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Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.
The best time to start investing is today You are different and so are your needs Why your returns are not the same as the market’s return? Understanding Taxation in Mutual Fund Investments
There is a misconception among some salaried individuals that because the employer has deduced tax at source, they are not required to file tax returns. Even though tax has been deduced and there is no other source of income, or liability to pay tax, employees have to file income tax returns. Every individual has to necessarily file the income-tax returns if the total income, before allowing any deduction, exceeds the exemption limit.

It’s the tax season. Here are a few tips to ensure an error free tax filing process.

File your returns

There is a misconception among some salaried individuals that because the employer has deduced tax at source, they are not required to file tax returns. Even though tax has been deduced and there is no other source of income, or liability to pay tax, employees have to file income tax returns. Every individual has to necessarily file the income-tax returns if the total income, before allowing any deduction, exceeds the exemption limit.

Even if your income is below the exemption limit, which is bound to happen at the beginning of one’s career, filing income tax returns will help in the documentation process if you are taking a loan or an insurance policy or when you are applying for a visa.

Pick the correct form

There are eight Indian Income Tax Return (ITR) forms. Depending on the various streams of income you earn, you have to select the return form accordingly. E.g. If you have income from salary, pension and interest income, then ITR-1 is the form for you. If you have capital gains or rental income or you’re paying off a home loan in addition to interest income and salary income, then you need to fill ITR-2. Make sure you select an appropriate form after taking into consideration, the flow of income from various streams.

Disclose exempt income

Income such as dividend received on mutual funds, long term capital gain on securities is exempt from tax. However, tax laws require you to report the same in your tax returns even though you do not have to pay any tax on them.

Annual Information Return

While filing income tax returns, it is essential to disclose any significant investments made during the year, transactions of immoveable property, cash deposits and credit card expenses aggregating or exceeding certain threshold limits. E.g. Credit card payments of Rs 2 lakh or more on a credit card, purchase of shares of a company of Rs 1 lakh or more, and purchase of units of mutual funds of Rs 2 lakh or more etc.

Consider income received by a minor child

A minor is not required to file a separate income tax return. However, the income earned has to be included in the returns filed by the parents although the amount may be negligible e.g. interest on savings in the bank account.

Avoid omission of interest received on bank account

Section 80L has been omitted from the statute effective April 1, 2006, and therefore, any interest earned from a bank deposit is taxable in the hands of the taxpayer. Hence interest received on the balance in your savings account is taxable. Make sure you take it into consideration while filing returns to ensure avoidable correspondence with the tax authorities.

Submit ITR-V in time (online filing)

After having filed returns online without a digital signature, it is mandatory to submit the ITR-V form generated, to the income tax officials, within 30 days of filing the returns else your return filing date will be postponed to date of submission of ITR-V rather than date of uploading the return. In effect it means that unless the ITR-V has been submitted, uploading your returns online will be treated as equal to non filing of returns.

Specify accurate bank details

The bank account number and the MICR code provided should be accurate so as to receive refunds without any hassles. In case of an error, you will have to submit a cancelled cheque showing correct particulars.

File returns on time

This can prove to be costly for the tax payer who has incurred losses and wants to carry it forward to the future years (short term capital loss, house property loss etc.). Under the tax laws, if returns are filed after the due date, losses cannot be carried forward for being set-off against the income in future years. Therefore, it is essential to file returns within the stipulated time frame.

Income tax authorities maintain that returns can be furnished at any time before the expiry of two years from the end of the financial year in which the income was earned. So for the income earned during financial year 2018-19, the delayed return can be filed before March 31, 2020. However, if you have tax outstanding and you do not pay your tax, then a simple interest will be charged on the amount that is outstanding.

Filing tax returns is a task we know is compulsory and has to be done on time, yet we tend to procrastinate and wait till the last moment. As a result, in a hurry you might tend to forget to disclose some items which may prove to be an invitation to the tax authorities to get after you. To protect yourself from coming under the scanner of the tax man, do your bit by ensuring there are no mistakes while filing tax returns.
When considering a life insurance policy with riders, make sure to understand the exclusions in the policy. For example, under Term Insurance, if the insured person commits suicide, whether sane or insane, within one year from the date of commencement of a term policy, the cover will become void, i.e. the nominee cannot claim the sum assured. Only the premiums paid up to the date of death will be refunded; after deducting the expenses incurred by the insurer for issuing the cover.

Before we get into the whys of life insurance, here’s a brief overview:

Types of Insurance

There are four types of insurance: Life, Fire, Marine and Miscellaneous Insurance. Life insurance is treated separately, while Fire, Marine and Miscellaneous insurance all fall within the General Insurance umbrella.

What is Life Insurance?

Life insurance is a policy that may be bought from a life insurance company, which helps beneficiaries financially after the owner of the policy dies. It is a contract between the policy owner (you) and the insurer (the life insurance company), which assures the paying out of a sum of money in the event of the policy holder’s death, or terminal or critical illness. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, and war. The cost or premium on your life insurance decides the type and kind of coverage you get under a life insurance plan.

Life Insurance can also be a form of savings in the long run, which we will discuss shortly, or it can be tied in with a pension plan. Life insurance can provide security, protect home mortgages, and facilitate other retirement savings.

Life Insurance in India

The Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999, have made life insurance in India a federal matter. Therefore, all life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA), irrespective of whether they are state-owned (Life Insurance Corporation of India) or private (ICICI Prudential Life Insurance, Bajaj Allianz Life Insurance Company).

Types of Life Insurance

Taking out a life insurance policy covers the risk of dying early, by providing for your family in the event of your death. It also manages the risk of retirement – providing an income for you in non-earning years. Choosing the right policy type with the coverage that is right for you therefore becomes critical.

There are a variety of policies available in the market, ranging from Term Endowment and Whole Life Insurance, to Money Back Policies, ULIPs, and Pension plans. Let’s see what each of these is about, so that you can consider the one that best suits you.

Term Insurance

Term Insurance, as the name implies, is for a specific period, and has the lowest possible premium among all insurance plans. You can select the length of the term for which you would like coverage, up to 35 years. Payments are fixed and do not increase during your term period. In case of an untimely death, your dependents will receive the benefit amount specified in the term life insurance agreement.

You can customise Term life insurance with the addition of riders, such as Child, Waiver of Premium, or Accidental Death.

Endowment Insurance

Endowment Insurance is ideal if you have a short career path, and hope to enjoy the benefits of the plan (the original sum and the accumulated bonus) in your life time. Endowment plans are especially useful when you retire; by buying an annuity policy with the sum received, it generates a monthly pension for the rest of your life.

Whole Life Insurance

Whole Life Policies have no fixed end date for the policy; only the death benefit exists and is paid to the named beneficiary. The policy holder is not entitled to any money during his or her own lifetime, i.e., there is no survival benefit. This plan is ideal in the case of leaving behind an estate. Primary advantages of Whole Life Insurance are guaranteed death benefits, guaranteed cash values, and fixed and known annual premiums.

Money-Back Plan

In a Money-Back plan, you regularly receive a percentage of the sum assured during the lifetime of the policy. Money-Back plans are ideal for those who are looking for a product that provides both – insurance cover and savings. It creates a long-term savings opportunity with a reasonable rate of return, especially since the payout is considered exempt from tax except under specified situations.

ULIP

Unit-linked Insurance Plans (ULIPs), introduced by the private players, are hugely popular, because they combine the benefits of life insurance policies with mutual funds. A certain part of the premium is invested in listed equities/debt funds/bonds, and the balance is used to provide for life insurance and fund management expenses.

Pension Plan

Insurance companies offer two kinds of pension plans – endowment and unit linked. Endowment plans invest in fixed income products, so the rates of return are very low. Unit-linked plans are more flexible. You can stop contributing after 10 years and the fund will keep compounding your corpus till the vesting date. You can opt for higher exposure in the stock market for your plan if your risk appetite allows it. Lower risk options like balanced funds are also offered.

Riders: Comprehensive coverage

In addition to the insurance plan of your choice, you might want to consider additional risk covers, in which case you can you can opt for riders: additional benefits that can be purchased with an insurance policy. Examples of riders include the Term rider, the Accidental Death Benefit rider, and the Critical Illness rider. Choosing the right set of riders ensures a comprehensive insurance cover.

When considering a life insurance policy with riders, make sure to understand the exclusions in the policy. For example, under Term Insurance, if the insured person commits suicide, whether sane or insane, within one year from the date of commencement of a term policy, the cover will become void, i.e. the nominee cannot claim the sum assured. Only the premiums paid up to the date of death will be refunded; after deducting the expenses incurred by the insurer for issuing the cover.

As important as it is to buy Life Insurance, it is even more important to pay your premiums on time. A life insurance company provides the insured with a grace period of 30 days i.e. a period of 30 days after the start date of the policy. The insured can pay premium on any day during this grace period. In case the insured dies during the grace period, the insurer is liable to pay the death benefit to the nominee less any amount outstanding (including the unpaid premium). This provision helps the insurer to minimise the risk of policy lapse unintentionally.

In these uncertain times, you’re better off planning ahead, and securing the future for yourself, and your family. Arm yourself with the facts for an assurance of a lifetime of security.

Remember it is not a wise thing to keep applying for a loan without any rhyme or reason. If your loan application gets rejected, this is also recorded in your CIBIL record. So weigh the pros and cons before you apply for a loan simultaneously to different banks. Wait till you receive an offer before you apply to another bank. This will give you a chance to rectify errors or update your credit record in case there is an issue with it before you approach another lender.

When you apply for a loan, banks judge your ability to repay the loan on various counts including your age, income, job stability and primarily based on your credit report - which is a reflection of your true credit worth. Here are some reasons you need to watch out for and guard yourself against to obtain a loan without any hassles.

1.Your residential address is on the defaulter list!
If you live under the same roof as someone who has slipped up on a loan payment or credit card dues and hence been reported to CIBIL, then the probability of your loan application to be rejected is likely to be high. The reason being your residential address will find a match with the one on the defaulters list.

2.Poor track record of credit card or loan repayments
You have been accumulating credit card dues over the years resulting in a huge pending payment, which is well past the due date. Or it could be that you have slipped up on a few EMIs. In these instances, your name would have been reported to CIBIL. When a bank looks up your credit card or loan repayment track record – it would have a strong reason to reject your loan. Also, telephone bills and insurance premiums are likely to join this list, so do keep a strict vigil on all your bill and credit repayments.

3.Too many previous loans and too little income
If you are juggling too many loans already, then your income minus the ongoing credit repayments is what will be considered as your real income. If another loan is likely to cause a severe strain on this income or make it unlikely for you to be able to repay effectively, then your loan will be rejected.

4.Loan guarantor to someone who didn’t pay up!
When you sign the dotted line to be someone’s loan guarantor do exercise a lot of caution. You must make sure the applicant you are vouching for has the ability to repay the loan without hassles. Unless and until you have strong reasons to believe so, do not rush to sign for them as if they fail to repay for any reason you will be accountable to repay the loan on their behalf. In such circumstances, where you have been unable to repay their loan, you will be reported to CIBIL and this will reflect in a bad credit report.

5.Co-applicant has a poor CIBIL record
It is important for all the loan applicants to have a good credit repayment record. If you have a clean record but your co-applicant has a credit card issue reported for instance, then your loan application may not be considered.

6.You are a compulsive impulsive job hopper
Banks place a lot of importance on job stability and certain banks even insist that an applicant needs to be employed with a particular concern for three years or more to be eligible for a home loan. Also, in instances where a reputed company’s future appears unstable, the bank can reserve its right to provide a loan to the applicant from that company.

7. You want a joint loan with your sister or friends
Though some banks might consider providing a joint loan to brothers who are co-applicants, banks as a rule don’t provide loans to sisters or a brother and sister or friends, who wish to be co-applicants. However, you can choose to opt for your parents as co-applicants for the loan.

8. Your loan application has been rejected before!
Remember it is not a wise thing to keep applying for a loan without any rhyme or reason. If your loan application gets rejected, this is also recorded in your CIBIL record. So weigh the pros and cons before you apply for a loan simultaneously to different banks. Wait till you receive an offer before you apply to another bank. This will give you a chance to rectify errors or update your credit record in case there is an issue with it before you approach another lender.

Here are some pointers to be prepared for your loan before you apply for it:

a.Gauge your repayment ability. Calculate your net worth and evaluate if you are ready for a loan commitment.
b.Get a copy of your credit report from CIBIL and other bureaus, where your records can be found. Analyze them and figure out if there are any concerns in the report, which needs to be addressed. For instance if you have paid all your credit card dues but this is not reflected in your CIBIL record, then you need to approach the bank in question and get proof for the repayment. You will then need to submit the proof to CIBIL and get the information updated.
c.Ensure you have back up funds to pay your EMI for a bunch of months, for emergencies like a job loss etc.
d.Make as much down payment as possible and prepare well ahead to close the loan as quickly as you can, to continue a good repayment track record. Moreover closing off a debt when possible, will free up your resources for other uses or even for a new loan if the need arises.

How to select the best Mediclaim policy for yourself and your family?

Today, health insurance is becoming a necessity and one should look at it as an essential investment for the well being of self and family. Mediclaim policies are extremely important to protect against huge medical expenditure when one is ill.

Why should you take health insurance?

Heath-insurance the average life span of an individual has increased considerably in India due to better health conditions, awareness about one’s well being and improved medical facilities. At the same time, the medical costs of treatment and surgery have increased a lot. Therefore, medical insurance makes complete sense, especially where majority of the family members are dependent on one or two earning members, as is generally the case in an average Indian household.

Types of Mediclaim policies

Medical insurance policies entitle you and your family members covered under the policy to take advantage of the high cover in times of medical emergencies.

There are 2 options available in the case of mediclaim policies:

1. Floater policy where the maximum sum assured allowed for all members of the policy in a year is fixed

2. Individual policies where each member can take cover up to the same limit in a year.

Individual policies are more expensive than the floater policies, so depending on the need, one can choose the option that suits his/her need the best. An additional advantage of individual policies is the no-claim bonus declared for every claim free year of the policy. Although the maximum cover that can be taken through an insurance company by an individual is fixed, you are allowed to take multiple policies with different insurance companies with a maximum cover is fixed per policy. In times of claim, the amount required will be split proportionately between all the insurance companies.

Which policy is good for you?

If you are young and just starting a family, then it is recommend that you choose an individual policy with a lower sum assured of Rs. 2.5 to 3 lakhs for all members of the family. If you have dependant parents under the age of 60, it would be advisable to cover them as well. Depending on affordability, you can either take individual policies or a floater policy to provide medical insurance for them.

Medical checkups and illness covered

Health insurance companies in India Most mediclaim policies do not have medical check-ups for individuals under the age of 45/ 50. They also have a set time period, which could be anywhere between 2 to 4 years, within which pre-existing illnesses are not covered. Dental and illnesses relating to pregnancy are not covered by majority of the health insurance policies. It is also advisable to go through the policy specifics to learn what payouts can be expected from the policy in case of different illnesses and medical procedures.

Role of an advisor

What is equally important while taking a health insurance policy is having a good advisor. Like other insurance policies, medical insurance requires good amount of policy servicing, especially while making a claim.

Cashless Claim

Many insurance companies now provide cashless medical claim facilities wherein the individual can get the treatment done in specified hospitals without any making any direct payment. The payment is made directly to the hospital by the insurance company, subject to the terms and conditions of the medical insurance policy. Even though there is sufficient paper work involved in the process, it helps in times of urgent need to know that such facilities exist and can be called upon.

Insurance companies now provide market linked health insurance policies as well. These are a combination of mediclaim and investment and work similar to unit linked life insurance policies.

Income Tax Benefits

Health insurance India Payment made for medical insurance can help save tax under Sec 80D of the Income Tax Act. As per section 80D of the Act, a deduction can be claimed by an individual in respect of the medical insurance premium paid up to Rs 15,000 for himself and his spouse and dependent children. Additionally, he can also claim deduction for the medical insurance premium up to Rs 15,000 for his parent(s). Further, the aforesaid deductions are increased up to Rs 20,000 in case the premium is paid for senior citizen (65 years or more). It is, however, important to note that the medical insurance premium should not be paid by cash to avail this tax benefit.

As important as it is to insure one’s life to protect your loved ones, it is of equal importance to insure you and your family members from the rising future medical expenses. So whatever might be your earning, status of health, age or level of employment, go get a medical and health insurance plan for you and your family members.
Please mark all your queries / responses to
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.