has to be filled every time a transaction is done; don’t give blank signed slips to your broker as it can be misused

– You can protect your account by using the freeze option

– Choose a good broker

– Don’t get carried away by advice given on whatsapp or Facebook; do your own study and invest

– Learn to time the stock market; don’t get carried away by short gains

– Review your portfolio at regular intervals

– Don’t allow your broker to trade; signing forms blindly and handing over to your agent may backfire

Some Quick Facts on Demat
Credits – Our expert Manoj Chaturvedi who has rich experience of banking having worked both in India and Europe during last 16 years. He is by qualification an MBA from XLRI, Jamshedpur and LLB from Faculty of Law, Delhi University.

Why Demat?
A demat account helps in complete paperless operations. All your securities get converted to electronic form from physical form. You are free from the hassles of filling up forms and are also free from any risks like forgery, theft etc. All your investments like bonds, mutual funds, shares etc. can be consolidated into one single account.

Can a person have more than one demat account in his name?
Yes, a person can have more than one demat account in his name; there is no restriction on that. An investor can open more than one account in the same name with the same Depository Participant (DP) or different DPs provided all KYC documents are submitted.

Can I change to another depository?
Yes, it is possible. If you have a demat account with a particular depository and for some reasons you wish to change, you will need to fill the Delivery Instruction Slip (DIS) book and submit to your broker.

Can a demat account holder authorize another person to operate the same?
Yes, a demat account holder can authorize any person to operate his/her account by executing a power of attorney (POA) to this effect. In case, any demat account holder wants to re-operate the account on his own, it can be done after having revoked the POA in writing.

Can I transfer shares to another demat account?
Yes, it is very much possible to transfer shares between demat accounts. The duly filled slip has to be submitted to the concerned DP and the transfer is done by NSDL or CDSL after receiving the document forwarded by the DP on behalf of the client. But the shares transferred from and the shares transferred to should fall under the same depositary i.e NSDL to NSDL and CDSL to CDSL.

I have some non-demat shares. How do I transfer them to demat account?
Open a demat account in the name of the person who has shares in the physical form and then ask the broker to demat the physical shares.

Can I have a joint trading account?
A trading account is always a single account that means there cannot be a second holder for a trading account, though you can have a nominee for a trading account. You can have demat account with a second holder and link multiple demat accounts to a single trading account.

Can I have multiple trading accounts?
Yes, you can have multiple trading accounts though not with the same broker. Though a second trading account would give you different trading platforms but it will add to your account opening charges and you will also have the burden of keeping track of two accounts.

Is it mandatory to dematerialize the physical share certificates?
No, it is not mandatory to dematerialize the physical share certificates. But all features of demat now can be accessed on mobile banking and are easy to operate. Bonus / right shares easily get credited to these accounts and transaction cost is also lower than it used to be in physical forms.

The Importance of Making A Will

It is important that we make a Will irrespective of our age, financial status and gender. Not having a Will can create several problems for your loved ones and your legal heirs may have to spend more time, money and energy to claim the money or property rightfully due to them.

Words: Sangeeta S

IF you die without leaving a Will, the law decides on whom your wealth will ultimately be given to. Obviously, we do not want such a thing to happen as it is our wealth and we should be able to decide who should be getting it, right? So make a Will today.
What happens if you die without a Will? When you die without a Will, it is called dying intestate (a person dying without making a will) or intestacy. And in that case, the wealth is divided as per The Indian Succession Act, 1925 which is a law applicable to all Indians except Hindus, Sikhs, Jains, Buddhists and Muslims as they are governed under separate laws of succession. Hindus, Sikhs, Jains and Buddhists are governed by the Hindu Succession Act, 1956. As per the Hindu Succession Act of 1956, if a person dies intestate, his wealth is distributed as defined by the law.
If a male dies intestate then the wealth goes to his heirs belonging to Class I and if they are not available, then it goes to his Class II heirs.

In case both are not available, then the wealth goes to agnates (distant blood relative of male lineage) and if they are also not there, then it is given to the cognates (distant blood relatives of male or female lineage). And lastly if none are available, then the wealth goes to the government. In case of a female dying intestate, the wealth first goes to her children and husband. If the female does not have any children then the property inherited from her parents goes back to her natal (her blood ancestry) family and any property inherited from her husband or in-laws gets transferred to the heirs of her husband.
To avoid such unnecessary complications, it is best to write a Will. A Will supersedes everything so if you do not want your wealth to go into the wrong hands and you wish to save your loved ones from unnecessary complications, it is a great idea to write a Will.
People often confuse between a Will and a nomination; they are two different things. In legal proceedings, Will supersedes a nomination, says an expert from the field.

The best way to avoid complication and ambiguity is to write a clear Will – a Will supersedes everything else.
Writing a Will is really simple and we have discussed this in our earlier issues too. But just to refresh our readers here is a quick recap on ‘how to make a Will’.

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Making of a Will
Anybody can make a Will at any time provided the person is an adult, above 18 years of age and is of sound mind. You can Will all your assets and property to whom you wish to provided you have complete ownership. All you need is a piece of paper where you write your Will. You have to sign the Will or put your thumb impression on the Will 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 authorized agent. You will be required to present the Will before the registrar for 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 of India.
The registration of a Will does not fall under the category of compulsorily registrable document says Rishu Agarwal, Advocate Supreme Court of India and Associate of New Delhi based law firm Legal Consultus, our expert. However, it is always advisable to have the Will registered for a few 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. Secondly, in case the original Will is lost, a probate may easily be obtained from the certified copy of the same, he adds.
Will can be changed as many times during one’s lifetime 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. A codicil is a written statement which 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 your Will anytime you wish.

Succession Certificate
Will is the best option for anyone and everyone. But in case there is no Will the legal heirs have the option of getting a succession certificate to make up for the absence of Will. But it is not as simple as it sounds.
If a male dies without a Will, his wealth does not get transferred automatically to his spouse. All his children and his spouse become equal claimants. And even if the children give consent for the wealth to be transferred to their mother, it has to go through a process which can be complex and may take time too.
To give an example Mr. Sharma (name changed) was careful with all his bank accounts and other investments and had registered his wife as nominee. He also had some shares where he forgot to add nominee. Even his financial advisors did not notice this. Now after his death all the bank accounts got transferred to his wife’s name except the shares. The wife was asked to produce succession certificate from court in order to get the shares transferred to her name. Now since Mr. Sharma had two children so the claimant for the shares was now 3 persons – the wife and two children. The law said, if both the children gave consent then the shares will go to his wife. The children agreed and it looked simple. But our systems are such that this simple case of obtaining succession certificate took complete sixteen months with children travelling several times to appear before the judge to give consent.alvaro-serrano-133360-unsplash
It may not happen in all the cases; some cases may get solved smoothly. It depends on the court and your advocates. Agreed we have laws where in absence of Will succession certificate can be obtained. But if all these can be avoided by a simple process of writing a Will, it is a good idea to write a Will.