How to recognize Easy Money and Fast Money Making Ponzi Schemes

How to recognize Easy Money and Fast Money Making Ponzi Schemes
Making quick money or easy money is the dream of many a people and organizations and due to this ambition, lots of schemes are launched. Everybody wants to be rich and famous and for that various schemes have been introduced. In the past quite innovative schemes like chit funds, plot ownership, teakwood scheme, collective money schemes have been devised to make easy money.

Keeping the trend going, one such scheme has been introduced in the shape of Freedom 251 mobile phone scheme which has taken the world by storm. This appears not only fishy and unbelievable but also such ponzi scheme will make the owners of the company rich and famous.  However the scheme also exposes the vulnerability of the general public.

Now whats the scheme all about….?

One non descript company appears out of nowhere with an offer for selling a smartphone on an unbelievable price of Rs 251 with features which can make many other existing smartphones look pale in comparison. The offer was to book the phone online for an initial period and to be delivered after some months or so. To make it appear transparent and genuine, popular and senior political leaders and ministers were invited to launch the scheme.

Lacs of people hit the website of the company to book the phone online and the successful buyers were assured to provide a link for submitting personal details for deliver and payment later.

How the company will dupe the buyers..?

The company will collect money form lacs of people with a promise to provide dirt cheap smart phone at the cost of Rs 251 after four months of booking. General public with the curiosity of owning a smartphone would not mind paying such a paltry sum. The financial mathematics of the scheme by the company is like this:

Cost of the phone- Rs.250
No of bookings- 50 lacs
Total money collected by the company- 50lacs*250=125 Crores
Period of delivery-6 months

(All figures approximate)

Now if the money collected by the company is deposited in the bank with a minimum interest rate of 6.5% for 6 months, the company will earn approximately 4 crores interest  in 6 months without any hitch.

This can be understood by the following illustration:

Even if due to any reason, either by Govt. action or other regulating agencies, the company is forced to refund back the public money, still it will retain the interest earned on the deposit amount. And keeping in view our legal system, it will take years for people to get their money back.

There are instances that Owners and CEOs of many such companies are not caught and not proved guilty for long time. You must be knowing the famous people who have not refunded the public’s money even after ordered to do so.

Therefore, before subscribing to such schemes it is advisable to go through the details and viability of such dubious schemes. One needs to apply their own mind and take necessary precaution in money duping schemes.

Even though such ponzi schemes have come and gone but poor people still get lured by such money making schemes whenever they are launched.  

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

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

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

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.