Investing via PARENTS/ CHILDREN SAVES TAX

Choosing shares to buy

Understand the economy and financial environment

The more reliable the information you have, the better your decisions will be. Here are some places where you can get information about market changes:

◾The Reserve Bank of India's quarterly Statement on Monetary Policy for commentary on the Indian economy
◾The business section of reputable websites, magazines and newspapers for new economic information
◾The research department of banks and stockbrokers for forecasts about economic conditions

Topics to keep up-to-date with include:

◾The Indian economy
◾Interest rates
◾Government policy
◾Exchange rates
◾Investor sentiment
◾Overseas economies and markets relevant to the business

You should also focus on industry specific or even regional influences that might impact a company's profits.

Finding shares to buy

Blue chip companies

If you are going to choose your own shares, a good place to start is with the S&P/ASX 50, a list of Australia's top 50 companies, commonly known as 'blue chip' companies.

Blue chip companies tend to be long established, stable companies that suit investors looking for steady returns with less risk.

Speculative companies

Companies that don't have a long history and are not in the top 100 companies in Australia are known as 'speculative' companies. While there may be potential for a large return, be aware that the opposite is also true and you could potentially suffer large losses.

Speculative shares are most suited to experienced investors who are prepared to risk their initial capital in the hope of higher returns.


Once you have a list of companies it pays to consider the competition that a company faces and how it compares to others in the sector.

You should find out:

◾What is the company's position in the market?
◾Are the goods and services it provides likely to be in demand in years to come?
◾Are there opportunities for the company to grow in the future?


Capital growth or income?

Work out what you want from your shares. Do you need regular income or do you just want capital growth?

If earning a regular income is important, then you may want to look at companies that have a track record of paying high dividends, which tend to be the larger companies on the ASX.

Smaller companies are often focused on growth, so they are more likely to reinvest their profits in the business, rather than paying dividends to their shareholders.

Market sectors

Each sector of the market has its own benefits and risks. For example as a general rule:
◾Financial sector - Banks and other financial institutions usually offer steady income through high dividends.
◾Resources sector - Mining companies offer potential for high capital growth but tend not to provide large dividends. This industry can be highly cyclical, which means it does well when the international economy is healthy, but badly when it is suffering.
◾Consumer sector - Retailers offer medium-sized dividends. This sector tends to move up and down with the Australian economy.

Researching companies
The value of your investment depends on the health of the business so it's important to research and compare before you invest.

Annual reports

One of the best sources of information is a company's annual report. This contains many important things you need to know about a company, including:
◾Core business activities
◾Future prospects
◾Whether the company is making a profit or loss
◾Company strategy

Annual reports can overwhelm you with information so we've identified several useful things you should look out for. See annual reports for more details.

Company alerts

For more up-to-date information, set up a free Company Alert and we'll email you every time a company lodges information with ASIC, including takeovers, buybacks and floats.

You can also visit the ASX website and check the 'Prices and Announcements' section, which lists documents received by the ASX.

The business section of the newspaper will also keep you informed.

Prospectuses

If a company is issuing shares for the first time, another useful source of information is its prospectus. To find out more, see prospectuses.

Research reports

Share brokers will often give you access to research reports for various companies.
Comparing companies in the same industry

Comparing a company to its competitors is one way of assessing its value. Companies release a lot of key information that will give you some idea of whether their share price is under or overvalued.

Bear in mind that these are very simple comparison tools. Professional investors will often take months to determine whether a share is worth buying. They are trying to predict how much profit a company will make in the years ahead. No one measure will give you the information you need, so always use a range of sources.

Here are some comparison tools that you could start with:

◾Earnings per share (EPS): EPS is the portion of a company's profit allocated to each share. The higher the EPS, the more a share is potentially worth. Companies publish their earnings per share, so you can find this information on their website, in their annual report or on the ASX website.

◾Price earnings ratios (P/E): This can be a good way of working out whether the price of a share is over or undervalued compared to its competitors. In general, the lower the ratio the better. But a low ratio is not always a good thing. It could mean that the market expects earnings to be lower in the future. To work out a P/E ratio, divide the current price of the share by the earnings per share.

◾Dividend yield (%): Dividends are paid from profits and can be a good reflection of how the company is performing. But a high yield is not necessarily a good thing, especially if the dividends come from borrowings. To work out the yield, divide the dividend per share by the share price.


SUMMARY :
◾The Indian economy
◾Interest rates
◾Government policy
◾Exchange rates
◾Investor sentiment

◾Overseas economies and markets relevant to the business
◾What is the company's position in the market?
◾Are the goods and services it provides likely to be in demand in years to come?

◾Are there opportunities for the company to grow in the future?
Annual reports
*Company alerts
◾Earnings per share (EPS)
◾Price earnings ratios (P/E)
◾Dividend yield (%)

EX-Dividend Date vs Record Date

Ex-dividend dates are used to make sure dividend checks go to the right people. In today's market, settlement of stocks is a T+3 process, which means that when you buy a stock, it takes three days from the transaction date (T) for the change to be entered into the company's record books.

As mentioned, if you are not in the company's record books on the date of record, you won't receive the dividend payment. To ensure that you are in the record books, you need to buy the stock at least three business days before the date of record, which also happens to be the day before the ex-dividend date.

                             As you can see by the diagram above, if you buy on the ex-dividend date (Tuesday), which is only two business days before the date of record, you will not receive the dividend because your name will not appear in the company's record books until Friday. If you want to buy the stock and receive the dividend, you need to buy it on Monday. (When the stock is trading with the dividend the term cum dividend is used). But, if you want to sell the stock and still receive the dividend, you need to sell on or after Tuesday the 6th.


SUMMARY :   EX-Dividend Date --  2 Business days before RECORD DATE

                        Need to buy the shares  a day before to EX-Dividend Date.
                        We can SELL the Shares on EX-Dividend Date +2 days  provided if you hold the shares already, In this case you will get the Dividend too.

Gift Tax in India – Everything you wanted to know about rules and exemptions

1. Upto Rs 50,000/year is not taxable

 

• By virtue of Section 56(2), any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under “other sources” subject to some exclusions .

 

• The first major rule which every person should know is that there is no tax to be paid on gifts received (cash or kind), if the amount of the gift is upto Rs 50,000 in a year.

 

•  But If Your total gifts in a year is Rs 60,000, then you will have to pay tax on the total amount of Rs 60,000 , not just on additional Rs 10,000 . This Rs 60,000 will be included in your income and you will have to pay tax on this Rs 60,000, as per your tax slab.

2. Any amount received by relatives is not taxable at all

 

Your spouse

Your brother or sister

Brother or sister of your spouse

Brother or sister of either of your parents

Any of your lineal ascendants or descendants

Any lineal ascendant or descendant of your spouse.

Spouse of the persons referred  in above points

 

Note : Lineal Ascendant means your father,grandfather, great grand father...     Lineal Descendant means your son, grand son, great grand son....

 

Example – So if you want to buy a house and your father/mother/sister/brother etc transfer Rs 20 lacs to your bank account. You don’t need to worry about the taxation part, because its a gift from your relatives and you will not have to pay any tax on this amount. However its a good practice to do the documentation for this, if the amount if pretty big like in this example. All you need to do is document this transaction on a paper which clearly states that who transferred the money and the reason for it, along with the signatures of both parties. In future, if there is any income tax scrutiny, this small piece of proof will be handy and will help you a lot.

 

Documenting Gift transactions

 It a document which transfer the legal title of the property to the donor, where the consideration is not monetary but is made in return for love and affection.

• Writing a plain typed note on a paper will generally suffice.
• It is not required to be stamped and registration is also not needed.
• You may simply mention the names of persons, their relation.
• And the gift is being given out of love and affection.

Movable Property & Immovable Property should be Registered/Stamped.

• Gift made by way of movable property is required to be made in stamp paper and stamped by the notary or court, and registration of gift deed is not required in this case.
•  For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor.
•  Gift of immovable property which is not registered is not valid as per law and cannot pass any title to the receiver.

 

 

3. Any amount received as Wedding Gift is not taxable

 Wedding gift is not taxable in your hands, either from relative or non-relative .

 

 However, it is not clear by provision, whether the gifts should have been on the exact date of marriage, or a few days before or later. Normally, it should be sufficient if the gift is given just on the occasion of the marriage, means either on the day of the marriage itself or a day or two before or after.

 

4. Gift Tax on Movable/ Immovable properties

There is a valuation aspect involved in gifting of immovable properties

• If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
• If the property is gifted for a consideration, then the actual value of the property will be taken

In case of other properties:

• If gifted without consideration and fair market value exceeds 50,000, then the fair market value will be taken as the final value
• If gifted for a consideration and the Fair Market Value (FMV) less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.

5. No tax on the amount received through WILL or Inheritance

When any sum of money or any property is received under a will or by way of inheritance, it is totally exempt from Gift Tax. So if you get a real estate worth Rs 50,00,000 and some other things worth Rs 30,00,000 through inheritance , you will not have to pay any tax on that amount received.

6.Tax Implication on the income earned, when the gifted money is invested

 

What happens when the gifted money is invested in products like FD’s or shares? Let’s say that the wife invests this Rs. 1 lacs in a bank FD and earns an interest @10% annually, ie Rs 10,000.

Now who will pay the tax on this interest of Rs 10,000?

 

Husband or Wife?

I know most of the people will think that its wife, because once she gets the gift, now its her money and she is 100% owner of that money and any income generated from that should also be her own income and she should pay the income tax on that amount. So here in this case, if wife does not have any other income apart from this Rs 10,000 , then her total income for the year will be Rs 10,000 only and as its lower than the exemption limit, so she will not be paying any tax and won’t be required to file any income tax returns.

 

However in real life, this is not how it works.

 

In this case, IT department clearly knows that people will gift the money to their spouse who does not have any income, so that the whole income generated become’s tax-free. To combat this, there is something called as Income Clubbing provisions, which adds the income of one person in other income in certain cases, and that will apply in this case.

So in the above example, this interest income of Rs. 10,000 would not go tax-free and will be clubbed with husband’s income and he has to pay tax based as per the applicable tax slab.

So if, husband earned Rs 10 lacs a year, now this Rs 10,000 will be his additional income making his total yearly income as Rs 10.1 lacs.

 

But Income earned from the income earned is not clubbed

 

One interesting point to note is that any further income generated from the income is not clubbed further and that will be 100% income of the person who got the gift.

So in above example, when wife gets Rs 1 lacs as gift, and earns Rs 10,000 as the income, that Rs 10,000 will be clubbed with income of husband, but when this Rs 10,000 is further invested into FD again and earns Rs 1,000 income, this time – it will be wife’s income and not husband.

So now, how you can apply this rule in real life? Here is a tip !

Let’s say you have Rs 10 lacs with you. If you invest this money in your name, you will earn Rs 1 lac as income from it and pay tax on it, but next time again when you invest this 1 lac, you will earn Rs 10,000 and then again have to pay tax on it because it will be your own income.

 

What is the alternative way ?

What you can do here is that, you can invest Rs. 10 Lakhs in your wife’s name and earn an interest of Rs. 1 lac. This Rs. 1,00,000 will be clubbed in your income for the computation of income tax; which was going to happen anyways. however, when your wife further invests this 1

However, when your wife further invests this 1 lac in another FD and earns Rs. 10,000 (assuming 10% interest) as interest on it, this time it will be considered as her income and will not be clubbed with your income. Assuming husband in 30% tax bracket, it’s a saving of Rs 3,000. Might look small, but its one of the ways to save the tax by Rs 3,000 in a legal way.

Be cautious about the take and give transactions

At times, we ask for money from our friends for some purpose and then give it back.  He swiped his credit card for a friend for Rs 50,000 and then asked his friend to pay him back through online banking. Here if you see, the amount came to his account, however it was a reverse transaction and not actually a gift, so ideally this transaction should not be considered at all.

 

                       If its a small amount and can be justified with proofs, there is not much to worry about this. But in this case, lets say there is a income tax scrutiny, and tax inspector asks you about this “Rs 50,000” coming to your account. Now – You can clearly say that the money you got from your  friend was a amount which you got back because you paid Rs 50,000 to him through your credit card. But just saying this will not be enough, He will ask you to prove it. Then you will have to bring your credit card statement, and prove to him that this was done by you for your friend and no one else.

 

                     If you have taken loan from friend and you have a proof that you have returned that money through your bank account,you need not worry. But if you have paid offline through cash, it is better to document and take necessary signatures from your friend so that in case of any IT scrutiny, these documents would be handful. if you cannot prove, IT DEPT has every right to include this as taxable income and you need to pay tax. Also if you have taken the amount as loan and not repadi within same financial yera through your bank account, it is better to have a document that you have taken loan so that you can provie this to IT dept.

PPF CHART for 15 years for 1 Lakh Rupees @8% Interest Rate

Investment Amount :  100000

Starting Year : 2014

Interest Rate :  8%

Small Savings Schemes Revised Interest Rates for the quarter from April to June 2016

How to Make Most of New PPF Limit of Rs 1.5 lakh

• Deposits in PPF account can be made in lump-sum or in maximum 12 installments.

• The interest on balance in your PPF account is compounded annually and is credited at the end of the year.But the point to remember is that the interest calculation is done every month: the interest is calculated on lowest balances in account between 5th and the last day of the month.So if you deposit after 5th of a month, you don't earn interest for that month.

• The ideal way to maximise the interest on your PPF account would be to invest Rs 1.5 lakh (the maximum investible amount in a year) at one go at the beginning of the financial year.

• PPF accounts follow an April-to-March year so to earn the maximum interest, you should deposit the amount on/before 5th of April every year.

• A one-time deposit will earn interest for the whole year.

• if you want to deposit some amount every month, remember to deposit on/before 5th of that month. This will help you to earn interest for that month.

Example :

Suppose, you deposit Rs 15,000 every month in 10 instalments. A back-of-the-envelope calculation suggests that if you deposit before 5th of every month, you can earn extra monthly interest of close to Rs 105 and for 10 months it would help you to earn Rs 1,050 more, at the interest rate of 8.7 per cent. For a long-term investment product like PPF, if you follow the habit of depositing before 5th of every month, it could mean bigger retirement kitty for you.

What happens when you accidentally transfer money to wrong bank account ?

Only “Account number” matters for online transfer

Let me give you shock of your life now.

Do you also think that if you transfer money to someone by adding their name, accounts number and IFSC code and if one of those does not match the transaction should fail and you should get back your money in your account. Right ?

But its far from reality ! . As per RBI guidelines, at the end of the day only bank account number should matter and name of the account holder and IFSC code are additional information which should be ideally checked by bank on their end, but there is no rule like that.

If you mess up with the account number, the transaction can go through you the money will be transferred. Its totally a bank choice and a “suggestion” from RBI to banks that they should ideally match Name and IFSC code before the transaction, but its not mandatory.

Responsibility lies with the remitter and not beneficiary

As per RBI directions, the final and sole responsibility of cross checking the account number, Name of the account holder, amount and every other detail lies with the remitter (the person who is sending money) and not the beneficiary (who is getting the money) . You can check numerous times before clicking the final button and after that no one else is responsible for your loss or transaction.

You as customer can not blame the bank to not check details at their end. There are thousands of cases where while typing the account number, one last digit got interchanged with another digit and the person did not realise this and their money is then at stake and in most of the cases , they never got it back. (You can learn more about NEFT and RTGS here)

If the account number does not exist, then surely the money will come back to you, because there is no valid destination to send the money. But if the account number exists and its active, then there are high chances that the transaction will go through .

What you should do if you have accidentally transferred money to wrong bank account ?

If you have made a mistake of transferring the money to a strangers account, then you should follow these steps mentioned below

The first step is to make sure you inform your bank the moment you realise that unintended money transfer has taken from from your end. The bank will then contact the beneficiary account holder and try to explain the situation to them. They will ask the account holder to give them permission to reverse back the transaction. In most of the cases, I have read on internet that the recipient of the money have agreed for the reversal (We have good people in this world, despite widespread belief that world is evil) .

 Precautions you should always take while transferring money Online ?

Precaution is better than cure, I personally believe that we are ourself responsible for any money transfer done online. Nothing stops us from taking extra precautions while transferring money online.

Lets see few things you can do ..

Trick #1 – Use CTRL-F to verify your account number

Most of the times, we are typing an account number which we have got in our emails, we look at the number (few digits at times) and then type it in other window when we are adding the beneficiary. What I personally do is once I have typed the account number (you cant copy paste the account numbers in all the bank website, as its disabled) . In that case you can just copy your account number from email, and type CTRL-F and paste the number there and you can visually see if it matches with what you just typed.

Trick #2 – Transfer Rs 1 first and test the transaction incase of big amounts

If you are transferring a big amount to someone, you can go one step ahead and first transfer Rs 1 and then confirm with the beneficiary if they have got it, and then on confirmation, you can trasfer the full amount. But I suggest to use it only in extreme situations when you really want to make sure if the account is genuine or not. At times, you might come across someone who gives you their account number and you are aware that they are careless by nature, and might have made some mistake while sharing account number, In that case you can take this extreme precautionary step ! .

Trick #3 – Verify the account number from right to left

Generally we are programmed to read left to right and we also match the account number that way, truly speaking, it might happen that we sometimes get fooled by our own confidence (4 zero , might look like 5 zero) .. So its better to also cross check the account number digit by digit from right to left. I personally cross check an account number digit by digit 2-3 times because I transfer any money online. I have never faced any issue of wrongly sending money to strangers account or sending excess money by mistake (One excess Zero in 10,000 and it becomes 1 lac) ..

Spend 1 extra minute to save your self big trouble

I hope you are clear by now that its your mistake if you transfer money to someone else account and you cant held someone else responsible for your mistake. Hence its always better to add the beneficiary account with precaution. Always cross check the account number 2-3 times.

When exactly does PPF account mature ? Answer is not 15 yrs !

When does a PPF account mature ? If you thought that its 15 yrs from the date you started your PPF account, then you are wrong ? Yes – there is a myth around this topic and most of the people do not know how does it actually work.

Its extremely simple to find out when exactly your PPF account matures, and let me show you how to calculate it!

How is PPF maturity date calculated for PPF account ?

The maturity period for PPF account is 15 years from the close of the financial year in which the initial subscription was made. Its that simple. So if you open your PPF account on 4th Nov 2014, this date lies in the financial year 2014-2015 , then the financial year ends on 31st Mar, 2015 . So the 15 yrs will be calculated from this date (31st Mar, 2015) and the lock in year would be 2015+15 = 2030 . So the exact date would be 1st Apr, 2030 in this case.

Note that PPF maturity always happens on 1st Apr , and not any random date of a year. Most of the people just add 15 yrs to the date of opening of PPF account to find out the maturity date.

So technically your PPF account can mature in 16 yrs in best case, suppose you open your PPF account in the first week of Apr, then your 15 yrs will be calculated from the next year (financial year ends on 31st Mar of the next year).

Hidden EPF Rules which will blow your mind

1: You can also nominate someone for your EPF

Do you know that there is also “nomination” facility in EPF? The nominee will be contacted at the time of death of the person and handed over the money from the provided fund. However if nomination is not present (which you should check), it can rise to all sort of issues while claiming money.

There is a form called Form 2 which has to be filled to change or update the nomination. Please contact your company finance department or directly send the form to EPFO department.

2.One can get pension under EPF

Do you know that there is something called EPS (Employee Pension Scheme) in provident fund? The EPF part is actually for your provided fund and EPS is for your pension.

The 12% contribution made by you from your salary goes into your EPF fully, but the 12% contribution which your employer makes, out of that 8.33% actually goes in EPS (subject to maximum of Rs 1250) and the rest goes into EPF. So understand it this way, a part of your employer contribution actually makes up your pension corpus. But there are some caveats to this.

• One is liable for pension only if one has completed the age of 58.
• One is liable for pension only if he has completed 10 yrs of service (in case of more than one companies, the EPF should have been transferred, not withdrawn)
• The minimum Pension per month is Rs 1,000
• The maximum Pension per month is subject to maximum of Rs 3,250 per month.
• Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.

3.No interest is given on EPS (pension part)

You must be thinking that you regularly get compound interest each year on your contribution + employer contribution. But it does not work like that. The compound interest is provided only on EPF part. The EPS part (8.33% out of 12% contribution from your employer or Rs 1250 whatever is minimum) does not get any interest. At the time of PF withdrawal, you get both EPF and EPS.

4: You might not get 100% of your Provident Fund money

Imagine your contribution + employer contribution has been total Rs 3,50,000 till date. Out of this 3,50,000 , suppose 2,50,000 has gone in EPF , and rest 1,00,000 has gone in EPS (for pension) . Now if you quit your job in 6th year of employment and opt for withdrawal of your Provided Fund money (EPF + EPS actually) , then do you think you will get total 3,50,000 . NO !

That’s because you always get 100% of your EPF part, but for EPS there is separate rule . There is something called Table ‘D’ , under which its mentioned how much you get at the time of exit from your job, there is a slab for each completed year and you get n times of your last drawn salary (depending on the completed year of service) subject to maximum to Rs 15,000 per month.

So if your salary in this case was Rs 30,000 per month, still you will be given only 15,000 * 6.40 = Rs 96,000.

Note that the table D is up to 9 yrs only, because if 10 yrs are crossed, then you are liable for pension.

5: You can invest more in Provident Fund, its called VPF

You can always invest more than 12% of your basic salary in Employee Provident Fund which is called VPF (Voluntary Provident Fund). In this case the excess amount will be invested in PF and you will keep on getting the interest, but the employer is not supposed to match your contribution. He will just invest up to maximum of 12% of your basic, not more than that.

6: Withdrawing of EPF amount at job change is illegal

Almost everyone thinks that withdrawing of your Employee Provident Fund amount after a job switch is totally fine and allowed, however as per the EPF Rules, it’s illegal.

You can only withdraw your Employee provident fund money, only if you have no job at the time of withdrawing your money and if 2 months have passed. Only transfer is allowed in case you get a new job and you switch to it. While there are no cases where EPF office tracks these things and takes up this matter, still just for your information you should know that if you got a new job and took it and then you are applying for withdrawal, it’s illegal as per law.

However in case of EPS, if the service period is less than 10 years, you’ve option to either withdraw your corpus or get it transferred by obtaining a ‘Scheme Certificate’. Once, the service period crosses 10 years, the withdrawal option ceases. Just for your information, you can withdraw your EPF money without the help of past employer signature by attesting your withdrawal form by a bank manager or some gazette officer. I hope you are clear about EPF withdrawal rules.

7: One can opt out of EPF if he wants

Yes!. I know this might be a surprising fact for many , but if one’s basic salary per month is more than Rs 15,000, he has an option to opt out of PF and not be part of it. In which case he will get all his salary in hand (without anything deducted every month).

But the sad part is that one has to opt out of Provident Fund in the start of his job. If a person has been part of EPF even once in his life, then he can’t opt out of it. So if you have already had EPF in your life. This option is not for you, but if you are new to job and your PF account number still does not exist, you can tell your employer that you don’t want to be part of Employee provident fund . You will have to fill up form 11 for this.

8: Your EPF gives you some life insurance too

A lot of people might not know that in case a company is not providing group life insurance cover to its employees, in that case the employee is given a small life cover through EPF. This is because there is something called Employees’ Deposit Linked Insurance (EDLI) scheme and your organization has to contribute 0.5% of your monthly basic pay, capped at Rs 15,000, as premium for your life cover.

However companies which already have life insurance benefits to employees as part of the company, are exempted from this EDLI scheme. The bad part of this EDLI scheme is that the life cover under this option is very low and that’s maximum amount of Rs. 60,000. While this is peanuts for most of the people in big cities. For employees in small scale industries and small cities, this amount of Rs 60,000 will still count something.

9: You can use EPF money can be withdrawn at special occasions

So now you know that EPF withdrawal is not permitted if you are still working. But there are occasionswhen Employee provident fund withdrawal is allowed.

While you cannot withdraw it fully, you can withdraw a partial amount. Following is a list of events when you can withdraw the Provident Fund amount and the conditions you need to fulfill

1. Marriage or education of self, children or siblings

– You should have completed a minimum of seven years of service.
– The maximum amount you can draw is 50% of your contribution
– You can avail of it three times in your working life.
– You will have to submit the wedding invite or a certified copy of the fee payable.

2. Medical treatment for Self or family (spouse, children, dependent parents)

– For major surgical operations or for TB, leprosy, paralysis, cancer, mental or heart ailments
– The maximum amount you can draw is 6 times your salary
– You must show proof of hospitalization for one month or more with leave certificate for that period from your employer.

3. Repay a housing loan for a house in the name of self, spouse or owned jointly

– You should have completed at least 10 years of service.
– You are eligible to withdraw an amount that is up to 36 times your wages.

4. Alterations/repairs to an existing home for house in the name of self, spouse or jointly

– You need a minimum service of five years (10 years for repairs) after the house was built/bought.
– You can draw up to 12 times the wages, only once.

5. Construction or purchase of house or flat/site or plot for self or spouse or joint ownership

– You should have completed at least five years of service.
– The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary.
– Can be avail of it just once during the entire service.

10: You can file an RTI application for EPF issues

Did you know that you can file an RTI applicable to get any kind of information regarding your EPF. You can file it if you are facing issues like no clarity about EPF balance, no action taken for your EPF withdrawal or transfer. To find out information about other issues on Provident Fund. I have done a detailed post on how to file an RTI for your EPF issue.

UPDATES

• In the recent budget 2015, the govt has made it clear that now an employee can choose between EPF and NPS. The employer will have to give this option.
• Now the new system of UAN is in place for EPF, which has made a lot of things more simpler

Conclusion on EPF rules

The overall Employee provident fund rules are too complicated and very old. A common man does not know all these EPF rules, but knowing these minimum 10 EPF rules will help him in his financial life.

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Solution of Notice of Defective Return under section 139(9)

Common cases when notice for defective return is sent:

– when you have filled up details of taxes paid, but have not provided income details, the Income Tax Department deems it defective.

– A notice for defective return is sent when tax deducted has been claimed as a refund, but no income details are provided in the return.

– The Department sends you a notice for defective return under Section 139(9), when you haven’t paid your taxes in full.

– when you are required to maintain balance sheet and profit and loss statement, but haven’t attached them with your income tax return, the tax return is declared defective.

– When total presumptive income under Section 44AD is less than 8% of gross turnover or recepits, ITR-4 has to be filed. A notice is sent when the filing is made on ITR-4S instead of ITR-4.

– the name mentioned on the income tax return does not match with the name on the PAN card.


when you haven’t paid your taxes in full.

You have to pay the remaining tax i.e showing up under field AMOUNT PAYABLE

1)Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
2)CHALLAN NO./ITNS 280 (payment of Income tax & Corporation Tax)
3)Fill the necessary details and pay the SELF ASSESSMENT TAX.
4) Get the Challan related details accordingly.

Downloading the Returns you filed in XML Format :

1)Go to https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html
2)Click on View Returns/Forms or Go to My Account Menu-->Click on Efiles Returns/Forms
3)Click on Ack. No of the corresponding Assessment Year.
4) In Download/Status Description you will have XML & ITR/FORM options.
5)Click on XML option and downlaod it.

Download the ITR TAX UTILITY following the below steps.

1)Go to https://incometaxindiaefiling.gov.in/e-Filing/Services/DownloadItrLink.html
2) For the Specific ITR1/ITR2/ITR2A.... which ever you got to file download the corresponding JAVA utility.
3)Once you download, Unzip it and click on ITR.bat
4)Now you can import the XML file (which is containing DEFECTS), by clicking on OPEN option.
5)You got to give the Login credentials of E-filing if asked.
6)Once the importing is done successfully, you can view all the data i.e filed by you earlier.
7)In the IT tab, add the Challan details that you have paid (Amount Payable )
8)In PART A - GENERAL tab,under Filing Status section, you got to fill the corresponding details.
    a)Return filed* ----- "18"-In Response to a notice u/s 139(9) where the original return filed was a defective retun
   b)Whether original or revised return?  -----Original
   c)Notice Number ----- Your  Communication Reference No----- (Eg : CPC/0000/B5/1000000001)
   d)If revised/defective/Modified, then enter Receipt No  ------ This is your Efiling                Acknowledgement No.
   e)Date of filing Original Return(DD/MM/YYYY)------Give the corresponding one
   f)If filed, in response to a notice u/s 139(9)/142(1)/148/153A/153C enter date of such notice --- --Please enter the date of the notice you recieved in your gmail/any email id.
  g)Residential Status*  ------RES-Resident
 h)Are you governed by Portugese Civil Code as per section 5A?(If "YES" please fill schedule 5A)*----- --No

9)After filling the above 2 tabs, click on Re-Calculate button.
10)Go to Part B- TTI tab, check Amount Payable.  It should be ZERO now.
11)Now Click on SAVE button so that it will be saved as XML format.
12)So, Now the Rectified XML is generated.

13)Now login to  https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html
14)Go to e-File Menu-->click on e-File in response to Notice u/s 139(9)
    Enter the Necessary details along with Acknowledgement no.
Upload the Rectified XMl i.e prepared above.
It will ask the same data which is provided in 8th Step.
So, give all the details.

15) That's it. you are done.

Top 10 companies that pay more than 25% dividend

1.ITC

2.PAGE INDUSTRIES

3.P&G Hygiene

4.ASIAN PAINTS

5.Dabur India

6.GlaxoSmithKline Consumer Healthcare

7.Supreme Industries

8.HDFC

9.GRUH

10.PIDILITE INDUSTRIES

How to earn maximum interest from PPF account?

If you want to earn maximum interest on your PPF account then invest money once in the year but before 5^th April. In this way, you can earn interest throughout the year because the money you have invested will be the lowest balance for every month hence you can get maximum interest. If you don’t have onetime money and you want to add the money every month then invest it before 5^th day of every month. 

Analysis:

§  When you invest Rs. 60,000 once a year but before 5^th Apr, for 8.7% Interest Rate, then you get the interest Rs. 5,220 and the final amount will be Rs. 65,220.

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Know Your EPF Account BALANCE.

By using the below link you can view your EPF Balance.

http://epfindia.com/site_en/KYEPFB.php

Employee PF Account Number :   ?

There are 3 Text Boxes.
In which you got to  fill the FIRST & 3RD one.
The 2nd Text Box is not a mandatory one.


Eg: TN/12345/54321 is your PF Account No.

Then give 12345  in the First Text Box.

54321 in the last Text Box.

Note :  Make sure you select the  STATE & ESTABLISHMENT CODE correctly.

Long Term Capital Gains Vs Short Term Capital Gains

Loss from Equity Shares
Can Carry Forward for 8 years if you have filed an Income Tax Return

Long term capital loss 
Is a dead loss – it can neither be adjusted or carried forward.

Taxation of Dividends received on shares:

Any dividend received on shares held in Indian company is fully exempt from payment of tax. However the company is required to pay a tax called Dividend Distribution Tax on such dividend at the rate of 15 percent on such dividend. So effectively 15 percent tax on your behalf has been paid by the company on the dividends received by you.

Read more at:Long Term Capital Gains