Personal Finance

Useful Online Tools You Can Use To Make Your Financial Life Easier

Many a times you need assistance while handling your finances, but you have nowhere to look for. Instead what you end up doing is either approach others for help or buy some software to solve your problems. But, why be dependent on anyone or spend money when the internet is full of helpful websites.

The internet hosts numerous websites with valuable tools that are completely free to use and can be of great help with money management. So, without further ado, let’s read ahead and check what these online tools are and how you can use them.

Financial Calculators

What is it that you are planning to do? Are you looking forward to taking a home loan or a personal loan, or are you interested in filing your income tax return (ITR)? Well, if your answer is yes, then the internet has a host of calculators available that can help you calculate your loan repayment amount or your tax returns.

Financial calculators give you a clear picture of what your expenses are going to be. To use these financial calculators, you only require a working internet connection and knowledge of good finance websites that offer such calculators. Once you access these calculators, you are required to put in the details as asked and keep proceeding as per instructions until you reach the result.

Insurance Calculators

Buying insurance is gradually shifting online. Online purchase of various plans, including pure term plans, is already drawing the attention of insurers. That is simply because of the online calculators, and very few add-on features of term insurance plans. However, insurance calculators are not just limited to term insurance plans. You can compare the quotes for ULIPs and Pension Plans as well.

Insurance calculators are specially designed to help you calculate the required monthly/annual premium if you are thinking of purchasing insurance plans. These calculators allow you to adjust the sum that you want your family to receive in your absence.

You can select various features and compare the premium for adding covers to your base plan. For example, term insurance of Rs. 1 crore may only cost about Rs. 11,000 or so for a 30-year-old non-smoker person. But, adding a Rs. 25 lakh critical illness cover may increase the premium by Rs. 2,000 or more.

Another example could be the term insurance calculator determining your monthly, half-yearly, or annual premium payments and helping you select the most affordable option. Annual premiums usually enjoy a discount over monthly premiums.

E-Insurance Account

You can now adopt e-insurance accounts to maintain your insurance policies in electronic form. Such electronic insurance account gives you access to your life insurance portfolio in a few clicks. This eliminates the need for physical policy documents. By submitting all the required KYC documents, you can open this account (opening the same is free). This brings benefits like:

* You can revise your insurance policies with accuracy and speed

* It increases transparency

Budget Planners

It can be a difficult thing to handle money and organize your expenses every month. Well, that can be controlled by budget planning tools available on the internet. These tools allow you to link your credit cards, debit cards, savings accounts, investments and loans all in one place. They also categorize and update every transaction that you make, thus helping you to understand where your money is being spent. This, in turn, helps you discover new ways and opportunities to save your money. Budget planners help you differentiate between the expenses that are a must, as compared to the expenses that are not entirely required.

You may be struggling with handling your finances. But, with these tools, you can lead a financially relieved life. These tools can assist you in planning out your financial goals and even predict whether such goals are achievable. The internet is home to numerous opportunities and the same can be said for financial management as well. So, try these online tools today and watch your lives turn around for the best.

Tax Benefits with Personal Loans

Yes, you read it right. You can enjoy certain tax benefits with personal loans as well. Since it is a tax saving season, undoubtedly, it seems a big news for people who are looking for ways to save taxes! However, the tax benefit would depend on the final use of the personal loan.

Before we discuss the tax benefits available, let’s discuss what a personal loan entails. A personal loan is considered to be one of the easiest ways to get the money, which can be used for any purpose. Both banks and non-banking financial institutions (NBFCs) offer personal loans with minimum documentation and easy repayment schedule. It can be availed online as well.

Tax Benefits of Personal Loans

As per our income tax laws, there is no specific tax deduction for a personal loan. However, in order to get tax benefits on a personal loan, the purpose for which the loan has been used does get considered. It means, if a personal loan has been taken and used for the ultimate purpose for which the tax deduction is available, the borrower becomes eligible to get a tax benefit, else it would not be given.

Usually, tax benefits on personal loans would be applicable if the online personal loan amount has been used for the below purposes:

Loan amount used for purchasing/constructing a residential house – If you take a personal loan for purchasing or constructing a house, you would be eligible for a tax deduction under section 24(b) of the Income Tax Act against the interest portion of your loan repayment. While for a self-occupied house, interest amount up to Rs 2 lakh can be claimed as tax-deduction, in case of a rented property, the entire interest paid on a home loan is eligible for the tax benefit. Further, if the loan amount is used towards paying the down payment, it would also get tax benefits. Similarly, the interest paid on the home improvement loan gets a tax deduction for up to Rs. 30,000.

Remember, the tax benefit is available only on the interest paid and not on the repayment of the principal amount. Having said that, it’s worth mentioning that a borrower has to give adequate proof to tax authorities to validate that the online personal loan money has been used to buy and renovate/repair the house.

Loan amount invested in business – If the online personal loan amount has been used in the business, the interest paid on the loan would be considered as an expense, and thus, it would be deducted from the gross revenue. This, in turn, will help in reducing the net taxable profit of the business, thereby lowering the tax liability.

Loan amount used for buying the asset – If the borrower has used the personal loan to buy assets like jewellery, shares, non-residential house etc., the interest paid on loan would be added to the cost of acquisition of the asset. Though tax deduction would not be available immediately in the year in which the interest has been paid, it would be added to the cost of acquisition and would be available in the year the asset gets sold.

Important Things to Remember Regarding Tax Benefits on Personal Loans:

* When the lender disburses the personal loan amount, no tax would be levied in the hands of the borrower as the loan amount is not an income.

* To claim a tax deduction, it is essential to submit evidence to prove that the loan amount has been used for any of the above-listed purposes.

* Personal loans must have been availed from a valid source, like a bank or an NBFC, as loans from an unknown source may be considered as income and thus, will not be eligible for tax benefits.

* As tax benefit is available only on the interest portion of your home loan and not on the principal amount, a borrower needs to submit the interest certificate to get the tax incentive.

To conclude, with personal loans, you get the freedom to use the loan amount as per your wish without informing the lender. So, if you need money for any of the above mentioned purposes, just apply for a personal loan and don’t forget to avail tax benefits as well.

Should You Invest in NPS Post Budget 2016?

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Budget 2016 has proposed a significant change in the taxation laws for National Pension Scheme (NPS). It has been proposed by the finance ministry to make 40% of your lump sum withdrawal to be tax exempt at the time of your retirement i.e. as you attain 60 years of age. But, does it make any sense to invest in NPS post this amendment or should you continue investing in equity mutual funds or PPF for your retirement years?

We all know that our contribution up to Rs. 50,000 in NPS provides us tax deduction under section 80CCD (1B). Unlike investments eligible for tax deduction u/s 80C, 80CCD (1B) provides an exclusive tax benefit for NPS. So, if you do not contribute in NPS, you need to pay tax as per your respective tax slabs. So, should you save tax by investing in NPS or just pay tax and then invest the remaining amount in equity mutual funds, PPF or debt mutual funds for wealth maximisation?

Honestly speaking, it is not an easy decision to take. To come to a conclusion, I’ll do a couple of comparative analysis here – one, comparing an investment in Equity Mutual Funds with NPS and the second one, comparing an investment in PPF with NPS. We will also have to make certain assumptions here based on which this analysis would come to a conclusion and you are most welcome to agree or disagree with my assumptions here because I am as human as you are and that is why there is enough scope of me committing mistakes as bad as anybody else on this earth.

Here are the assumptions I have made in this analysis:

You are 35 now and would retire after 25 years from now.
You are in the 30% tax bracket and will have to pay Rs. 15,450 as tax in case you decide not to invest Rs. 50,000 in NPS.
Equity Mutual Funds would generate on an average 13% annual returns for the next 25 years.
PPF would generate on an average 8.1% annual returns for the next 25 years.
NPS with 50% contribution towards equity, 25% contribution towards Government Debt and 25% contribution towards Corporate Debt would generate on an average 10.375% annual return for the next 25 years. To provide more clarity here, I have assumed 12% annual returns from equity, 8% annual returns from government debt and 9.50% annual return from corporate debt.

So, should you invest in NPS for saving Rs. 15,450 in tax?

Scenario I – Say No to NPS in the present scenario, as it is not advisable to invest in NPS even with the exclusive tax benefit it enjoys u/s 80CCD (1B). Your investment of Rs. 34,550 in diversified equity funds should result in a higher retirement corpus for you as compared to Rs. 50,000 invested in the NPS. Here is what you’ll have in your retirement corpus at the end of 25 years from now:

Portfolio I – NPS – 50% of Rs. 50,000 invested in equity index, 25% in Government securities and 25% in corporate debt – Retirement Corpus Rs. 57,43,171

Portfolio II – Equity Mutual Funds – 100% of Rs. 34,550 invested in diversified equity mutual funds – Retirement Corpus Rs. 60,75,621

Portfolio III – PPF – 100% of Rs. 34,550 invested in PPF – Retirement Corpus Rs. 27,70,607

So, the above calculation clearly shows that investing in diversified equity mutual funds would generate the highest retirement corpus for you, even after paying 30% tax + 0.90% education cess on your taxable income over and above Rs. 10 lakh.

But, there are certain points which you need to keep in mind here which are in favour of NPS. Firstly, from taxation point of view, I think the present situation is not the best one for NPS and it could only improve from hereon. There is still a lot of scope of improvement for making NPS a better product to invest in. Also, I think the present taxation laws are already highly favourable for equity mutual funds. So, let us have a look at some other scenarios and whether it is a ‘Yes’ or a ‘No’ for NPS in those scenarios.

Scenario II – Say No to NPS, if you are in the 20% or lower tax brackets. You should rather invest in equity mutual funds to generate a healthy corpus for your retirement years.

Scenario III – Say No to NPS, even if you think this government or some other government will increase the exempt portion of your lump sum withdrawal in NPS from the current 40% to 100% or any percentage between 40% and 100% during the next 25 years.

Scenario IV – Say Yes to NPS, if you believe in the theory of “one bird in hand is better than two in the bush”. If you decide not to invest in NPS to save Rs. 15,450 today, you’ll have to pay it to the government and you’ll be left with Rs. 34,550 only to invest. With NPS, your first tax outgo will happen when you retire at the age of 60. Then also, if you withdraw 40% of your retirement corpus as lump sum, it is tax-free and invest the remaining 60% for buying an annuity, you are not required to pay any tax on that 60% as well. You’ll be required to pay tax only on the annuity income you would receive on your investment.

On the other hand, if you decide not to invest in the NPS, you’ll have to pay a tax of Rs. 15,450 to the government and your investment of Rs. 34,550 in equity mutual funds will take a long 25 years to beat NPS as far as a higher retirement corpus is concerned.

Scenario V – Say Yes to NPS, if you fall in the 30% tax bracket and you think this government or some other government will make long term capital gains (LTCG) on equity mutual funds taxable anytime during the next 25 years. Even a 10% LTCG tax on equity mutual funds will make NPS a better retirement product to invest in.

Scenario VI – Say Yes to NPS, if you are hopeful that this government or some other government would allow you to invest more than 50% of your Rs. 50,000 in equity portion of NPS. Personally I think there should an option allowing you to invest 100% of your money in equity. That would make NPS an attractive investment for me to save tax.

Scenario VII – Say Yes to NPS, if you are hopeful that this government or some other government would give you the liberty to invest 60% of your lump sum withdrawal anywhere you want and make it tax exempt as well.

Scenario VIII – Say Yes to NPS, if you are a conservative investor and don’t want 100% of your investment to be made in equities. With NPS, even 50% of your investment in equity index would result in a healthy retirement corpus which should be very close to the expected retirement corpus with 100% investment in equity mutual funds.

NPS vs. Equity Mutual Funds vs. PPF – Other Factors

NPS - Other Factors

There could be other such scenarios based on which your decision to invest in NPS could change. If you think I have missed any such significant scenario, then please share it here, I’ll incorporate that also to make it an even more comprehensive analysis.

National Pension System (NPS) – Save Tax u/s 80CCD (1B) worth Rs. 15,450

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

We all want to save taxes. We all invest to save taxes. Some invest in PPF, some in ELSS, some in NSC, some invest in 5-year bank fixed deposits. But, we all know the maximum investment limit for saving tax under section 80C is Rs. 1,50,000. So, we all want to save more tax, over and above 80C. But, there are only a limited number of investment options which provide tax exemption other than 80C. One of those options is NPS – National Pension System.

Introduced in Budget 2015, your contribution in NPS can save you tax of up to Rs. 15,450, if you are in the highest tax bracket of 30%. NPS provides an additional deduction of Rs. 50,000 from your taxable income. Interested? Read on.

So, let’s start our journey to know more about this tax saving investment avenue and see whether it truly makes sense to invest in it or it is better to pay tax and invest in mutual funds to earn higher tax-free returns.

How to open an NPS account?

Online Account – There are 2 ways to open an NPS account online – one, directly through NPS Trust’s website and two, through an intermediary, like your bank, ICICI Direct, HDFC Securities etc.

Offline Mode – You can also approach a POS (Point of Service) and get this account opened.

Documents Required – PAN card copy, address proof copy, 2 passport-size photographs, investment cheque and Duly Filled Subscriber Registration Form.

Exclusive Tax Benefit u/s 80CCD (1B)

If you decide to invest in NPS, you can avail a tax exemption of Rs. 50,000 from your taxable income. As the minimum investment requirement is Rs. 6,000, you can contribute any amount between Rs. 6,000 and Rs. 50,000 to save tax.

Which Account is eligible for Rs. 50,000 Deduction – Tier I or Tier II? – Your contribution to Tier I account is eligible for up to Rs. 50,000 tax deduction u/s 80CCD (1B). Tier II account does not entitle you to any tax deduction.

Minimum/Maximum Annual Contribution – As per the NPS rules, you need to contribute at least Rs. 6,000 in this account in a financial year. However, you can do so in multiple instalments and minimum contribution in a single contribution is Rs. 500.

However, there is no upper limit on your contribution to NPS. You can contribute any amount to your NPS account. But, as far as tax benefit is concerned, you can have only up to Rs. 50,000 in tax deduction.

Six/Seven Pension Fund Managers – These are the pension fund managers (PFMs) which are managing the subscribers’ money in NPS at present.

HDFC Pension Management Company
LIC Pension Fund
ICICI Prudential Pension Fund
Kotak Mahindra Pension Fund
Reliance Pension Fund
SBI Pension Fund
UTI Retirement Solutions

Seven Annuity Service Providers – These are the insurance companies which would provide you pension as you retire at 60 years of age.

Life Insurance Corporation of India (LIC)
SBI Life Insurance
ICICI Prudential Life Insurance
Bajaj Allianz Life Insurance
Star-Daichi Life Insurance
Reliance Life Insurance
HDFC Standard Life Insurance

Where your money gets Invested? – Your NPS contribution will get invested in Equity (E), Government Securities (G) or Corporate Debt Securities (C) either as per your own choice (Active Choice) or as per your age (Auto Choice).

Active Choice – Under “Active Choice”, you can have your money invested in these three asset classes as per your own choice. You can allocate your money among these three asset classes (E, G or C), but there is a cap of 50% for Equity (E) investment allocation.

Auto Choice – Under “Auto Choice”, your money gets invested based on your age i.e. the higher your age as the subscriber, the lower would be the allocation for Equity.

Returns – As NPS is completely market driven, there is no guaranteed/defined return in this pension scheme. Returns get accumulated throughout its tenure and get paid as annuity or lump sum benefit on maturity.

Historical Equity Returns of NPS (Returns as on 31st December, 2015)

Historical Corporate Debt Returns of NPS (Returns as on 31st December, 2015)

Historical Government Securities Returns of NPS (Returns as on 31st December, 2015)

Charges – This account attracts a processing charge of 0.25% of your contribution amount, subject to a minimum charge of Rs. 20, plus service tax as applicable. So, if you contribute Rs. 6,000, then Rs. 20 + service tax will be the charges. In case your contribution is Rs. 50,000, then a charge of Rs. 125 + service tax will be deducted from your account.

Exit – As you turn 60, you will be required to use at least 40% (maximum 100%) of your accumulated savings to buy a life annuity from an insurance company. Rest 60% or less, you can withdraw as lump sum amount. If you decide to exit before 60 years of age, you will have to buy an annuity with 80% of your accumulated savings, rest 20% amount you can withdraw as the lump sum benefit. Both, annuity income as well as the lump sum withdrawal, will be taxable.

In case of death before 60 years of age, entire pension corpus will be paid to the nominee of the subscriber.

Should you invest in NPS?

Please check this post – Should you invest in NPS Post Budget 2016?

Also, if you think I have missed to cover any important aspect(s) of NPS, then please share it here, I’ll try to include it in the post above.

Use Paytm to pay your phone bills

I paid my Airtel postpaid phone bill using Paytm today, and got a Rs. 50 cashback in the Paytm wallet by using a CASH150 promo code.

The deal is that you get 10% or Rs. 50 off (whichever is higher) on phone recharges using the code above, and is valid till June 10 2015.

I believe this is a simple and useful deal because almost everyone has a prepaid or postpaid connection; this deal works on both, and the only thing you have to do is instead of paying from the regular cellphone website using your credit card, use the Paytm wallet.

If you don’t have the Paytm wallet then it’s perhaps not worth your while to get one just to do this but a lot of people have these mobile wallets and in that case there’s really no reason to NOT do this.

This deal is available frequently enough which means that it is not a matter of saving fifty bucks one time, but rather saving this every month, well at least till they decide to withdraw it, and it neither adds time nor effort to an activity you would do anyway.

When the Paytm coupon on this recharge expires, I’ll update this post with the new coup0n code, and in the meantime, if there is a better way to do this then please leave a comment.

What’s the best way to get online deals in India?

Last week I told a friend that I needed to go to the dentist, and his first advice to me was buy a Groupon worth Rs. 80 and get consulting worth Rs. 800. I don’t really want to use a Groupon for a dentist, but this particular friend is an expert in getting deals, and is so enamored with deals that he hardly ever buys anything at full price anymore.

I’ve always been wary of deals, discounts, sales etc. because you end up spending more than you wanted to by buying crap that you don’t need. However, the hotting up E-Commerce space in India means that there are a lot of online deals and discounts without any hidden terms or shenanigans that you can take advantage of.

While 20 or 30 percent off is quite common, getting things for free on online deals is not uncommon either. Aditya tweeted this out today, and I know a few other friends who have done similar things.

Ordered lunch though TinyOwl Paid bill of 155 via Paytm Got Cashback of 77 from Paytm & 150 from TinyOwl Earned 72 Rs for eating lunch ????????????????

— Aditya (@forwardshortleg) May 31, 2015

I’m admittedly new to this game, but there are at least two things which are very apparent to me that should be done in order to get your hands on the best deals available online.

Get a Mobile Wallet

Mobile wallets are a relatively new concept in India but have gained popularity very quickly, and in fact there are now more mobile wallets than credit cards in India.

Paytm and Mobikwik are the two leading mobile wallets in India, and the benefit of using either of them is that almost all shopping sites accept these sources of payments, and you often get a decent cash back when you use the mobile wallet option. If you don’t use this — you would either use a credit card or a debit card, and there’s really no reason to use the mobile wallets instead.

Go to DesiDime.com before buying anything

DesiDime.com comes highly recommended from my friend, and I thought it was quite useful as well. This is a coupons site, and not only does it give you free coupons, it also tells you about the combinations of discounts, and cash backs that mobile wallets offer so you can take advantage of both of them.

A quick glance through this site can tell you if there is a deal on something you wanted to buy, and if there is a deal, then what’s the best way to go ahead and pay for it.

But does this work on what you actually want?

As I said earlier, my primary reservation against deals, coupons etc. is that you end up buying crap you don’t need, so I waited to write this post till I had used this method myself on something that I needed, and satisfied myself that it actually works.

I needed black trousers, and it so happened that Jabong had a 50% off on brands that I wear, so I bought a trouser from there, and paid using MobiKwik which ensured a Rs. 100 cash back on top of the original discount. So, in this particular case I paid Rs. 950 for something I’m pretty sure I’ve paid slightly over Rs. 2,000 a few months ago, and yes, I’m satisfied that it does work.

I’m sure that there are many more tricks that I’m unaware of, so please leave a comment and let me know as well as any advice on what doesn’t work and you should stay away from.

And, back to the Tweet at the beginning of the article — the code that Aditya used still works in case you’re interested, and TinyOwl operates in your city.

What is the best way to invest a lump sum of money?

One of the best problems to have in life is to have a lump sum of money that you don’t know what to do with. You could have inherited this money, won it in a lottery, or perhaps more likely — earned it over a period of time and never invested it due to inertia.

Obviously, there are many variables that need to be considered before you decide how to go about investing a lump sum amount but there is a framework that you can rely on, and I’m going to write about that today.

Shiv and I did this exercise for a couple of clients recently so I’m relying on the work we did there and generalizing it to fit to a larger audience, but if you feel that I’ve missed taking into account any parameter, please leave a comment, and I’ll respond to it.

How big is your lump sum amount, and do you have enough stashed away for an emergency fund?

Everyone should have an emergency fund which should be at least six months of your expenses in a savings account or a liquid fund, and if you don’t have one then you need to fund that with your lump sum amount immediately.

What is your asset allocation?

After funding your emergency needs, you should look at your current asset allocation which is broadly categorized as follows:

Real Estate
Debt
Gold
Equity

If you determine that you need to put more money in real estate or debt — you can invest your lump sum amount in your choice of asset in this category at one go since these are relatively less volatile asset classes, and in any case you don’t really have a good option to invest in real estate in a staggered manner.

However, if you determine that you need to invest in gold or equity then you should use a more staggered approach that protects you from market volatility.

Invest in a Debt or Liquid Fund and then use STP to Diversified Equity or Gold Funds

I say that you should use a staggered approach but it would only be fair to mention that this is a matter of opinion and not fact. A lot of people consider investing a big amount all at once better because the equity market tends to go up more often than it goes down, and if you work with that as your guiding principle — it is better to have invested all your money at once, and make it work for you from the very beginning. This Morningstar article illustrates why investing a lump sum at one go can be numerically better than a SIP approach with the help of an example.

That said, I wouldn’t follow this advice with my own money or recommend it to anyone else simply because the risk outweighs the benefit in my opinion. If I invest 20 lakhs in the market tomorrow and it falls by 10% in the next couple of months — it will take me a signficantly longer time to make that amount back than it would take me if I just invested a little every month, and bought more units during the time of market falls.

The most practical way to make this work is to buy a couple of liquid or debt funds, and then start a STP (Systematic Transfer Plan) from them to fund a diversified equity fund, or a gold fund over a period of 18 to 24 months.

This can be easily and cheaply done with the usual trading accounts that most people hold and is one of the best ways to invest a lump sum of money.

Is it better to buy Thai Bahts in India if you are traveling to Thailand?

I recently went on a short holiday to Bangkok and I was wondering if it’s better to convert INR to Thai Baht in India itself, or does it make sense to buy THB once in Bangkok.

Based on my research – I decided to buy USD in India, and then use that to buy THB once in Bangkok.

The factors that made me go with this option are as follows:

The first thing I did was to look for what rate I was getting on THB in India itself, and the best rate I found was 100THB for Rs. 203.25. Quick calculation and some guess work seemed to indicate that this is worse than what you can get from buying USD in India and then converting that to THB in Bangkok.
Money changers are ubiquitous in Bangkok and it seemed very likely that the USD to THB rate that you can get in Bangkok would be much better than the INR to THB rate you would get in India.
You can shop around for a good rate to buy Dollars in India, specially cities like Hyderabad, but you may not get that much of an opportunity to do that once in Bangkok. For instance, I was able to buy dollars at a rate of Rs. 64.4 to a dollar in Hyderabad.
It wasn’t clear to me how much THB I’d actually need in Bangkok and they charge a fee to convert it back to USD, which would be a complete waste, and it would be ideal if you converted only that amount which is close to what you plan to spend.

Eventually, I got the following two rates to get from INR to THB. The first one was Rs. 64.40 to a Dollar which I got in Hyderabad by using BookMyForex and 32.55 THB to a Dollar which I got at Super Rich at a mall in Bangkok.

The rate that I was getting in India to convert INR directly to THB was 100 THB for Rs.203.25 and the effective rate that I got by buying USD in India and THB in Bangkok was 100 THB to Rs. 197.84, so that shows you that the best idea is to buy USD in India, and then use those USD to buy THB in Bangkok.

The table below gives you a comparison.

Transaction	Exchange Rate
Buy THB in India using INR	100 THB = Rs. 203.25
Buy THB in Bangkok using INR	Not a viable option
Buy USD in India and THB in Bangkok (64.40 Rupees to a Dollar and then 32.55 THB to a Dollar)	100 THB = Rs. 197.84

Other things to Consider

You have to pay 1,000 THB as visa fee upon arrival in Thailand and this fee has to be paid in Thai Bahts itself. This is quite an annoying thing as the last thing you want to do after a long flight is to find a currency exchange and change money. However, as annoying as it might be, it is not very hard. You can find money changers before you get in the immigration queue and change a small amount to cover the visa fee and taxi because you will get a better rate once you are outside the airport.

Also, keep in mind that they need you to have a passport photograph to staple on your application, and take that with you or you will have to cough up a ridiculous amount to get that photo.

The last thing I want to point out is that although people told me you could buy THB in INR in Bangkok, I couldn’t see such money changers myself, and I would certainly not recommend that option to anyone. If you are traveling abroad, it is better to change INR to USD at home itself, and not fall into a situation where you have to a pay a ridiculous amount to buy local currency in INR.

Atal Pension Yojana – Government Guaranteed Pension Scheme for the Unorganised Sector

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

88% of India’s total labour force of 47.29 crore belongs to the unorganised sector, in which the workers do not have any formal provision of getting a regular pension payment on retirement. Moreover, due to increasing labour wages and better medical facilities, these people also face a risk of increasing longevity. So, this work force would require some kind of assured income guarantee to sustain itself in the coming years.

Launching Atal Pension Yojana (APY) from June 1, 2015

To encourage workers in the unorganised sector to voluntarily save for their retirement, the government of India will be launching a new scheme, called Atal Pension Yojana (APY), from 1st June, 2015. Finance Minister Arun Jaitley announced this scheme in his budget speech on February 28th.

This scheme will replace the UPA government’s Swavalamban Yojana – NPS Lite and will be administered by the Pension Fund Regulatory and Development Authority (PFRDA). The benefits of this scheme in terms of fixed pension will be guaranteed by the government and the government will also make contribution to these accounts on behalf of its subscribers.

Under this scheme, a subscriber would receive a minimum fixed pension of Rs. 1,000 per month and in multiples of Rs. 1,000 per month thereafter, up to a maximum of Rs. 5,000 per month, depending on the subscriber’s contribution, which itself would vary on the age of joining this scheme.

The minimum age of joining this scheme is 18 years and maximum age is 40 years. Pension payment will start at the age of 60 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.

The Central Government would also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, i.e., from 2015-16 to 2019-20, who join the NPS before 31st December, 2015 and who are not income tax payers. The existing subscribers of Swavalamban Scheme would be automatically migrated to APY, unless they opt out.

Who is eligible for Atal Pension Yojana?

Any Citizen of India, aged between 18 years and 40 years, who has his/her savings bank account opened and also possesses a mobile number, would be eligible to subscribe to this scheme.

Government Funding – Indian Government would provide (i) fixed pension guarantee for the subscribers; (ii) would co-contribute 50% of the subscriber contribution or Rs. 1,000 per annum, whichever is lower, to eligible subscribers; and (iii) would also reimburse the promotional and development activities including incentive to the contribution collection agencies to encourage people to join the APY.

Who is eligible for Government Co-Contribution in Atal Pension Yojana?

Subscribers of this scheme, who are not covered under any other statutory social security scheme and are not income tax payers, would be eligible for the government’s co-contribution of up to Rs. 1,000 per annum.

Social Security Schemes which are not eligible for Government Co-Contribution

Employees’ Provident Fund (EPF) & Miscellaneous Provision Act, 1952
The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948
Assam Tea PlantationProvident Fund and Miscellaneous Provision, 1955
Seamens’ Provident Fund Act, 1966
Jammu Kashmir Employees’ Provident Fund & Miscellaneous Provision Act, 1961
Any other statutory social security scheme

Minimum/Maximum Pension Payable – This scheme will pay a minimum pension of Rs. 1,000 per month and a maximum pension of Rs. 5,000 per month, depending on the subscriber’s own contribution per month.

Minimum/Maximum Period of Contribution – As the minimum age of joining APY is 18 years and maximum age is 40 years, minimum period of contribution by the subscriber under this scheme would be 20 years and maximum period of contribution would be 42 years.

Atal Pension Yojana – Contribution Period, Contribution Levels, Fixed Monthly Pension and Return of Corpus to the Nominees of Subscribers

Internal Rate of Return (IRR) – Thanks to the government funding of Rs. 1,000 per annum per subscriber account for 5 years, your account would generate an IRR of approximately 0.66% per month or 8% per annum. This pension amount per month is fixed and the government has made it clear that if the actual returns on the pension contributions are higher than the assumed returns, such excess return will be credited to the subscribers’ accounts, resulting in enhanced pension payment to the subscribers.

Minimum Contribution – A subscriber aged 18 years will have to contribute a minimum of Rs. 42 per month in order to get Rs. 1,000 pension per month starting 60 years of age. For a 40 years old subscriber, his/her minimum contribution would be Rs. 291 per month. The contribution levels would vary and would be low if subscriber joins early and increase if he joins late.

Maximum Contribution – A subscriber aged 40 years will have to contribute Rs. 1,454 per month in order to get Rs. 5,000 pension per month starting 60 years of age. For a 18 years old subscriber, his/her contribution for Rs. 5,000 monthly pension would be Rs. 210 per month.

Can I increase or decrease my monthly contribution for higher or lower pension amount?

The subscribers can opt to decrease or increase pension amount during the course of accumulation phase, as per the available monthly pension amounts. However, the switching option shall be provided only once in a year during the month of April.

What will happen if sufficient amount is not maintained in the savings bank account for contribution on the due date?

Non-maintenance of required balance in the savings bank account for contribution on the specified date will be considered as default. Banks are required to collect additional amount for delayed payments, such amount will vary from minimum Re. 1 to Rs. 10 per month as shown below:

(i) Re. 1 per month for contribution upto Rs. 100 per month

(ii) Rs. 2 per month for contribution upto Rs. 101 to 500 per month

(iii) Rs. 5 per month for contribution between Rs. 501 to 1,000 per month

(iv) Rs. 10 per month for contribution beyond Rs. 1,001 per month.

Discontinuation of payments of contribution amount shall lead to following:

After 6 months account will be frozen.

After 12 months account will be deactivated.

After 24 months account will be closed.

Subscriber should ensure that the Bank account to be funded enough for auto debit of contribution amount. The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.

Post-Retirement Rate of Return – Considering a retirement corpus of Rs. 1.7 lakh and monthly pension of Rs. 1,000, this scheme is going to generate a return of 0.59% per month or 7.1% per annum for its subscribers. I think this return is also on a lower side.

Nomination Facility – This scheme will also provide the nomination facility to its subscribers. In case of the subscriber’s death after attaining 60 years of age, the whole corpus generating the pension income to the subscriber would be returned back to the nominee of the subscriber. In case of untimely death of the subscriber before 60 years of age, the balance would be returned back to the nominee of the subscriber.

Where to open APY Accounts – You need to approach points of presence (PoPs) and aggregators under existing Swavalamban Scheme. These agencies would enrol you through architecture of National Pension System (NPS).

Points of Presence & Aggregators

Application Form – Here you have the links to the application form for subscribing to Atal Pension Yojana – Application Form in English – Application Form in Hindi

I think a subscriber should opt for a minimum monthly contribution of around Rs. 167 or so, which would make it approximately Rs. 2,000 annual contribution. 50% of Rs. 2,000 i.e. Rs. 1,000 would be contributed by the government as well. So, the subscriber will get the maximum benefit of government funding.

As mentioned above, the scheme would start from June 1, 2015. So, interested people will have to wait till then to open an account. If you have any other query regarding this scheme, please share it here.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Application Form in English

Application Form in Hindi

Highlights of Budget 2015 for a Retail Investor & Taxpayer

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Big Budget Day is over. Some are happy with the budget, some are not. Some are terming it to be rich people’s budget, but the finance minister is claiming it to be pro poor as it will help in high government spending and thereby job creation. What all is there for the Indian investors and taxpayers in this budget, I’ve tried to cover some of its important proposals.

No Change in Income-Tax Slabs – In July last year, the Finance Minister gave multiple tax reliefs in the form of higher basic income tax exemption, higher 80C deduction limit and higher exemption for interest paid on home loans. This year, he has been less generous. Most importantly, he has left the income tax slab limits completely untouched. Though a slew of tax saving measures have been announced, but it would cover a very small percentage of population.

Additional Exemption of Rs. 50,000 for NPS u/s 80CCD – There is a gift for the taxpayers in the form of additional exemption of Rs. 50,000 u/s 80CCD. This exemption will be over and above Rs. 1,50,000 exemption u/s 80C. You just need to invest this amount in New Pension Scheme (NPS).

Moreover, if you are a salaried individual and if your employer is already contributing or is ready to contribute to your NPS account, here is a good news for you. The limit for employers’ contribution to NPS under section 80CCD has been raised by Rs. 50,000 to Rs. 1,50,000 as compared to Rs. 1,00,000 earlier.

Wealth Tax Abolished – I think the decision to abolish wealth tax is a very welcome move. Firstly, I think most Indian taxpayers do not understand wealth tax laws. Moreover, I think less than 1% of our total tax paying population was actually paying wealth tax earlier. So, the Finance Minister has decided to phase out something which was not making any meaning contribution to his tax kitty and creating unnecessary confusion among the taxpayers.

However, to compensate for his revenue loss, the Finance Minister has decided to levy 2% additional surcharge on the super rich individuals having annual income of Rs. 1 crore or more. This is easy to understand and quite practical as well.

Service Tax Exemption for Varishtha Pension Bima Yojana – LIC’s immediate annuity pension plan for senior citizens, Varishtha Pension Bima Yojana, has also been made a little more attractive as it has been moved out of the service tax coverage. This scheme was already generating a guaranteed return of 9% to 9.38% return for its investors. With this exemption, it is going to earn higher returns for its investors.

Tax-Free Bonds for Road, Railway & Irrigation Projects – Finance Minister has announced the reintroduction of tax-free infrastructure bonds. But, as the details have not been announced, it is difficult to guess the form in which these bonds will be launched. Whether only the interest will be tax-exempt or the investment amount will be subject to tax deduction, like 80CCF infrastructure bonds and whether these bonds will be available for public investment or not, all these are the questions which will get answered in a few days time.

Sukanya Samriddhi Scheme Gets Tax-Free Status – Sukanya Samriddhi Scheme, which got launched on January 22nd this year, has been made more attractive by making its interest income and maturity proceeds fully tax exempt like PPF. This scheme is currently generating 9.1% return for its investors in the current financial year, which makes it the highest tax-free income generating scheme. But, the rate of interest is subject to revision every financial year. So, if your girl child is 10 years or below, you can take advantage of this scheme. I’ll cover this scheme in detail next week here.

Gold Monetisation Scheme, Sovereign Gold Bond and Indian Gold Coin to be launched – The government has decided to introduce Gold Monetisation Scheme, in which the depositors will be able to earn interest in their metal accounts. What would be the rate of interest, it is yet to be announced.

Another alternate, in the form of Sovereign Gold Bond, will also be launched. The bond will carry a fixed rate of interest which will be announced at a later date, and also be redeemable in case in terms of the face value of the gold, at the time of redemption by the holder of the Bond.

Moreover, an Indian Gold Coin, which will carry the Ashok Chakra on it, will also be launched. Such an Indian Gold Coin would help reduce the demand for coins minted outside India and also help to recycle the gold available in the country.

80D Exemption Raised by Rs. 10,000 – The Finance Minister has also increased the deduction limit on health insurance premium under section 80D to Rs. 25,000 from Rs. 15,000 earlier. In case of senior citizens, this limit has been raised from Rs. 20,000 to Rs. 30,000. So, at a time when the medical expenses are rising at a high speed, this move should encourage people to go for a higher medical cover.

Exemption Limit for Transport Allowance Raised to Rs. 1,600 – The Finance Minister has also decided to double the exemption limit for transport allowance from Rs. 800 per month or Rs. 9,600 per year to Rs. 1,600 per month or Rs. 19,200 per year. This would leave a handful of extra money with the salaried taxpayers.

Service Tax increased to 14% – Taxpayers should also get psychologically ready to pay more for the services they use. The Finance Minister has raised the rate of service tax to 14% from its earlier base rate of 12% + cess of 0.36%.

Budget 2015 has been able to bring smiles on the faces of Indian stock market investors as it was up in the yesterday’s special trading session. Will this momentum sustain amid poor corporate earnings or will this budget be able to change the fortunes of corporate earnings in the quarters to come? It is all up to be seen in the coming months and quarters. Lets wait & watch.