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personal finance
Steps to reduce your car insurance premium
tax advice |
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Home loan for NRIs
Know it all before taking the plunge Bienu Vaghela
As we know real estate is a sector which is popular among NRIs not only for investment purposes but also for stay of their families. So yes, NRIs can buy properties in India and avail housing loans, too, in respect of residential properties from banks. They can purchase a residential house, either under-construction or on resale. They can even take a loan for self-construction of a residential property on a plot in India. Not only this, they can get finance for the purchase of a plot of land allotted by a society/development authority or even to renovate/improve an existing residential property in India. Like resident Indians, NRIs, too, can avail up to 80-85% (depending on the flat value) of the cost of residential property as a home loan. But the down payment should be done from direct remittances from abroad through normal banking channels or from non-resident external (NRE) account and/or non-resident ordinary (NRO) account in India. Even the EMI payment should be remitted to the lending bank or HFC from any of these accounts. However, in case of an NRI, there is stress on certain pre-requisites for sanctioning the loan such as qualifications, current job profile, past experience, probability of continuing abroad for the loan tenure and probability of servicing the loan with an extended tenure in case of return to India. The Loan To Value (LTV) ratio for NRI customers varies from one bank to another, though the manner of calculation is the same in case of a regular home loan. The income taken into account for calculating the home loan eligibility is the repatriable income plus any income in India. For NRIs working in countries that restrict repatriation such as African countries, only the repatriable portion of the income is considered for calculating loan eligibility. Though the regular home loan tenure can be up to 25 years (as in case of current times due to increase in interest rates), loan tenure for NRIs is normally 10 to 15 years due to their better affordability. Along with documents required for thehome loan, some additional documents are required to be submitted along with the application form for a NRI home loan. Additional documents required
Repayment of loan is permissible through following sources:
It is important that an NRI provides General Power of Attorney (POA) in favour of a local and trustworthy relative as per the draft of the bank which should be duly attested by the Indian consulate in the country of his residence. In case the loan borrower is in India, the POA can be locally notarised. Most banks require the POA to ease the process of dealing with the NRI lender. The POA holder only gets the powers that you give and does not have the power of dealing with the property. Like resident Indians, there are certain tax benefits too for NRIs on interest payments which can be useful if they have any income chargeable to tax in India. Finally, there are other similarities like if as an NRI you want to pre-close the home loan due to availability of surplus funds or due to switching lenders, loan pre-payment penalty will be charged by the bank, though most banks and all home finance companies have stopped charging pre-payment on floating rate loans. The author is Chief Editor,
Apnapaisa.com. The views expressed in this article are his own.
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Steps to reduce your car insurance premium
Motor insurance premium is determined by several factors. By making use of the following tools, you can easily reduce your car insurance premium without comprising by buying a lower cover or a policy devoid of important benefits. Purchase online Purchasing your insurance online would not only reduce the time required to visit your insurance company or agent, but it will also enable you to save money. To encourage customers to buy policy directly from their websites, insurance companies offer attractive deals and premium rates. Insurers also provide instant quote service on their websites. Before deciding on policy purchase, you can request for instant quote for your desired policy thereby comparing and selecting a policy that meets your requirements and is suitable to your budget. Opt for deductibles Deductible is the monetary loss borne by a vehicle owner. Deductible can be either compulsory or voluntary. In case of compulsory deductible, you are required to bear a pre-decided amount while the rest of the expenses will be paid by the insurer in case of damage to your vehicle. For reducing your motor insurance premium, you can also opt for voluntary deductible which is an additional deductible. In this case, you voluntarily agree to pay a certain portion of the claim amount from your pocket. In return, the insurer would offer you an additional discount on your insurance premium. Avail No Claim Bonus No Claim Bonus (NCB) is a discount applied to the insurance premium for those who have not registered claims in the previous years. NCB increases for every year of no claim starting from 10% and goes up to 50%. In addition to helping you reduce the premium on your car insurance, the NCB benefit can also be transferred to your new car, when you buy one. Given that the premium on a new car (and presumably bigger car) is much higher compared to an old car, you will be able to make substantial savings on the insurance premium of your new car. Install anti-theft device Installing anti-theft device in your vehicle can be proven crucial at times when your vehicle is vulnerable to theft. Vouching the importance of such device, insurance companies now encourage their customers to install anti-theft devices as a measure of precaution. Moreover, insurers offer special discount on the premium for installing such devices in cars. Cars with pre-fixed anti-theft devices are available with vehicle dealers or one can buy these devices separately in the local market. You can avail special discount on insurance premium if you are a member of bodies such as the Automobile Association of India or Western India Automobile Association (WIAA) which are empowered under the Motor Vehicles Act. Declare the correct IDV Insured Declared Value (IDV) is the depreciation applied on your vehicle over the manufacturer’s selling price, based on age of the car. It is the maximum amount that the insurer will pay in case the vehicle is completely damaged and needs to be replaced. At times, car owners seek a higher IDV, however, it does not make sense to seek a higher than reasonable IDV since it will end up increasing the insurance premium on the car without any associated benefit. So go ahead, follow these simple steps and enjoy the drive in your favourite vehicle. The author is Head, Customer Service Motor,
ICICI Lombard. The views expressed in this article are his own |
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Interest on tax-saving fixed deposits taxable
SC Vasudeva
My son is serving in the Punjab Government. He had deposited Rs 1 lakh with a nationalised bank in a tax-saving fixed deposit under Section 80C in August, 2013. His department will deduct Rs 30,000 from his salary towards EPF from 01.03.2013 to 28.02.2014. When he submitted the said FD in his office, his department had refused to accept the same. Kindly clarify whether we can enclose a photocopy of the FD with the income tax return for claiming the rebate a) Also advise whether the interest accrued on such fixed deposit will be added in the gross salary after the closing of every financial year or after the completion of five years i.e. on the maturity of the fixed deposit. — Ramesh Kumar At present, it is not possible to enclose any paper along with the return at the time of filing it. However, your son can claim deduction to the extent of Rs 1,00,000 towards the amount of fixed deposit made in accordance with the provisions of Section 80C of the Income-tax Act 1961 (The Act). a)Interest receivable on the amount deposited in a fixed deposit in accordance with the provisions of Section 80C of the Act would be taxable. Your son can choose the accrual method or cash method of accounting for such interest. In case he chooses the cash method, interest would be taxable in full at the time of maturity of the fixed deposit. It would, however, be advisable to include the interest on accrual basis as it may enable him to obtain the benefit of lower tax slab of 10% in case his salary does not exceed Rs 5 lakh per annum. I am retired from the Punjab Government service. I got treated from Fortis and Max Super Specialty Hospital, Mohali, which are not on panel of the government. I incurred an expenditure of more than Rs 15,000 on my treatment. These were curtailed by 40-50% by the government while reimbursing, certifying therein that the approved rates are on par to the extent, in accordance with the rates of All India Institute of Medical Sciences (AIIMS), New Delhi. Please advise whether my medical reimbursement is still liable to tax deduction or exempted under the first proviso to Section 17(7) of the Act. — GK Sood As per provisions of Section 17(2)(ii) of the Income-tax Act 1961 (The Act), any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment in any hospital approved by the Government for the medical treatment of its employees is not taxable. Therefore, in case Max Super Specialty Hospital is approved by the Government for treatment of the employee of a particular entity, the reimbursement made to an assessee would not be taxable. However, in case the hospital, as aforesaid, is not approved by the Government, reimbursement exceeding Rs 15,000 would be taxable. Section 17(2)(vii) of the Act will not be applicable in the case cited in the query as it is applicable to medical treatment outside India. It may be added that the provisions as explained hereinabove are applicable to an employee. I presume the medical expenses were incurred during the tenure of your employment. In case the medical expenses were incurred during the retirement period, the above provisions would not be applicable and no deduction would be allowable for medical expenditure incurred on your treatment. I am an NRI. I have spent more than 365 days in India in the preceding four years ending April 31, 2013. During the financial year 2013-14, I spent more than 60 days in India. I had no income from India during all these years and lived on my savings from overseas. Please advise whether I am required to file an income tax return. If so, in which form should I file my return? — Arvind Kalia According to provisions of Section 6(1) of the Act, you will be considered a resident in India. However, to determine whether you were “ordinarily resident in India” in any previous year, it would be essential to ascertain whether you were in India for a period of, or periods amounting in all to, 730 days or more in seven previous years preceding the previous year. This information is not available in the query sent by you. Presuming that you were resident and ordinarily resident in India i.e. you were also in India for 730 days or more during the seven previous years preceding the previous year, you will be required to file return if you have any asset (including any financial interest in any entity) located outside India or signing authority in any account located outside India. You will be required to file the tax return on or before the due date applicable to an individual. It would be July 31, 2014, being relevant to the financial year 2013-14.
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what are Options & Futures*
An option gives you the right to buy or sell the underlying asset . A call option gives you right to buy the underlying asset while a put option gives you the right to sell. An option contract specifies the strike price, that is, the price at which you can buy or sell the underlying asset. In Futures, you buy a contract which will have a specific lot size of shares. When you buy a Futures contract, you don’t pay the entire value of the contract but just the margin. Open interest is the the total number of contracts not closed or delivered on a particular day. |
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