Monthly Archives: March 2018

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Important things a Tax Payer should not miss!


Make sure you pay your taxes; otherwise you can get in a lot of trouble.– Richard M. Nixon

Well no one could have said it any better. Not paying taxes correctly and making mistakes in doing the right calculation may cost you bad in future. So, it’s important to be completely aware of the basics of income tax. Deadlines of filing income tax returns, knowing the income tax slab, sharing the right information and many more important things like these are crucial and missing such details can result in scrutiny and adverse action by the I-T department. Our purpose here is to not just warn you but help you with the nitty-gritty of tax matters, so that your journey as a tax payer remain smooth and hassle-free.

Your bank or banks’ interest income counts!
This is a common mistake that most taxpayers do while filing their Income Tax Return (ITR) – They forget to include interest earned from savings bank account, fixed deposits or interest earned from
loans given to acquaintances. Now if you think all this is tax-free, you are so wrong. Interest up to Rs10,000 earned from the savings account is allowed as a deduction under Section 80 (TTA), but you
need to mention such income in the ITR. Also tax-saving fixed deposits although help save tax under Section 80C, the interest earned from them is fully taxable. So, don’t forget to include such income while filing ITR.
Also, it’s mandatory to report all your bank accounts (you can skip the dormant account which is not operational for 3 years) in the ITR. While mentioning the bank detail, you should provide the account
number, IFSC code, name of the bank and account type (current or saving) in the ITR.

Never ignore TDS claims
Now, it’s a known fact that any tax deducted on salary appears on Form 16 provided by the employer. However, for tax deducted on all other incomes, a person needs to check out his Form 26AS online. Besides TDS, 26AS also reflects the payment of advance tax made. If you notice a mismatch or a difference, you should immediately notify your employer before filing return and get it rectified.

Never hide your assets
Taxpayers earning above Rs 50 lakh are required to disclose the details of the financial assets (including movable and immovable assets) which they own as on date. It could be in India or foreign lands (although you live in India, you may earn income from investment abroad). This is the duty of such taxpayer. If you miss any material information especially related to foreign belongings or transactions, which needs to be part of ITR, then you can be penalised for such mistake.

Original documents, not required
There is no need to submit any document in original to the I-T department during the process of filing income tax returns. They are also not required to be given to your CA (you can always deny, if
asked for originals), if you are taking any such assistance. Just keep the copies of the documents ready in your file as the IT department may ask you to furnish the same at a later stage. And that’s
about it!

Previous employer’s information is very crucial
Now once you move from one company to another, you may forget to collate and pass on information from your previous employer to your new employer. And it may so happen that your new employer also doesn’t take into account the income earned from your previous job. Tax is then deducted on the assumption that income for the remaining months is the only income for the year.
But problem arises when you go ahead and file your tax returns at the year-end. At that time, the incomes from the two employers are added and the deduction and exemption are halved and tax
liability arises. So to avoid that make sure to pass on exact information from the previous company to the current one!

ITR filed. Now verify it.
One of the most crucial things that you cannot miss. Your work doesn’t get over once you file your income tax return. You need to verify your ITR. You have two simple options to achieve the same.
Either do it manually (sending ITR-V to CPC Bangalore) or electronically (E-Verification) through net
banking, Aadhaar OTP etc. Missed date is actually not a miss!
If you have missed the I-T return filing deadline of July 31, you can always file a belated return within a year. For instance, belated return for the financial year 2017-18 can be filed by March 31, 2019. You must ensure that you do not miss this crucial deadline.

For any assistance or an appointment with financial expert, feel free to get in touch with our team on contact@sbsfin.com

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Common Mistakes To Avoid While Taking A Home Loan

Buying a dream home isn’t easy. And considering a home loan is even tougher!
Borrowing a home loan requires careful planning and analysis. Sometimes, you need to spend months and months to
get everything streamlined. You should do some preparation and background work to avoid hassles in your home loan process. Here we are discussing some common mistakes one should avoid while
taking a home loan.

Choosing your property first? Choose it alongside a lender.
Imagine you find your dream house and then discover that the lender that you had chosen will not fund that property due to some legal or document issues. Won’t that break your heart? Most of the
banks (lenders) provide loan for ready-to- move-in property and even for under-construction properties with renowned and approved builders and projects. But if the property is unapproved or
unauthorised or if there are legal issues, chances are the bank will reject your application and refuse to give loan.
Also, if the property is very old or it is developed by a relatively unknown builder, the bank might have an issue with providing a property loan. The best way is to select your property and
then simultaneously find out if any other lender has funded for another flat in the same building.
That lender should anyway be a part of your consideration set. Also if you approach lenders alongside, you are likely to get better rates as lenders reserve their best rates for immediate disbursement cases.
You can also approach a property agent to help you in finding the lender.
Another thing to consider here is to not consider the bank where you have an active account as a first preference. It may sound as a convenient option, it may not necessarily be the best option.
Always approach multiple lenders to see who is offering you the best interest rates and other services. Remember that even a difference of few decimals points in interest rates can help you save a lot over the loan tenure.

Confused between fixed or floating? Choose according to your requirement.
Now as you choose your lender, remember you can avail a loan either on fixed rate of interest or floating rate of interest.
Fixed rate of interest remain unchanged irrespective of the changes in the rate of interest in future years.
Whereas floating rate of interest suggests that rate of interest will
change if the RBI will make changes in the interest rates. How to zero down on one? Here’s the formula.
If you are taking the loan for a shorter duration (5-7 years), choose a fixed rate of interest.
But if you are going to repay the loan in say 20 years or more then you should take a loan on floating rate of interest as you can’t predict the changes for such a long duration.

Borrowing more than you can afford? Not a good idea!
Don’t make the mistake of borrowing more that what your income level permits. While determining your loan eligibility, banks would most definitely consider your income and liabilities but they may
not consider your existing expenses.  You need to consider that. It is always better to consider your budget according to your current income and expense levels. If your existing expenses are high and you take a loan which results in high EMI payment, you may end up in a financial crunch. Yes, you read that right. Now, we don’t want to make you all nervous here.
Just do a simple calculation of all your fixed monthly expenses. And add this to the amount of EMI on your proposed home loan.
If the total expenses are way too close to your monthly income levels, you should settle for a less expensive property.

Not planning to read the loan agreement? You may end up signing for something you didn’twanted
It’s lengthy, it’s going to take time. Yes. But make sure you invest that time and effort. After all you are signing up for your dream home! Almost 80 per cent of home loan borrowers do not take the
pain of reading every clause in the agreement.
This can have serious repercussions,  if the bank official fails to mention something that may be critical for you when discussing the terms orally.
Don’t fall into that category. Spend some extra time in reading every aspect. Also, it is always advisable to clarify all doubts before you sign the agreement.

Not taking insurance cover for the home loan? You are putting your family in trouble
Your home is for you and your family. But I am sure you don’t want to put the burden of home loan to your family in case something unfortunate happens to you during the tenure of the loan.
So, it’s most important to take an insurance cover or a life cover on home loan that includes coverage of your home and other liabilities.
The cover will provide monetary benefit to your family in case of an
unfortunate incident and ensure that your family members inherit your home not your home loan.
You should also consider taking a personal accident or critical illness cover. In case, your income gets interrupted due to any critical illness (Cancer, Stroke, Heart Attack, Major organ transplant, etc.), the policy will take care of your home loan liability.

For any assistance or an appointment with financial expert, feel free to get in touch with our team on contact@sbsfin.com

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Common Myths About Fixed Deposits

Fixed Deposits, also called as Term Deposits, are one of the most traditional investing options.

While we may be hearing a lot of noise around other investments like Mutual Fund SIPs, Liquid, Balanced and Debt Funds, Tax Free Bonds, PPF, EPF and what not! To some nothing beats the assurance and simplicity of a Fixed Deposit.
It’s a popular choice when it comes to showing investments on paper at the end of a financial year. But all that simplicity and assurance comes at a price! This article will help you remove some of the most common myths surrounding the Fixed Deposits and the interest accrued out of them. Read on, so that you are well aware next time you are investing in one.

 

Myth 1 – Fixed Deposits are only offered by banks

Fact – Fixed Deposits are also offered by other companies

It’s quite a general believe that Fixed Deposits are only offered by Government or Private sector banks. In fact, you can approach multiple leading companies and NBFCs (Non-Banking Financial Companies) who offer Fixed Deposits for retail investors.  And the catch is you are likely to enjoy better interest rates with these institutes as compared to bank deposits. Although these institutes may not give you attractive features like flexible tenure options, online account access and insurance cover on your fixed deposits.

 

Myth 2 – TDS (Tax Deducted at Source) on Fixed Deposits is mandatory

Fact – Knowing the mandates well could help avoid Tax Deduction

This is no myth that fixed deposits are taxable, however, not everyone needs to pay taxes. Yes you read that right! Returns from Fixed Deposits are included as a part of one’s total income under ‘income from other sources’. So, if your interest income exceeds Rs. 10,000 in one financial year, TDS will be 10%. For company deposits, TDS is deducted once interest exceeds Rs. 5,000 in one financial year. Minors, housewives, senior citizens, and people living on zero taxable income or no income, can most definitely avoid TDS. In that case, one needs to submit form 15G or form 15H to avoid TDS. If you’re over 60 years with no income, you won’t be losing any of your money on taxes, and can even enjoy a better interest on FD returns.

 

Myth 3 – All FDs Offer Tax Benefits

Fact – Select 5 year deposits offer tax benefits

Now if you are looking for tax saving, you will have to know that not all FDs offer that benefit. Tax benefits under section 80C of the Income Tax Act are offered only on specific deposits – for instance you’ll need to lock in your money for at least 5 years for this purpose. And during this time, the deposits cannot be pledged nor withdrawn.

 

Myth 4 – Regular interest payments on Fixed Deposits fetch more returns

Fact – A cumulative Fixed Deposit with returns only on maturity would fetch you more

Fixed Deposits come with two options, one where you receive interest payouts at regular intervals, and two a cumulative deposit where the whole amount (principal amount + bank’s interest) is received on maturity. The latter fetch you more returns. How? Well, that’s the magic of compounding. What happens in a cumulative deposit is the interest paid by the bank is compounded or multiplied at regular frequencies. So, higher the frequency of compounding, higher the yield on investment.

 

Myth 5 – Investing on an FD in the name of a family member helps saving taxes

Fact – Investing on an FD in the name of a family member doesn’t help saving taxes

Money gifted to spouse or children doesn’t attract tax. But when it comes to investment the income it generates is clubbed with the income of the giver and taxed accordingly. So, if you are thinking to invest in fixed deposits in the name of any family member, remember the interest will be taxed as your income. So, it’s best to avoid.

 

Myth 6 – In case of cash crunch, premature withdrawal is the only way

Fact – Fixed Deposits have other options in times of emergencies

If at any time you require money from your Fixed Deposits, most banks offer part withdrawal of funds, so that you could withdraw the amount you require taking care of the emergency, and the balance would continue to earn interest.

Henceforth, investing helps your savings grow – only if you truly understand how the concept works. At SBS Fin, we want our investors to indulge and understand wealth management as well as the money market instruments. Try and inculcate the habit of being up-to-date with the trends of the stock market and analyzing its ups & downs for better investing strategies. The same can be followed and assessed on our mobile app SBS FinFit, the same is available on Google Play and App Store.