Jeevan Jyoti Bima Yojana- PMJJBY and Suraksha Bima Yojana-PMSBY

PMJJBY
Jeevan Jyoti Bima Yojana (PMJJBY) and Suraksha Bima Yojana (PMSBY), two of the most prominent social security insurance schemes declared in the Union Budget, will be launched by the Prime Minister on 9th May 2015. This would be a path breaking initiative towards providing affordable universal access to essential social security protection in a convenient manner linked to auto-debit facility from the bank account of the subscriber.

The two insurance schemes to be launched namely, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) would provide insurance cover in the unfortunate event of death by any cause / death or disability due to an accident. The convenient delivery mechanism of the schemes is expected to address the situation of very low coverage of life / accident insurance and old age income security products in the country.  

Benefits of the Scheme under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

PMJJBY will offer a renewable
  1. One year life cover of Rupees Two Lakh to all savings bank account holders.
  2. Available in the age group of 18 to 50 years extendible up to 55 years,
  3. Covering death due to any reason,
  4. Nominal premium of Rs.330/- per annum per subscriber.
  5. The scheme would be offered / administered through LIC or other Life Insurance companies.

Benefits of the Scheme under Pradhan Mantri Suraksha Bima Yojana (PMSBY)

PMSBY will offer a renewable
  1. One year accidental death cum disability cover of Rupees Two Lakh (Rupees One Lakh for partial permanent disability) to all savings bank account holders.
  2. Available in the age group of 18 to 70 years.
  3. Nominal premium of Rs. 12/- per annum per subscriber.
  4. The scheme would be offered / administered through Public Sector General Insurance Companies (PSGICs) or other General Insurance companies. 
In short the schemes being launched by the prime Minister are offering risk coverage of Rs 4 Lakhs on payment of premium of Rs 342/- per person per year. This kind of coverage is not available anywhere else and that too without any medical checkups and any conditions therof. Thought the Aadhar Number is desirable but in case Aadhar Number is not available, the benefits of insurance cover will not be denied to anyone. 

How Do Banks and Housing Finance Companies Decide on the Loan Amount?

home loans eligibility criteria
As you prepare to buy a new home or intend to build your dream home, more often than not it is the financial aspect that calls for a closer scrutiny. The market is flooded with different kinds of home loan schemes, each one seeming to be more attractive than the others and it is herein that a prospective customer must lay emphasis on. As the risks in offering a home loan is higher, the loans carry a higher interest rate and a bigger down payment. But what are the criteria banks adopt to offer you a home loan to enable you o buy it.

Usually, most banks and housing finance companies give home loans up to a maximum of 85% of the cost of the house. The 15%, sometimes called 'seed money' or 'equity', will have to be provided by the loan applicant. The amount, for which the applicant is eligible, is determined by the age, income, number of dependents, monthly outgoing and repayment capacity. This varies from case to case.


The Bank/HFC assesses your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable / surplus income (which in turn is based on factors such as total monthly income / surplus less monthly expenses) and other factors like spouse’s income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. 


Typically a bank assumes that about 55-60 % of your monthly disposable / surplus income is available for repayment of loan. However, some banks calculate the income available for EMI a payment based on an individual’s gross income and not on his disposable income. The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo / outflow which in turn depends on your disposable income.

Banks generally fix an upper age limit for home loan applicants.  Only if you qualify in there criteria for giving loans, you can go for a home loan to build your dream house.

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
1
1981-82
100
17
1997-98
331
2
1982-83
109
18
1998-99
351
3
1983-84
116
19
1999-00
389
4
1984-85
125
20
2000-01
406
5
1985-86
133
21
2001-02
426
6
1986-87
140
22
2002-03
447
7
1987-88
150
23
2003-04
463
8
1988-89
161
24
2004-05
480
9
1989-90
172
25
2005-06
497
10
1990-91
182
26
2006-07
519
11
1991-92
199
27
2007-08
551
12
1992-93
223
28
2008-09
582
13
1993-94
244
29
2009-10
632
14
1994-95
259
30
2010-11
711
15
1995-96
281
31
2011-12
785
16
1996-97
305
32
2012-13
852
33
2013-14
939
34
2014-15
1024

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.

OPENING OF CAPITAL GAINS ACCOUNT

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.

WITHDRAWL FROM CAPITAL GAINS ACCOUNT SCHEME

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.

OTHER FEATURES OF CAPITAL GAINS ACCOUNT
  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.

Insurance
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.