Category Archives: Blog

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Are you Holding Adequate Emergency Funds Amidst Covid-19?

Most people think they have nothing to worry about until something unexpected happens. This suddenness can catch you off-guard without any financial preparation. Something as simple as being late on a bill or as extreme as being robbed and watching something they’ve worked hard for disappear in minutes.

The recent experience with Covid-19, made everyone realise the emotional and even financial preparation they had, or the lack of it. The last two years saw job loss, salary cuts, deaths, and many unimaginable emergencies.

During the second wave of Covid infections in India, around 20-23% of affected people had to visit the hospital for treatment. During the third wave, however, only 5-10% of people so far have needed hospital care. But as we have experienced, situations can turn any moment.

The hospitalisation costs have been high during the second wave, and shortage even led to black marketing of essential medicines. If we are not financially prepared for times like these, we could be losing all our savings in one go.

Whether its Covid-19 or any other unforeseen circumstances, the need for adequate emergency funds has never been more apparent.

What is an Emergency Fund?

An emergency fund is a fund where you save money regularly, to help you meet obligatory expenses without taking a last-minute loan or selling your assets. Obligatory expenses are those which are essential for your day-to-day life and cannot be avoided, such as food, rent, EMI, basic repairs and maintenance, insurance premiums, etc. 

However, obligatory expenses could mean keeping a domestic staff, chauffeurs, or going to a gym for some individuals. It will vary depending on income and lifestyle.

An emergency fund will help you carry on your life, as usual, become financially secure, and it will also provide a safety net in case of an emergency. 

How to Save for an Emergency Fund?

Start with a beautiful quote on savings by Warren Buffett. 

“Do not save what is left after spending, but spend what is left after saving.”  

For saving, the most important thing to do is budgeting.

  • As a first step, figure out what your spending is. This involves keeping track of all your obligatory and discretionary expenses. 
  • Post this, make a budget that will show how your expenses measure up to your income. Now, plan your spending, try to cut unnecessary and impulse expenditures and set up short-term and long-term goals.
  • Next, estimate the money required in your emergency fund. The amount could differ for every individual.
  • Once you know your requirement, start saving each month to build a corpus.

How much should be your Emergency Fund?

Each individual can have different amounts in the emergency fund depending on factors such as age, the number of dependents, income, health, lifestyle, etc.

If you are the only earning member with dependents and kids, you might want to save more to cover expenses for all, and if you are single and have no dependents, you could save less counting only your expenses.

However, it is believed that to be financially secure, an individual should have three to six months of living expenses saved.

For example, if your monthly expenses are Rs. 40,000, then you should have anywhere between Rs. 1, 20,000 to Rs. 2, 40,000 at any time.

Investment Avenues for Emergency Fund

Find a lucrative and safe instrument to invest the money once you know how much to keep in an emergency fund.

An emergency fund has only one objective, to provide you funds when you need them, without any delay.

Ideally you can invest your money in a liquid instrument that has no lock-in period.

Individuals should avoid having an inadequate emergency fund that will be unable to meet their expenses. 

The options available to an investor are:

  1. Cash

Cash is the most liquid instrument in case of emergencies. There might be times when you are unable to visit a bank to withdraw money or when online payment is not accepted. However, cash should be kept only minimal.

  1. Savings account

Keeping money in a savings account is just like maintaining cash, but with some interest component. A savings account is a very safe instrument and will also provide you with some returns. In a savings account, you can also withdraw money at any time without any withdrawal fees.

  1. Short-term fixed deposits

You could also think of investing in a short-term fixed deposit. It is also a very safe instrument that will provide you with better returns as compared to a savings account. However, check the terms and conditions withdrawal fee before opening a deposit account. You can take out an emergency loan against your fixed deposits.

  1. Overnight funds

Debt funds that invest in overnight securities are known as overnight funds. 

Overnight funds have zero interest rate risk and minimum credit risk, thus they are among the safest debt funds. They also provide better returns than fixed deposits and are more liquid. 

  1. Liquid mutual funds

Liquid mutual funds are also an excellent investment option to park your emergency funds, and they invest in short-term money market instruments having a maturity of up to 90 days. The short-term money market instruments include Certificates of Deposits, Term Bills, etc. They offer a higher return than fixed deposits and are more liquid. 

However, they carry an exit load if redeemed before seven days. If liquid mutual funds are redeemed before three years, then they are also subject to capital gains tax. 

Avoid investing in just one instrument but split up your emergency funds among the above instruments based on your risk level. 

You should also avoid investing your emergency funds in highly volatile assets, such as equities, equity mutual funds, corporate bonds, etc., or instruments with more extended lock-in periods, such as Public Provident Fund (PPF) and National Savings Certificate (NSC), etc.

Conclusion 

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” — Warren Buffett.

If you want to have funds during an emergency, start saving money for your emergency fund today. 

It is critical for investors to have an emergency fund to meet the unexpected liquidity needs that may arise in their life’s journey and cannot be postponed.

For many of us, Covid-19 has been a warning. 

As per a recent survey, 51% of people have started to save more than before, and 36% of people are investing more in wealth creation.

You can think of an emergency fund as your parachute that will save you from falling. 

Building an emergency fund is not enough. You need to review it at least once a year, as there could be changes in your financial goals and needs.

Reach out to at:contact@sbsfin.com for more investment avenues for liquidity.

 

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Great Investing is a Marathon, not a Sprint

Since I am into running these days and training for my first 11k, marathon strike me as an accurate metaphor for investing. Successful long-term investors are like marathoners. They must be well prepared, resilient, disciplined and focused to complete the run. Sprinting, like short-term investing, is really a different sport 🙂

You ask any runner; no runner thinks about 42 kilometers at once. Even the thought would be overwhelming. Instead, runners picture their run-in blocks: 5km, 10km, or even one kilometer at a time. Manageable blocks.

This same philosophy can be useful when saving and investing, let’s say, for retirement, especially when it’s still decades away. While the idea of saving a big corpus to retire comfortably may feel like a near-
impossible feat when we assign a number, investing just Rs.1000 per month in your 20’s looks manageable and reasonable.

In a world of instant gratification, we look for quick returns on even our investments, whether it is in stocks, real estate, or any other financial product. But to be truly successful, look at investing for the long term.

We can learn a lot from marathon runners when it comes to investing.

1. Preparation and planning. When you are training for a marathon, runners have a plan broken down into daily tasks. They not only run but also prepare their body by investing in strength training to build
stamina and endurance. Same way, investors need to have a roadmap, learn, and educate themselves on investments, opportunities and risks involved.

2. Patience is a key. You don’t run 42 kilometers straight away; you prepare your body, and it takes immense patience to run a marathon. Same goes with investments. We rarely get instant gratification. Wealth creation journey is a journey of patience. The trick is to be patient and stay the course.

3. Perseverance. A runner must be mentally and physically prepared for marathon long before the start of the run. Investing is no different. In the investing journey, you will encounter setbacks, losses, and market volatility. Investors' tenacity and staying power will determine victory.

4. Focus. Marathon runner’s focal point is reaching and crossing the finish line. Their goal is to run 42 kilometers. Same way, investors have goals, but the goals keep evolving with time. Investors need to focus on their vision, road map to stay on course and reach the destination.

There’s no denying the power of consistency and daily showing up to become a successful marathon runner. Same way regular savings, time and compounding will take you towards your goal. A journey of a marathon begins with the first step. A journey to Rs.1 crore begins with your first Rs.1000 investment.

 

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5 Most Important Aspects of Personal Finance and How to Maximize Your Returns with a Financial Expert.

The most common advice for a financial goal is to create a plan. However, it’s easier said than done. You may find it difficult to carve your financial path by creating a good portfolio. It is always advisable to seek help from a Financial Consultant. By consulting a financial advisor you can accrue high returns since the professionals are specialized and qualified in finance-related dynamics.

Personal finance is financial security for any person. Financial literacy and awareness is the key to financial capability and independence. Personal finance decisions require a high financial awareness quotient. Financial Consultants help in building a balanced portfolio in consideration of your
risk tolerance, active income, tax implications, and legal imperatives to accrue maximum returns.

Top 5 aspects of Personal Finance

Personal finance is the process of managing your money. It is a broader term that accommodates several financial parameters. The five pillars of personal finance are:

1. What you save

Your savings determine your financial health. If you park money as savings, you are creating an emergency fund. Creating a contingency fund regularly may act as a shield during an unexpected, unforeseen, and unpredictable event that may lead to loss.

Liquid funds are one such example of an emergency fund. They carry nil risk in terms of credit and interest. Your savings in liquid funds may last for a short term (3-6 months) that can be withdrawn within the week of saving. It is highly liquid and also yields better returns when compared to Fixed Deposits.

Setting money aside as savings can be a blessing in disguise at any emergency event. Thus, what you save is a paramount factor of your personal finance to maximize returns.

2. What you invest

Investments help you in growing money while you sleep!

You can invest your money in different baskets that can help in creating a balanced portfolio that accrues high returns in the long run. To build an investment portfolio you require financial acumen. Your folio depends on your :

  • Financial goal
  • Risk tolerance level
  • Type of investment choices
  • Time frame

Stock markets are a great avenue to maximize returns. It may be in the form of mutual fund investments or investments in stocks.

The time frame is one of the key factors that determine which investment option to choose. You may have financial goals to accomplish on a short, medium, or long-term basis.

3. How you protect

Insurance helps in protecting against risks and exposures. To maximize returns in the future, you may need insurance as a protective umbrella.

In personal finance, health and life insurance is a must. Good protection cover availed today can help in a better future. Some of the most important insurance to consider apart from health and life insurance are:

  • Personal Accident Insurance
  • Mortgage Protection Insurance

4. How you plan your taxes

Personal finance includes planning for taxes. Tax planning helps in tax saving. If you begin tax saving today, you can accrue benefits in the future. Careful planning in consideration of applicable deductions and exemptions can help you save taxes.

Indirect taxes are mostly unavoidable since they are related to consumption. You can save direct taxes vigilantly. However, tax saving is a different concept from tax deduction, tax evasion, tax avoidance, and tax exemption. Tax harvesting helps in wise tax planning.

5. How do you plan your retirement?

Planning for retirement includes:

  • Creating a retirement corpus from an early stage
  • Retirement financing during retirement

Personal finance is crucial to plan for retirement and also during retirement. It is always better to start creating a retirement corpus at an early stage of life. A discipline develops when you begin saving and investing in your future at the beginning stage of your earnings for your retirement. You can generate wealth for generations while creating a retirement corpus.

During retirement, you may need security for which you need retirement financing. Your risk appetite may be much lesser during retirement and hence it is advisable to exercise risk-free or lower risky investments and savings baskets.

How to maximize your returns with a financial expert?

There is a noise of information when you search on the internet about personal finance tips. It may be challenging to cut through the noise and find what’s best for you.

A financial advisor helps with authentic, structured, and directional personal finance tips. Consulting a financial advisor helps in outsourcing the solution of your financial worries and ambiguities to specialists and analysts in the field of personal finance.

You can just sit back on your armchair and concentrate on your mainstream job, while your financial consultants help in managing your money.

If you choose to manage your finances, you are likely to monitor the market every now and then, which may lead to a likelihood of missing out or mistaking an opportunity. A financial advisor eliminates such exposures by carefully studying your needs, goals, and risk levels.

The ways in which financial consultants help are as follows:

  • Act as a financial behavioral coach

Financial consultants act as a reliable bridge between you and your finances. You may rail off from accruing returns if you do financing on your own. A financial advisor acts as a financial behavioral coach on advising the right track of financial planning.

  • Value addition

Financial advisors help in adding immense value to your portfolio. To aim for both growth and value, a consultation with a financial advisor can be that great value addition in terms of quantifiable quality.

  • Investment planning partner

Financial Consultants may be your perfect investment partner to manage your finances in the most optimum and sustainable manner. Investment planning is the real agent in return maximization.

  • Retirement planning partner

A financial advisor helps in designing a retirement blueprint that can help you navigate to a better future.

  • Financial Counselor

Financial consultants may help in financial counseling during any ad-hoc, strategic, and overall financial requirements

Route to maximizing returns

Any investor wishes to maximize returns. Maximizing returns would mean such a balanced portfolio that accrues returns periodically or at the end of its tenure. Capital appreciation is the most important parameter that an investor aims to achieve and financial advisors strive to assure.

It is important to compare financial advisors in terms of fee, reputation, and clients before choosing the best one that suits your financial goals and needs.

 

 

 

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What are the Safe Investment Options in 2022?

With the lessons from the ongoing pandemic, individuals have realized that investing is an absolute need of the hour. Individuals need to make savings a step further. Investing is best leveraged when one follows a disciplined and systematic manner.

What to Consider

While planning your investing discipline, you should consider the following aspects:

  • Analyze Your Finances
    It is crucial to understand where you financially stand at present and what you want to create in the future. Consider your financial obligations and map out the distance between current finances and the futuristic value you want. Subtract your financial obligations from your regular income – this amount you can consider to invest.
  • Consider Timelines for Your Financial Aims
    You are familiar with the finances at hand and your financial goals. Stay realistic and make sure you determine the duration to meet your financial aims. If you want to invest for your retirement, it is necessary to consider the amount that needs to be devoted to achieve this goal.
  • Determine Your Risk Appetite
    An investor should know his/her limitations and scope for investments based on the risk appetite. It helps investors find aligned investment opportunities at the desired level of risk. An investor’s risk profile varies by factors like regular income, financial obligations, dependents, age, etc. Your risk-taking capacity may reduce with increased financial obligations or on being closer to retirement.
  • Ensure Liquidity due to Ongoing Pandemic
    Most investors prefer an investment with easy liquidity due to the pandemic. Though it is wise to have an emergency reserve aside, your investment portfolio must have enough liquidity. Make sure you pay the least penalty for early redemption of your investment.
  • Diversification to Even Out Risks
    The saying – do not put all your eggs in one basket – goes with every investment portfolio. It helps minimize risks. Also, it does not limit your capital growth to a single instrument. You can assure the safety of capital and guaranteed returns with a fixed deposit, but to minimize the impacts of inflation, you may need to include stocks in your portfolio. Similarly, your stock investment may bring losses for you due to a sudden slump in economic growth, but fixed deposits in your portfolio can manage risk.
  • Tax-efficiency
    As the new year is around the corner, most investors look at financial planning with tax savings. Like others, you can consider various Small Saving Schemes like Sukanya Samriddhi Yojana, NSC, PPF, NPS, and fixed deposits.

Investments to Ensure Safety

1. Fixed Deposits

Fixed deposits (FDs) are debt instruments. Most risk-averse investors highly prefer FDs as they are not market-driven investments. Reserve Bank of India (RBI) has remained the repo rate unchanged at 4% and reverse repo at 3.35% to support economic growth.

  • It is a secure investment with various benefits – low deposit amount, flexible tenor, stable and regular returns, tax benefits under Section 80C, Income Tax Act, and easy redemption.
  • You can invest in FDs for seven days to ten years, depending on the financial institution you choose. To increase flexibility, you can create an FD ladder with different maturities.
  • You can save income tax with 5-years tax-saving fixed deposits. You should know that investors need to put the initial investment amount for the entire tenure of 5 years. There is no pre-maturity withdrawal facility.
  • For higher interest rates than banks, you can consider corporate fixed deposits with renowned NBFCs. You can find a few leading NBFCs that have increased the FD interest rates in 2022 and offer up to 7.05%. With banks, it is 5.25-5.5%.

2. Public Provident Funds

At present, the Public Provident Fund (PPF) offers an interest rate of 7.1%. The Government reviews the interest rate quarterly. In the past, PPF depositors have earned higher interest up to 12%.

– It is considered a safe investment as it is a sovereign investment – fully guaranteed by the Central Government.
– You need to invest for 15 years. However, it allows you to withdraw prematurely after completing five years.
– You can deposit in your PPF account up to Rs 1.5 lakh in a financial year.
– It is a savings-cum-tax-saving investment in India. It will provide you with tax-free interest.

3. National Pension System (NPS)

NPS is a market-linked voluntary retirement savings scheme with the Central Government of India under the purview of the Pension Fund Regulatory and Development Authority (PFRDA). The NPS is one of the safe schemes for individuals with a low-risk profile.

– The age limit to subscribe to NPS is 18 to 65 years.
– You can withdraw prematurely after completing ten years in NPS.
– A subscriber is eligible for tax deduction under Section 80C and under Section 80 CCD 1(B).
– Returns on the NPS eventually depend on asset performance in the market. It invests in Government Bonds, Equities, Corporate Funds, Real Estate Investments Trust (REIT), Commercial Mortgage-Backed Securities, and Alternative Investment Funds (AIFs).

4. Dividend-Paying Stocks

Companies that are regular to pay dividends can be a safe investment. The IMF (International Monetary Fund) has projected the growth prospects of the Indian Economy at 8.5%. These are well-established companies with a track record of steady growth and regular dividends.

– Dividend investing is an appealing strategy for investors with a lower risk profile. It comes with two sources of potential income – regular dividend and capital appreciation with an increase in stock price.
– It can be risky if you can not make the right decision on what to avoid. Every company can not maintain a regular payout in every economic environment, like the present pandemic and its new variants. A diversified portfolio of dividend stocks can be a solution to make it safe and a steady income source.
– For a diligent pick of dividend-paying stocks:
– A company should have recorded a dividend yield of 3% or more.
– The proportion of earnings that the stock pays to its shareholders should be over 40%.
– The dividend-paying scrip with a drawn dividend policy

Few companies that have paid a high regular dividend to their shareholders are Clariant Chemicals (dividend yield of 11.2%)
Coal India (dividend yield of 9.9%), and Bharat Petroleum Corporation (dividend yield of 9%).

5. Government Bonds

RBI manages the issue of government bonds under the category of government securities (G-secs). It is considered a safe investment with the Government back. It is a contract between an investor and the Government to provide interest at a predetermined interest rate for a specified period.

– Most of the time, it is issued with a fixed coupon rate, but it can be a floating rate bond also.
– Investors need to invest funds for the long-term, i.e., 5-40 years. However, you can trade them on the stock exchange.
– Returns on these bonds are exempted from taxes under Section 10, Income Tax Act, 1961.

For an easy reach of the Government securities to individual investors in 2022, the apex bank in India has launched the RBI-Retail Direct Scheme. Retail Direct Gilt (RDG) Account allows individuals to apply for G-secs in the primary auctions and secondary market through a simplified investment process.

 

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6 Things to do before year 2021 ends

Pandemic has shown how, in the blink of an eye, things can change. There is no household which was not affected by Pandemic wave 2 directly and indirectly. My sister and her family came covid positive and my sister had to be hospitalized for a week. Lost my paternal uncle to Covid complications. A close friend lost her mom to covid. Another close friend lost her cousin after 3-week of battle.

Year 2021 was indeed a very challenging year for everyone. The bygone year and the havoc created by Covid has brought to the forefront the need for having certain vital elements in place that can help navigate us and our near ones if something happened to us with ease.

The lessons have come a hard way. Give this activity a priority before the year ends. Untimely death/mishaps are not under our control but sorting our financial paperwork to make life easy for our near ones is something which is under our control.

1. Check all your Nominations

When we make investments, the usual practice is to do the investments in our own individual names (single holding) and nominate our parents for various investments, bank accounts. We get married and start a family but forget to change the nominations. We procrastinate too, citing lack of time and how does it matter, parents are there with us.

This year while doing an audit check, I realized in my NPS account and health insurance policy my mom is still the nominee. My Mom died 2 years ago.

It will be a painful time-consuming exercise especially if we have not been organized since start 😊but trust me this is the best year end gift we can give to ourselves and our loved ones. Start with checking Nominations in your Bank accounts including salary account, Fixed deposits, PPF, PF & Pension, NSC, NPS, Insurance, Demat, Bank lockers, real estate.

All this while I thought my mom’s demat account was in joint holding with me. We had never checked the records, especially the client master sheet, which you get as part of welcome kit while opening demat account.

Post her death we thought transferring shares would be easy to my demat as it was with same Bank. On trying to submit transmission request with all documentary proofs, we got to know that it was in single holding and my dad was the nominee. My Dad never had a demat account in his own name. To transfer Mom’s shares, we must open his demat account in single holding. To convince my Octogenarian Dad was a herculean task 😊

2. Passwords

In today’s digital world, we have passwords for practically everything right from email accounts, bank accounts, various mobile/desktops applications. We have passwords for even accessing mobile and laptops.

Put all the passwords on paper and share that with your trusted family members. We can search online for password diary too or make our own diary. During my trip to US, I had picked up Password diary from Barnes & Noble’s saving all my password category wise.

3. Investments

During our wealth creation journey, we deal with multiple people for investments and various insurances.

Do we maintain all the data in one place in a spreadsheet or a record book? (You can download the free version of pdf fillable client record book we have especially designed for our clients. You can also place a request for a hard copy of the record book at:https://buff.ly/3oTZYMW).

4. Will

As I mentioned earlier, in the blink of an eye, things can change. Make a will. It’s never too early to make a will even if you have just started earning. Will can save you a lot of hassles later when you will have to run around for notarized copies, indemnity bond, NOCs.

5. Liabilities

Do we have a list of all the loans we have taken in one place? Car/Home/Personal loan, details of their EMI’s, terms and conditions in case of the death of the borrower.

How about the list of all the standing instructions we have given for all our bill payments through our credit/debit cards?

6. Location of Documents, Locker key

Do we have a designated place where we keep important documents like Pan card, passport, voter’s id, Aadhar card, locker keys. Are family members aware of the location.

For example, I have this big wall unit where I maintain my personal library and keep all my important files and folders. There is one drawer in that unit where all the important documents proofs are kept. All the family members are aware of this.

We can’t predict future and can’t control the outcomes. But what we can do is ‘Be Prepared’.

 

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Decoding The Form 26 AS

What is Form 26AS?

Form 26AS is a consolidated annual tax statement issued under Section 203AA of Income Tax Act and Rule 31AB of Income Tax rules to all PAN number holders.

This includes following details to tax payer based on various statements or returns filed by other persons or by assessee himself:-

  1. Details of Tax deducted and tax collected by other persons for such PAN. Therefore, Form 26AS provides a proof that tax has been deducted and collected on your behalf.
  2. Confirms that TDS has been deducted by different entities and deposited by the deducted into the account of government
  3. Details of Income tax deposited for corresponding PAN.

How to get Form26A

Form 26AS can be downloaded from TRACES website. To download Form 26AS, log in to your income tax filing account on the Income Tax department’s e-filing website https://incometaxindiaefiling.gov.in, either directly or through the Net banking facility of authorized banks.

Once you log in, click on ‘View Form 26AS (Tax Credit)’ tab, either under ‘My Account’ or ‘Quick links’ tabs. You will be redirected to the TDS-CPC website to view this form. You will be redirected to the TDS-CPC website to view this form. You need to choose the relevant assessment year (i.e. year following the financial year) for which you want to download the statement. You can view HTML format and then click export as PDF to save as PDF file.

Verify your tax details in Form26AS

This initiative by the Income tax department of introduction of Form 26AS has obviated the need to submit the TDS certificates (Form 16 / 16A) by the tax payer along with the tax return.

However, the taxpayer is required to verify the details in the Form 26AS and highlight any discrepancy in the details (over / underreporting of income or taxes) to the tax deductor immediately to make necessary rectifications. This is to avoid any inquiry by the Income tax department on tax mismatch resulting in a tax demand due to non-availability of appropriate tax credit at a later date.

Therefore, it is important for every tax payer to ensure that the taxes claimed in the tax return are in line with the taxes as appearing in the Form 26AS.

Changes in New Form 26AS

Government is taking all the measures to collect information from counter parties, so that undisclosed incomes can be reduced to minimum. With this objective present form of 26AS has been replaced with “Annual Information Statement” which contains more auto-populated details about corresponding PAN.

The Central Board of Direct Taxes (CBDT) has notified a new Form 26AS vide Notification No.30/2020 dated 28th May, 2020 through which Rule 31AB has been omitted and a new rule Rule 114-I has been inserted. Changes have become effective from 1 June 2020 replacing the earlier Form 26AS.

Form 26AS provides information for a particular financial year. The new Form 26AS seeks to provide following additional data:-

  1. Additional Basic details about PAN Holder
  2. Details of specified financial transactions
  3. Tax demands and tax refunds
  4. Pending and completed income tax proceedings

Additional Basic Details about PAN holder in form 26AS

Presently, Form 26AS was disclosing Name, PAN and address of PAN Holder. However, revised Form 26AS will contain information following additional information also:

Aadhar Number
Date of Birth
Mobile Number
Email Id

Details of specified financial transactions in form 26AS

With an objective to reduce undisclosed income, Income tax act has created onus on various parties such as Banks, Stock brokers etc. to report specific financial transactions to IT department.

Specified Financial transactions includes:

Nature of Transaction

Reporting person

Aggregate cash deposit for Rs 10 lakhs or more in saving bank account

Bank or Co-operative Bank

Cash deposit or withdrawal amounting Rs. 50 Lakhs or more in one or more current account of a person in a year

Bank or Co-operative Bank

Cash received for amount exceeding Rs. 2 Lakhs for the sale of goods or rendering of services.

Any person who is liable for tax audit under Section 44AB

Expenditure in foreign currency via debit card, credit card or traveller’s cheque for the amount Rs.10 Lakh or above in a year.

Authorised Dealer, Money Changer, Offshore Banking Unit, Any other person authorised to deal in foreign exchange or foreign securities

Payment by credit card amounting Rs.10 Lakhs or above in a year

Credit Card Issuing Authority

Credit card bill paid in cash for Rs 1 lakhs or more.

Credit Card Issuing Authority

Purchase or sale of immovable property having value of Rs. 30 Lakhs or above.

Inspector-General or Registrar or Sub-Registrar under the Registration Act, 1908

Mutual Fund Investment in a year of Rs 10 lakh or more.

A trustee of a Mutual Fund or such other authorized person managing the affairs of Mutual Fund

Purchase of bonds or debentures for Rs 10 lakh or more in a year.

A company or institution issuing bonds or debentures

Purchase of shares of company for Rs 10 lakh or more.

A company issuing shares

There are various other transactions for which reporting is required. Therefore, any person having such transactions need to make proper disclosure in IT Return.

Information about Income Tax Demand and Refund in New form 26AS

Presently, information related to Income tax demand and refund are available after login into the Income tax portal under specific tab. However, now Form 26AS also contains details of Income tax demand and refund.

Earlier, information related to Income tax refund paid was available. Now, it is yet to check whether it shows details of refund due or not.

Information related to Income Tax proceedings in New form 26AS

Information related to Income tax proceedings was available post login at Income Tax portal under specific tab. However, in new Form 26AS such information has been incorporated in Form 26AS itself.

Therefore, details of pending proceedings against PAN holder will auto-populate in Form 26AS.

Benefit of Form 26AS while filing Income tax return

A taxpayer should ensure that the income tax return or ITR is in sync with Form 26AS. In case of any discrepancy, the income tax department may issue a tax notice to seek explanation for such discrepancies in the figures of income or TDS appearing in Form 26AS and income tax return.

The earlier Form 26AS only provided information regarding tax deducted at source and tax collected at source relating to a PAN. However, now it provides some additional information also such as details to specified financial transactions.

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5 Most Important Lessons for Car Loan Borrowers

When I was buying my first car, I left no stone unturned to find the right car fitting my budget, right dealer, and lender.

Being into this domain, I knew exactly what I wanted. And I thought that my job was done when loan was sanctioned, and I got the delivery.

After paying the Car loan EMI for 5 years when it was a roller coaster 5 years on work front, I was joyful and happiest after paying my last instalment. Felt like huge burden got lifted from my shoulders.

For next 5 years I slept on the closure believing my job was done, loan was repaid. But what I did not realise till the time came, for me to send my 10-year-old car to my sister who lives in another state, that there was an unfinished task for me as the borrower.

That is when I learnt the lessons about the Closure of Car Loans. Here are the 5 Most Important Lessons for Car Loan Borrowers that we need to do to claim complete ownership of our vehicle.

1. Get your loan account statement

Since I was sleeping on it for 5 years, all hell broke loose, when I realized the lender was bought over by another company and the struggle started to get the contact details for the new company. The car loan account statement records your entire loan transactions, right from the beginning till the closure of the loan and is therefore an important document that needs to be obtained once the loan repayment is completed.

2. Obtain the No Objection Certificate

Second document that needs to be obtained from your lender is the No Due Certificate (NDC) or No Objection Certificate (NOC). NOC certifies that you have repaid the loan fully and no dues are outstanding against the associated loan account.

3. Get your car insurance policy updated

When you avail a car loan, your vehicle gets hypothecated to the lender, i.e. the lender possesses the right to seize your car in case you default on your loan. And this hypothecation information is recorded by your car insurance company as well. It is important for you to get this information updated in your insurance policy. Upon receiving the NOC, first submit it to your insurance company, who will then issue revised insurance papers with updated insurance policy, with your name as the owner, instead of the lender.

4. Get the hypothecation removed

Even if you have completed your car loan repayment, you may not be able to engage in any third-party transaction, such as selling the vehicle, until the hypothecation is removed. Hence, make sure you submit the application for hypothecation removal from the RC at your respective RTO, as the NOC received from the lender is usually valid for up to three months from the date of its issue. You must obtain form 35 from the RTO, as it states removal of hypothecation between you and the lender.

You need to submit the NOC, along with the updated insurance policy and other relevant documents such as address proof, to the RTO for verification of documents, post which the RTO will begin the procedure to update the RC. Until you receive your revised RC with your name as owner and a stamp indicating that hypothecation and endorsement have been removed, the RTO would give an acknowledgment receipt, which can meanwhile be used as the RC book.

5. Ensure the loan closure gets updated in credit report

Lenders are usually quite pro-active in informing the concerned credit bureaus whenever you avail any form of credit, whether it’s a credit card or loan. But, on the contrary, they may not be that prompt when it comes to informing about closure of any loan account. Therefore, once your car loan account is closed, do not forget to request them to inform the credit bureaus, so that the same gets updated in your credit report. Follow up with your lender in case the information is not updated in your credit report. And when the set timeframe given by lender has passed, you can consider placing an online request with the concerned credit bureau to update your records.

Ensure that you do take these steps for the closure of your Car Loan and only then be happy and relaxed about paying your last instalment.

Based on my personal experience I will strongly recommend this be done within a reasonable time. After all, a stitch in time, saves nine.

Still getting some questions in your head? Write to me contact@sbsfin.com.