I AM FROM IRDA

“I’m from Irda. You’ll get 1.8 lakh bonus if you buy a new policy”

Posing as employees of the regulator or insurance companies, fraudsters are luring policyholders with offers of bonus if they buy a new plan. Here’s how they take gullible policyholders for a ride.

    Ten seconds is all that Vijay Sharma gives a telemarketeer. But since the call was from the insurance regulator’s office, he didn’t disconnect it abruptly. Instead, he put everything else on hold and listened intently. “I am calling from the service management department of the Irda. You are losing money on your Ulips because the bonus that accrued on them has gone to the agent,” the caller explained. “If you want, it can be refunded to your account.” 

    Sharma is usually circumspect about such offers and SMS marketing. However, the caller knew his name, phone number, address and full details of the plans that the Delhi-based sales executive had bought in the past 3-4 years. So, there was very little reason to doubt his words. Besides, he had nothing to lose. 

    Or so he thought. Sharma’s suspicions were aroused when the caller spelled out the terms of the deal. “Your code has been activated and if you link your existing policies with that code, the accrued bonus will be credited to your account directly. To do that, you have to buy a policy from any company through us,” he went on.
    Sharma was lucky not to fall for the fraudster’s bait. Mumbai-based Ajit Majhi did and got

trapped. In February, he was promised a similar deal by someone posing as an official of an insurance company. “She told me that to claim the bonus amount of 84,000, I would have to take another policy of 25,000 from the company,” he said in an angry complaint to a consumer forum. 

    He bought the policy, but far from getting a bonus, his gullibility encouraged the fraudster to go for a bigger kill. She kept fobbing him off with excuses and then announced that the bonus had been enhanced to 1.85 lakh, but that he would have to buy another policy of 50,000. “I told her I couldn’t afford to buy another policy and asked her to give me only the original bonus amount of 84,000,” Majhi said. 

    The fraudster was not finished with the milking. For the original bonus too he had to buy another policy. “I told her I had no money, but she advised me to borrow from friends and repay them when I get the bonus money,” says Majhi. Eventually, he bought another policy of 25,000 in his wife’s name. 

    By doing so, he only dug a deeper hole for himself. He hasn’t got the money yet because there was no such bonus coming his way in the first place. Now he has two insurance policies he didn’t need. “Paying an annual premium of 50,000 will be a burden for me,” he says. Before Majhi fell into the trap, the fraudster was calling him 6-7 times a day. Now, her phone is constantly switched off. 

    A senior manager in the customer care department of the company says that after the first policy was sold to Majhi, the company made a welcome call and explained the features of the policy in detail. Majhi admits he was told that there was no bonus offer. “When I called the adviser, she told me that customer care would not know about the bonus details and it would be credited to my account shortly,” he says. 

    Insurance companies are now warning their customers not to fall for such frauds.

What should policyholders do?

Don’t go by verbal promises: Never believe an offer till you see it in black and white. Also, make sure that the brochure or table shown to you is authorised by the company. Agents often get promotional material printed with promises of lofty returns. 

Check credentials of agent: Make sure you see the seller in person. Check his identity card and other details. This is a litmus test: if he refuses, he is probably not authorised to sell. 

Don’t buy in a hurry: Anybody who pushes you to buy a policy within a deadline is probably mis-selling. Don’t close the deal in the first or even the second meeting with the broker. Ask for at least 7-10 days to study the plan and compare its features. 

Take a second opinion: Tell the agent you will be discussing the plan with another consultant before deciding. Fraudsters often ask the victim not to discuss the plan with anybody else. 

Use freelook period: If the policy document does not mention the promised benefits, return the policy within the 15-day freelook period. Agents try and buy time till 15 days are over.

Source : ET Wealth – 23/07/2012

OPT FOR FLEXI HOME LOANS AND EARN MORE ON SURPLUS FUNDS

How savings account-linked smart housing loans can take care of your emergency needs as well as bring down your loan liability

Home buyers in India have little say in the interest rates on their loans. A high credit score, healthy repayment record, bigger pay package and so on do not fetch any discount in interest rates. They hinge primarily on the overall interest rate scenario in the economy. That is why products with flexible interest payable are a big innovation in the home loan space. Although they are nowhere as popular as the regular home loans, banks such as SBI, Citibank, Standard Chartered, HSBC, among others, offer loans where the interest payable can be flexible. 

THE WORKINGS 

These products – called flexi or smart loans – come with some variations, but they work like ‘sweep-in, sweep-out’ deposits. Now, such deposit accounts automatically transfer funds that cross the threshold limit in your savings account into a fixed deposit. This helps you take care of your emergency needs and earn higher-than-savings-account return at the same time. ‘Flexi’ home loans use a similar mechanism, although with a slight difference. In this case, your loan is usually linked to a current account. “The loan works like an overdraft account where the interest is charged on the outstanding balance on a daily basis. You have the option of withdrawing the unused amount as per the limit sanctioned,” says VN Kulkarni, chief credit counsellor with the Bank of India-backed Abhay Credit Counselling Centre. “The broad concept used here is that of the weighted average, where your principal outstanding is adjusted for the balance kept in the linked current account,” adds Kapil Narang, COO, Ameriprise India, a financial planning firm. It could especially benefit borrowers who may have bought an under-construction property, with payments made to the builder being linked to the stage of construction. Here, you would be paying relatively small amounts in installments. If you have a flexiloan, you can withdraw funds only to the extent required and thus save on the interest outgo. Remember, however, that features could vary as per the bank you may have chosen. 

COUNT YOUR BENEFITS 

Now, say, you’ve opted for a regular home loan. In this case, your salary would be credited to a savings bank account that will fetch you a return of 4-7%. The amount required for your EMI payment would be transferred to your loan account and the balance would continue to earn the savings bank rate. “In a flexi home loan, the amount lying in your home loan account will be factored in, while interest will be charged only on the outstanding balance on a daily basis. If you have parked your entire salary on the first of the month and have not withdrawn any amount say till the 10th, you will save interest on the loan to that extent,” explains Kulkarni. “In effect, your savings will fetch interest at the rate which you are paying on your home loan. Your return will be around 10.5-11 %, depending on the rate being charged to you. This will enable you to bring down your interest cost and ultimately the repayment period.” This feature could also spur you to use your income judiciously. You can look at parking as much money as you can in the linked current account to reduce the interest burden. Consequently, your total repayment period, too, will shrink sooner. With a regular home loan, on the other hand, a tendency to splurge the amount remaining after paying EMIs sets in. 

WATCH OUT FOR THE PITFALLS 

“The rate of interest is usually higher than that of regular home loans,” points out Madan Mohan, independent loan counselor. “Also, borrowers should enquire about the processing charges on such credit facilities. There could be other services charges, too, which a regular home loan does not levy.” Therefore, study the terms and conditions carefully. This apart, you should go for this facility only if you are sure about making optimum use of its features. Remember, this facility will work to your advantage only if you diligently park your surplus funds into the account regularly.

 

GAUGE ITS SUITABILITY 

Though the concept may seem attractive, it may not fit into the requirements of all borrowers. “The scheme will be best suited for the double income category, where both husband and the wife have a sufficient disposable income,” says Kulkarni. They can make good use of their surplus money, which otherwise would have been parked in lowyielding savings bank account. “It is also suitable for those who earn certain incentives on a regular basis and can afford to park such extra income in a flexi-scheme. Likewise, all those who find that they can pay more than the stipulated EMI every month could also consider such facilities,” he adds.

Source – Preeti Kulkarni - The Economic Times – 20/07/2012

KEEP OFF PERSONAL LOANS - LOOK FOR CHEAPER LOANS

Loan against assets is a cheaper alternative to personal loans that charge you anywhere between 16% and 24%

    A personal loan is the easy way out for many individuals. Stuck with a small mismatch of funds, many people don’t think twice before applying for a personal loan. The money may be used for something big like bridging the gap for a house purchase or unproductive purposes like a vacation or a grand wedding. But the trouble with personal loans is: they are very expensive. Banks charge around 16% to 24% on these loans. That is why it is imperative that you should explore other avenues before settling for a costly personal loan. If you don’t have the option of a soft loan from friends or relatives, you should consider taking a loan against your assets. 

“Asset-backed loans such as loan against securities, loan against gold and loan against property help you cut down the cost of borrowing,” says Madan Mohan, a Mumbai-based independent financial counsellor. A loan against shares is slightly cheaper at around 12.5%, and a loan against property would be available at around 14%. 

LOAN AGAINST PROPERTY 

To begin with, banks offer a percentage of the market value of the asset as loan to you. For example, suppose you are offering your house as a security to the bank. The bank will assess the market value of the house and your loan repayment ability. If the assessed market value of the house stands at . 1 crore, the bank may consider offering a loan of up to . 60 lakh. The bank will also consider factors such as residual life of the property and the maximum tenure it can allow to repay the loan before approving you the loan. If you have bought a house using a home loan, you can still get the additional loan. Banks offer such “top-up” loans to their home loan customers. The maximum loan amount under this product is around 70% of the market value of the property less the outstanding loan and is subject to the current loan eligibility. 

Apart from the lower interest, loan against property also comes with a longer repayment tenure. A bank typically allows a maximum repayment term of five years for personal loans. Loans against property, on the other hand, come with a longer repayment tenure of up to 10 years. Banks also allow higher amount of loan under loan against assets. Personal loans are generally capped at . 20 lakh, but one can get as high as . 5 crore under loan against property. But obtaining loan against property takes time. “A loan against property involves valuation of property, legal and technical checks from bank, which consume some time. If you are in a hurry, opt for loan against movable assets such as gold and shares,” says Harsh Roongta, founder & CEO of Apnapaisa. 

LOAN AGAINST GOLD & SHARES 

Banks offer loans against gold, shares, mutual fund units and insurance policies. In case of loan against gold, you will come across banks offering as high as 70% of the gold value. NBFCs will restrict the loan amount to 60% of the value of gold. For shares and mutual fund units, banks apply a haircut of around 50% of the market value. Most of the banks will allow loans against liquid shares – read “A” group shares. If you have a single-stock portfolio, banks apply higher haircut than for a diversified portfolio. If you offer shares of only one company, banks may apply 60% haircut and you may get a loan of up to only 40% of the market value of these shares. As single stock means higher risk for the lender; so it is better to approach the bank with a diversified share portfolio or mutual fund units. In such cases, one may get up to 50-55% of the market value. 

Even in case of diversified equity portfolio, banks assess weight of each share. If one company’s share has more than 60% weight in the portfolio, the bank may prefer to cap the loan to 40% of the market value. In case of life insurance policies, you can get up to 50% of the surrender value of a policy. That means your term insurance policies with no surrender value are not eligible for loans. 

Interest rate on a loan backed by movable asset, such as gold, is generally lower by around 150 to 200 basis points compared to a loan against property. Also the interest rate depends on the loan to value ratio – the extent of market value of asset that the bank is offering as loan. “If the bank is offering higher loan against the value of the asset, it may charge higher rate of interest too, to compensate for the high risk it takes,” points out Harsh Roongta. Processing fee on a personal loan is generally around 2-3% of the loan value, whereas for a loan against property it stands at around 1%. 

The borrower has to bear the valuation expenses, stamp duty payable toward mortgage and other legal charges too, which are one-time expenses. It is better to think for a while before choosing a loan.

Source – Nikhil Walavalkar - The Economic Times – 28/6/2012

WHAT IS FORM 26AS

What is Form 26AS & how to view it online ?

Form 26AS is a consolidated statement which reflects all the advance tax paid by you personally or through TDS/TCS way. The best part about it is that you can view it online by just quoting your PAN Number. You can view your Form 26AS online or download it in PDF or Excel format, but for that you need to register on the income tax website.

Why do we need Form 26AS ?

We all check our bank accounts when some one deposits money into it . Once we see that the amount is matching, we feel at peace and confirmed that there is no issue . Now in the same way through out the year, we might pay the tax in parts . It can be in form of Advance tax cut by our companies, TDS cut by the bank on your fixed deposits , TDS cut by some third party who is making payment to us . They all pay this tax on our behalf to tax department and it is linked to our PAN card.

Now at the end of the year before filing for tax returns, we might want to check that how much tax is already paid by us through different ways and then we might want to pay additional remaining tax or ask for a refund in case we see that we paid more tax in a year.

An important point to note is, do not disclose your PAN information to someone else , otherwise it becomes a security issue . Others can also view your Form 26AS and hence find out how much tax you paid  .

How to view Form 26AS online ?

1. Go to this website : https://incometaxindiaefiling.gov.in/portal/index.do

2. Register your PAN Card and password (search for REGISTER)

3. Once you are registered , go to Login page (Search for LOGIN)

4. Go to “My Account” section (at the top) and sub section - “View Tax Credit Statement (Form 26AS)”

5. Choose assessment year , date of birth and click SUBMIT

6. It will ask you for confirmation to redirect to NSDL website to view your form 26AS

7. Click on the bottom button which says “View Form 26AS”

8. You can now see your Form 26AS

Direct link to Form 26AS in your netbanking ?

Yes, A lot of banks like ICICI , SBI etc provide a direct link to your form 26AS through internet banking. On clicking the link, You can directly see 26A.

Did you knew this information already ? Would you like to share some of your past experience when you needed form 26AS and how it was useful to you?

Source : www.jagoinvestor.com

NEW RULES OF FILING TAX RETURNS

Several changes have been made in the tax filing rules since last year. Findout what these mean for you.

A week may be a long time in politics, but when it comes to filing tax returns, some people may find that even four weeks aren’t enough. As the deadline forfiling tax returns approaches, thousands of Indians who have worked abroad will be scrambling to gather the information required to be filled in the new tax forms. This year’s budget had proposed that individuals who have assets abroad must file their tax return and mention details of their foreign assets in the forms. “This new requirement is likely to become a big nuisance. Even if you have $10 in a bank account abroad, it has to be reported in the tax form,” says Amarpal S Chadha, tax partner, Ernst & Young.

This is just one of the several changes in the tax filing rules this year. Some of these are minor and may not make a material difference. But most of them are significant and will broaden as well as deepen the information that an individual discloses in the tax returns. For the honest taxpayer, who pays his taxes and has nothing to hide, these changes should not matter. However, he will have to be a lot more disciplined in keeping records of financial transactions.

The new forms are a wake-up call for taxpayers who have not been entirely honest in paying their taxes. Nearly 5% of the respondents in an online survey conducted by ET Wealthlast week said that they have under-reported their income quite a few times. Another 10% said they have done so just once or twice. We believe there is also a large community of innocent offenders who don’t even know that they are falling foul of the tax laws.
    

These taxpayers must realise that Big Brother is watching. Earlier this year, the IT Department announced that nearly 27.5 lakh taxpayers made cash deposits of over 10 lakh in their bank accounts in 2009-10 and 2010-11. More than 6 lakh people purchased or sold property worth over 30 lakh. Over 15 lakh cardholders made payments of over 2 lakh in a year on their credit cards. All this information flows to the IT Department from banks, credit card issuers, property registration authorities, mutual funds and brokers. The department has put about 2.22 crore transactions under the scanner.
    

To ensure that your tax returns are flawless and you don’t end up on the wrong side of the law, ET Wealthreached out to experts to understand the changes in this year’s tax forms. Here is what they had to say.

E-filing for income over 10 lakh
Any individual or Hindu Undivided Family (HUF) with an annual income of 10 lakh and above will now have to compulsorily e-file the income tax return. Till now, only corporates were required to e-file their returns, whereas individuals and HUFs were free to file manual returns. The new rule might seem like a big change, but it actually affects a very thin creamy layer of taxpayers. Only 5.5% of the total 4.2 crore taxpayers have an income of over 10 lakh, and a vast majority of these taxpayers has already taken the e-filing route.
    

The government wants to nudge taxpayers to e-file because it improves tax compliance and reduces its own backoffice workload. It even lessens the chances of mistakes in the tax returns. When returns are filed physically, data entry operators manually feed the information into the system. In the process, they introduce many mistakes in the return, which leads to delays in refunds or, worse, a notice from the tax department.

Declaration of foreign assets
Resident Indians will have to declare foreign assets in their tax returns. The assets covered include bank accounts, immovable property and interest in any company. The taxpayer will have to mention the peak bank balance in his account during the year as well as the total investment in other assets at cost price. Even if you were merely the signing authority for a bank account in a foreign country, it has to be mentioned in the return. The government estimates that Indians have stashed roughly $500 billion in foreign tax havens. By introducing this change, the government intends to track the undisclosed income from these assets.

Details of tax relief claimed
The scrutiny of foreign income does not stop here. If the assessee has claimed relief for taxes paid abroad, he will have to mention details in his return. Till now, a taxpayer merely had to mention the tax relief he was claiming. Now, he will have to mention the name and code of the country visited, income earned, taxes paid, and the tax identification number in the foreign country.
    

Tax filing portal Taxspanner estimates that about 10 lakh employees of IT/ITeS companies have been abroad on projectbased assignments during the past 10-15  years. If these professionals opened bank accounts, invested in stocks or bought assets there, these details will have to be mentioned in their returns. What’s more, they have to file their returns even if they don’t come in the tax net. These will have to be filed online.

Ownership pattern of property
The new reporting requirements have also plugged a big loophole in the way income from property is reported. Till now, a taxpayer had to just mention the property and the income received as rent. Now he will have to disclose the ownership details in the tax return. If the property is jointly owned, the percentage share in the property and the details of the co-owner need to be mentioned. “This also means that the rental income will have to be proportionately divided among the joint owners,” says Ankur Sharma, co-founder and managing director of Taxspanner.com.

Deduction for donations
The taxpayers who have been generous during the year will now also have to be more careful. If they want to claim tax deduction for donations given to organisations, they must provide full details of the recipient. You are required to give the name and address of the organisation, its PAN, amount of donation and the amount eligible for deduction.
Bank details now mandatory

Till now, a taxpayer was required to mention his bank account details only if there was a tax refund due. In the new forms, you have to mention your bank account details even if there is no refund. Give the bank name, your account number and the MICR code.
    

Despite the changes, the basic rules remain the same. If you have some unpaid tax, pay it right away before you file your return. File by the due date to escape penalty. If you miss the 31 July deadline, you can always file by the end of the assessment year. You will, of course, forego some privileges enjoyed by taxpayers who file their returns by due date.
    

For instance, you will not be allowed to carry forward short-term and longterm capital losses (except from house property). This provision can be very helpful, especially if you have lost money in stocks. Also, you will not be eligible to file a revised return if you don’t file by the due date.

Source - BABAR ZAIDI – ET Wealth – 2/7/2012