Wage Revision for PSU Banks Officers at 15% Increase

Long awaited wage revision for  Bank employees and Officers has been finally settled with 15 % pay rise. The wage revision agreement reached between UFBU and IBA on 23rd February, 2015, which can be considered as breakthrough in over 28 months old overdue wage revision for bankers. Now the Bankers will have two Saturdays off in a month in addition to the wage rise. The wage revision will be implemented with effect from November 2012.

There are 27 public sector banks in the country with a combined employee strength of about 8 lakh. There are about 50,000 branches of these banks across the country.

Cost Inflation Index for the Year 2014-15

The Central Board of Direct Taxes (CBDT) has revised a value for the cost inflation index for 2014-15 vide Notification No. 31/2014, Dated: June 11, 2014.  The Cost Inflation Index helps reduce the inflationary gains, and the index is useful for income-tax assesses in the computation of tax on long-term capital gains.

 Cost Inflation Index-

Sl. No.
Financial Year
Cost Inflation Index
Sl. No.
Financial Year
Cost Inflation Index

Long Term Capital Gains  computation :

LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of improvement +cost of transfer)

Indexed cost of acquisition
 =Cost of acquisition x CII of year of transfer /CII of year of acquisition

Indexed cost of improvement
 =Cost of improvement x CII of year of transfer /CII of year of improvement

Tax liability on LTCG with Indexation is to be taken at 20%

Capital Gains Account Scheme: Key Features & Tax Benefits

Capital Gains Account Scheme: Key Features & Tax Benefits
The profit that arises on the sale of any property is referred to as Capital Gains and is chargeable to tax. But Govt also provides for various schemes for saving tax on such capital gains under Section 54, 54B, 54D, 54F etc.

However, as per the provisions of these sections, the amount is required to be reinvested in specified investment types before the specified period. However, if the due date of filing income tax returns falls before the expiry of the specified period, the amount of capital gains is required to be invested temporarily in the Capital Gains Account Scheme which can be easily withdrawn at the time of investment in the specified instrument.

Capital Gains Account Scheme

As per the Income Tax Act, the taxpayer is allowed some time (2/3 years) to invest the capital gains in specified instruments. However, in many cases the due date for filing income tax returns for the year in which the capital gains arises is before the expiry of the specified period.

To avoid such issues, the income tax act prescribes that the taxpayer should deposit the amount of capital gains in the capital gains account scheme on or before the due date of filing of income tax returns which can be easily withdrawn at the time of investment in the specified instrument.

Features of Capital Gains Account Scheme

The Capital Gains Account Scheme was introduced in the year 1988, and as per the Capital Gains Account Scheme the amount of capital gains to be claimed as an exemption should be either be re-invested or deposited in the Capital Gains Account before the due date of filing of returns.

The Govt has notified 28 banks which can open the Capital Gains Account on behalf of the Govt.  All branches of these 28 banks except Rural Branches are authorised to open the capital gains account.

There are 2 categories of Capital Gains Account which are as follows:-

Capital Gains Account -Type A – Savings Account: This is like a normal savings account and the interest payable on this account is the same as the interest paid on normal savings account by that bank.

Capital Gains Account -Type B – Term Deposit Account: This is like a fixed deposit wherein the amount is deposited for a fixed period of time. The interest rate on this account is equivalent to the interest paid on fixed deposits by the bank. As Type B accounts are same as Fixed Deposits Account, any withdrawl from this type of account attracts a penalty for pre-maturity withdrawl.

The interest paid and pre-maturity penalty levied varies from bank to bank and is different for different banks.

Capital Gains Account Type A is advised when the amount of capital gains is to be used for construction of a house as the amount would be required to be withdrawn in various stages. Type B Term Deposit Account is advised when the amount of capital gains is to be utilised for purchase of a house.

Capital Gains Account Type B is also of 2 types – Cumulative and Non-Cumulative. Under the cumulative option – the interest is re-invested and the total amount is paid at the time of the completion of the term period or at the time of withdrawl (whichever is earlier). Under the non-cumulative option, the interest is paid at regular intervals and is not reinvested.


To deposit the amount in the capital gains account, the taxpayer would first be required to apply for opening the account by making in application in Form A. He would also be required to submit the following documents along with Form A – Proof of Address + Copy of PAN Card + Photograph.

Type A Account can be converted into a Type B Account and vice-versa on an application made by the taxpayer in Form B.


The amount deposited in the Capital Gains Account can be withdrawn by making an application in Form C. The amount so withdrawn has to be utilized within 60 days from the date of such withdrawal and only for the purpose of such withdrawal. The unutilized amount should be re-deposited immediately.

For subsequent withdrawal, the application is required to be made in Form D by detailing the manner/purpose for which the previous withdrawal has been utilized.

Many Banks don’t issue any cheque book for the capital gains account and amount as the amount is to be withdrawn not using a cheque but by furnishing an application in Form C/ Form D.

  1. Only Individuals and HUF are allowed to open capital gains account.
  2. The amount deposited in the Capital gains account cannot be offered as a Security for any Loan/ Guarantee.
  3. The Interest on such account is not tax-free and TDS is also liable to be deducted from such account as per the provisions of the income tax act.
  4. The taxpayer can also appoint nominees to this account by making an application in Form E. Such nomination can also be cancelled by making an application in Form F.
  5. To close the Capital Gains Account, an application in Form G is required to be made. In case of the death of the depositor, such application would be required to be made by the nominee/legal heirs in Form H.
  6. The approval of the income tax officer who has the jurisdiction of the depositor is also required at the time of making an application for the closure of the account.

If the amount deposited in the capital gains account is not utilised for the specified purpose before the expiry of the specified time, the amount of capital gains not utilised would be chargeable to tax as capital gains in the financial year in which the time period expires.

With inputs from www.charteredclub.com

Ways to Save Money for your Retirement

Save Money for your Retirement
Retirement is expensive. To maintain your standard of living when you stop working, it is estimated that you will need at least 100 percent of your pre-retirement income with inflation or more. Retirement planning is about managing your money today so that you can make the most of your retirement period. Your retirement plan should balance your needs, wants and the reality of your finances. So take charge of your financial future. The key to a secure retirement is to plan ahead for your retirement.

A strategy for how you save today can make a big difference in how much money you will have after your retirement. A solid retirement saving plan charts out methods of creating retirement income and creates a roadmap to help ensure that your money will last as long as you do.

To start with these are the ways to save money for your retirement-

Have a saving mindset
You should designate an amount of your pretax income to contribute to your retirement savings on a monthly or bi-weekly basis and have it taken out of your salary, just like your taxes. It's easiest to save money when you don't have it in your hands; you're effectively taking the decision of whether to save that money out of your control.

Start saving, keep saving, and stick to your goals
If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you're not saving, it's time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it's never too early or too late to start saving money.

Cut your unnecessary expanses
Usually when we are working and earning good money we tend to indulge in purchase of goods and luxuries which may not have a long term use. Therefore it is necessary to assess before buying anything whether you will actually need it. This way not unnecessary expenditure can be curtailed but also it will contribute to your savings for your planned goals.

Put money into an individual retirement plan
You can put up to 5000 a year into an Individual Retirement Plan; you can contribute even more if you are 50 or older. You can also start with much less. IRPs also provide tax advantages. The tax treatment of your contributions and withdrawals will depend on which option you select. IRAs can provide an easy way to save. You can set it up so that an amount is automatically deducted from your savings account and deposited in the Individual Pension Plan.

Investment in stocks is best for long-term growth
Stocks have the best chance of achieving high returns over long periods. A healthy dose will help ensure that your savings grows faster than inflation, increasing the purchasing power of your nest egg.

Contribute in employer’s pension schemes
The best method to save money for your retirement planning is to join the retirement options provided by your employers and contribute to it as much as possible. The options provided for retirement are usually much deliberated upon and offer the best returns on your savings. Moreover it is easy to handle and safe investment for the retirement.

Invest in a second house
Investment in a house can be a sure shot success method for savings for your retirement planning. The returns on real estate investment have been stupendous over a long period of time. In your working life, you should consider investing in a second house if you already own a house for accommodation. Owning a second house will provide you with a cushion for your retirement as it can be disposed off any time to meet your unexpected financial needs.

Protect against risk with an insurance policy
If you were to die unexpectedly during your working years, your family would not only suffer the loss of your income for day-to-day needs, but also the nest egg you would continue to build for retirement. Life insurance can provide for both your family’s current lifestyle as well as your survivor’s plans for retirement. The permanent life insurance you use to protect your loved ones can be another possible source of income in retirement. Permanent life insurance accumulates cash value that grows tax deferred. If you no longer need the full death benefit after you retire, you can access that cash value to help supplement your retirement income.

Avoid over-diversification of savings  
You want to diversify among different asset classes and underlying investments to manage risk, but if you are duplicating the same investments with numerous vendors, you’re probably overpaying fees and that can impact your bottom line.

Revisit your investment strategy 
Look for ways to get a little more growth without more risk than you can tolerate. If you choose only the most conservative investments for your retirement savings, your savings may not grow fast enough to give you the income you need after you retire.

Follow the sound and prudent methods of savings and investment for retirement planning and enjoy the sunset days of retirement.

5 Best Saving Options for Single Parents

Best Saving Options
Usually there are two parents for children to take care and one of them is the bread winner for the family as a whole. Under double income families with sufficient savings and investments, it is quite convenient to maintain the usual activities of the household. What if you are the only parent in your family to look after your kid or kids? What are the ways in which you can adopt best saving options for single parents?

Things can go wrong if there is no savings or proper financial planning for the kids in case there is demise of the last or sole bread winner. Nobody thinks of any eventuality but if proper financial planning is done, you can save your children form many hardships if a prudent line of actions is drawn for their future. We all have a limited amount of funds, and the needs are rising day by day, and you don't know what urgent need appears up anytime. So, for those situations, we must have some ready funds, saved, to be utilized. Therefore we need to know what are the best saving options for a single parent.

Keeping in view the various financial issues involved in providing for the children, listed below are the 5 best savings options for a single parent.

First and foremost, one should take a life insurance policy. A Life Insurance plan ensures that your family is financially secure even if tomorrow you are no longer around to care for them. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets against risk. Life insurance provides money typically to beneficiaries after a loved-one who has life insurance dies. There may be many types of insurance policy but for a single parent to provide for protection against unexpected eventuality, buying a term life insurance policy is an affordable alternative to costly conventional savings oriented life insurance policies.

Buy a House
Secondly, the best saving option for a single parent is to buy a house in order to provide for shelter and financial security to the dependent in case of the death of the parent. This is definitely one of the best saving options to create wealth indirectly. If the financial position of the family is strong, then the house can be bought otherwise you can buy a house by availing home loan to buy property. Buying a house serves dual purpose-savings as well as investment and keeping in view the tax benefits and other perks associated with home loan, you can create huge wealth in future for the security of the dependent.

Investment in Pension Plans
Pension is an arrangement for which people have to invest in their working life. There are hardly any companies that provide for Pension Plans today and even if they do, how many actually stick on to the same job for long to be eligible for the same? Retirement is a stage for which people do not want to think in their early working life. But if you are a single parent and have to look after the dependents then planning to save in pension options is a must. That’s why investment in pension plans needs to be planned for well in advance so that the corpus is ready by the time you plan to retire or in case of the loss of the bread winner.

Fixed Deposits
Fixed deposits as they are known because of their tenure are a safe savings cum investment option that must be resorted to by people with dependents particularly single parents. Fixed deposit is the most handy liquid tool for meeting out unexpected emergencies-be it breakdown of household goods, medical emergencies or unexpected travel. Fixed deposit or term deposits are a safe investment for which you can apportion a small amount every month on a SIP basis and deposit it as fixed term deposits for future use.

Systematic Investment Plan (SIP)
Systematic Investment Plan (SIP) is another smart financial planning tool for a single parent to create a corpus, by investing small sums of money every month, over a period of time. SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme, ETF or direct purchase of stocks. SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. SIPs also help in availing benefits of compounding allowing investment to grow at a fast pace.

These are some of the options which should be resorted to by single parents in order to provide for the maintenance of their dependents. Even if there are no emergencies, still saving on a regular basis can go a long way to build sufficient corpus for their wards.

Save Spend or Invest- How to Manage your Money?

Save Spend or Invest- How to Manage your Money?
When you start earning, money starts pouring in and the most vital question about money that becomes important is how to manage your money? The Personal finance education needs to start young in life as it is the basics of future. At every stage of your lives, when you earn money, you will be faced with 3 choices: save, spend, or invest. How you earn money and the way in which you implement these decisions will evolve with different phases in your life. Save, spend or invest- how you manage your money is the most important aspect of your financial planning for a prosperous future.

A person who puts a portion of his pay cheque in a savings bank account of fixed deposit is fundamentally a saver. He may think of himself as an investor but from the point of this choice- Save, spend or Invest- how to manage your money? ,he is not. He objective is to withdraw the money many years from now and spend it. At that point he may become an investor because his objective will change towards getting an income from his money, but until then he is a saver because he gets no income.

Why should you Save Money?

An investor saves money to invest it and get an income stream. A good investor can obtain more risk-adjusted income from his savings than a poor investor. But the question is why should you save money?? The main reasons are:

  1. Happiness or peace of mind
Saving money is one of the best habits people can take to increase happiness. A regular saving habit increase the satisfaction level of the person and give them a peace of mind as the cushion of having money to meet the family and personal expanses is quite important. If you have no money, it is not possible to meet out you necessary expenditure for today or tomorrow.

  1. Fulfill your Dreams
Saving is the biggest tool to realize your dreams. If you want to make your dream come true like buying a house or a bigger car or most importantly going on travel to your choicest place, it is a must to save money. The biggest regret people have is that they did not save the money to fulfill their desire at the right time. In order to realize your dreams, start saving money early.

  1. Emergencies
We hope that emergencies won’t happen, but we all know that they do. A family member can develop a health issue, you might need to make an emergency trip, you may have a car to get repaired suddenly, severe weather could flood your house or you may have to pay for any other unforeseen expense. Any of these emergencies can be expensive, and we are likely to encounter some sort of emergency from time to time. So why not be prepared rather than potentially become another victim of an emergency.

Why should you spend?

Spending is the act of disbursing the money you earn. You can’t save all the money you are earning as money is required to meet many daily expenses and to sustain. Whether to buy food, household goods, house, furniture and consumer durables as well as luxuries like car, fancy clothes, travelling, all this can be done only if you spend money. But while doing so it should be kept in mind that money is not everlasting and should be spent wisely.

Why should you invest?

Investing is the art of building wealth (financial or personal), before you write a cheque, whether it be to your bank or your broker, be honest with yourself about what is motivating you to make that financial commitment. The only way to attain financial security is to save and invest over a long period of time. Investing is to make your money work for you. You should invest because:

  • Your money earns money
Someone pays you to use your money for a period of time. You then get your money back plus “interest.” Or, if you buy stock in a company that pays “dividends” to shareholders, the company pays you a portion of its earnings on a regular basis. Now your money is making an “income.”

  • You buy something with your money that could increase in value
You become an owner of something that you hope increases in value over time. When you need your money back, you sell it, hoping someone else will pay you more for it.

Finally, when you start earning, learn the best habit of saving early, spend wisely and invest your money prudently to build wealth and be financially secure in future.

Some Things You Need To Know About Life Insurance

 Some Things You Need To Know About Life Insurance
Life insurance is an important financial tool that could benefit you at many different stages in your life. A Life Insurance plan ensures that your family is financially secure even if tomorrow you are no longer around to care for them. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets against risk . Life insurance provides money typically to beneficiaries after a loved-one who has life insurance dies.

Advantages of Life Insurance are enumerated below…

Life Insurance provides risk cover 
Life today is full of uncertainties and in this scenario Life Insurance ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event like your absence if you are the person on whom everybody depends.. 

Life Insurance is planning for life stage needs
Life Insurance not only provides for financial support in the event of untimely death but also acts as a long term investment. You can meet your goals, be it your children's education, their marriage, building your dream home or planning a relaxed retired life, according to your life stage and risk appetite. All the traditional life insurance policies i.e. traditional endowment plans, offer in-built guarantees and defined maturity benefits through variety of product options such as Money Back, Guaranteed Cash Values, Guaranteed Maturity Values.

Life Insurance is protection against rising health expenses
Life Insurers through riders or stand alone health insurance plans offer the benefits of protection against critical diseases, accidental benefits and hospitalization expenses. This benefit has assumed critical importance given the increasing incidence of lifestyle diseases and escalating medical costs.

Life Insurance builds the habit of thrift
Life Insurance is a long-term contract where as policy holder, you have to pay a fixed amount at a defined periodicity. This builds the habit of long-term savings. Regular savings over a long period ensures that a decent corpus is built to meet financial needs at various life stages.

Life Insurance is safe and profitable long-term investment
Life Insurance is a highly regulated sector.  The regulatory bodies,  through various rules and regulations ensures that the safety of the policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a long-term savings instrument, also ensures that the life insurers focus on returns over a long-term and do not take risky investment decisions for short term gains.

Life Insurance is best for retirement planning 
Life Insurance is one of the best instruments for retirement planning. The money saved during the earning life span is utilized to provide a steady source of income during the retired phase of life.

Life insurance gives protection plus savings over a long term  
Since traditional policies are viewed both by the distributors as well as the customers as a long term commitment; these policies help the policyholders meet the dual need of protection and long term wealth creation efficiently. Traditional policies offer an opportunity to participate in the economic growth of the country without taking the investment risk. The investment income is distributed among the policyholders through annual announcement of dividends/bonus.

Life Insurance provides facility of loans without affecting the policy benefits  
Policyholders have the option of taking loan against the policy. This helps you meet your sudden, unplanned life stage needs without adversely affecting the benefits of the policy they have bought.

Life Insurance is eligible for tax benefits
Insurance plans provide attractive tax-benefits for both at the time of entry and exit under most of the plans.

Life insurance is a tool for mortgage redemption
Insurance acts as an effective tool to cover mortgages and loans taken by the policyholders so that, in case of any unforeseen event, the burden of repayment does not fall on the affected family.

In this way, life insurance offers several advantages not available from any other financial instrument.