Finance

Invest in realty through physical or financial mode based on your risk appetite

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Real estate has conventionally been a preferred choice for most Indians. For ages, Indian investors have been investing in physical real estate. However, over the years, real estate funds have emerged strongly, but is largely confined to High Net worth Individuals and family offices, considering the minimum ticket size of Rs 1 crore. Soon investors will have an additional avenue to participate in commercial real estate through Real Estate Investment Trust (REITs).

Physical residential real estate

Real estate, as an investment class, has typically delivered consistent returns to investors. But one must undertake adequate research on parameters like project location (including site visits), its proximity to job corridors, access to social and physical infrastructure and whether it is largely driven by end users. Check on developer credentials in terms of quality and timely delivery through the past track record.

Though the industry is now under a new regulatory regime through RERA (Real Estate Regulation and Development Act), it is still work in progress in many states. One should check if the property is registered under RERA. Once implemented effectively, RERA can be a powerful tool for investors.

Ready-to-move-in properties don’t entail possession risk and what you see is what you get – immediately. In any case, due to the sheer quantum of investment and it being illiquid, investment in this asset class has to be a well-calculated decision. In the current market scenario, there is flexibility in pricing as well as payment schemes, but one must check for any hidden costs.

Real estate investments entail a long-time horizon of at least five years and the investor must be clear on the financial implications of stamp duty, registration, GST (in case of under construction properties), prevalent interest rates, tax benefits on interest paid on home loan, tax implications on selling etc.

Real estate funds:

A relatively new mode of investing is through a managed real estate fund. As these funds invest in multiple projects across geographies, the risk can be diversified vis-à-vis a single property. The minimum investment required to invest in these alternate investment funds is Rs 1 crore with a typical lock in of five to seven years. Before zeroing on any fund, one must evaluate credentials of the fund’s promoters and management, its capability in raising, investing, managing and exiting funds at reasonable returns through their past track record. Evaluation of the fund’s strategy on location, developer partners, project segment – affordable/mid segment housing is as critical. One must evaluate fund managers’ role and control in project execution as active participation ensures timely delivery at optimum cost.

Real Estate Investment Trust (Reits)

Reits that invest in income generating properties like commercial/retail spaces are likely to be soon listed in India. They require a minimum investment of Rs 2 lakh per investor. Reits generate regular dividend income as well as capital gains, on transfer of Reit units on exchanges. Reit’s returns hinge on rental yields and price appreciation of the units, which would depend on demand supply trends in commercial/retail real estate industry.

Thus, there are multiple modes available for investing in real estate today and one should decide on the same basis their risk appetite.

Nisha Shiwani has worked in many companies in various capacities and in her free time loves to express herself through her articles. She is based out of the pink city Jaipur.

Finance

Income Tax exemption may be raised to Rs 5 lakh by Modi government: Report

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The Narendra Modi government is expected to double the income tax exemption limit in the interim Budget, reports have said. This would make income tax-free till Rs 5 lakh per year, up from the present Rs 2.5 lakh exemption. The expected bonanza is being perceived as an effort to shore up the BJP’s support with the middle class just months before the 2019 Lok Sabha election.

The raising of the income tax exemption is expected to be announced by Union Finance Minister when he rises to present the Modi government’s interim Budget, or vote-on-account, on February 1, new agency IANS reported.

It is the practice of the Union government to present a vote-on-account if a general election is around the corner, and leave the final Budget and appropriation process to the next government when it takes charge.

The abolition of the income tax or at least raising exemption slabs significantly has been a key focus on the economic agenda of a number of ideologues and advisors of the BJP. The move could also be seen as a bid by the ruling party to fight back against reports of middle class anger going into the elections.

At present, tax is not applicable on income up to Rs 2.5 lakh per year. Income between Rs 2.5 and Rs 5 lakh is taxed at 5 percent while income between Rs 5 lakh and Rs 10 lakh attracts income tax of 20 percent. All income over Rs 10 lakh is taxed at 30 percent. Individuals over the age of 80 pay tax only on income over Rs 5 lakh per annum.

There is also speculation that the Jaitley may announce a reduction in the top income tax rate from 30 percent to 25 percent.

The government is also in the process of rolling out the new Direct Tax Code, which is an overhaul of the income tax regime that has been in place for over 50 years. The new Direct Tax Code is set to be introduced on February 28.

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Finance

A low credit score can impair a business’s growth

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Most of you would be aware that low credit score has the potential to make credit expensive and even lead to non-availability of loans and other credit facilities. You are probably also aware, of a personal bureau report being different from commercial bureau reports. However, as against this factual difference, personal reports do impact the outcome of business loans as well. Especially when loans are sought by small and medium enterprises. The truth remains that the impaired personal credit history or a low credit score can become a stumbling block in the growth of business.
The business will need funding at all stages. Credit is required right from the start-up stage to growth phases of different magnitude. When people set out on entrepreneurial journey, they may be under the assumption that the business and they are two different entities. But for the lending institution actually both are unanimous. If either of them shows a sign of stress on repayment, the outcome of business can swing in the wrong direction. Truth remains that a financial stress on personal front will affect the enterprise’s finances and vice-versa. That is why personal credit score will have a bearing on business loan applications as well.
Now that we understand the reasons as to why the personal credit score will impact the underwriting decision of a business loan, let us dwell further into the details.
Impact on margins and profits
A low personal credit score score can lead to unfavorable terms on the loan. A higher rate of interest would mean the cost of funds will increase and thus will have a negative impact on margins.
But why should a lower credit score result in getting a higher interest rate or a higher fee being charged. One may ask if the entity and the owner are worthwhile, why should the terms be different from others. Let us understand this from a lending institution’s point of view. The rate of interest is directly proportionate to the risk that is associated with the loan. To clarify even simpler terms: different loan products attract different rates of interest. A home loan and a gold loan come at a much cheaper rate than a personal loan. Both home and gold loan are secured with a collateral, while the personal loan is pure cash with no collateral to fall back upon in the eventuality of a default, hence the rates of interest varies.
Losing out on opportunities
Business is about opportunities. One single deal has the potential to make or break the business. Suppose one is into trading and to be able to materialise a deal that can add to lot of value both in terms of scale and profits, he is needed to invest an amount that requires fund raise. However, on account of the poor personal credit profile, the loan application of business gets declined. The business suffers loss due to losing out on the opportunity.
There are scores of people who want to embark on the entrepreneurial path. The dream of becoming a job creator rather than being in one may just not flag off on account of impaired credit history, in case there is a requirement of funds right at the outset of business.
Hence it becomes highly important to maintaining a good credit score. Unavailability of credit can severely impair the growth prospects of the business.

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Tax on bonds will vary depending on the type, holding period

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Profits made on sale of any investment, which is generally referred to as capital asset under income tax laws, are taxed under the head capital gains. The same is taxed as short-term capital gains (STCG) or long-term capital gains (LTCG) depending on for how long you held the investment.
Under the income tax laws different holding periods are prescribed, ranging from 12 to 36 months, for different classes of assets to qualify as long-term capital asset. In respect of LTCG you are liable to pay tax at concessional rate. You are also entitled to claim exemption if investments are made in certain specified assets.
The holding period requirement for debentures and bonds, for qualifying as long-term capital asset, also varies depending on whether the same are listed or not. Let us understand the taxation aspects of bonds and debentures not only in respect of interest income but also profits on the sale. Both these products are referred to as bonds in this article.
Tax on periodic interest
Generally, you receive interest at periodic intervals or lumpsum at the time of maturity, in case of cumulative bonds. The interest income on bonds becomes taxable under the head “income from other sources”, and you have to pay tax on such income at the slab rate applicable to you.
You have the option to offer the interest income either on receipt basis or on accrual basis. Once you have opted for a particular mode for offering this income for tax, you have to consistently follow it. I would advise you to offer the interest on accrual basis in case of cumulative bonds, so as to avoid exceptionally high liability on receipt of large income on maturity. In case of zero-coupon bonds the difference between issue price and the face value is treated as capital gains, as no coupon rate is specified for such bonds.
Even in case of tax-free bonds, though the interest is tax-free, any appreciation realised at the time of sale or redemption is taxed as capital gains.
Holding period
The tax treatment of profits made on sale or redemption will vary depending on the holding period of such bonds. The profit on sale or redemption are taxed as long term in case holding period is more than 36 months, otherwise it will be taxed as short-term capital gains.
However, bonds which are listed on any stock exchange in India are treated as long-term asset, if they are held for more than 12 months. But in case of other assets this requirement is 36 months. So for listed bonds you can avail the benefits of LTCG even if sold after 12 months, but have wait for 36 months to avail the same benefits available for LTCG gains for other bonds.
Tax rates
STCG on sale of any bond, is treated like your regular income and is taxed at the rate applicable to you, which varies between 5 and 30% and surcharge and cess. You are also entitled to avail the deduction under Section 80 C, etc, in respect of such gains, which is not available for LTCG.
For sale of these bonds, after 12 months in case of listed and after 36 months for others, you have to pay tax at flat rate of 20% (cess and surcharge extra) irrespective of quantum of amount of such LTCG.
Moreover, the method to compute short-term gains and long-term capital gains also vary. Short-term capital gains are computed simply by subtracting the cost of acquisition of such bonds from the sale/redemption price. However, for bonds which are treated as long-term capital assets, you are entitled to enhance your cost of acquisition by a cost inflation index notified by the government with reference to the year in which the same were acquired. This benefit, called indexation benefit, is available for only Capital Indexed Bonds issued by the government and Sovereign Gold Bonds issued by the Reserve Bank of India.
Likewise, any appreciation in the redemption value of rupee denominated bonds issued by an Indian company, on account of exchange rate difference, is exempt and is not taxed. In case of listed bonds you have the option to pay tax at 10% of the capital gains. The option to pay 10% tax instead of 20% is not is not available for zero-coupon bonds even if listed.
Tax exemptions
You have the option either to pay tax on LTCG or avail exemption from payment of such gains by investing the net sale proceeds in buying a residential house subject to fulfilment of certain conditions. This exemption, available under Section 54F, will be useful to you where the amount of sale/redemption proceeds, as well as capital gains, are substantial enough to justify huge an investment in a house.

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Cashless treatment is most sought after insurance benefit

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The demand for health insurance is increasing on account of the rise in lifestyle diseases and the growing health care cost, said a study by GOQii, a tech-enabled healthcare platform.
According to the GOQii IndiFit Report 2019, titled “Insurance: An Investment in Health’, 85% of people believe they should get health insurance before the age of 30. Of those surveyed, 90% of people believe healthier people should get a lower insurance premium and 70% are willing to share health data with insurance companies to get a discount on premiums.
“Overall trust in the healthcare system has deteriorated further with 96.5% of people not trusting the system, with 67.8% of Indians not trusting hospitals. To add to this, the rising cost of healthcare has prompted Indians to focus more on health insurance. 62.8% of Indians believe having a health insurance policy is an absolute necessity and approximately,’’ the report said.
The report is a year-long study of more than 7 lakh GQii users. According to the report, despite increasing awareness about the importance and need for an insurance policy, 20% of the respondents don’t own an insurance policy. “The common notion that continues to prevail is that insurance is confusing to understand, a prime reason that discourages people from buying one. The high cost of insurance also deters them,’’ the report said.
Respondents strongly believed cashless hospitalisation (87.9%) is the most sought-after health insurance benefit followed by medical bills reimbursement facility (67.7%) and better treatment in best hospitals (59.0%), the report said.
Among the reasons people look at while buying a particular health insurance policy were good quality hospital network – 42.3% and easy claim procedures – 41.9%. Low cost, good coverage and benefits, simple terms and conditions are some of the other convincing factors for people to buy health insurance.
The report also said that 38.3% people between the age group of 20-45 years suffer from at least one lifestyle disease ranging from diabetes, blood pressure, cardiac issues to thyroid, and acidity.
There has been an increase of lifestyle diseases in the last two years. Cases of cholesterol among people have increased from 10.1% to 14.1%, high blood pressure has increased from 9% to 12%, the GOQii report said.

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Finance

Tax on bonds will vary depending on the type, holding period

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Profits made on sale of any investment, which is generally referred to as capital asset under income tax laws, are taxed under the head capital gains. The same is taxed as short-term capital gains (STCG) or long-term capital gains (LTCG) depending on for how long you held the investment.

Under the income tax laws different holding periods are prescribed, ranging from 12 to 36 months, for different classes of assets to qualify as long-term capital asset. In respect of LTCG you are liable to pay tax at concessional rate. You are also entitled to claim exemption if investments are made in certain specified assets.

The holding period requirement for debentures and bonds, for qualifying as long-term capital asset, also varies depending on whether the same are listed or not. Let us understand the taxation aspects of bonds and debentures not only in respect of interest income but also profits on the sale. Both these products are referred to as bonds in this article.

 Tax on periodic interest

Generally, you receive interest at periodic intervals or lumpsum at the time of maturity, in case of cumulative bonds. The interest income on bonds becomes taxable under the head “income from other sources”, and you have to pay tax on such income at the slab rate applicable to you.

You have the option to offer the interest income either on receipt basis or on accrual basis. Once you have opted for a particular mode for offering this income for tax, you have to consistently follow it. I would advise you to offer the interest on accrual basis in case of cumulative bonds, so as to avoid exceptionally high liability on receipt of large income on maturity. In case of zero-coupon bonds the difference between issue price and the face value is treated as capital gains, as no coupon rate is specified for such bonds.

Even in case of tax-free bonds, though the interest is tax-free, any appreciation realised at the time of sale or redemption is taxed as capital gains.

Holding period

The tax treatment of profits made on sale or redemption will vary depending on the holding period of such bonds. The profit on sale or redemption are taxed as long term in case holding period is more than 36 months, otherwise it will be taxed as short-term capital gains.

However, bonds which are listed on any stock exchange in India are treated as long-term asset, if they are held for more than 12 months. But in case of other assets this requirement is 36 months. So for listed bonds you can avail the benefits of LTCG even if sold after 12 months, but have wait for 36 months to avail the same benefits available for LTCG gains for other bonds.

Tax rates

STCG on sale of any bond, is treated like your regular income and is taxed at the rate applicable to you, which varies between 5 and 30% and surcharge and cess. You are also entitled to avail the deduction under Section 80 C, etc, in respect of such gains, which is not available for LTCG.

For sale of these bonds, after 12 months in case of listed and after 36 months for others, you have to pay tax at flat rate of 20% (cess and surcharge extra) irrespective of quantum of amount of such LTCG.

Moreover, the method to compute short-term gains and long-term capital gains also vary. Short-term capital gains are computed simply by subtracting the cost of acquisition of such bonds from the sale/redemption price. However, for bonds which are treated as long-term capital assets, you are entitled to enhance your cost of acquisition by a cost inflation index notified by the government with reference to the year in which the same were acquired. This benefit, called indexation benefit, is available for only Capital Indexed Bonds issued by the government and Sovereign Gold Bonds issued by the Reserve Bank of India.

Likewise, any appreciation in the redemption value of rupee denominated bonds issued by an Indian company, on account of exchange rate difference, is exempt and is not taxed. In case of listed bonds you have the option to pay tax at 10% of the capital gains. The option to pay 10% tax instead of 20% is not is not available for zero-coupon bonds even if listed.

Tax exemptions

You have the option either to pay tax on LTCG or avail exemption from payment of such gains by investing the net sale proceeds in buying a residential house subject to fulfilment of certain conditions. This exemption, available under Section 54F, will be useful to you where the amount of sale/redemption proceeds, as well as capital gains, are substantial enough to justify huge an investment in a house.

 

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Finance

Buy low sell high through Smart SIPs, dynamic funds

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Investing is all about making profits. Investors need to buy low and sell high. The purpose of this idea is defeated during times when stock markets are expensive and high. Since the amount of Systematic Investment Plan (SIP) in a mutual fund is fixed, the mutual fund SIP keeps on buying high. As a result, your average investment cost may rise higher with each passing month that the market inches up. This problem of ‘buying high’ can be addressed in two ways. One is ‘Smart SIP’, which dynamically adjusts to market conditions every month. So, if equities are expensive, only a small portion of SIP is invested in equity funds and the rest goes into debt/fixed income schemes. The second way is by investing in a dynamic asset allocation fund, where the proportion invested in equity, equity-linked derivatives, and debt is managed actively so that investment in equity is more when prices are low but investment in equity is reduced if the market gets expensive. Dynamic asset allocation funds are offered by fund-houses. Smart SIPs are offered by fund distributors and brokerages. Which one should you choose? DNA Money helps you take an informed decision.

SIPs turning smart

Fund distributors and brokerages have tied up with specific mutual fund companies for their own version of Smart SIPs. These SIP variants, with a minimum monthly amount of Rs 5,000, aim to do the same thing – buy less of equity fund units when markets are high. Invest the rest in debt. When markets fall, buy more equity fund units. In this way, chances of getting better returns are enhanced.

For instance, FundsIndia’s ‘SmartSIP’ in association with Franklin Templeton AMC invests in an equity fund and a debt fund, from the Franklin India stable, every month. By default, the equity fund’s allocation would be 70% and the debt fund would receive 30%. However, allocation to the equity fund and the debt fund will dynamically change every month based on both market fundamentals and momentum factors. In this way, there is no disturbance to the investor’s monthly savings. There is also no need to increase the SIP amount or reduce it. Money from SIP installments is deployed in the equity and debt markets after taking into account the current market variables such as valuations, momentum, market sentiments etc.

R

Wadiwala Securities also has a ‘Smart SIP’. It uses PE (Price to Earnings) ratio of index as the indicator of market valuation. When market/index are quoting at more than 19-20 times its earnings, the Smart SIP puts new money of investors into debt. Money invested in debt is waiting to be switched to equities. When market valuations are extremely high, it will switch the complete investment from equity to debt. This money will be moved back to equity when valuations turn attractive. The broking house’s website shows that this Smart SIP facility uses funds from HDFC MF.

According to Srikanth Meenakshi, co-founder and COO, FundsIndia.com, the primary advantage is that SmartSIP has the potential to return higher. “In our back-test analysis over the past 10 years, SmartSIP has given up to 2.6% higher CAGR than a regular 70:30 (equity:debt) SIP. On an average, the outperformance has been 1.6% CAGR,” he says.

From the customer’s perspective, this behaves exactly like a regular SIP – a fixed amount of money gets debited from the bank account and gets invested in a portfolio of funds. “There is no new learning or understanding required from the customer to get going with SmartSIP. All decisions regarding monthly allocation are made by experts taking into account the situation in the equity market. The monthly allocation is transparently disclosed to the investor prior to every SIP installment, including the reasoning that went into deciding the allocation,” says Meenakshi.

Dynamic funds

Dynamic Asset Allocation or Balanced Advantage Funds invest in a mix of equity, equity-related instruments and fixed income securities without any upper cap or lower limit on their exposure to such asset classes. “These funds are free to dynamically change their exposure to various asset classes from 0-100% of their total portfolio on the basis of their in-house quantitative models, which typically have underlying valuations as the variable,” says Naveen Kukreja – CEO& Co-founder, Paisabazaar.com.

These funds can also hedge their equity exposure through positions in equity derivatives to reduce the risk to their equity portfolio and qualify as equity funds for taxation purposes.

So, if you invest in a dynamic asset allocation fund, you don’t need to worry about two funds – one equity fund and a debt fund. Also, dynamic asset allocation funds are different from other hybrid funds. Other asset allocation funds like balanced funds, monthly income plans, etc, come with a pre-set percentage range of allocation for various asset classes. “These funds too can change their portfolio asset allocation depending on various market factors, but only within their pre-set asset allocation ranges determined by the Sebi’s fund categorisation regulations,” points out Kukreja.

Smart SIP vs dynamic funds

While Smart SIPs and Dynamic Asset Allocation funds aim to do the same thing, there are some differences. “The allocation of investors’ money is fully disclosed every month in a transparent manner with SmartSIP. Not so the case with dynamic funds,” says Meenakshi.

The second difference is that in case of dynamic funds, the asset allocation and investment decisions are taken by the MF management team. “In case of these SIP variants, the asset allocation decision appears to be taken by the MF distributor or brokers’ team. They rely on some in-house model to decide how much of equity and how much of debt every month. Of course, once it is decided how much goes into equity and how much goes into debt, the money will be invested in schemes with good fund managers,” says Rajesh Sharma, an investment expert.

The third difference is that though dynamic asset allocation funds are free to dynamically change their exposure to various asset classes from 0-100%, the funds rarely go for 0% equity. Technically, Smart SIPs can go much higher or much lower depending on market conditions, giving them the real power to be dynamic.

Doing dynamic asset allocation on your own

What are the problems if someone does the job of dynamically changing asset allocation on their own? It would require constant observation of changing market trends and valuations and appropriate changes to the investment portfolio. As this requires knowledge and skill-sets that most individual investors may lack, poor market interpretation and wrong decisions may increase the risk of loss and missed opportunities.

Frequent portfolio rebalancing may also increase your investment cost through exit loads and short-term capital gains tax. Thus, dynamic asset allocation funds save individual investors from the complicated task of asset allocation and help reduce the cost associated with the frequent rebalancing of the portfolio,” says Kukreja.

SPREAD YOUR RISKS

  • By default FundsIndia’s SmartSIP invests 70% in equity fund and 30% in debt fund
  • Dynamic asset allocation funds change their exposure to various classes from 0-100% based on quantitative models
  • R Wadiwala’s Smart SIP puts new money into debt when market/index are quoting at more than 19-20 times it earnings

 

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Business

GST Coucil meet on January 10: Home buyers, small businesses likely to get huge relief

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The GST Council in its 32nd meeting on Thursday could provide huge relief to MSMEs and small business. Favourable announcements for the service sector is also expected. Sources told Zee Media Breau that the council might increase the threashold limit of Rs 20 lkah to Rs 50 lakh.
The increased limit would benefit small businesses and micro-small and medium enterprises (MSMEs) with turnover Rs 20-50 lakh.
Besides, the GoM could also allowed disaster management cess for Kerala. The GoM has proposed 1% tax for initial two years.
Home buyers and real estate sector could also get massive boost in the GST Council meet tomorrow.
According to sources, sin googs can attract more tax, however, not all states are on the same page over this.
The GST Council in its meeting on January 10 will discuss the recommendations of the two ministerial panels.
The council, in its previous meeting on December 22, 2018, had rationalised the 28 per cent tax slab and reduced rates on 23 goods and services.
Briefing reporters after the recent council meeting, Jaitley had said that the next meeting would consider rationalisation of tax rates on residential properties and raising the threshold limit for MSMEs from the current Rs 20 lakh.
Also, the council would consider a composition scheme for small suppliers, apart from discussing levying a calamity cess as well as GST rates on the lottery.
The GST Council is likely to consider lowering GST on under-construction flats and houses to 5 per cent, PTI reported.
Currently, the Goods and Services Tax (GST) is levied at 12 per cent on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
However, GST is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale.

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Business

Insurer may ask for basic income documents for high value coverage

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While buying a life insurance policy do I have to show the rental income from my property along with my salary income as proof? – Parag Keswani

Insurance is a contract of utmost good faith. Hence most of the companies allow issuance of insurance coverage basis declaration (for example income, health, etc) and KYC documents. No income documents are required up to specified sum assured. This cut-off will vary with every insurer, basis their sourcing experience. However, for high value coverage, companies do ask for basic income documents and for a salaried individual, if there is an additional income in form of rent, the same would reflect in his ITRs. Companies do not insist on additional documents. However, its always prudent for insured to provide every disclosure, as appropriate.

I have a pension policy purchased more than 15 years ago. I pay Rs 10,000 premium every year. After retirement it will give me very little pension every month. Should I discontinue it? – Prema Ravichandran

Considering you have been invested for over 15 years, it would be advisable to continue paying premiums to fully avail the benefits of the plan including the tax perk. If you choose to discontinue, the cash value will be lower than the corpus you are likely to receive at the end of the policy tenure. As this is a pension plan, the amount received at the end of the tenure needs to be utilised purchasing annuities only. Also, I would refer you to your insurer to understand the complete details of the product as the returns on the plan would vary at maturity based on whether it is a market-linked or traditional pension plan.

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7th pay commission: Good news for these employees, details inside

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7th pay commission: With the arrival of 2019, good news came for the employees of these states. Amidst the central government employees ‘demand of rise in salary and change in fitment factor, government staff of this state will now get a dearness allowance (DA) at 125 per cent of their basic salary.
West Bengal Chief Minister Mamata Banerjee on Thursday announced that the government employees of the state will get DA at 125 per cent of their basic pay from this month, while assuring the employees of clearing all the dues by January.
The decision to pay DA at 125 per cent from January was taken by the West Bengal government in June 2018, a leader of the West Bengal State Coordination Committee informed PTI on Thursday.
Earlier in December, the government of Maharashtra has decided to implement 7th Pay Commission recommendation in giving salary to employees. This was a long standing demand of employees and there have been several stand-offs between the government and employees.
Earlier, 17 lakh employees in Maharshtra went on a 3-day strike, demanding a pay hike and the earliest implementation of the seventh pay recommendations. However, it should be noted that around 1.5 lakh gazetted officers withdrew from the strike after a Government Resolution (GR) was issued stating that the pending arrears of the Dearness Allowance (DA) for a period of 14 months will be paid to them.
The decision is significant as next year is very important for Maharashtra politically. Not only there is Lok Sabha polls but assembly polls are also slated to be held later in the year.

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Here are the new features EPFO is likely to introduce in 2019

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Subscribers of the retirement fund body EPFO may get an option in the new year to invest more of their savings in equity market, besides a host of other social security benefits and digital tools to manage their funds.
At present, the Employees’ Provident Fund Organisation (EPFO) invests up to 15 per cent of its investible deposits into the exchange traded funds (ETFs) and so far such investments total about Rs 55,000 crore.However, the ETF investments do not reflect in members’ account and they do not have an option to increase the proportion of their retirement savings to be invested into stocks.The EEFO is now developing a software that would help show retirement savings in cash and ETFs components separately.
At present the account only shows the savings as gross cash component. Once the cash and ETF components are shown separately in the EPF accounts, the next big leap for the EPFO would be to give an option to subscribers to increase or decrease investments in stocks. Earlier this year, the EPFO’s apex decision making body, the Central Board of Trustees (CBT), had suggested exploring possibility of giving such options.
Labour Minister Santosh Gangwar who is also Chairman of the CBT told PTI, “By introducing numerous digital tools, the service levels for workers as well as employers have been eased a lot.” “By way of supplementing the employer’s share of contribution at the rate of 12 per cent, a good number of approximately 90 lakh new employees are extended the benefit of social security net through the EPFO,” he said. Under Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), the Government of India is now paying full employer’s contribution (EPF and EPS both) with effect from April 1, 2018 for a period of three years to the new employees as well as to the existing beneficiaries for their remaining period of three years.

In 2018, a pensioners’ portal was also launched through which all EPFO pensioners can get details of pension-related information.The EPFO presently covers 190 industries (mentioned in the schedule 1 of the EPF Act) with over 20 crore accounts in over 11.3 lakh covered establishments.For the EPFO’s 63.2 lakh pensioners, 55.3 lakh Jeevan Praman have been received as on October 29, 2018 and 49.4 lakh have been approved.

 

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