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  • Quote Your PAN and Save Excessive Taxes on Fixed Deposit

    Quote Your PAN and Save Excessive Taxes on Fixed Deposit

    For any financial transactions above Rs. 50,000 PAN (Permanent Account Number) is mandatory to quote. Fixed deposit is not an exception in this rule. Many investors hesitate to give their PAN, fearing theft of identity or excessive taxation. However, it is the myth. In reality, quoting PAN makes you a compliant citizen and secures your investment. You can always save tax if the income is within your taxable limits. Read on below paragraphs to know the importance of PAN card when you open FD with any bank or financial institute.

    Security of Investment

    Every citizen of India has a unique PAN card. It is quite possible to have a common name and surname of the individuals. However, they cannot have the same PAN card. Hence, in case your FD is misplaced by you, you can safely and rightfully claim your money by presenting your PAN card if you have quoted it while opening the FD. On the other hand, chances of fraud and miss-representation increases when no PAN is attached with your fixed deposit.

    The rate of TDS (Tax Deduction at Source)

    Every financial institution is mandated to deduct the income tax at source for interest income, popularly known as TDS. If your FD has PAN information, mandated TDS rate is 10% of interest income. In the absence of PAN, TDS shall be deducted at 20% rate. Hence, you are liable to pay double income tax when you do not quote the PAN.

    Tax Credit

    TDS cannot be claimed back while you file your income tax return. On the other hand, FD with PAN is eligible for tax credit. You can also claim the refund of the tax deducted if your gross income is within the taxable limit.

    TDS Certificate

    If no PAN is quoted, no TDS certificate is issued. Hence, even if your tax is deducted, you cannot claim a tax deduction in any of your income tax return. It is similar to the situation when you have made payment,but you cannot avail the receipt of the same. Consider applying PAN if you do not have the same.

    Tax Exemption

    If your gross income is below taxable limit, you can claim exemption from TDS. However, such exemption is not valid if your deposit does not bear PAN. This rule is also applicable for Form 15 G or 15 H that are widely used to prevent TDS from the fixed deposit. Hence, even if you are not liable to pay income tax because of your lower income, you have to pay heavy tax at the rate of 20%, only because of the absence of PAN.

    Limit on FD Amount

    Without PAN, you can open a fixed deposit from Bajaj Finance with a very limited amount of Rs. 50000 or less. No financial institution is allowed to open FD beyond this limit without furnishing PAN from the depositor.

    Benefits of Furnishing PAN in your Fixed Deposit

    There are dead-ended implications of not furnishing PAN in your fixed deposit. On the other hand, furnishing PAN card gives you several benefits. First and foremost, there is no limit on the investment amount. You can invest the amount of your choice without any limitation, to make your fixed deposit. If your gross income is below taxable limit, you can submit form 15 G or 15 H to prevent TDS from your interest income. In the case of taxable income, TDS will be deducted at the rate of 10% only. You shall be issued TDS certificate,and the tax credit will also be reflected in your form 26AS.

    Moreover, by any chance, if you miss your fixed deposit receipt, you can request for duplicate receipt from the bank or NBFC by presenting your original PAN card. The bank will retrieve the details from the system based on your PAN card and issue duplicate receipt. Hence, your money is safe when you use your PAN card while making a fixed deposit.

    Applying PAN is Easy

    Nowadays applying PAN is easy and online. You have to furnish basic details about your identity, residential address,and date of birth. Consider applying for the same if you do not have it, and enjoy legitimate tax saving on your hard earned money.

  • Most Profitable Business Ideas to Work from Home

    Most Profitable Business Ideas to Work from Home

    There are many benefits of working from home, which include avoiding time wastage in traffic jams, saving on fare or fuel to get to the workplace, having flexible work hours, and not having to put up with annoying colleagues. Also, you could work from home on a part-time basis while still holding onto your 9-5 job, giving you a fallback plan in case you lose the job or need more money. Isn’t it also so exciting to work in your comfy pants and t-shirt, and to get paid for it?Here are some jobs you can do from home, whether you want to quit your 9-5 or make some extra money to supplement your main income:

    Tax returns preparation
    Many individuals and businesses lack the requisite skills to ensure that their numbers are correct at the end of the year. If you have the expertise to do tax returns, you can work for time-strapped businesses or individuals, or even for those who may not find it economical to engage a tax expert on a full-time basis. In preparing tax returns, you will help businesses be compliant and avoid incidents that may plunge them into tricky situations, resulting in hefty fines for non-compliance. Such incidents may make a business go into financial chaos and have cash flow issues, thus defaulting on its payments to creditors and thereby damaging its credit score. In the case of a business or individual with a bad score, they can work with experts to help them boost their score.

    Book keeping
    If you are a trained accountant, you can consider doing freelance bookkeeping from your house. But you cannot be a Certified Public Accountant if you are to become a freelance bookkeeper. With basic bookkeeping skills offered by most colleges, you are good to go. This job is vital for small businesses that may not be able to afford to hire a full-time bookkeeper, or their scale of work does not require a full-time bookkeeper. You can have a full-time bookkeeping engagement while working for several small clients.

    Online coaching
    You could be well skilled at something and have a lot of passion for it, too, like writing. You can turn that into a side job by offering your services one-on-one, or you can even do it as your main job. You need to develop a good system to put your skills and experience into delivering top-notch training. You can also build a community around the service you are offering and help the members to trust and help each other.

    Copywriting
    Do you have a thing with words to the point that you can come up with convincing copies for advertising and marketing agencies? Well, then you can use your talent and skills to make some money by writing captivating copies from the comfort of your home.

    Social media management
    Instead of spending so much time online and earning nothing, you can help start-ups and other business or organizations as well as individuals who want to build their online presence on various social platforms, like Facebook, Twitter, Instagram, and more. You need to establish your own social following and build a brand around yourself.

  • How is MCLR Calculated and Does it Make Home Loan Cheaper?

    How is MCLR Calculated and Does it Make Home Loan Cheaper?

    Living under your own roof or home offers a place to dwell and buying a home also comes with other benefits such as the value of the property appreciates with time. Many of us avail home loans to build or buy that home that you have always wanted. Home loans have become cheaper in recent times, thanks to a drop in the interest rate.

    One of the reasons why home loan interest rates are declining is because the change base rate to the Marginal Cost of Funds based Lending Rate (MCLR) has led to the fall in interest rates on housing loans. This new method was introduced by the Reserve Bank of India (RBI) from 1 April 2016, under which all banks in India follow or lend loans based on the MCLRs.

    MCLR Meaning

    MCLR refers to the minimum interest rate of a bank below which it cannot extend a loan. This rate is an internal benchmark for the bank. It describes the method by which the bank calculates the interest rate offered to an applicant. This is based on the marginal cost of funds, tenor premium, the cost to maintain the cash reserve ration and other operating costs.

    To understand MCLR better, it’s essential to understand what the base rate on the home loan is, which was in place before MCLR was introduced. The base rate is the minimum interest rate a bank levies a customer who wants a loan. No bank can offer loans below the base rate.

    Since banks shifted from base rate to MCLR from April 2016, the latter has become the benchmark lending rate at which banks offer loans. With the MCLR much lower than the base rate, home loans have become cheaper.

    How is MCLR Calculated?

    To learn how MCLR is calculated, you need to understand what marginal cost of funds, tenor premium, costs of maintaining cash reserve ratio and operating costs.

    • Marginal cost of funds: Sometimes banks borrow funds to meet their business expenses and pay interest on these funds is known as the cost of funds. Marginal cost is the additional expenses banks incur to fund investments or an asset.
    • Tenor Premium:it’s the amount of time left to repay the loan. Various loans have several tenures or time periods. If the bank, under MCLR, extends a loan with a higher tenor, then there’s a lot of risks involved. To make up for the risk, banks charge a tenor premium.
    • Cost of Maintaining the Cash Reserve Ratio: Banks, as per RBI guidelines, must maintain a certain percentage of their total deposits with RBI in current accounts. This percentage of deposits is called Cash Reserve Ratio (CRR).
    • Operating Expenses or Costs:Apart from the services charges, banks incur expenses in extending the loan to you. These expenses are known as Operating Costs or Expenses.

    So, Does MCLR Make Home Loan Cheaper?

    MCLR is offered in six or one-year options, which are the benchmark rate on floating interest rate loans. If you choose a one-year MCLR, then your home loan rates will be revised every year. Banks are extending home loans at lower floating interest rates and now is the time to switch or choose an MCLR based home loan. It may be noted that you need to consider the costs of loan transfer if you are transferring your home loan from a fixed rate to a floating interest rate.

    However, do watch out after moving to MCLR based loans, there’s always the risk of an incline in the movement of the interest rate before you reach the revision period. If the RBI hikes the repo rate, the rate at which it lends money to banks, MCLR too will increase accordingly. Also, ensure that under the MCLR based home loan, you have the option to pre-close or part pay the loan amount or transferring the loan to another lender does not attract heavy penalties.

    MCLR does make home loan cheaper if interest rates are declining. So, take the right decision which suits your requirement and not go by what the market reflects about MCLR.

  • Everything You Need to Know About Pradhan Mantri Awas Yojana

    Everything You Need to Know About Pradhan Mantri Awas Yojana

    Most people may have heard of Pradhan Mantri Awas Yojana, but may not be aware of what exactly this plan is. This article summarises everything that you want to and need to know about Pradhan Mantri Awas Yojana (PMAY).

    What is Pradhan Mantri Awas Yojana?

    Launched by the Government of India, PMAY aims at making housing affordable for all Indians. There are two types of schemes:

    1. Pradhan Mantri Awas Yojana Urban (PMAY-U)
    2. Pradhan Mantri Awas Yojana Grameen (PMAY-G)

    As the names suggest, the first plan is for those living in urban areas while the second plan is to provide monetary help for those living in rural areas.

    Both schemes provide financial assistance and credit subsidies to those looking to build or buy their own home.

    One of the main features of PMAY is the credit linked subsidy scheme. This credit subsidy is provided on the interest charged on home loans.

    For both middle-income groups and people from economically weaker sections of society, this interest subsidy is provided on home loans taken either for purchase or for construction of a home.

    Features of PMAY

    • A subsidy of 6.5% on the interest rate for the home loan for a period of 20 years.
    • It is mandatory to use eco-friendly material for construction.
    • Unless there is no female family member, the scheme makes it compulsory to register the property under the names of both the male and female members of your family.
    • The scheme is elderly friendly and differently-abled friendly. This is why it is mandatory for homes that are being built to provide ground floor accommodation for the differently abled as well as senior citizens.
    • GST for those applying for a loan via this scheme is 8%. This was brought down from 12%.

     Who is eligible for PMAY?

    To be eligible for PMAY, you need to meet the income criteria set by the government for this plan. The four groups that are eligible for the scheme are:

    1. Persons belonging to economically weaker sections of society (EWS)
    2. Those who belong to low-income groups (LIG)
    3. Individuals who are part of the middle-income group (MIG I)
    4. Those who belong to the second tier of the middle-income group (MIG II)
    Criteria EWS LIG MIG I MIG II
    Annual household income Up to Rs.3 lakh Rs.3,00,001 to Rs.6 lakh Rs.6,00,001 to Rs.12 lakh Rs.12,00,001 to Rs.18 lakh
    Woman co-ownership/ ownership Compulsory for new property, not existing property Compulsory for new property, not existing property Not compulsory Not compulsory
    Existing permanent home Applicant or applicant’s family cannot have a permanent dwelling of their own

    Note: if you or your family members have already benefitted from a Government of India housing scheme, you will not be eligible for PMAY. Moreover, not all cities in India are on the approved list of cities for PMAY. You can find the list of cities by logging in to the Ministry of Housing and Urban Affairs website.

     What you need to keep in mind

    Based on the income group you fall under, here is what you need to keep in mind:

    EWS/LIG individuals

    • Apply for the scheme before 31 March 2022.
    • EWS individuals can choose a home with a carpet area of 30 metres square and the carpeted area for LIG individuals is 60 metres square.
    • The loan tenure is up to 20 years and you need to repay the loan before you turn 70 years.

    MIG I individuals

    • A subsidy of 4% is applicable on the interest up to Rs.9 lakh only. Any extra amount taken up that will not receive a subsidy.
    • The total carpet area of the home cannot be more than 120 metres square.
    • The maximum tenure of the loan is 20 years. However, banks can extend this to 30 years on a case-to-case basis.
    • Your age at the end of repayment cannot be greater than 70 years.
    • Total debt payments including the EMI on your home loan cannot be more than 50% of your gross income.

    MIG II individuals

    • The credit linked subsidy of 3% is limited to Rs.12 lakh. If your loan is greater than Rs.12 lakh, the subsidy will not be applicable on the additional amount.
    • The loan tenure is 20 years which can be extended to 30 years on a case to case basis. This will be provided only if you are less than 70 years old at the end of the repayment period.

     

    How to apply for PMAY

    If you meet the eligibility criteria and are looking to apply for this scheme, here are the steps you need to follow:

     

    Apply via the Joint Facilitation Centre:

    • You will need your Aadhar number and two passport size photographs to complete your application.
    • Pay a fee of Rs.25.
    • You will then receive an application number. This number can be used to check the status of your application.

     

    You can also apply online by visiting the official PMAY website:

    • Visit the PMAY website.
    • Click the ‘Citizen Assessment’ tab.
    • Then choose ‘Benefits under other 3 Components’.
    • Enter your Aadhar number (without spaces) and then select ‘Check’.
    • You will then receive the PMAY application form. Fill in the required details and submit the form.
    • Click on ‘Save’.
    • You will receive an application number. You can use this number to track the status of your application.

     

    Documents needed to apply for PMAY

    • Completed PMAY
    • Identity proof. This can be your PAN card, Aadhar card, voter ID card, or driver’s license.
    • Address proof.
    • Proof of income and a self-attested income certificate.
    • Your latest income tax return or form 16.
    • Bank account statement for the last 6 months.
    • An affidavit claiming you or an immediate family member do not own a property in India.
    • A valuation certificate of the property you are looking to purchase.
    • Construction agreement with a builder or developer.
    • An approved construction plan as well as a certificate from an architect or engineer stating the cost of construction or repairs.
    • A certificate from the architect stating the property’s fitness.
    • NOC from a housing society or any other recognised body.
    • Letter or allotment and other property-related
    • An invoice/receipt for the advance payment you made for the purchase.

    PMAY is a way to ensure that all Indians have access to affordable housing since housing is the right of all and not just the affluent. However, like with any loan, do your research and choose the right developer or home before you go ahead and apply for this scheme.

  • 4 Ways Pawn Shops Determine Prices

    4 Ways Pawn Shops Determine Prices

    Pawn shops come across plenty of used items and brokers need to consider many elements when it comes to determining the value of an item. A pawn broker’s appraisal takes into account the item’s condition and even the seller’s circumstances. While third-party and in-house experts are often consulted, most pawnbrokers turn to online resources and blue book databases when valuing an item.

    There are Gold Buyers in Melbourne who use different methods for different types of stock.

    General Merchandise

    General pawn shops, those don’t really specialize in something, deal with plenty of different items, including:

    • Sports Goods
    • Consumer electronics
    • Specialized tools
    • Antiques
    • DVDs and video games
    • Musical instruments
    • Jewelry and watches

    Each kind of item has unique considerations and current market values. To arrive at a price, the broker will use his skills and experience to look at the condition of the item, including accessories and packaging. They may even consider ongoing economic trends when pricing merchandise.

    Gold and Jewellery

    We all know that pawn shops do a lot of business in precious metals and jewelry. So, they’re likely to have expertise and experience when it comes to valuing items. For instance, they have familiarity with clarity and cuts of diamonds, and carat weights. They’ll also consider the metal price of silver and gold, keeping up with day to day changes.

    While pawn shops don’t offer set a fixed minimum value on items, they often use a percentage as a baseline when valuing gold.

    Value Databases

    Before the days of the Internet, pawn shop owners relied on blue books for baseline resale values of just about any type of item. Some big pawn shop chains even developed their own internal guidebooks to help with assessments. Today, pawn brokers can head online and consult related auction sites for ideas on current market values.

    Specialties and Experts

    While most pawn shop owners have familiarity with the value of many items, some shops specialize in certain merchandise. Gold and jewelry are the most common pawn shop specialization, but there are those shops that specialize in firearms, electronics and even sporting goods. Sometimes, a broker may call in an expert or this-party consultant if they need assistance determining the value of something.

    What’s more, the hard numbers of resale potential and market rate considered, small pawn shop owners have a great deal of flexibility to consider a borrower and seller’s circumstances. A pawn broker may place a certain degree of value on repeat business from satisfied sellers and borrowers and even recognize themselves as part of a community.

    What’s more, some pawn shop owners may even offer a higher value depending on an item’s personal meaning, although this is not the case for all pawn shop owners. Offering a higher price, though, for a family heirloom compared to an identical item a seller grabbed at a car boot sale.

    Overall, pawn shop owners know their trade. They have experience when it comes to properly value different types of items to ensure the best price possible.