Tax authority (CBDT) extends deadline for filing Income Tax returns by 31 August

Tax authority (CBDT) extends deadline for filing Income Tax returns by 31 August

The Central Board of Direct Taxes (CBDT) has extended the due date for filing of Income Tax Returns from July 31, 2018, to August 31, 2018, for certain categories of taxpayers.

The Central Board of Direct Taxes (CBDT) has extended the due date for filing of Income Tax Returns to August 31, 2018, for categories of taxpayers who were to file their returns by July 31.

 
The decision comes days ahead of the July 31 deadline, which several groups had requested the government to push to later.

CBDT had notified the new income tax return forms for assessment year 2018-19 on April 5. Experts said the introduction of new forms was leading to delays in filing of returns.

Further, the CBDT had said non-filing of ITR Before The Due Date from this assessment year would lead to a penalty of Rs 1,000, 5,000 and Rs 10,000, depending on when the returns were filed after the deadline. The fine for taxpayers having income under Rs 5 lakh remained at Rs 1,000.

If you are still unclear in choosing the appropriate ITR for disclosing your income earned during the previous year, here's a quick guide on the various ITR forms.

ITR 1 Sahaj:

Applicable to individuals that are an ordinary resident in India deriving income from salaries, one house property, other sources and having total income upto Rs 50 Lacs.

ITR 2:

It is applicable to any individual having total income exceeding Rs. 50 Lacs or having foreign asset/income or having more than one residential house property or income from capital gain or HUF.

ITR-3:

It is applicable to individuals and HUFs deriving income from profits and gains from business or profession along-with any income from salaries or house property or capital gains or other sources.

ITR-4 SUGAM:

It is for resident taxpayers (Individual, HUF, Firm other than LLP), who have opted for presumptive income scheme as laid down under section 44AD, 44ADA and 44AE of the Income Tax Act, 1961.

ITR-5:

This form can be used by a person being a Firm, Limited Liability Partnerships (LLP), AOP/BOI, Private discretionary trust, an Artificial juridical person referred to in section 2(31)(vii), Cooperative Society and Local authority.

ITR-6:

This form is being used by Company, other than a company claiming exemption under section 11 of the Income Tax Act. The ITR also introduces a new Schedule for Ind AS Compliant companies wherein they are required to disclose the balance sheet and P/L account in the same format as prescribed under the Companies Act, 2013

ITR-7:

Required to be filed when individuals including companies fall under section 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F). This ITR form is basically meant for trusts claiming exemptions u/s 11 of the Act, Political party, Mutual funds, Securitization trust, and other specified assesses.

For Tax Planning
Damodaran K
Financial Counselor
9940857995

.... enlighten yourself and enlighten others.

Read this, understand the value of insurance , enlighten yourself and enlighten others.

1. We buy gold for our children's education and marriage, but we don't buy a child plan.

2. We get fear on seeing an insurance agent, rather than getting a feeling of protection.

3. Only "20 crore" Indians have got insurance policy out of "130 crores" population.

4. We buy a screen guard to protect our mobile worth 10k, but we don't insure our life which is worth more than 10 Crores.

5. We get our daughter married to an unknown person. But we think a lot when a known person advices us about taking an insurance policy.

6. We fight among ourselves on Bhagavath Githa and Khuran, but we don't realise death is "FATE"

7. We place our chappal very carefully  in a stand paying Rs.5/-.  But we don't feel like paying Rs. 50/- a day to insure our life.

8. We believe Babas who do "magic" but we don't believe insurance agent who guides us with "Logic".

9. We envy Govt employees for their pension facility. But  we don't like saving some amount every month in a Pension policy and get pension for life time.

10. As per world census, more than 10k people everyday , do not wake up from sleep on their alarm set previous night.
Please remember only " FIRE ENGINE" comes with alarm, but "DEATH ENGINE" does not ...

11. We buy invertor to have light in our home during power off.
But you are the light to your family. Insurance policy is the invertor for your family to have light even when are not there.

12. When we die, it's LAST DAY only for us. But for family, it's just another day. They continue to live next day too.. Protect THEIR life with insuring YOUR life.

13. You know the balance in your mobile card, you know the balance in your Debit card ....  Do you know ... what is the balace in your life card?

RECHARGE" your life card with insurance..,,,

Dhamodharan.K
Financial Counselor
9940857995

Why It Is Important To Invest In Health Insurance plans In 2018?

Why It Is Important To Invest In Health Insurance plans In?

In India health care expens is increased day by day, health care is actually becoming a pain for a lot of Indians. The pain is further aggravated by the fact that we still don’t efficient public health care services which should have been providing services at a discounted rate which has lead to more dependence on private facilities and which is quite unbearable for lot of households and makes it tough for them to manage financial turmoil in a state of health emergency. The most effective way the to take this  problem can be by building effective financial reserve for handle the emergency .The cost effective option to build that reserve is to buy a health insurance plan. In fact if you don’t have a health insurance plan in place then it should be the most important commitment that you should make for 2018...This supposedly should be the most effective investment which you should plan for the year 2018.

So if you are planning to fulfill your Health Insurance this year, below is the list of thing that you should look into in your health insurer’s plans so that you make the most effective decision:

Hospitalization benefits: In the earlier days the only way you can raise a claim with your health insurer is when you have gone through a 24 hour hospitalization. Though the concept has changed drastically but still a lot of policies do have certain limitations which defines what would be covered and what is the amount that would be covered so while buying a health insurance do look at the various clauses governing which this part of the  benefit.

Day to Day care related benefits:  With recent advancements in medical science today a lot medical treatment doesn’t even require somebody to get a hospital admission. All a lot of ailments can be handled by OPD services provided by various hospital. While planning for your health insurance in 2020 you should look at guidelines regarding day care health procedure and check is there any limitation governing the same.

Cashless facility: Today all health insurance plans offer cashless facility but the challenge lies in understanding are there any hospitals under your insurer's network present in current city of residence. Though cashless is an efficient way  to settling claims and you don’t have panic for financial aid when you are faced with a medical emergency but the factor regarding presence of hospitals through which you can access this facility is also very important.

Room rent: This is actually bit tricky benefits. A lot of health insurer limits the type of services that you can opt under a specific plan and hospital room facilities in one of them. A  better of this very important because it's misinterpretation can put you in a state where your others claims can also be denied.

Ancillary benefits : You should understand the during the state of a medical emergency other than the major cost like hospitalization , doctor advise and medicine cost there are a lots of ancillary cost involved which we often ignore. One of the most common of them is Ambulance services which can be at times can become very costly. While investing in a health insurance plan do check at things relating how claims would be settled by your insurer against all these costs.

Other than these important things which are defining factors to identify which policy to buy and which not , you can always take tax benefits on Sec 80D on the premium that you would pay this year and in the future years subject to the conditions the regulation don’t change. Another thing is that important is that you always do an online comparison of all Health Insurance Plans before investing so that the decision that you take this year should have long term benefits.

Invest little today for tomorrow huge expence

Call me for more

DHAMODHARAN K

Financial Planner

+91 7358210672

GOOD INVESTMENT MADE BY LIC

GOOD INVESTMENT MADE BY LIC

LIC could still make some money from it if IDBI Bank turns around in the next two or three years.

The consensus about Life Insurance Corporation of India’s proposed investment in beleaguered IDBI BANK is that it is a bad, very bad idea.

Stock market pundits, banking and insurance experts, economists and the media have uniformly dubbed it a retrograde move, one that is bound to fail given the insurmountable problems at IDBI and LIC’s lack of expertise in turning around failing banks.

IDBI shares have bounced back somewhat immediately after the deal’s announcement at the end of June, though they are still far away from the March levels.

The fall could be a reflection of the tough road ahead for B Sriram, the newly-appointed managing director of IDBI Bank, and his team who have to grapple with shrinking market share, rising bad loans and the absence of a credible retail strategy to take on the might of the NBFCs and smarter private sector bank rivals.

IDBI Bank is now under the prompt and corrective action (PCA) mode of Reserve Bank of India which bars it from lending though it can still collect deposits so the first step will be to convince RBI that IDBI is ready to do normal business again.

The primary argument against the LIC-IDBI deal is that it is a gross misallocation of resources. Policyholders’ money should not be used to bail out ailing banks especially when there is no clear turnaround strategy.

Returns to policyholders will suffer as these investments lag the broader market or worse, collapse sparking a government bail-out.

While the argument about government’s over reliance on the LIC may be on the mark, the fears about LIC’s financial performance suffering due to the IDBI deal are grossly exaggerated. Let’s examine the argument one by one.

The IDBI investment of just over Rs 10,000 crore (including investments before 2018) is less than 2 per cent of LIC’s equity assets under management (AUM) of over Rs 5 lakh crore. Equity is only 20 per cent of the total assets. The percentage of its holdings in PSU banks may be higher but one should note not all these investments are struggling. State Bank of India, Bank of Baroda, for instance, are neither under PCA, nor is their financial position as bad as IDBI or some of the PCA banks.

Secondly, there is the question of LIC’s products and its status as a government-backed insurance company. A small, negligible portion of its policies are unit-linked insurance plans or ULIPs. The majority of its products are traditional protection plans.

A sovereign guarantee on all LIC products ensures that the policyholders get sum assured and vested bonus as most of the plans are participating plans, where 95 per cent of the surplus is allocated to policyholders. This guarantee ensures that policyholders don’t lose out in the unlikely event LIC fails to discharge its obligations.
.

LIC attempts to generate surpluses which can be used to make payouts for claims or endowment policies have to be closed. A small portion of its massive equity portfolio underperforming for some periods is unlikely to have a significant impact on such payouts especially when there also exists the Corporation’s debt portfolio which is several times larger than the equity portfolio.

Of course, an insurance company’s investment portfolio can go wrong and clobber its financials but LIC seems an unlikely candidate at this point given the size of its overall investment in PSU banks as a percentage of its equity AUM.

This, however, does not mean that the government has done something fantastic by persuading LIC to buy into IDBI. The problem with the transaction is less about LIC’s ability and financial clout and more about the government’s own readiness in dealing with bank recapitalisation and disinvestment.

IDBI Bank was among the earliest candidates for disinvestment. It was supposed to be privatised a few years back as selling down the govt stake did not involve amending the Bank Nationalisation Act. Despite the best efforts of the PMO and the finance minister, Arun Jaitley, it did not happen.

You can blame the usual ills for this — red tape bureaucratic inertia and an unwillingness to take risks but the problem is that the first failure has now come back to haunt the government.

A private investor would have been far more nimble-footed in recognising the problem of NPAs and taken steps to tackle it if it had been sold two years ago. The management would have got sufficient breathing room, if early and timely recognition had happened, to tackle issues relating to the bankruptcy court and the RBI’s February 12 circular.

Today, IDBI Bank is in a far worse shape and private investors are unwilling to even come close. With elections looming and the bad loan problem only becoming bigger, the government, in desperation, has palmed it off to LIC.

Now, LIC could still make some money from it if IDBI Bank turns around in the next two or three years. It is difficult but not an impossible task, but the whole saga shifts the limelight onto the government’s approach to disinvestment which has been tentative, wary and devoid of strategic intent. It is almost as if the government is unsure of what to do.

Why Health Insurance is Important?

.It is your duty to be responsible to your health and start saving and investing early in a suitable health insurance, says Financial Planner

At the dusk of life, when a person has worked for a good 20-30 years, s/he wants rest and lead a relaxed life -- without the constant worry of taking care of others. This phase of retirement however comes with a concern: the absence of fixed earnings.

Any prudent individual plans ahead before s/he can settle down. S/he saves during her/his lifetime and invests in well-paying schemes, so that they don’t have to be conservative in their spending post retirement. However, with retirement comes old age too, which brings with it health issues. Hence, it becomes imperative for people to undertake healthcare planning as well.

Advantages of beginning early

It is always advised to plan for healthcare early because you never really know when an emergency situation will strike. On a more technical side, your savings get time to multiply and grow.

For example, if you save Rs 5,000 per month at the age of 20 and it pays 12.5 per cent per annum compound interest then by the end of your 60th year (when you retire) you would have saved Rs 5.94 crore.

But if you begin at the age of 30, you would only have saved Rs 1.76 crore. So, if you give 10 less years to your savings, you miss out on the benefits of compounding by more than four crore.

Availing adequate medicare without the worry of insufficiency

It is inevitable to contract diseases in one’s old age.

Without investing in a sound healthcare plan, it will also be very difficult to avail the services of a good hospital or a doctor.

One will be easily able to concentrate on best healthcare rather than ‘how am I going to pay the medical bill?’

The most important aspect of health insurance is that one is not limited to government hospitals but can actually avail good facilities at private hospitals as well.

Financial security

The price of medical service is very steep and rising rapidly. Once, a person is admitted to a hospital, there are various costs, which a person has to pay. They involve not only doctor’s fee but also charges for various diagnostic tests, medically prescribed expensive drugs and sometimes even a re-examination fee.

The list does not include other exorbitant bills that one has to pay off when a surgery -- major or minor is involved. Paying off these expenses will naturally drain one’s savings. And where such expenses are contingent in nature and have not been prudently accounted for, they hurt more.

There are many who would argue that going to government hospital is cheaper as there is less cost involved.

It is important to note, private hospitals are well equipped with modern facilities in comparison to government hospitals. Also, keeping in mind the kind of low doctor-patient ratio India has, one has to fend on their own -- looking for good medical services instead of relying on the state.

If you have a health insurance policy, you can take the benefit of modern facilities as your health insurance will pay for the hospitalisation as long as it is within the permissible limits of the policy.

Covering pre-existing diseases

First of all, let us understand what pre-existing disease actually is.

Pre-existing ailments or diseases are symptoms, diagnosed ailments or any existing or past health condition which exist at the time of applying for mediclaim Policy.

When one applies for a healthcare insurance, please ensure that the detailed medical background of the family is provided.

The IRDA has mandated a maximum of four years after which one’s pre-existing diseases need to be covered by the policy but generally, health insurance companies cover it much earlier as well.

  Deduction for the premium paid for Medical Insurance

Deduction under this section is available to an individual or a HUF. A deduction of Rs. 25,000 can be claimed for insurance of self, spouse and dependent children. An additional deduction for insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age or Rs 50,000 (has been increased in Budget 2018 from Rs 30,000)  if parents are more than 60 years old. In case, a taxpayers age and parents age is 60 years or above, the maximum deduction available under this section is to the extent of Rs. 100,000.
   Example: Rohan’s age is 65 and his father’s age is 90. In this case, the maximum deduction Rohan can claim under section 80D is Rs. 100,000. From FY 2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for the preventive health check up to individuals.

If want to know more please contact 

Dhamodharan.K

Financial Planner

9940857995

licdhamu@gmail.com

  

Don't delay filing your income tax returns

    Don't delay filing your income tax returns 
The tax returns season is underway. You must take all steps to ensure your return filing is error-free. For this it is important to file your returns punctually by the July 31 deadline and to keep yourself updated about any changes in the tax filing norms.

If you wait till the last minute to file your returns, you may commit mistakes in a hurry and will have to file a revised return by March 31, 2019. From assessment year 2018-19, if you file your income tax return (ITR) after the due date, you may have to pay a penalty up to Rs 5,000 if you file by December 31 and Rs 10,000 thereafter. For those whose income is under Rs 5 lakh, the penalty is Rs 1,000.

   There are several such developments in recent times. To be on the right side of the norms, it is important to file your returns on time. Take a look at some important changes to ensure an error-free filing well within the July 31 deadline.

Change in tax-related rules Income tax slab rates have changed for AY19. For individuals whose taxable income is between Rs 2.5 lakh and Rs 5 lakh, a rate of 5 percent would be applied. The tax slab of 20 percent remains the same for individuals earning Rs. 5 lakh to Rs 10 lakh, and 30 percent for income above Rs 10 lakh.

If you own more than one home, then till AY18 the entire interest paid on the home loan was allowed as deduction under Section 24B, but now it has been restricted to Rs 2 lakh in a financial year. Earlier, the complete loss from house property was allowed to be set-off without a ceiling, but it is now restricted to Rs 2 lakh in a financial year and the remaining loss can get carried forward for the next 8 years.

Earlier, the holding period to claim long-term capital gain tax on immovable property was 3 years, but from AY19 the holding period has been reduced to 2 years.

The base year to calculate the indexation for ascertaining LTCG was 1981 earlier, It is 2001 from this assessment year.

Earlier, there was no surcharge on an individual’s income, but from this year a 10 percent surcharge will be applicable if the total income exceeds Rs 50 lakh up to Rs 1 crore. If the income exceeds Rs 1 crore, a surcharge of 15 percent will be applicable.

Section 87A earlier provided a rebate up to Rs 5,000, but the same has been slashed to Rs 2,500.

Changes in ITR form Sahaj or ITR-1 form will now require additional details related to salary break-up. It would need details of perquisites, allowances, et al. It would also require detail of income from the property including rental income, tax given to local authority, etc.

In the new ITR form, you have to mention the details of exemption from capital gain separately. For each section such as Sec 54, 54 B, 54 EC, 54 GB, etc you have to mention the details in the relevant column.

ITR 4 has also changed, as it would now need additional details such as secured/unsecured loan details, fixed assets, capital account, etc.

GST details required while filing ITRStarting this year, you have to specify the exact turnover details mentioned while filing Goods & Services Tax. This can be cross-checked by the Income Tax Department. You also need to mention the GST detail in ITR.

To make your tax filing process an error-free exercise, it is important you keep your documents handy, do your calculations beforehand and file before the July 31 deadline.

Depending on your mode of filing returns - either through a private tax filing portal or through the government one, you should be aware of the form you need to fill. In case it is done through a private portal, the correct form will be chosen for you. If you file via the government website, you will have to manually choose it.

Since the I-T Department has introduced 7 new forms this year, it is wise to have some time in hand to pick the correct form and avoid mistakes.

While filing your returns, you would also require time to verify your tax deducted at source details in Form 26AS. Any mismatch should be brought to the notice of your employer. Again you need time to make rectifications, therefore plan ahead to avoid last-minute rush which can cause errors.

Things to keep in mind - Keep all important documents handy while filing returns to save time and to keep errors away 
- Claim all tax benefits and deductions properly -even the ones you forgot to mention in your tax declaration 
- Take note of important details like interest earned from recurring deposits and fixed deposits, which are fully taxable at the applicable slab rates. Interest earned up to Rs 10,000 from savings bank account is exempt under Section 80TTA.

By being aware about the changes and updates in the tax filing norms discussed above, you can avoid the last minute hassles and have an error-free filing process.

For Tax Planning
Dhamodharan.K
Financial Planner
licdhamu@gmail.com
9940857995

Lifetime-high! Sensex Stocks Down

Lifetime-high! Sensex up, stocks down

With 72% of Nifty mid-cap stocks falling this year — and 28% by more than a fourth — the market is mostly in a bear grip

The Sensex may have hit a new high at 36,548.41 points on Thursday but more than 75% of stocks in the broader market are down between January and now. That’s because only a handful of stocks are driving up the indices; the rest are underperformers. An FE study showed more than 75% of all stocks with a market capitalisation of Rs 1,000 crore and above are in the red so this year. As Bank of America Merrill Lynch put it, India’s version of a “Fin-Tech” re-rating is supporting the index amid a correction. The stocks that have done spectacularly are Tata Consultancy Services (TCS), Kotak Mahindra Bank, HDFC, HDFC Bank, Infosys and Reliance Industries (RIL).

Of the Nifty 50 companies, 31 are trading in the red with just 10 companies driving up the benchmark. At 11,023.20 points, the Nifty is now is just around 100 points away from its all-time high closing level of 11,130.40. But the Nifty mid-cap index, at 18473.9, is down 12% since January.

At Thursday’s new high, the Sensex in 2018 so far has been flat in dollar terms while the Dow is up marginally by 0.7%. India is a very expensive market. At 36,548.41, the benchmark Sensex trades at a price-earnings(PE) multiple of 18.01 times to the estimated one-year forward earnings, a premium of 12.4% to the long-term average PE of 16.03 times. This compares with 8.6 times for South Korea’s Kospi and 14.2 for the Jakarta Composite. Brazil’s Bovespa and the Shanghai Composite are trading at a price-earnings multiple of 10.4 and 10.6, respectively, data from Bloomberg show.

Thursday also saw RIL — the most valued company after TCS — re-entering the $100-billion club after more than a decade. The two together boast over 22% of the combined market capitalisation of Sensex.  The poor breadth of the market has probably kept foreign portfolio investors (FPIs) away; since April, FPIs have sold stocks worth $2.9 billion, the bulk of it in May. However, domestic institutions have been buyers to the tune of $6.1 billion. Local buying since January has hit nearly $10 billion whereas foreign funds have sold shares worth $790 million.

For Safe Investment Call now

K Damodaran M.Com.,LL.B.,HDCM.
Financial Counsellor
licdhamu@gmail.com
9940857995

Only 30% investors hold equity mutual fund schemes for over two years

   Only 30% investors hold equity mutual fund schemes for over two years

(Source:.  Avneet Kaur, ET Online | May 07, 2018, 04.19 PM IST)

   Mutual Funds may have gained currency after demonetisation, but most investors still look at mutual funds only as a short-term bet. According to an AMFI report, only 30.40 per cent investors in enquiry muthal funds stay invested for more than two years. This data is as on March 31, 2018. AMFI releases this report every quarter.

This data clearly shows that most investors do not understand that they should invest in equity schemes for a longer term horizon to achieve their long-term financial goals. Mutual fund advisors say investors should invest in equity mutual funds only if they have an investment horizon of at least five years.

The report also shows that 10.1 per cent investors invest in equities for up to one month, 10.5 per cent invest for one to three months, 11.3 per cent remain invested for three to six months, 18.7 per cent invest for six months up to an year and 19 per cent invest for a term between one and two years.

The data clearly suggests that most investors do not understand the basics of equity investing. They do not understand the risk associated with investing in equity. There are countless studies which show that investing in equity mutual funds with a short investment horizon can result in loss of money.

This is why equity schemes are not recommended for short-term investors. Taking out money from equity schemes in a short period may be the reason why many novice investors complain of not making satisfactory returns from their equity mutual funds.

Investors should also know that getting in and out of equity mutual fund schemes involves exit load and capital gains tax. If equity mutual fund schemes are sold before a year, short-term capital gains will be taxed at 15 per cent. If equity investments are sold after a year, long-term capital gains of over Rs 1 lakh will be taxed at 10 per cent without providing for indexation benefit.

Mutual fund advisors advocate linking investments to goals to resist the temptation of getting out of the market. They believe having a goal would help investors to focus on their goals and carry on without bothering about daily market movements.

Fathers are one of the most influential role models for their children.

Fathers are one of the most influential role models for their children.

As we all know, children are like sponges and take in everything they see and hear. When raising children, fathers have to be aware that they are constantly being watched. The question is, how can fathers be the best role models for their children?

1) Lead by Example

We all can relate to when our parents told us, to “lead by example”. Now, fathers can truly understand the meaning. If children see their father treating others with kindness then they will be leading by example to show their children how to treat others. Another example of this is how you handle adversity in your career or in the workplace.

2)   Love

The greatest way a father can be a role model is to show their children love. Tell and show your children that you love them. By doing so, you are showing that men can show their emotions, then they will be able to pass that down to their children.

3)   Discipline

Show your children what discipline is. For example, if a friend asks to go to dinner, but you have work to complete, kindly decline and complete your work. Showing your children that you have discipline, will hopefully be a quality that stays with them.

4)  Always Teach

Always be ready to teach at any moment. If you fail or succeed at something, there are teachable moments to share with your children. Any type of environment you are in, you can teach. This could be at home, grocery store, football game, even in the car.

5)   Attitude

Try to always have a can-do attitude for your children to see. If they are around positive and motivated attitudes than hopefully, they will be too. Being negative will only create more negativity.

6)   Work Ethic

Fathers can actively show their children how to have a great work ethic. This can be done by children helping their father with yard work or work in the house or  working hard at their job. They will then see the work they completed and can be proud of what they accomplished.

7)   Manners

As a father, your children will treat people the same way you do. If you have a son, treat your wife well, so your son will know how to treat women. If you have a daughter, treat her well so she will know how a man is supposed to treat her. Fathers should always be a gentleman in any situation so they can be the best role model.

 

IS CHILDREN EDUCATION EXPENSIVE?

 Rather than making investments on
ad-hoc basis, it’s crucial that one puts a plan in place to meet child’s education needs.

The cost of education in India is increasing at a fast pace. From primary to secondary to higher education, parents are increasingly finding it difficult to meet the growing fee structure and other costs associated with education. Aniruddha Bose, Director & Business Head, FinEdge Advisory says, “Education costs are inflating at an above-normal rate, and the returns on your child education fund need to outpace inflation.”

According to National Sample Survey Office (NSSO), between 2008 and 2014, the average annual private expenditure for general education (primary level to post graduation and above) shot up by a staggering 175 percent while during the same period, the annual cost of professional and technical education increased by 96 percent. The expenses typically include course fees, books, transportation, coaching and other related costs.

The cost of providing education in private institutions in 2014 was about 11 times that in government schools, while the cost of higher education from a private institution is about three times that in one run by the government.

According to rough estimates, on an annual basis the education inflation is about 10-12 percent. Even by conservative estimate, if education cost inflation of 6 per cent a year is considered, then an engineering course that costs Rs 6 lakh at present will cost around Rs 15 lakh after 16 years. Similarly, an MBA course that costs around Rs 10 lakh would cost around Rs 34 lakh after 21 years.

Thankfully, for parents whose children are about to join a college or want to pursue higher education, but are short of funds, education loans come to their rescue. However, you should depend on education loans only to bridge the gap between your savings and the actual requirement. So, if your children are still small and have a few years before funds will be needed for them, here’s how you can self fund your child’s education.

Put a plan in place: One needs to put a plan in place by setting up a target amount for child’s education needs. The world is witnessing newer types of courses and it might be difficult for you to zero-in at the career option which your child might take up in the future. Still, to make an informed start, identify 2-3 career options and find out their current cost. Inflate it by considering a conservative inflation of 8 percent per annum for the number of years after which the child would require funds.
Once you have estimated the requirement, find out how much you would require investing each month towards it. Assuming a growth rate of 7 per cent in the above example, you need to put aside around Rs 4,500 per month for the engineering course you child will pursue after 16 years, while it will be about Rs 5,000 per month for doing MBA after 21 years. You may take the help of financial planners  to arrive at the figure.

Portfolio: The investment portfolio for child needs, when they are at least ten years away, should primarily hinge on safe investment. Therefore, safe return instruments such as tax free, Govt guaranteed products of LIC OF INDIA.
Ulips with equity fund options can be the mainstay of one’s portfolio. In addition, a LIC's Jeevan Lakshya may also be used to fund your child education needs. “Basically, the key determinant of the ideal asset allocation would be the number of years left for the goal achievement,” says Financial Planner.

Jeevan Lakshya

One may even consider investing through Jeevan Lakshya with the waiver of premium feature to ensure that the child gets the required amount at the desired age. As a parent, ensure you have adequate life insurance preferably through  term rider plan so that any unfortunate incident does not derail children needs.
This is a traditional endowment plan which is simple to understand. The plan offers both savings and financial protection for loved ones of the parents. The protection can be further enhanced with the inclusion of two useful riders at a nominal cost. It is a very good cost effective plan offer by Life Corporation of India.

Jeevan Lakshya plan is a combination of both protection and savings.

Tax Benefits- Under the income tax act of 80C the premium paid under this plan is permissible for availing rebate on annual income tax and as per section 10 D the maturity amount is free from tax.

Conclusion: De-risk the funds earmarked for children education  remember not to touch the child investment portfolio for any need other than what it has been created for. “Even if you were to pause your monthly saving for a while, do not redeem your goal-based investment to finance other short-term needs” is what FINANCIAL PLANNER suggests. Funding your child’s education is, in fact, one dream you cherished the day your kid was born. Do not, therefore, do anything which stops you from realising your dream.

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Give Wings to Your Child's dream

   One evening when Ganesh came back home from work, his 5 year old daughter, Sreenithi  came running to him. She had a drawing paper in her hand. 

“See NANA, what I made.” Her voice was excited.

He looked at the paper, which had a sketch of an airplane. 

His wife, Revathi, told him that she saw in the newspaper the picture of a woman flying a plane, which inspired her to do the sketch. 

“This is great Sreenithi. I am so proud of you.” He hugged her.

Sreenithi had put in a lot of details including her parents sitting behind and she herself on the controls in the cockpit. For a 3 year old, it was quite an achievement.   

“NANA, one day I will become a pilot and fly a plane. I will take Mummy and you along. It will be great fun.” She said with a chuckle. 

“Of course Chellam, you can do anything.”, said the doting father. 

“How will I learn to fly?” Sreenithi posed the innocent question.

“You can go to a flying school to learn.” Ganesh was referring to flying courses. 

“When can I go to that school?” She was still curious.

Ganesh looked up thinking. “After a few years, when you are big enough to fly”         

Sreenithi had a broad smile on her face.

“Let’s eat dinner.” Revathi interrupted the conversation.   

On the dinner table, Revathi asked, “Isn’t a flying school expensive?” She was concerned. 

“Anything for Avani, We will figure it out.” Ganesh was confident that he would fulfill Avani’s dream. 

Ganesh did some research and realised that if he saves some amount regularly in a mutual fund, it was possible to accumulate the fee of a flying school. If there was any shortfall, he can take a loan to fill the gap.

At that stage, he decided to invest Rs. 10,000 per month through Safe return Scheme in LIC

He tagged his investment as “Sreenithi’s Wings.” This ensured that he will use the money only for Sreenithi flying school fees.  

What happened so far was in year 2005.  

Cut to 2018. Ganesh and Revathi have their eyes wet with joy. Sreenithi has been selected for a flying school course.

Their daughter is actually fulfillingher childhood dream. 

But, what about the costs?

The overall costs including fee and other expenses at the flying school are expected to be very high.

But Mahesh, who with his diligence and commitment continued to save Rs. 10,000 per month via a systematic investment plan (SIP) in a mutual fund scheme, is not concerned. He doesn’t need to take any loan since drip by drip he accumulated the amount required for Sreenithi’s dream. 

Ganesh is now looking forward to the day when Sreenithi, as a pilot, takes them for a ride in the skies. 

LIC traditional savings are subject to GURANTEE, read all scheme related documents before choosing a plan.

House Rent Allowance rules and regulations

House Rent Allowance means, if you are a salaried person and staying in a rented accommodation, then you can claim tax exemption for the rent paid. The rent can be partially or fully tax exempt

House Rent Allowance (HRA) is exempted under section 10(13A) of the Income Tax Act.

House Rent Allowance rules and regulations

Under House Rent Allowance rules and regulations, you will get exemption up to a minimum of the following 3 amounts:

Actual House Rent Allowance (HRA) received by the employee in the year.Rent paid by the employee for his accommodation in excess of 10% of his salary.50% of the salary, if he stays in any of the 4 metro cities of Delhi, Mumbai, Kolkata or Chennai; otherwise, 40% of the salary.

The salary for this calculation means the basic salary which includes dearness allowance if the terms of employment provide for it and commission based on a fixed percentage of turnover achieved by the employee.

Please note that if the employee is staying in his own house or not paying any rent, he will not be eligible for the above tax exemption.

Most salaried individuals get confused when it comes to claiming exemption on one’s House Rent Allowance (HRA) while filing tax returns. However, here is a lowdown to make the process simple for the taxpayer.

It is important to know that you can claim HRA exemption benefit only when you are living in a rented house. Those who live in their own house cannot avail tax exemption benefit on HRA.

Much before you get your Form 16, the exempt HRA amount can be seen in the tax projection statement provided to you by your employer at the beginning of the financial year. The employer deducts the HRA from salary. When it comes to filing of ITR, you can view the deduction in Part B of your Form 16.

Declare the rental to the employer

The best way to get HRA exemption is to mention the amount in the declaration form provided to you by your employer at the start of a financial year. Dhamodharan, Financial Counsellor with LIC OF INDIA said it is advisable that the employee claims HRA through the payroll to avoid a mismatch between the tax return and Form 26AS. In case the employee is unable to claim the same through the employer, then he or she can claim the same while filing the yearly tax returns. “This can be done by computing the amount of exemption for HRA and reflecting the same in the place provided in the salary appropriate schedule in the return form,” he said.

“While seeking tax benefits on HRA, if one fails to justify the deduction of the amount from the total income it can attract penal consequences under the provisions of the Income-tax Act, 1961. The amount of HRA, in any case, will get reflected in Form 16 issued by the employer,” said Dhamodharan, Financial Counsellor with LIC OF INDIA

Documents required for claiming HRA benefits

The deduction for House Rent Allowance (HRA), under section 10(13A), is generally availed by the employee through the payroll by providing requisite supporting documents and also, meeting the necessary conditions. To claim HRA, you need to have relevant documents with you. The supporting documents for this purpose would be
rent agreement,
rent receipts.
If the amount of rent exceeds Rs 1 lakh per annum the PAN of the landlord is also necessary.
In case the landlord does not have a PAN, a declaration to this effect should be obtained from him, along with his name and address details.

An employee generally has to submit all relevant documents with their company Human Resources department. However, the tax authorities do not require an employee to submit documents to them. “While supporting documents are not required to be submitted with the tax return, it is necessary to ensure the same is readily available in case there is a query from the tax office/Central Processing Centre (CPC),” said Dhamodharan.

Also, individual taxpayers not receiving a house rent allowance (could be non-salaried individuals as well) could claim a deduction for their rental expenses based on Section 80GG subject to specified limits.

Do not claim false HRA while filing ITR

You should not file wrong information in ITR forms otherwise you may have to pay a penalty. Dhamidharan said that a new provision introduced vide Finance Act, 2016, brought in the concepts of underreporting of income and misreporting of income.
“Mis-reporting of income has been defined to mean, inter alia, misrepresentation or suppression of facts or claim of expenditure not substantiated by any evidence.
Therefore cases involving the wrong claim of exemption HRA by furnishing false rent receipts, where rent cannot be justified would clearly attract penalty at the rate of 200% of the amount of tax payable,” he said.

Can you claim HRA if you own a house?

The answer to this question is both – Yes and No.

You cannot claim house rent allowance (HRA) if you are staying in your own house.You can claim HRA if you are staying on rent, not in your own house.

Can  pay rent to employees' mother/brother/parents and claim HRA?

Yes, employee can claim HRA if you are paying rent to your mother, brother or parents but they need to show the income as Income under House Property.

Can HRA be claimed by both the husband and wife?

Yes, HRA can be claimed by both the husband and wife if:

Both husband and wife, are paying rent to the landlord.Husband and wife are giving separate receipts for the rent paid to the landlord

The husband and wife can claim HRA exemption proportionately but both can not claim the entire rent paid to landlord.

What is 80GG claim deduction for HRA?

Section 80GG applies for HRA claim deduction under the following conditions:

If your employer does not include HRA in your salary, andSelf employed people

You can still claim deduction under 80GG.

How to save income tax through your family members? What you must know

How to save income tax through your family members? What you must know

Saving tax through family! Surprised! Yes, we can save tax through our family members, i.e., parents, major children and wife. To save tax through family members we need to invest in ways that our tax burden shifts to our family members and we can take the benefit of income tax slabs. Saving tax through family means not only saving in tax but also means higher post-tax returns on your investment.
Here is how we can save tax through our family members.

Save tax through parents

You can save tax through parents as well as through parents-in-law. To achieve this goal, you need to give away a portion of your funds, either as a gift or a loan, to your parents as well as your parents-in-law so that in years to follow your income tax burden becomes lighter as the income on funds transferred by you to them would bring in income which would be taxed in their hands.

Let’s assume that both your parents are senior citizens. Here’s how you go about it. Income tax deductions allow senior citizens a tax-free income of Rs 3 lakh. To exhaust this limit, say, you gift `28 lakh to each parent in cash. Of this, both can individually put Rs  15 lakh in a senior citizens savings scheme that earns a return of 8.3% and pays interest every quarter. Each will get yearly interest of nearly `1.2 lakh. If they invest the remaining `13 lakh each in the State Bank of India’s (SBI) fixed deposit (FD) of eight years (at an interest rate of 7.25%) that pays interest each quarter, it will fetch them each an income of nearly `0.95 lakh annually. That means your parents have individually earned `.215 lakh each year. With the tax-free limit at `3 lakh they don’t even need to file tax returns.

Same planning can be done for parents in laws.

Save tax through major children All your adult children are as solid as a rock to help you save income tax. After October 1, 1998, the provisions relating to gift tax have ceased to exist. Now you are free to gift away your money to your children without attracting gift tax. Investment made by major children out of the gift received by you will be taxed in the hands of your children. If for any reason you are inclined to make gifts to your major children, then you may give interest-free loans to your adult children so as to legally reduce your taxable income.

It is lawful to grant interest-free loans to adult children from your own funds.

Save tax through your wife

Married taxpayers can make a substantial saving of income tax by setting up two separate independent income tax files, one for the husband and another for the wife. If your wife is already filing Income Tax Return then she may continue filing the return with her new surname (in case she has changed it) and address or with her old surname and address. However, care should be taken to ensure that no gift or transfer from husband is made to the wife as clubbing provision may get attracted.

Don’t forget to mention these small things while filing income tax returns

Don’t forget to mention these small things while filing income tax returns

It is July. The first quarter of the financial year has come to an end and appraisals too are behind for most of salaried employees. Most of you must have got your Form 16 from your employers. That paves the way for filing of income tax returns as the July 31 deadline is fast approaching.

Income tax return filing is an important act and has its own benefits if you do it before the deadline. Here are a few seemingly small things that all salaried individuals should take care of while filing their income.

Check your Form 26AS

 

This is the buzzword and do not miss it. “Tax authorities match the entries in Form 26AS with your submissions,” points out Akhil Chandna, Director, Grant Thornton India LLP. “You must check your Form 26AS online and ensure that there are not any mismatches between your income tax returns and the contents of Form 26AS.”

 Check the year and format

“You must be careful while filing your income tax returns. Do confirm if you are filing for the correct assessment year and you have chosen the right format,” says Balwant Jain. There are multiple formats for different types of tax payers. Also these formats change over the years. If you are filing income tax returns for multiple years, you have to be doubly careful.

Mutual fund investments

Mutual fund investments are catching up big time and there are many first time investors in India. Though there was no long-term capital gains on equity funds till last financial year, the taxes on short-term capital gains on both equity and non-equity funds were payable. So was the case with long-term capital gains on non-equity funds. That necessitates you to run through your mutual fund statements and your bank statements. “If you have opted for systematic investment plans (SIP) or systematic withdrawal plans (SWP), you will have to compute taxes and file accordingly,” says Balwant Jain.

Interest income

“Do not forget to mention the interest earned on your saving bank accounts and fixed deposits,”says Balwant Jain, certified financial planner based in Mumbai.  You should be adding this interest income to your gross income and then proceed to compute the income tax. Do check your bank account statements for interest earned by various fixed deposits and bonds you hold. If you have invested in a bank fixed deposits

Income of minors

“If you have a minor son and daughter then the interest income earned in their name must be added to your income and then offered to tax,” says Balwant Jain. The income earned in the name of kids must be added to the income of that parent whose income is higher among two.

Provide correct bank details

Last but the most important, mention your correct bank account details while filing income tax returns. This is essential to process your tax refund, if any.

Filling Income Tax return? Don't miss these 9 tax breaks

Income tax return filing is a process that is often completed mechanically.

However, investing a little time and thought into it can allow you to claim deductions you might have failed to while submitting your investment declarations. Read on to see how you can maximise your tax breaks.

1. Savings account interest
The balance in your savings account earns interest every quarter, which is considered part of your total income. However, the income tax (I-T) department, under Section 80TTA, allows exemption of up to Rs 10,000 on this interest. Interest earned on post office savings will also fetch a similar benefit.

2. Rent exemption without HRA
Many taxpayers shell out house rent but can’t claim deductions due to the absence of the house rent allowance (HRA) component in their salary. Under Section 80GG, you can avail of the benefit for the rent even if your salary package does not include HRA, provided you are not eligible for any housing benefit. You will not qualify for this break if you, your spouse or child owns the house you live in. The exemption is limited to the least of: rent paid less 10% of total income; or Rs 5,000 a month; or 25% of total income.

3. Breaks for specified illnesses
Keeping in mind the fact that treatment of ailments like cancer, kidney failure or AIDS entails huge expenses, the income tax rules allow relief under Section 80DDB to tax-payers suffering from such diseases.

Specified diseases under Sec 80DDB
Taxpayers can claim up to Rs 40,000 in deductions if he suffers from any of the following ailments
Ataxia, Full-blown AIDS, Malignant cancers, Dementia Cholera, Hemiballismus, Thalassaemia, Chronic kidney, failure Parkinson’s disease, Haemophilia, Motor neuron disease, Dystonia, Aphasia

They can claim a tax deduction of up to Rs 40,000. “If the person is a senior citizen, then the deduction can go up to Rs 60,000,” says Chetan Chandak, Head, Tax research, H&R Block. If the afflicted taxpayer happens to be a super senior citizen, the relief is enhanced to Rs 80,000. However, if the expenses incurred have been reimbursed by employers or through insurance policies, the taxpayers will not qualify for the deduction. If the reimbursement is partial, they will be eligible for the tax break on the balance amount.

4. Ancillary home loan charges
Home loan borrowers know that one of the chief benefits of this loan is the tax benefits it offers on the principal repayment (Section 80C) and interest paid (Section 24). However, few know that even the processing fee paid can be claimed as deduction under Section 24. The processing fees and other ancillary charges are considered as interest and qualify as exemptions.

5. Loans for down payments
Home loan-seekers often borrow from friends and relatives to arrange for the downpayment. They either do not pay any interest on such loans or if they do, fail to claim deductions under Section 24, despite being eligible. Section 24 also covers interest paid on any loan taken for the purchase, renovation or reconstruction of a house. However, you should draw up a loan agreement with the lender. The interest earned by the lender will be taxed as his income.

6. Deduction for disabilities
If a taxpayer suffers from 40% disability (as certified by a medical authority), he/she can claim a deduction of up to Rs 75,000 under Section 80U. Expenses incurred in respect of a disabled dependent will fetch a deduction of Rs 75,000 under Section 80DD. In both cases, if the disability is severe (more than 80%), the deduction is Rs 1.25 lakh. This is a flat deduction. The disabled should dependent on the taxpayer for maintenance.

7. Income of disabled child
If you have made investments in the name of your spouse or minor child, the income earned will be clubbed with your income under Section 64 and taxed as per the slab applicable to you. However, in case the child is disabled, income from investments made in his/her name will not be clubbed with the income of parents. The latter can use this provision to invest in taxable instruments like FDs and debt funds.

8. Setting off losses
If you lost money in investments during the previous financial year, you can adjust some losses against capital gains from the sale of stocks, property, gold or debt funds. Short-term capital losses can be set off against both short-term capital gains as well as taxable long-term capital gains. Long term capital losses can only be set off against taxable long-term capital gains.

9. Benefits for donations made
Typically, deductions under Section 80G on donations made do not reflect in Form 16. So, this exemption can be claimed while filing returns. Depending on where you have contributed, you can claim a deduction of 50-100% of the donation made. However, it cannot exceed 10% of your total income. “If the donation was made in cash, no deduction is allowable if the amount exceeds Rs 2,000,” says Dhamodharan, Tax Savings and Investment counselor.

2018 the year real estate died

New Delhi: We all know somebody who has made a mini fortune by investing in a flat or residential plot at the right time. Despite the usual ups and downs, there exists a deep-rooted sense among Indian investors that residential property is a sure-fire investment which delivers excellent returns. This wisdom has been passed on from generation to generation.

Yet, unless you’ve been living under a rock, it’s evident that residential real estate has been down in the dumps. According to National Housing Bank data, property prices in Mumbai and Bengaluru increased annually by just about 7.50% and 5.75% respectively between June 2013 and September 2017. In Delhi, prices actually fell by -0.70% annually during the same period. Beyond the data, we hear numerous stories of investors in distress with their money stuck in delayed projects. There are also stories of many brokers, in fact the entire realty ecosystem, struggling to cope with this slowdown.

 

However, many feel that real estate has bottomed out. Their logic is that from now on, or soon, the cycle will reverse and prices will start moving upwards. In reality, this is either wishful thinking by people who are stuck with depreciated assets or an illusion created by stakeholders. The fact is, investing in residential real estate will not get you 20-30% annual returns or double your investment in about 3-5 years any more, as it did back in the golden days of 2001-2007.

This time it is different. There are various factors which indicate that the lull in the real estate is here to stay. Therefore, it certainly does not make sense to buy a residential property from an investment point of view at this point in time. “Considering the rising interest rates and high maintenance cost and tax on rentals and capital gains, I would not suggest investment in physical real estate,” said Nishant Agarwal, managing partner and head, family office, ASK Wealth Advisors.

 

Considering the rising interest rates and high maintenance cost and tax on rentals and capital gains, I would not suggest investment in physical real estate- Nishant Agarwal, managing partner and head (family office), ASK Wealth Advisors

 

The reason low returns are expected from real estate is that there has been an irrational increase in property prices in the past. Moreover, even after prices have remained largely stagnant for few years now, in many locations property is overpriced. Many investors who bought property 3-4 years ago are finding it difficult to get a buyer even after reducing the price lower than the purchase value.

Remember, any asset class, be it realty, gold or equity, has its own cycle. No asset classes will give you positive returns forever. Nor will it constantly give you a negative return. With that caveat out of the way, read on to understand why real estate will take much longer to recover.

Black swan moments

 

Demand in real estate started declining from 2013. By 2016, it had hit an all-time low. The overall market was going through a bearish phase when it was impacted by two major ‘black swan’ events. In May 2016, the Real Estate (Regulation and Development) Act or RERA was enacted. And six months later, the government demonetized high-value currencies—it washed out 2016 and 2017 for residential real estate.

One of the aims cited for demonetisation was that it would help curb the rampant use of black money in real estate transactions, especially in the secondary market. Black money is what lubricates the real estate sector, as anyone who deals in cash finds it the easiest investment to channel funds into. This is so because of the difference between the circle rate, which is fixed by the government, and the market rate of properties. For instance, in Delhi’s posh Defence Colony, circle rates are around ₹2.45 lakh per sq. m whereas the market rates are above ₹5 lakh per sq. m. This is why homebuyers, who don’t have unaccounted funds or cash, find it difficult to buy properties in these localities.

“Initially, there was a setback, but once again cash is back in the market. However, the magnitude of cash proportion has declined to some extent,” said Vasant Kumar, a south Delhi-based real estate agent. But the general attack on black money has had some impact. Many buyers and sellers are now not comfortable dealing with cash. What this translates into is a lower supply of money flowing through the real estate segment—many feel that this will continue for a long time.

 

On another front, it will take years for RERA to make any significant impact on ground. Only a few states have implemented RERA effectively; many have diluted the key provisions of the central act. These dilutions include exempting a majority of under-construction projects from RERA’s purview as well as easing penalties for builders who do not comply with the act. Once all states implement RERA, developers will take time to comply with the regulations. It is expected that homebuyers or investors will also wait for things to settle down. Effective implementation of RERA is important to restore confidence among homebuyers. Until then, demand will remain muted.

Relax, pay more tax

The tax man has not been kind to the real estate sector. Now investors have to calculate how much profit can be retained after taxes. The implementation of the goods and service tax (GST) from July 2017 disturbed real estate transactions, stretching the lull. In fact, over the past few years, the government has introduced many changes in the tax regime, which have negatively impacted homebuyers and investors.

 

While earlier, a service tax had to be paid for under-construction properties, now GST has to be paid. The effective rate of service tax was 4.5% of the property’s value, while the effective rate of GST is 12% with inputs tax credit (ITC). Though the government believes that after taking ITC into consideration, the tax proportion would be lower. But, “there is still confusion about the amount of rebate that a prospective homebuyer is entitled to on the back of the pass-over of ITC. The confusion is not only about the percentage of ITC but also the mode and tranche of the rebate,” said Anuj Puri, chairman, ANAROCK Property Consultants.

In addition, after buying a property, the buyer has to register it by paying stamp duty and registration fee, which are in addition to GST. Stamp duty is levied by state governments and usually varies between 5% and 8%. This means that GST and these other fees constitute about 20% of a property’s value. Such high transaction costs make real estate unattractive for investors. Worse, there are other taxes: income tax is levied on rental income as well as capitals gains made from property transactions. But, many tax benefits and exemptions of have been scrapped or restricted in the last couple of years. In short, investing in real estate is no longer tax friendly.

Supply, over supply

 

The slowdown will also linger because of an over-supply—a huge inventory pileup—at developers’ end. What makes it worse is the mismatch in demand and supply. For instance; there are about 120,000 apartments in Pune lying unsold, followed by Bengaluru with about 100,000 units lying unsold.

When the going was good, most developers were focusing on mid-category, luxury and premium-housing projects. At the moment, the demand is for affordable housing units. Therefore, there is huge unsold inventory of other units across most micro markets, mostly in the suburbs and far-flung areas of metros. “The developers failed to ascertain the need of homebuyers and launched projects which were not in line with their demand,” said Samantak Das, chief economist and national director -research, Knight Frank India.

It’s obvious that when there are few takers for the current inventory, developers will not even think of launching new projects. Even clearing the inventory will take time—at the current sales volume, it will take 85 months to clear the current inventory in Greater Noida. Obviously, prices will remain subdued.

 

Clearly, greed, over-ambition and financial indiscipline of developers are the main reasons investors are shying away from realty. According to 360realtors.com, a real estate portal, there are about 340,000 residential units running behind schedule of construction in Mumbai. The situation is similar in many other cities. There are many homeowners and investors who are stuck in real estate projects, with their finances in a mess. They are paying rents and paying off their loans, but possession is a distant dream.

The number of projects running behind schedule is reducing because developers have stopped launching new projects. Even so, it will take a long time to bring the sector back on track. As per ANAROCK , “During 2017, out of the total 5.8 lakh residential units slated to be completed across the top seven cities in India, 4.3 lakh units (74%) actually missed their stipulated completion deadlines.”

Even big developers like Unitech Group, Jaypee Group and Amrapali Group have failed to deliver projects. The impact of long delays, poor quality of apartments, failure to deliver the amenities promised and non-compliance with rules and regulation will take a long time to fade away. Homebuyers will wait till things improve or buy only ready-to-move-in apartments.

The investment scenario

To make matters worse for real estate, other investment avenues are flourishing. According to data from Association of Mutual Funds in India (AMFI), total assets under management by assets management companies (AMCs) as of 31 May 2018 was about ₹22.6 trillion. On 31 may 2013, this figure was about ₹8.68 trillion— that’s an average year-on-year increase of 21%. During the same period, according to www.valueresearch.com, hybrid equity oriented funds had given an average annual return of 16% and liquid funds around 8% per annum.

Since 2001, real estate has performed poorly in comparison to equity and gold. “Real estate as an asset class has lost its sheen (in terms of investment asset) given the various reforms (demonetization, RERA and GST) introduced in the last two years and especially when other asset classes like equities have been doing well,” said Rahul Jain, head - Edelweiss Personal Wealth Advisory.

With all these factors working against real estate, we can at best expect a nominal return in next decade or so. A low rental yield of below 3% is also a big deterrent. At best, experts feel, one should invest in real estate for diversification—irrespective of the low returns. “Equity is a highly volatile, whereas real estate is not that volatile. We must understand that real estate is cyclical in nature,” Binaifer Jehani, director, CRISIL Research, said. In the present scenario, “if you have a horizon of about 15 years, you can go ahead and invest in real estate,” she added. Clearly, invest in real estate only if you have the patience to play a very long waiting game.

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero 

Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history. The cryptocurrency’s 2018 crash may help cement its place in the bubble record books.

Down about 70 percent from its December high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78 percent peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and other red-hot initial public offerings that flamed out in the early 2000s.

While Bitcoin has bounced back from bigger losses before, it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest. Bulls point to the Nasdaq’s eventual recovery and say institutional investors represent a massive pool of potential cryptocurrency buyers, but regulatory and security concerns have so far kept most big money managers on the sidelines.

“You’ll have to see the market reverse before you see” institutions pile in, Peter Smith, chief executive officer of Blockchain Ltd., which introduced a crypto trading platform for professional investors on Thursday, said in an interview on Bloomberg Television.

Read more on how Bitcoin’s rally compared to history’s biggest bubbles.

Bitcoin declined as much as 4.2 percent to $5,791 on Friday, the lowest level since November, according to Bloomberg composite prices. The cryptocurrency recovered on Saturday in Asian hours, rising 8.6 percent to $6,397 at 11:35 a.m. in Tokyo, according to Bitstamp.

Still, Bitcoin is down around 55 percent this year, according to Bitstamp. Other coins including Ether and Litecoin slumped more, while the combined value of tokens tracked by CoinMarketCap.com declined to $236 billion. At the peak of crypto-mania, they were worth about $830 billion.

While it was difficult to find fresh catalysts for Bitcoin’s drop on Friday, hacks at two South Korean exchanges and a regulatory clampdown in Japan have weighed on sentiment in recent weeks. Regulators around the world have stepped up scrutiny of cryptocurrencies on concern that they’re a breeding ground for illicit activity including money laundering, market manipulation and fraud.

Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4 percent of coins with market caps from $50 million to $100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group.

Bitcoin may not go to zero, but it’s “very much” a bubble, Robert Shiller, the Nobel laureate economist whose warnings about dot-com mania proved prescient, said in an interview with Bloomberg Television’s Tom Keene on Tuesday. Last year’s Bitcoin surge was “not a rational response,” he said.

WHY WILL?

WHY WILL?

A Will can ensure your properties are distributed as per your Wishes and not as per the legal process or succession laws of your religion - to ascertain who your legal heirs are. A Will can assure you that the family bonding remains intact. Every individual must know “Why Will is necessary”, and there are many valid reasons like:-

Many individuals get insurance policies for themselves and family members because we all accept the truth that life is full of uncertainties, and death is inevitable for all individuals, at any age. So, if a person has taken an insurance policy for the financial stability of his / her family members but he has not arranged to give written instructions as to how insurance claim should be distributed within the family, in such a situation how can you expect proper or smooth distribution of insurance claim after you leave them without informing about your wishes?

Hence, be it small or big properties a Will is must for all ages. Even for a single Insurance policy a Will is required to know your wishes – who should get what from your assets, wealth, properties. 

If your Will is available to your family, they shall have very clear instructions to obey your wishes with all respect, no confusions / hassles or any disputes within the family.

All NRIs should have a separate Will made, according to the Indian laws for their all properties in India.

It is only a Myth in many people’s minds - that if Nominations or Joint Accounts are made for various properties like flat, bank accounts, shares, lockers etc. it is not necessary to make a Will. However, all must know that as per law it is a misconception that nominee or joint holder automatically becomes a legal heir. A Nominee / Joint Holder can only be a Trustee of your properties / your joint holding share and it is duty of Nominee / Joint Holder to distribute your share in properties to your legal heirs as per your WILL or succession laws. However, physical shares hold in companies with nominee is an exception as per current law; hence nominee of physical shares in a company becomes a legal heir.

Through a Will, one can spell out his / her feelings, wishes as well as guidance or tips in addition to distribution of properties which can help your family to take actions in future when you are not with them.

Many individuals make a Will as a part of Estate Planning or Tax Planning to avoid heavy tax burden.

If there is No-Will, all properties will be distributed as per succession law applicable to you as per the religion you follow like Hindu Succession Law etc – and not as per your wishes.

As per Hindu Succession Law – if a person dies without a Will – his properties are distributed equally to living Mother, Wife, Sons and / or Daughters as Class 1 heirs and if no legal heir is available in Class 1, then the properties goes to Class 2 heirs equally viz.  Brothers, Sisters etc.

Not making a Will may create undue disputes within the family due to confusions about your wishes, their understanding about succession laws and sometimes these disputes end in a long-drawn legal litigations in court of law / media. We have seen many such cases in India as well as all over the World.

A Will made by a Parsi or Christian before getting married are to be treated as cancelled / revoked on marriage.

In Muslims, a Will is allowed only upto 1/3rd of total owned properties and the rest is distributed equally to the family as per religious Islamic laws like Sharia. There are different laws for Shia, Sunni and other caste in Muslims religion. A Will made by Muslims require a detailed understanding about applicable religious laws and family of the person.

K Dhamodharan.,M.Com.,LL.B.,HDCM

Personal Financial Planner

+919940857995., +917358210672

licdhamu@gmail.com