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11 February 2012 to 17 February 2012

** Legal **

Q. I along-with my sister are two children of our parents. My father has a property. I would like to divest my stake in the property of my father. How do I do it. Umesh, Ranchi

Ans. The share of property of your father shall devolve upon you as per your father’s will and upon his death. Presently, with receiving the property you cannot divest stake in it.

Q. I am 24 year old and am getting married. My surname shall change from Gupta to Mitra. Kindly advise where all do I need to make changes in official records. Inder, Bokaro

Ans. On getting married, you need to make changes in following major documents – 
· Passport
· PAN card
· Bank Account
· Demat Account
· Driving License

** Insurance **

Q. Pls guide me on how to prevent myself from being missold an insurance policy Randip, Dhanbad

Ans. Please beware of following statements by Insurance Agent - 
1.Unit-Linked Insurance Plan (Ulip) as a five-year product. Mis-selling also takes place when these agents promise stupendous returns within a span of five years.
2. Buy Ulips instead of ELSS. It's like an MF with insurance: 
3.Don't buy term cover, you won't earning anything in return. 
4. Money back policy offers insurance & return on premium.
Though the above statements are partly true but not the best solution for an individual. Insurance and Investment should be segregated. Term insurance is one of the best product for an individual. Return from insurance products are very less as compared to investment products.

** Taxation **

Q. Kindly clarify the rate of long term capital gains tax on unlisted shares. Is it 10% without indexation and/or 20% with indexation? Santosh, Ramgarh

Ans. For unlisted shares the option of paying income tax at 10% without considering indexation benefit is not available. Such long term capital gains are taxable at 20% after considering indexation benefit.

04 February 2012 to 10 February 2012

** Insurance **

Q. My wife has met with an accident and has been admitted to a hospital. The cost of the treatment is Rs. 7.5 lakh. I have three insurance policies. How can I claim from insurance companies as the hospital gives only one discharge form. Prem, Ranchi

Ans. As you have taken 3 insurance policies, different insurers shall settle claim to the extent of the risk covered. Submit all the required documents to any one insurance company. After the company accepts the claim in proportion to the sum insured, the insurer will return the original documents and you can claim the balance from the other companies.

** Taxation **

I am an NRI and do not have income in India. I have received a property through inheritance. On selling the same I made a long-term gain of Rs.1,20,000. Can I opt for tax laws specifically available to NRI and take benefit of basic exemption? Subhash, Bokaro

Ans. You may not be entitled to basic exemption on on long-term capital gains.

Q. I am a self-employed. After filing my Income Tax return for assessment year 2011-12, I realized that I have not claimed TDS credit of Rs. 45000/-. However, it is reflecting in Form 26AS. Can I claim the TDS which was not shown in the return? Please guide. Sitaram, Dhanbad

Ans. Hopefully, you have filed your original return within the due date. You can now file a revised return and claim the TDS omitted by mistake.

Q. I am living with my parents in house owned by my father. My company pays me HRA (house rent allowance). Can I pay rent to my parents and claim tax deduction for the amount which my company is providing me under HRA? Amresh, Ramgarh

Ans. The Income Tax laws does not prohibit you from claiming deduction in respect of rent paid to parents. For rent paid you can represent it to your Company and claim HRA exemption. I would also advise you to make payment of rent by cheques.

** Investing **

Q. I have to invest Rs. 50,000 to save tax under section 80 C. I am planning to invest in mutual funds under ELSS scheme. Please advise me on few funds. Raju, Ranchi

Ans. I suggest you to invest in 2-3 mutual funds and thus diversify your risks. On the basis of past performance, I would suggest you to make investment in - HDFC Tax saver, Canara Robeco Equity Tax Saver and Fidelity Tax Advantage. It is further suggested to opt for growth plan.

28 January 2012 to 03 February 2012

** Taxation **

Q. I am 27 years old and planning to buy a flat in Ranchi worth around 35 lakh. My dad is a senior citizen and plans to fund my flat by selling his flat in Jamshedpur. I plan to take a home loan too. Will this transaction be treated as an income for me? Shyam, Ranchi

Ans. Assuming that the house owned by your father has been held for more than 36 month (long-term capital asset) and he would be selling the house within March 31, 2012. If you plan to complete the purchase within July 31, 2012 the due date for filing your father's return of income, then your father can park the money in FDs. Interest earned on the deposits will be taxable. However, if you think that the purchase would take longer, then your father need to deposit the amount of capital gains in an account maintained under the capital gains savings account scheme and utilise the balance in that account to fund purchase of the house . Your father shall have to be a co-owner of the property to be eligible to claim tax exemption under Section 54. On following above, this transaction will not result in taxable income.

Q. I have been investing of Rs.70,000 (maximum possible till now) in my and my minor child’s PPF accounts. My child has recently turned adult. Can we now contribute Rs. 2 lac to the two accounts? Ramesh, Bokaro

Ans. Yes, on your child becoming a major, you can now contribute Rs.100,000 to each of the accounts.

** Insurance **

Q. I am 29 years old and planning to take medical cover though I have insurance from my employer. I have gone through the ICICI Lombard’s family floater policy. Please advise if this is a good policy to cover myself, my wife and my daughter. Bablu, Dhanbad

Ans. ICICI Lombard offers comprehensive coverage for your family with floater benefits. The policy offers cashless claim facility at over 4,000 network hospital across India. There is no sublimit on room rent, doctor fees and hospital charges. Floater benefit under the policy is available up to the age of 60 years and thereafter will be renewed under individual plan up to the age of 70 years. You should also check the network hospitals of the insurer in your area before taking a decision.

** Investing **

Q. I have started investing in mutual funds from June 2011. I want to accumulate a corpus of Rs.25 lakh in the next five years. I am currently investing Rs.2,500 through SIPs in HDFC equity tax saver, Rs.2500 in Sundaram SMILe, Rs.5000 in HDFC Top 200. Please suggest on my goals and plan. Jitendra, Ramgarh

Ans. Your current investment pattern of saving Rs.10,000 a month is likely to yield a corpus of Rs. 25 lacs in 10 years. Whereas your goal is to build a corpus of Rs. 25 lac in 5 years. You need to save and invest in monthly SIP Rs.31000/- approx to achieve your goal. I have assumed a return of 12% p.a. for working out above. If the capital market shows upward growth, and assuming a return of 15%, the monthly SIP shall be approx Rs.29000/-.

21 January 2012 to 27 January 2012

** Taxation **

Q. Is it possible for one to secure tax deduction under sec 80 C on two housing loans on two different properties? Vinod, Ranchi

Ans. Yes it is possible to claim deduction for two houses. Under section 80C deduction is claimed for repayment of principal on housing loan. Interest deduction is claimed under section 24(b).

** Insurance **

Q. Is it advisable to keep inventory of home appliances to ensure one fast insurance claim settlement? Upendra, Ramgarh

Ans. Yes. One should list items together with description, attach receipt. You may also do well to keep photographs.

Q. What should I consider before buying a life insurance policy? Umesh, Bokaro

Ans. Assuming the purchaser has determined his / her insurance requirement and identified the type of policy (say, term, whole life etc.), in my view, he/ she should consider following aspects before buying -
Comparative premium cost
Comparative claim settlement ratio
Charges deducted on surrendering the policy

Q. My father has received 20 lakh from the sale of ancestral property. Will this amount be taxed? If he gifts it to family members will there be any exemption on tax? Will the family members have to pay tax on the gift? Abhijit, Ranchi

Ans. Capital Gain from sale of ancestral house is taxable. You need to first compute the capital gains arising from this sale, as per laid down norms. Further, he can make investment in capital gains tax saving bonds in accordance with the provisions of Section 54EC or investment in a house in accordance with the provisions of Section 54 to claim tax exemption on the capital gains. Distributing the sale proceeds among the family members as gift will not result in tax exemption. The amount of gift received will be exempt from tax in the hands of family members

** Investing **

Q. Please advise on investing my retirement corpus. I want to receive steady income. Amar, Dhanbad

Ans. Though specific investment advice relates to your risk profile and other factors like existing portfolio, generally speaking you should invest in partly in post office MIS scheme (present limit for joint accounts is Rs. 9 lac), debt mutual fund having monthly income scheme, fixed deposits and balance equity oriented mutual fund scheme.

14 January 2012 to 20 January 2012

** Investing **

Q. I am investing through SIP, Rs.60,000 in 12 mutual funds in categories of Equity Diversified and Balanced. Should I continue investing? Abhijit, Ranchi

Ans. Your investing through SIP is the advisable way to building wealth. You thus avoid the vagaries of fluctuating market. However, I do not recommend your investing in 12 mutual funds. I would suggest a portfolio of 3 mutual funds under each category - Equity Diversified and Balanced Fund.

Q. I am generally advised to remain invested in capital market for long term. I am presently invested in DSP Blackrock Balanced Growth, HDFC Top 200, HDFC Equity and HDFC Tax Saver. With markets having fallen, should I exit? Rakesh, Ramgarh

Ans. You are rightly advised to invest for longterm in capital market.You should tie up exiting from investments to your financial goals like - buying home, child higher education, child marriage etc. As for your portfolio of four funds, it is made of highly-rated funds. You are advised to review the performance of the funds once a year.

** Taxation **

Q. I have retired from a private company in 2007. I stopped filing income tax return from 2007-08 as my interest income is less than the taxable income. I submit Form 15H to my banks where I have deposits. I find that my bank has deducted TDS of Rs. 25000 for the A.Y. 2011-12. If I have to claim the refund of the TDS , do I have to submit income tax returns for each of the last few years? What shall I do now? Ranjeet, Bokaro

Ans. You are only required to submit the income tax return for the AY 2011-12 and not for any of the past years. You are also advised to make a written communication to your Bank citing the lapses by the Branch, so that in future such errors are not committed.

Q. I wish to sell my house which I purchased from the builder five years ago. In addition to stamp duty & registration cost, can I include the amount paid to the builder towards items like lawyer fees, water & electrical connection, development charges etc. in cost of acquisition? Yugeshwar, Dhanbad

Ans. Yes, you can include all such one-time expenses in the cost of acquisition. You may also include the following - i) Travelling expenses incurred for the acquisition ii) Interest paid (on loan taken for the purchase of the property) during the pre-construction period, if the deduction thereon has not already been claimed under Section 24(b).

31 December 2011 to 06 January 2012

** Taxation **

Q. I have paid the advance tax in December for the 2nd quarter for A. Y. : 2012-13, but by mistake I have written in the Challan A. Y.: 2011-12. Kindly advise me how can I rectify the same. 
Chandan, Ranchi

Ans. You may file an application with your Assessing Officer praying for correction of the A. Y.. Attach copies of return of income and tax payment challans for the A. Y. 2011-12 to substantiate that you did not claim credit of taxes paid in December 2011 in your return of income for A. Y. 2011-12.

Q. I purchased 2 houses in 2005 and 2008. I wish to sell off the first house in order to clear the outstanding loans taken for the second house. I have taken loans on both the houses from different banks. Please advise, in doing so, will there be any tax liability? Dheeraj, Ramgarh

Ans. The sale of house will result in Long Term Capital Gains. There is no exemption for paying off the loan. To claim exemption, you can either buy/construct another house or invest in capital gains tax saving bonds in accordance with the provisions of Section 54 or 54 EC.

Q. I received a joining bonus of Rs. 3 L for which tax of Rs. 1 L was deducted. I subsequently resigned from the company and paid back the full amount Rs. 3 L. How do I get back my Rs.1 L that was earlier deducted by my employer? Giddu, Bokaro

Ans. File your income tax return and claim refund therein.

Q. My mother, aged 58years is getting family pension from Port Trust after the death of my father. She is getting around Rs.1,95,000 per year. I would like to know if she is liable to pay tax on family income, and does she have to file a return? Himanshu, Dhanbad

Ans. No tax is payable since after deduction U/S 57, the total income is Rs. 1,80,000 which is below the limit of Rs.190000. Further, there is no need to file a return also.

24 December to 30 December 2011

** Customs Duty **

Q. My Uncle has sent me her used mobile phone as a gift, the current cost of the same in India being Rs.20000/- It was sent via courier from USA to India. I have tracked my item with its item number and came to know that my parcel was sent to customs for verifications. My question is, do I have to pay custom duty? Alam, Ranchi

Ans. Yes, you have to pay duty on this mobile phone. Gifts upto Rs 10,000 is allowed duty free.

Q. I frequently travel abroad. I carry my laptop and bring back the same. I understand that under the custom rules I can bring buy one laptop abroad and its duty free. I want to know what is the correct procedure here? Dinesh, Ramgarh

Ans. If you are carrying one laptop and bringing the same, then there is no need to declare As you are eligible for one laptop without any duty at the of returning into India as per exisiting rule. But ,if you are planning to bring one more laptop then it is advisable to get export certificate for current laptop. In that case , you can also bring additional laptop without Customs duty. You may carry purchase receipt of your laptop. It acts as easy reference to enter value in the certificate and help Customs authority to verify value of your laptop. In absence of such value proof, Customs authority can fix value for your laptop.

** Insurance **

Q. How will it help one to hold his/her life insurance policies in a demat account as planned by IRDA? Laukesh, Bokaro

Ans. Insurance in electronics format, alternatively called demat accounts, will allow one to hold policies in electronic form. Having an e-insurance account will reduce hassles for buyers in keeping safe custody of policies. It will also save insurers crores in printing and dispatching policies. The move is expected to bring efficiency in customer service.

** Taxation **

Q. I plan to buy a car for my wife. Will it involve any tax implication either for my wife or me? Satyadeo, Dhanbad

Ans. There are no income tax implications on buying a car for your wife. However, if your wife intends to earn by giving it on hire, the income shall be taxable in your hands. Further, preparation of gift deed is not needed.

Q. I have invested Rs. I Lakh per annum in a ULIP for three years (i.e. total of Rs. 3 lakh) and the redemption amount is Rs.7 Lakh. Do I have to pay tax on Rs.10 Lakh or on the Rs.7 Lakh profit? Amardeep, Ranchi

Ans. As per taxation laws, sum received from life insurance proceeds will be exempt if - i. the premium payable for any of the years during the term of the policy did not exceed 5% of the sum assured under the policy and ii. the sum is received only upon the completion of the original period of contract of the insurance or upon the death of the insured. Therefore, if you redeem the policy upon completion of the original policy term and the sum assured under the policy is at least Rs.20 Lakh, then the redemption amount will be exempt from tax in your hands.

17 December to 23 December 2011

** Taxation **

Q. I have transferred Rs 10 lakh from my funds to my wife’s savings account. She day traded in share market and made a profit of Rs.25000/-. Shedoes not have any other income. Does she have to file income tax return? Bantu, Ranchi

Ans. The income shall be taxable in your hands due to clubbing provisions of the Income Tax Act. Hence, it will be added to your income. and you will have to pay tax as per your slab rate.

Q. My brother and I took a joint education loan from a bank in 2010 to pay for my brother’s MBBS course. I pay the EMI. Bank has sent me the statement of education loan interest to get a tax relief under Section 80E. Can I claim this tax relief ? Dasrat, Ramgarh

Ans. No. Deduction under Section 80E cannot be claimed for interest paid on loan taken for higher education of brother. Such deduction can be claimed only if the loan is taken for higher education for self, spouse or child.

** Insurance **

Q. While shopping for a suitable health oriented policy, we chanced upon Jeevan Arogya. Can you please guide us on this policy? Firoz, Bokaro

Ans. LIC Jeevan Arogya is a defined benefits Health Insurance plan. The policy offers Lump sum benefit irrespective of actual medical costs. The daily Hospital Cash Benefit is limited to Rs. 4000 per day in the first year of the policy and Major surgical benefits are 100 times of the initial daily benefit you choose. Health risk is insured upto the maximum age of 80 years under this plan. This plan is more suitable if bought along with your traditional Mediclaim policy.

** Investing **

Q. I want to invest Rs.50,000 in mutual funds which can yield me moderate returns and give tax benefits. I have a very demanding job and do not know much about mutual funds / capital market. Please guide. Dipak, Dhanbad

Ans. I suggest you to go for a systematic investment plan (SIP) which would be convenient to you. Herein, you pay a specified money say Rs.4000 /- every month. Opt for choice of 2/3 funds. As you intend to take tax benefit, opt for ELSS scheme of mutual funds. Here the lockin period of investment is 3 years. Recommended funds for you are - HDFC Taxsaver and Fidelity Tax Advantage.

26 November to 02 December 2011

** Taxation **

Q. If I gift a sum, Rs 5,00,000, to my married daughter, then how do I benefit in income tax? 
Bablu, Ranchi

Ans. You will not get any direct tax benefit. The income on the amount gifted shall no longer be taxable to you. This may be deemed to be your tax benefit.

Q. I was recently gifted a painting by my friend. The painting is by a renowned artist and it's value is Rs.1,00,000. Pls clarify, if I need to pay any amount as tax for this gift? Waqar, Ramgarh

Ans. Yes, the whole amount being fair market value of the painting, is to be added to your taxable income. This is so even if you receive gift in kind.

** Insurance **

Q. My wife and children are residing at Dhanbad while I am here in Ranchi. Can I cover all of us in one mediclaim policy? Vivek, Bokaro

Ans. Your health insurance policy is in force across India. Yes, you can cover the entire family under one policy. You must check, however, whether there are any network hospital near to your as well as your family's place of residence.

Q. After taking life insurance policy, if a person contacts with any disease, is it mandatory to inform the Insurance Company of the new disease? Upendra, Dhanbad

Ans. No, it is not mandatory to infrom Insurance Company of your health status in respect of your existing life insurance policy. At the time of pruchasing a policy, however, you must declare existing disease, if any.

Q. Can I seek treatment at home and be reimbursed for it under health insurance? Shivam, Ranchi

Ans. Most policies offer the benefit of treatment at home, subject to following conditions:
i) Condition of the patient is such that he cannot be moved to the hospital or 
ii) There is no bed available in any of the hospitals and only if it is like the treatment given at the hospital / nursing home which is reimbursable under the policy. 
Such an arrangement is called "domiciliary hospitalization" and is subject to certain restrictions both in terms of the amount which is reimbursable as well as the disease coverage.

19 November to 25 November 2011

** Insurance **

Q. What are the new rules governing ULIP? Rosan, Ranchi

Ans. From November 1 following key changes in ULIP has taken place - 
· ULIP that has not completed 5 years can be reinstated within 2 years from the day of discontinuance.
· Individuals with irregular income can skip upto 2 years of annual premium.
· The discontinuance charges are reversed on revival.
· Minimum guarantee on discontinued policy is presently 4 %.

Q. I have taken home loan. My bankers are insisting me to buy home loan insurance. Please guide. Souvik, Ramgarh

Ans. It is advisable to increase your insurance coverage when you have increased your liabilities. My suggestion is to take regular premium term loan policy to have higher coverage rather than home loan insurance.

Q. I have a term insurance policy for 10 lacs. I am 27 year old. I intend make a visit to USA for 3 year study. Does the policy provide coverage outside India? Avik, Bokaro

Ans. Most term insurance policies provide coverage in whole of India as well as abroad. However, do check out the terms and conditions of your policy.

** Taxation **

Q. I want to invest in mutual funds that offer tax benefits. Please let me know its salient features. 
Rajan, Dhanbad

Ans. Equity Linked Savings Scheme (ELSS) of mutual funds has following characteristics -
· It offers twin benefits - capital appreciation and tax savings (upto Rs. 1 lac).
· Over long term (10 years) most of the ELSS schemes have returned more than 20% p.a..
· Best time to invest in ELSS is when equity market is low.
· ELSS has lowest lock -in period among tax saving instruments.
· You can remain invested in ELSS even after lock-in period.

Q. What is pre-EMI interest and how do I claim tax benefit? Samir, Ranchi

Ans. Your bank may make tranches of payments to the builder before the house is completed. Such disbursements are called Pre-EMI payments and you have a choice to pay the interest portion of pre-EMI.
Tax benefits of interest portion of pre-EMI is available in five equal instalment starting from the year in which construction is completed. Please note that there is no tax benefit on principal portion of pre-EMI payments.

12 November to 18 November 2011

** Taxation **

Q. I pay rent for my accommodation but I do not receive house rent allowance (HRA) from my employer. Can I claim deduction for rent paid? Anirudh, Ranchi

Ans. If you are paying rent more than 10% of your total income, you can claim deduction under section 80 GG. Deduction is limited to the lower of Rs. 2000 or 25% of your total income.

Q. If I buy a house jointly with my mother and take a joint home loan, can both of us claim income-tax deduction? Aditya, Ramgarh

Ans. As you and your mother are joint owners of property as well as joint applicant of loan, both of you can claim deduction for interest on housing loan as well as principal repaid during the year.

Q. I am a freelance property broker. Last year I earned Rs. 2.5 lac and accordingly have filed income tax return. This year, my income is not likely to cross Rs.1.5 lac. Do I still need to file return? 
Karan, Dhanbad

Ans. You are required to file IT Return this year if your income after availing deductions under section 80 c (like LIC, NSC etc.) is above Rs.1.80 lacs. Hence this year you are not required to file return. However, if you have any tax deducted at source (say from fixed deposits), you need to file the return for claiming refund.

** Investing **

Q. I intend to invest in Gold. Pls advise. Anupam, Bokaro

Ans. Gold as an asset class has performed well over last 2 years. However, recently it is witnessing volatility. I am sure before deciding on investing in gold, you have invested in regular asset classes as fixed deposits, small savings, mutual funds etc.
I advise you to invest in Gold ETF, instead of directly investing in gold coins / jewellery. Units of Gold ETF can be purchased through your share broker and the same are credited to your regular dmat account. There is little to choose from among various Gold ETF. Only consideration being expense ratio. The one having least expense ratio should be preferred.

29 October to 04 November 2011

** Insurance **

Q. I am 65 and my wife is 60. We'd like to take mediclaim policy. Our total annual premium could be in the range of Rs 30000 per head. Will you pl suggest a suitable mediclaim policy? We are willing to undergo medical checkup. Waqar, Ramgarh

Ans. There are several senior citizen policies like National Insurance Varishtha, Bajaj Allianz Silver Health, Star health Red Carpet, New India senior citizen mediclaim. The premium for Bajaj Allianz may be high, but service level likely to be better than others. Underwriting may be strict and hence no guarantee of being accepted. It is recommended to to go through an efficient broker to help you buy policy and thereafter in claims handling.

** Banking **

Q. I intend to use the facility of online payment. Can you please explain me the term RTGS and NEFT. Vivek, Ranchi

Ans. These are popular mode of making payment through banking channel without the use of cheque to the payee. RTGS stands for Real Time Gross Settlement. Put simply, under this facility bank makes payment to payee immediately on receiving instruction. The amount should be for more than Rs. 2 lacs. NEFT stands for National Electronic Funds Transfer. Here the payment is upto Rs. 2 lacs and is made in batches spread out over a day.

** Taxation **

Q. I intend to transfer my mutual fund holding with HDFC equity fund from dividend option to growth option. Pls advise, if any taxation arises on such transfer. Vinod, Dhanbad

Ans. Such a transfer from dividend option to growth option shall result in capital gain / loss. If you have held the units for more than 1 year, the gain shall be tax free. Otherwise, it will be taxable as short term capital gain which is liable to tax @ 15%.

** Investing **

Q. My stock broker friend has advised me to purchase some stocks as stock markets is at very attractive levels? I don't have enough money right now. He has suggested me to get a personal Loan and invest in shares. Please guide Vinay, Bokaro

Ans. The suggestions given by your friend is not advisable at all. Investing in shares is risky and you must not invest on so called "tips". You should also not invest in shares from borrowed funds. These are some principles which if followed shall do you good in financial strength.

Q. I intend to invest is some safe company fixed deposit scheme. Please advise. Raman, Ranchi

Ans. Company Fixed Deposit are not secured, hence not safe. If the company goes bankrupt, you shall be repaid just before equity shareholders. You may invest in fixed deposits of such companies which enjoy good credit rating. Though credit rating does not make company fixed deposit safe, it gives confidence on the company's financial health.

15 October to 21 October 2011

** Banking & Finance **

Q. We started one fixed deposit with a private bank in our child's name in October 2006 and they matured in October this year. The bank says due to a clerical error they forgot to debit to our account the principal amount, hence, the interest is not payable. Can the bank do this? Nasim, Ramgarh

Ans. By issuing a fixed deposit receipt, the bank has entered into a contract with you and is bound by it. The bank's plea that a clerical error caused the problem does not hold good. Banks have well laid out checks and balances for issuing a fixed deposit receipt.

** Insurance **

Q. I took a personal accident policy on September 20, 2009, from a general insurance company for Rs. 2 lakh each for myself and my wife and Rs 100,000 for my son. I paid the premiums for three years. Now, the company has reduced my daughter's cover to Rs.50,000 all of a sudden. Can the company do so? Arvind, Ranchi

Ans. An insurance company cannot reduce the sum assured under your existing policy without giving a sufficient reason and also without your consent. You can approach your service branch to find the reason for the same.

** Taxation **

Q. My employer has provided me a car for official use. Alternatively, I can use my car for official purpose and the employer will provide for its running and maintenance. How will my journey from home to office and back everyday will be treated? Vishal, Dhanbad

Ans. The use of car for commuting between home and office is considered as official use per taxation laws.

Q. I am 26 and earn Rs. 27,000 every month. I have made a monthly recurring deposit of Rs.5,000 and I want to invest Rs.5,000 every month through SIP. Please suggest a good fund to invest in. Ashit, Bokaro

Ans. You should consider investing in income tax planning funds. These have a three-year lock-in period and deduction available upto Rs.1 lakh in a financial year. Consider investing in Canara Robeco Equity Tax Saver or Religare Tax Plan, which are highly rated funds. You still have six months in this financial year to stagger your investments in this category of funds.

08 October to 14 October 2011

** Insurance **

Q. Kindly let me know the usual reasons for rejection of medical claims by Insurance Companies. Bhabani, Ramgarh

Ans. Few common reasons for rejection of claims are –

· Claim is for exclusions stated in the policy. 
· De before the waiting period ends for pre-existing illness
· Deficient documentation
· Delay in intimation / submission of claim
· Fraudulent claims.

Accordingly, you should take precaution as to avoid falling in any of the above common reasons.

Q. Most of the financial advisors recommend term insurance as most appropriate insurance cover. However, online insurance companies do not cover critical illness, accident and permanent disability as additional riders. Please advise how to take such riders? Raju, Ranchi

Ans. You are advised to buy standalone policies offered by general insurance companies to cover critical illness and permanent disability. Features of such standalone policies are better than riders included in other policies.

** Banking **

Q. I have taken educational loan from a nationalized bank. I am eligible to be covered under the subsidy scheme meant for lower income group. I approached branch manager to mark my loan under the scheme. He has declined stating that the scheme is no longer applicable for current financial year. Please guide. Amitaj, Dhanbad

Ans. As per the notification issued by Ministry of Human Resources, Govt. of India, the scheme is effective from 2009-10. There is nothing in the notification that states when the scheme ends. Please ask your branch manager to visit www.education.nic.in/uhe/Eduloan-IBA.pdf. Accordingly, you may again request him for average under the scheme.

** Investing **

Q. Capital market has fallen since last few months. Please advise whether I should take money out of capital market and allocate in debt like debentures / bonds. Sumit, Bokaro

Ans. Though the market has dipped, it I not wise to shift money and allocate in debt at this juncture. I suggest you to adopt following strategy –

· Invest in shares only if you have at least five years to reach your financial goals.
· Historical data prove that returns from capital market is more than any other asset class, over long run.
· Do not invest large amounts at one go.
· Use systematic investment plan to invest at regular intervals.

01 October to 07 October 2011

** Taxation **

Q. I have received a flat through a registered gift deed by my father. The property's registered value was Rs. 2.90 lakh. I have sold the flat for Rs.15 lakh. I want to know the tax implications, if any? If I invest the sale proceeds in purchasing another flat, will I be exempted from tax? Vivek, Ranchi

Ans. You have not provided full details. If total holding period of yourselves and your father is more than 3 years, the gain of Rs.12.10 lac is long term capital gain. You are entitled to tax exemption on purchase of new house provided the amount of long-term capital gains is equal to or less than the cost of the new house.

Q. I have two houses in Ranchi, and both are in my name. I took a loan from a bank to purchase them. I stay in one house, whereas the second house is lying vacant. Please advise the tax benefit I can avail as both the houses have been financed through a loan and the interest is over Rs.1.50 lakh per house per annum. Dilip, Bokaro

Ans. The house occupied by you can be considered as the self-occupied house. The income from a self-occupied house is taken as nil. However, you can claim deduction of up to Rs.1.5 lakh for the interest payable on the loan taken for the purchase of the house. The other house will be considered as 'deemed let out'. The annual notional rent of the house will be added to your taxable income. However, you can claim three deductions against this income: a) the amount of property tax paid in respect of the house; b) an allowance for repairs and maintenance (computed at 30% of 'the notional rental income minus property tax'), and c) the amount of interest payable on the loan taken for the purchase/repairs of the house. For this house, you can claim deduction on the entire amount of interest even if it exceeds Rs.1.5 lakh.

** Banking & Finance **

Q. I am a retired person and have invested my pension benefits in fixed term deposits in a branch of nationalized bank. In April, an agent offered me a credit card against one of my deposits as lien. However, my application was rejected. When one of my deposits matured on July 31, the bank refused to give the amount saying it was marked as lien for the credit card. I have written many reminders but without result. Pls guide Sujit, Ranchi

Ans. The question of a lien on your deposit does not arise, if the credit card has not been issued. In fact, the lien is marked at the time of issuance and not before. Since your complaints have yielded no result, you can now file a complaint with the banking ombudsman . You may also write to the nodal officer ofthe Bank.You can also claim the expenses incurred by you, if any, from the bank.

Q. I have deposits in a private bank in joint names, with instructions that the deposits be paid to the first depositor or survivor. I want to know whether on maturity, it is sufficient if any one of the two discharges the deposit receipt? Shankar, Dhanbad

Ans. Since the deposit receipt states that it is payable to the first depositor or survivor, the discharge, ie, signature, of the first depositor is a must.

17 September to 23 September 2011

** INSURANCE **

Q. I am 35 and have a term plan from LIC for 10 lakh. I purchased the plan due to the company's good record in settling claims. Policy from LIC appear costlier as compared to private insurers. However, as revealed by Irda data, claim settlement ratio of private insurers is less than LIC. I am confused whether I should go for an LIC policy or an online plans which are much cheaper. Raman, Ranchi

Ans. In view of big difference in the premium, I advise you to consider an online term insurance plan like ICICI Prudential iProtect or Metlife Met Protect. Take care to disclose all material facts and provide correct information in the proposal form when applying for the policy. This shall ensure no difficulty during claim settlement.

Q. I am 35. I have been paying 2,000 per month as premium for a Jeevan Saral policy and also 2,500 every year as charges for riders. I am told that my total death claim is 10 lakh and in case of accidental death it will be 15 lakh. If I take additional accidental death insurance from a general insurance company will I get additional amount in case of claim? Shyam, Bokaro

Ans. The death benefit under LIC-Jeevan Saral Policy is 250 times the monthly premium together with loyalty additions, if any. If you buy a personal accident policy from a general insurance company, you can claim the benefit under the policy additionally.

** Taxation **

Q. I intend to give gift to my daughter who will then purchase a flat for her self occupation. What will be the tax implication of this transaction? Biswanath, Ranchi

Ans. The income from the self-occupied house will be considered as nil. Consequently, there will be no tax implication for either of you.

Q. Is the amount received on redemption of NHAI, REC bonds taxable in the hands of the assessee?
Ajay, Dhanbad

Ans. The principal amount received on the redemption of NHAI or REC bonds is not taxable.

** Investing **

Q. I invest 4,000 every month in HDFC Top 200, 3,500 in BSL Frontline Growth and 1,500 in Reliance Growth. Now I want to invest 2,000 per month more. Should I opt for another fund or a gold fund? Subir, Hazaribagh

Ans. Your existing portfolio require restructuring. You should consider increasing your allocation to other largecap funds like DSP Blackrock, Birla Sunlife Frontline Equity, before investing in gold fund.

03 September to 09 September 2011

** Banking **

Q. My son has a savings bank account in a nationalized Bank. He had deposited a cheque of 50,000/- in his account in April 2011. But the bank did not credit the amount on the ground that the account has become non-operative and transferred the money into a suspense account in their books. Is the bank justified in doing so? Santosh, Ranchi

Ans. A savings account should be treated as inoperative/ dormant if there are no transactions for over a period of two years. Before classifying the account as inoperative, the bank may approach the customer and inform him/ her in writing that there has been no operation in the account and ascertain the reasons for the same. As per the norms, interest on savings accounts should be credited on a regular basis whether the account is operative or not. Although the proceeds of cheque stated by you is held in a suspense account, the bank should have initiated action to activate the account and credit the proceeds and pay interest from the date of realisation of the cheque.

** Insurance **

Q. I am 26 and I want to take an life insurance policy in which I will invest 2,000 every month. I intend to encash the proceeds when I am 50. Can you suggest a suitable policy from either LIC or any other insurer? Mandal, Bokaro

Ans. I recommend you to buy a term insurance plan to cover your financial risk and invest in different investment products like PPF and mutual funds to accumulate wealth in the long term.

** Taxation **

Q. I have a fixed deposit of 10 lacs for five years. The interest and principal is payable on maturity. The amount of interest is accrued every year, but it is not received in hand. How should treat interest income in my tax returns? Ritesh, Ranchi

Ans. You may offer interest income either in the year it accrues to you or in the year you receive it. You should consistently follow the method adopted.

Q. Is the 'not ordinarily resident' category still in existence? If so, for how long can one be a 'not ordinarily resident' after becoming a resident? What are the tax implications during that period? 
Irani, Dhanbad

Ans. Yes, the category of not ordinarily resident still exists. Your earnings on your investments abroad will be non-taxable in India till the time you are either a non-resident or not ordinarily resident status. A resident is considered as not ordinarily resident if he was a non-resident in India for at least nine of the 10 preceding financial years or his total stay is India in the preceding seven years was less than 730 days. Typically, one can retain the same for two years from the year he becomes a resident.

** Investing **

Q. I have received a lump sum of 5 lakh from my grandmother as gift. I would like to invest this amount in mutual funds. What would be the right fund to invest in right now? Nandi, Hazaribagh

Ans. Your resolve to invest the money received in gift is well appreciated. You have not stated the period for which you intend to remain invested. Assuming long term time horizon of 5 years or more, and assuming you would like to take moderate risk, I recommend you to invest in equity oriented balance mutual fund. Under this category, you may invest in two well performing funds - HDFC Prudence and Birla Sun Life 95.

27 August to 02 September 2011

** Banking **

Q. How many nominees can a savings bank account have for drawing pension from the government of India/state government? Shankar, Ranchi

Ans. As per the RBI’s clarifications, the pension can be credited to his or her existing savings/current account maintained with the branch selected by the pensioner. Pensioners can open joint account with their spouses and nominate one person.

Q. My current account with Private Bank is frozen without notice. On enquiry I was informed that the freeze is due to a high number of transactions, even though the minimum balance has been maintained. Is the bank justified in freezing the account? Arun, Bokaro

Ans. As per Code of banks’ commitment to customers, while opening an account itself, the bank is supposed to inform you about the number of transactions, cash withdrawals, etc, that can be done free of charge within a given period. In my view a bank cannot block due to high number of transactions. You should take it up with higher authorities.

** Insurance **

Q. I obtained an insurance policy from LIC in 2003 in my wife’s name. Her name is spelt wrongly in the original policy document. Is there any implications due to incorrect spelling of name? How can I get it corrected? Dulal, Ranchi

Ans. A small inaccuracy in the name of the policyholder may not be a hindrance in claim settlement. Wrong name will be printed in all payment instruments issued by your insurer — be it a survival benefit or claim — and your bank may not accept it for realisation. Hence, it is better to bring it to the notice of LIC and get it corrected. An application, along with a valid photo ID, will be sufficient to get the name corrected.

** Taxation **

Q. Is interest on PPF deposits exempted from tax? Is NSC’s maturity amount taxable? 
Swapan, Dhanbad
Ans. Interest on PPF account is exempt from income-tax. Interest on NSC is taxable.

Q. I am a NRI. I recently sold a plot in India and incurring significant capital gain. I understand there are two ways of computing capital gains in India — indexed and non-indexed. Are these two ways valid for NRIs? We have to report and pay capital gains taxes in the US also on this sale. Can we claim credit/ exemption for the taxes we pay in India on US returns? Pintu, Hazaribagh

Ans. A non-resident can claim the indexation benefit while computing the amount of capital gains. Yes, you can claim credit of taxes paid India in the US tax returns.

Q. I have a query on e-returns. If the acknowledgement is not received from CPC, Bangalore, is there any way I can check what the status of the e-returns is? Somu, Ranchi

Ans. First register yourself in the portal incometaxindiaefiling.gov.in. Then log in to your account. You will be able to see the ITR - V receipt status under the 'Services' menu.

20 August to 26 August 2011

** Insurance **

Q. I am 28. I have taken an online term plan (ICICI Pru I protect - option II) of 70 lakh with the accidental death benefit rider. But the policy does not have cover for critical illness and permanent disability. Should I go for another policy for these riders? If yes, please suggest a good policy. I am looking for a risk cover of 15 lakh. Debu, Ranchi

Ans. A critical illness policy provides a lump-sum amount immediately on the diagnosis of any illness mentioned in the policy and, hence, offers extra security against financial burden in case of any of the listed illnesses. You can consider a critical illness benefit plan like ICICI Lombard Critical Care, which covers nine major illnesses and accident death and permanent total disablement resulting from accident.

Q. I am looking for a insurance plan that covers hospitalisation/surgery expense due to accidents. Please guide. Ranju, Bokaro

Ans. All health insurance plans cover hospitalisation and surgery expenses due to sickness / accident. While purchasing a health insurance consider following featurer - Renewability for longer period, Minimum exclusions, Cashless claim facility, Maximum network hospitals No sub-limits.

** Investing **

Q. I am 28. I recently started investing 2,000 through monthly SIPs in HDFC Top 200 to learn how investment works. I intend to invest further 8000 monthly. Please suggest funds in which I can invest for the next 20 years. Abhijit, Ranchi

Ans. HDFC Top 200 is a highly-rated lequity diversified fund. With the investment in this fund, you would have understood how SIP works. For a time frame of up to 20 years, I suggest you invest in - Canara Robeco Equity Diversified Fund, HDFC Equity Fund and Birla Sun Life 95 - Equity oriented Balanced Fund It will also be beneficial if you financial goals and invest keeping those goals in mind.

Q. I am 23 and want to plan for my retirement at 50. Should I invest in Ulip or mutual funds for my retirement kitty? Rumela, Ranchi

Ans. Ulips are hybrid products that combine insurance and investing and, in the process, compromise on both the fronts. Mutual funds are liquid, the costs associated with them are low and they focus only on investing. Therefore, they are the best tool for long-term wealth creation. You should invest regularly and systematically to build a retirement corpus.

** Taxation **

Q. I want to invest in mutual funds for tax benefit and good returns. Please suggest the funds I should invest in. I want a return of 50,000every year.

Ans. Section 80C of the Income-Tax Act offer tax benefits for investments up to 1 lakh in taxplanning funds each financial year. I advise you to invest over the year by way of SIP in -Fidelity Tax Advantage and HDFC Tax Saver. Tirtha, Ranchi

13 August to 19 August 2011

** Taxation **

Q.  I've filed my tax returns online. I got the ITR-V acknowledgement. In the acknowledgement, the total tax and interest payable is shown as 24,000 - total tax paid: nil; tax payable:  24,000; refund : nil. But my form 16 shows a TDS of. 44,000. Am I eligible for refund of the over 20,000 excess deduction? Santanu, Ranchi

Ans: It appears that your e-return is incorrect as it does not reflect the credit of income taxes deducted at source by your employer. Please file a revised tax return. Please make sure that you correctly fill up the TDS Schedule.

** Banking **

Q. I opened a fixed deposit account with a private bank for Rs. 1 lac. At the time of opening bank officials said as per their scheme a savings account with zero balance comes bundled with an FD account. But, later a statement for the FDR savings account showed 750 was being detected every quarter as as non-maintenance charges. What can I do in this matter? Dhiraj, Bokaro

Ans: While opening the account, the bank should have clarified that even though the account offered the zero-balance facility, you will be charged for not maintaining a minimum balance. The Bank has thus violated code 8.1.1 b of the Code of Banks Commitment to Customers. You may write to the nodal officer of the bank, drawing his/her attention to the deficiency in service. If there is no response within 30 days or if you are not satisfied with the bank's response, you may file a complaint with the Banking Ombudsman.

** Insurance **

Q. I am a housewife. I bought Life Pension policy on the advise of my banker. I have to pay a premium of 50,000/- every July. But I feel I have been duped by my banker into buying this policy to meet his targets. Should I continue to pay the premium? I am 55. I have no other insurance. 
Sandeep, Ranchi

Ans: A Life Pension plocicy is a unit-linked pension plan. Your quantum of pension will depend on the term of your policy and the performance of your fund during the accumulation phase. You can stop paying future premiums after three full premiums have been paid. If you surrender your policy before the completion of five years. You need to pay surrender charges. I advise you to review the performance of your policy after it completes five years.

Q. I am a 34-year-old widow. My son, parents and in laws are all dependent on me. I have an income of 6 lakh. I have LIC's Amulya Jeevan term policy for 25 lakh. For the same premium I get a cover of 75 lakh through another insurer. I now want to end my LIC policy. How do I close it? Is there any option to make any conversion of the policy? Pravakar, Ranchi

Ans: LIC - Amulya Jeevan does not acquire any paidup value. If you do not pay your policy premium within the grace period, your policy will lapse and all insurance benefits will cease immediately. Please ensure that your new policy is issued before your existing policy lapses.

06 August to 12 August 2011

** Banking & Finance **

Q. I have an outstanding of 57500 on my Credit Card. Pls advise if it is a better option to pay off with a personal loan. Arun, Ranchi

Ans. Credit card debt is the costliest debt and is around 30% per annum. Rate of interest on personal loan is also high but lesser than that of credit card. You may also consider taking demand loan against securities like NSC, LIC policy. Interest on such loans usually work out cheaper.

Q. I have a home loan from nationalized bank on a floating rate of 10.5% currently. I am also eligible for a loan from my employer at fixed rate of 9%. Can I use the loan from my employer to pay off partially the loan from bank? Mahendar, Ranchi

Ans. It will certainly reduce your loan burden. You need to check whether the bank will reduce the EMI or the repayment period. If the period is reduced keeping the EMI undisturbed, then your monthly outgo on account of loans (to be paid to the bank and to the employer) will go up. You may also need to pay some pre-payment charges as per your loan agreement.

** Investing **

Q. I work on a non permanent job earning 30,000 per month. My savings per month are about 7,000. Considering the nature of my employment and my savings capacity, what would you recommend as the safest mutual funds for investment tenure of three to five years? Please suggest an appropriate portfolio. Anil, Bokaro

Ans. Considering the non-permanent nature of your job, I first recommend you to create an emergency fund for 4 months 92000/- Park this fund in fixed deposit. Thereafter given your investment tenure go for equity oriented balance fund. Few good performing funds you may consider - HDFC prudence and Birla Sun Life 95.

Q. In 2003, I took LIC's New Jeevan Dhara/ New Jeevan Suraksha Plan - 1 (with profit) under schedule 11B for 10 years. The last premium to be paid is in Jan 2012. I will start receiving pension from Jan 2013. Pls guide as to whether I should opt for lumpsum amount or regular pension.. 
Basant, Ranchi

Ans. You can commute 1/3rd of your pension on the day of vesting and receive the amount in lump sum, which will be tax free. I recommend you to select the 'Life annuity with a return of purchase price on death of the annuitant' option under the plan to receive a stream of regular pension income thereafter. Please note that this income is taxable.

** Taxation **

Q. I am a salaried professional and trade in shares sometimes. Am I liable to pay tax on the STCG @15.45% or the presumptive tax? Rinku, Ranchi

Ans. I believe you may not use the word "trade" here as it has different meaning in taxation law. I presume you invest in shares sometimes and sell the investment on your reading of market behavior. In the event, you are liable to pay tax on short term gain (if you sell before 12 months of purchase) @15.45%.You may not go for presumptive taxation as it may also require keeping books of accounts and audit in case turnover is beyond 60 lakhs.

30 July to 05 August 2011

** Taxation **

Q. I have four fixed deposits in different companies in a cumulative mode. I will get the interest along with the principle amount only after they mature. How should I treat my interest earning in income tax? Rajan, Ranchi

Ans. It is advisable to treat your interest income on yearly basis. You should ask for interest certificate from the bank. If total interest payment by a branch of a bank is more than Rs. 10000/-, the bank is obligated to deduct tax at source. The bank issues certificate in Form 16A on which basis you file your income tax return and claim tax already deducted and paid by the bank.

Q. I am going to file my tax returns for the first time. Excess tax was deducted from my salary, as I was not aware that I had to furnish investment proof to save tax. So I need to file for a tax refund, too. What's the last date for filing of tax returns? Surendra, Ranchi

Ans. Assuming that you have no other income apart from the salary and interest, you can file your tax returns in the ITR 1 form. Since you need a tax refund, I would advise you to file your return electronically. For filing return , you can avail of the services of a tax return preparer or chartered accountant. You can also use web-based tax filing solutions to e-file your tax return. Few websites are : www.incometaxindia.gov.in, www.taxyogi.com. The last date for filing the return is July 31.

** Investing **

Q. Which mutual fund shall yield better return than bank fixed deposits? Ashok, Bokaro
Ans. Bank fixed deposits provide guarantee returns and capital protection. Mutual fund investments do not offer such characteristics. Different categories of mutual funds carry different risk. It will be a good idea for you to start off with a balanced fund like HDFC Prudence or HDFC Balanced. Both are highly rated and have a proven track record and performance history.

** Insurance **

Q. I am 39. My family consists of my wife, two children and my mother. I had taken individual mediclaims for all in 2001.Then I migrated to a family floater plan with higher sum assured. I now realize that the floater plan has more isadvantages. What should I do now. Gopal, Ranchi
Ans. I recommend you to continue with your existing floater plan. Buy additional cover under Bajaj Allianz-Extra Care or Star Health - Super Surplus Insurance Plan. These policies offer you wider protection at a lesser price.

Q. I am 42. I took an LIC Jeevan Saral policy earlier this year, with a monthly premium option. I plan to take another Jeevan Saral policy, with higher monthly premium. As per the chart provided by LIC, I shall receive a 10% internal rate of return. Is this realistic? Swapan, Ranchi

Ans. LIC Jeevan Saral is an endowment assurance plan. The loyalty addition is not guaranteed but may be payable from the 10th year onwards depending on the performance of LIC. The projected investment return of 10% is not guaranteed. Insurance plans are not good investment products. I advise you to read and understand the benefits of the plan before buying the policy.

23 July to 29 July 2011

** Investing **

Q. I need at least Rs.25 lakh in 10 years. Which funds should I invest in to build this corpus? 
Rakesh, Ranchi

Ans. I advise you to go for equity diversified mutual funds. Assuming a conservative return of 12% p.a. you need to invest Rs.10,900/- per month. If the return goes up to 15%, you will accumulate Rs. 30 lacs in 10 years from the same investment. This is also based on assumption that present tax exemption shall continue. On the basis of current performance, I suggest you allocate your investment to following 3 mutual funds - HDFC Top 200, Fidelity Equity, Birla Sunlife Frontline Equity Plan A.

** Banking & Finance **

Q. If one of the joint holders of a savings account dies, what should the survivor(s) do? Can the survivor(s) continue to operate the old account? Wakil, Ranchi

Ans. As per the guidelines in case of a joint account opened, the bank permits the surviving account holder(s) to have access to the credit balance in the account for withdrawal. Payment to the survivor(s) can be made in the normal course provided there is no order from a competent court restraining the bank from making such payment. 

Q. I got a home loan of Rs10 lakh sanctioned from a PSU bank for a flat at Ranchi on the following terms: "The interest will be charged at 8.5% pa fixed up to one year, and 9.25% for the second and third year. But, on receipt of the monthly statement of the account, I found 9% has been charged on the outstanding amount in first year. There has been no response to my written complaint. What course of action is available to me? Mithlase, Bokaro

Ans. In my view this is a case of breach of contract by the bank. Since the bank has not replied, you can file a complaint with the Banking Ombudsman explaining the position. Do enclose a copy of the sanction letter and the letter to the bank. The Ombudsman will be in a position to resolve the matter.

Q. I took a housing loan of Rs.20 lakh from a private bank in 2005 to build a house. Subsequently, when the interest rate went up, I got it transferred to a nationalised bank. I notice that my SB a/c was debited by Rs. 50,000 towards insurance. On enquiry I was told that this is insurance charges of my property valued at Rs.1 crore. Can I make the bank reduce the coverage to loan amount and reduce my charges. Pls advise. Chandan, Ranchi

Ans. As per the RBI guidelines bankers have to insure the property /goods in case of hypothecation/pledge. In order to avoid average clause this has to be for the full value. Hence you cannot ask the Bank to reduce coverage.

16 July to 22 July 2011

** TAXATION **

Q. I had stocks of Nirma, and I participated in buyback offer. I incurred short-term gains. Can this gain be set off against short-term losses from shares sold through NSE on which I paid STT? 
Kirti, Hazaribagh

Ans. Yes, you can set off short-term capital gains arising from sale of shares in a buyback scheme short-term loss arising from sale of equity shares through stock exchange on which STT has been paid.

Q. I received a plot from government at a concessional rate on lottery basis. I paid for the plot. I constructed a house on it with my funds. I put my wife's name as the owner of the property. I have now given the house on rent. The lease deed has been made in my wife's name and the monthly rate is being deposited in my bank account. Kindly advise rental income is taxable in whose hands - me or my wife? Mukesh, Ranchi

Ans. The entire cost of the house was funded by you. Therefore, the rental income would be considered as your taxable income even if the lease deed is made in your wife's name.

** INSURANCE **

Q. I am 60 year old. Four years ago, after retirement, I invested Rs.5 lakh in two ULIP policies of private insurer. As per the representation by agent and company officer, the policies would give me Rs. 10,000 per month as pension. I now realize that this is not the case. Should I continue or switch to better options? Ajay, Bokaro

Ans. Due to the limited fund options and various charges applicable in the ULIP policy, it may not be able to meet your requirement. You have the option of surrendering the policy after it completes three years with applicable surrender charges. Check the actual surrender value. If you plan to surrender your policy, you can invest the surrender proceeds in a low-cost, assured-return investment scheme for a regular income.

** BANKING & FINANCE **

Q. I pay my electricity, telephone and gas bills through the electronic clearance service of my bank. Recently the Bank has started charging Rs.100 for each ECS. Please advise can a bank levy such charges unilaterally? Nitis, Ranchi

Ans. As per the code of conduct for banks, a bank is supposed to display about its tariff schedule. I believe the bank must have done so in Branch and its website. If so, the bank has every right to recover these charges.

02 July to 08 July 2011

** Taxation **

Q. I have earned Rs.1.5 lac as income from short term capital gain from shares. I do not have any other income. Do I have to pay tax? Vinod, Bokaro
Ans. Residents are allowed basic exemption before applying the tax rate. Since basic exemption limit is Rs.1.60 lac, you are not liable to tax on the above income.

Q. I have entered into agreement 3 years back with a builder for purchase of flat. The project is not yet complete. I am not handed over the possession. I now intend to sale the flat to interested buyer. Will this be long term capital gain? Aslam, Ranchi
Ans. You are selling the interest in flat. This is a capital asset. As you have held this for more than 36 months, the gain resulting therefrom is long term capital gain. You will be allowed reduction in tax liability on investing in eligible investments.

25 June to 01 July 2011

** Investing **

Q. I observed that small and mid cap stocks have good potential for appreciation. Should I invest in mutual funds that invest in small and mid cap stocks? Sanju, Ranchi

Ans. Typically small and mid-cap sectors are volatile and risky. Hence, mutual funds investing in such sector are also risky as compared to equity diversified mutual funds. If, you intend to take risk in hunt of higher return, you may proceed with investing. 
Q. I plan to invest Rs.1 lac for two years in a mutual fund. I am OK with small return but not reduction from the invested amount. Please suggest a suitable mutual fund. Rahul, Ranchi
Ans. Ideally, you should invest in debt oriented balanced mutual fund. Returns from such funds range between 10 to 15%. Prominent funds in this section are – HDFC MIP Long term, Reliance MIP.

** Insurance **

Q. I have just purchased a flat for Rs.16 lacs and intend to buy a home insurance. Should I take the cost of purchase as the sum assured or should I add something more? Sudhir, Hazaribagh
Ans. You should include the cost of flat and the amenities that you have added in it like extra fittings. Hence your insurance amount shall be for amount higher than Rs 16 lacs. You should review the sum assured once in five years.

18 June to 24 June 2011

** Taxation **

Q. I have a self-occupied house and  I have purchased an apartment on home loan. I have rented out this property. Can I claim tax benefit for interest paid? Are there any limits for this loss? 

Rahul, Ranchi

Ans. You are entitled to set off the interest paid to the bank against rental income from the apartment. There is no limit up to which the interest can be set off if the property is on rent.

Q. I went abroad for my higher education and I took an education loan from a bank in the US . Now I have come back to India but continue to service this loan. Can I claim tax benefit on this loan? 

Ajay, Ranchi

Ans. As per the Income Tax provisions you cannot claim tax benefit for loans taken from a bank outside India. You could have claimed tax benefit, if you had taken loan from a foreign branch of Indian Bank. It is most ikely that your lender bank has not been notified by the Indian Govt.

** Insurance **

Q. I am 30 years old and  my company doesn't provide any health cover for me and my family. I want to buy a health cover for my wife who is 28 years old. Which policy should I buy? Ankit, Bokaro

Ans. I suggest you buy individual health insurance policies for you and your wife for an amount of  Rs. 2 lacs. Most of the insurers offer cash less facility which you should opt for.

Q. My mother is 55 years old and diabetic. She does not have a health insurance. Can an insurance be taken for her now? Subham, Ranchi

Ans. You can take a policy for her. Do disclose that your mother has diabetes. The cost of policy may be higher but it shall cover medical conditions associated with diabetes.

** Investing **

Q. I invested in ULIP of a private insurance company with annual premium of Rs.25,000 for 15 years. After paying 4 years premium I want to avail premium holiday and withdraw. Pls advise? John, Hazaribagh

Ans. After payment of regular premium for at least three complete years, you may opt for Premium Holiday for a maximum period of five years. You may recommence paying Regular Premiums within five years from the date of the first unpaid Regular Premium. You can do partial withdrawals too after three completed years.

04 June to 10 June 2011

** Insurance **

Q. I am 60 years old and have paid the first instalment of Rs50,000 for Ulip. Value of my investment after 3 months is Rs40,000. Is it worthwhile to continue at my age, considering the reduction in value in such a short period? Vijay, Ranchi
Ans. As ULIP is a market linked insurance product, it suffers from risk of market fluctuation. Such product should be purchased with time horizon of above 5 years. At this stage if you decide to discontinue, there will be huge reductions. In your age purchasing ULIP is ill advised. You may speak to your agent to inform you on the surrender value and then decide whether to continue or stop.
Q. I have got a health insurance policy from my employer for Rs. 40,000. Please advise whiether I should purchase additional policy to higher coverage. Chand, Ranchi
Ans. You presently have a bare minimum coverage. You should purchase health insurance with sum assured between Rs. 1 to 5 Lacs. You should also cover your members of family. The important things that you should consider while taking a policy are the size of the network of hospitals where cashless treatment can be taken, the number of years after which the insurer starts covering pre-existing diseases and the number of ailments that are covered under daycare expenses provided under the cover.

** Taxation **

Q. I have got capital gains from sale of a residential house in January 2011. I want to invest in National Highways Authority of India (NHAI) bonds in June. How long can I keep the capital gains in my savings bank account to avoid paying tax? Dasrat, Bokaro
Ans. As per the provisions of section 54EC of the Income-tax Act, you need to invest capital gain amount within 6 months from the date of sale. You can invest in NHAI or REC bonds, subject to Rs. 50 lac limit. Till this investment you can keep the money as per your choice. 
Q. I would like to know that if I invest Rs20,000 on infrastructure bond for five years, do I need to pay tax on interest earned on the bonds? Deepak, Ranchi
Ans. Interest income earned from infrastructure bonds would be taxable. You should offer the interest for tax, every year over the tenor of the bonds.

** Investing **

Q. I am 50 years old and have around Rs15 lakh investment in PPF and NSC. I want to invest Rs10 lakh in MFs with a mix of equity and debt. Suggest funds keeping in mind the inflation rate. I want to stay invested for 10 years and have medium risk appetite. Devendra, Hazaribagh
Ans. It is good to know that you know your risk appetite. Allocation to investment classes should be based on risk profile. I suggest you to go for equity oriented balanced fund. The best in the lot is HDFC Prudence which has a track record to yielding return 28.39% per annum over the 10 year period.

14 May to 20 May 2011

** Investing **

Q. I am 27 years old having 16000/- income per month. Live with parents in Ranchi. No investment till now. How much and in what shape should I invest ? Deepak, Ranchi
Ans. Congratulations on your determination to invest. The total amount of investing depends on your ability to save. A part of your investment should go towards tax eligible deductions. I advise you to go for term insurance of Rs.25 lacs. If you are not covered under provident scheme, then open a public provident fund and make investment. This is also eligible for tax deduction under section 80 C. After meeting the investment for tax planning, go for equity diversified mutual fund. Given your age, you can take risk and invest in such funds.
Q. Is it true that PSU's offer the lowest rates for Mediclaim? How? Ganesh, Ranchi
Ans. Insurance companies offer their own premium rates that are decided on the basis of their company policy, past claim ratios, future expectations of claims etc. It is not true that PSUs offer the lowest rates. Before buying a policy you should compare the rates offered by various insurers. Another aspect worth looking for is the insurer's ration of claim approval.
** Taxation **
Q. I have transferred Rs 10 lakh from my account to my wife's account. She invested in the equity market and earned Rs.50000/- during 2010-11. My wife does not have any other income. Does she have to file income tax return? Firoz, Bokaro
Ans. As your wife has earned out of money given by you, the income earned by her needs to be added / clubbed with your income. Alternatively, if you treat the amount as loan to your wife, interest at appropriate rate on Rs.10 lacs, needs to be clubbed with your income.

** Legal **

Q. Can a grandparent make payment through his bank account related to SIP, not exceeding Rs. 50,000, in favour of his grandchild? Giddu, Ranchi
Ans. Yes, a grandparent can pay from his bank account for SIP investments in the name of his grandchild, provided the grandchild is a minor. Restriction on third-party payments for investments does not apply to members of family. Suitable declaration need to be given by the grandparent.

** Insurance **

Q. I am 30 years old. I have a term life insurance of Rs50 lakh. I want to buy another Rs50 lakh term plan. Which policy do you recommend? Is it better to have life insurance policies from two different insurers? Chandan, Hazaribagh
Ans. It is appreciative that you are opting for term plans, that usually is the best way for life insurance coverage. At your age and profile, I recommend you to buy a policy online and look for a plan that offers you the best rate and buy it. Having multiple life insurance policies from multiple providers can sometimes create complications for nominee in case of a claim.

07 May to 13 May 2011

** Investing **

Q. Do gold and silver still hold potential for investors? How? Kuldip, Ranchi
Ans. Yes, I feel such investment hold good for investors in long term. There appear to be "bubble" in silver prices that has corrected by 33% from its peak and is bound to correct further. A price after correction of 10-15% from this level is appears to be a bargain purchase. As for the Gold, it is fine to purchase at regular intervals by way of Gold ETF. Thus, these are much safer investment option for small investors. 
Q. Kindly let me know future of UTI Energy fund. Hold or dispose it. Vikas, Ranchi
Ans. This is a sectoral fund that invests in, energy sector covering industries such as oil & gas (exploration, production, distribution and related areas). Investing in such a fund is risky and should suit your risk profile. If your investment horizon is more than 8 years, then stay invested as this sector has a good chance in participating in India Growth story over long run.
** Taxation **
Q. Can I invest more than Rs.70000/- in a year in PPF ? Supposing I do investment in my minor child's name as well as my name. Kundan, Bokaro
Ans. No, You cannot invest in PPF for more than Rs.70000/-. This limit does not increase if you open another account for your minor child. The contribution in the child's account is clubbed with the parent's limit of Rs 70,000 per year. So, if you invest Rs 10,000 in your child's account this year, you can invest only Rs 60,000 in your own.
Q. I intend to gift a fixed deposit of Rs.50000/- to my married daughter. Do I get any tax benefit of this gift? Vijay, Ranchi
Ans. By gifting fixed deposit of Rs.50000/- ( receipt drawn in favour of your daughter) you will not get any tax benefit. The interest earned on this will be taxable in the hands of the daughter.

** Insurance  **

Q. I intend to buy term insurance. Is return of premium option worth considering? Umesh, Hazaribagh
Ans. Return of premium option in Term insurance plans return the total premiums paid during the term of the policy to the life assured in the event if he/ she outlives the plan. I recommend that a without return of premium term insurance is a better option. You can cover higher coverage with lower premium. The amount thus saved can be invested in suitable avenue generating returns.

30 April to 06 May 2011

** Taxation **
Q. I am 35 year old. My father has made a gift to me. I have invested it in fixed deposit and earning interest. Please advise on tax liability of interest. Rajan, Bokaro
Ans. You will be liable to pay income tax on earned interest.
Q. My father and myself are purchasing a flat for Rs.20 laces in our joint names. My father is entirely meeting this cost. I am paying for stamp duty and registration charges. Can I claim these expenses as tax deductible? Can I also pay rent to my father and claim HRA from my employer? Rohit, Ranchi
Ans. Yes you can claim the expenses as tax deductible under section 80 C subject to overall limit of Rs. 1 lac. No, you cannot claim HRA as you are a joint owner.

** Investing **

Q. I have invested in shares of a listed blue chip company. The market prices has since fallen by more than 15%. What strategy should I adopt - sell / purchase more? Aftab, Ranchi
Ans. Please do not rush to sell or purchase due to steep fall of your blue chip investment. I advise below 3 steps to decide. Firstly, do not buy a share at a wonderful price just because it is a blue chip or it is too big to fall. Secondly, evaluate the adverse reason of fall. If the reason is likely to be recouped then do not rush to sell, rather hold on. Thirdly, if you feel that there will be steeper rise in price of this share in near future and now it offers a better alternative than other shares, go on to buy more.
Q. I need to invest Rs. 10 lacs for a period of 5-7 years. Should I invest in a fixed deposit or a debt fund? Subir, Ranchi
Ans. I understand that per your risk profile, you have zeroed on safer options. Debt funds are better than fixed deposits. Rate offered by banks on fixed deposit fluctuate over time. If the rates are going up (which it will in near future) this may require you to break old deposits and make fresh one. IN debt funds, you are absolved from shopping for rates. Fund manager does it for you. Hence you may actually land up getting higher return. Besides, there is no TDS on debt funds. It is also more liquid than fixed deposits.
** Insurance **
Q. I am planning to marry in the month of June. I hear now-a-days there are insurance plans to cover risks relating to a event of marriage. Please advise. Ujjal, Ranchi
Ans. Most companies sell wedding insurance as part of wedding insurance. Indian wedding are generally very expensive. Hence, there exists a good case for insurance coverage. Some of the risks covered are - risk of cancellation or postponement, theft of jewellery, food poisoning, terror attack etc. Beware! Please read the policy fine prints before making the purchase.

23 April to 29 April 2011

** Investing **
Q. I intend to invest Rs.15000/- per month in mutual fund for next 10 years. Please suggest few schemes. Shashi, Ranchi
Ans. I advise you first to set your financial goals for which you are saving. Your goals should state theyear and amount of money required for your various needs. Mutual funds are of various typescarrying different risk and return - Equity Diversified, Sectoral, Balanced, Debt and Liquid. Hence, you should know your risk profile before allocating funds to any particular type. Suggested equity diversified funds are HDFC Top 200, DSP Blackrock. Suggested Debt Fund is Birla Dynamic Bond Fund.
Q. I need to build up a fund of Rs. 20 lacs for my daughter's marriage in next 5 years. Please suggest how to proceed. Munna, Ranchi
Ans. I suggest you save Rs.20000 per month on a debt fund yielding on an average a return of 9.5%. You also save Rs.6000 per month in equity diversified fund. By the end of 5 years you will have the required money for your daughter's marriage.

** Taxation **

Q. Is there any new development on tax exemption in new pension scheme? Pintu, Bokaro
Ans. Yes. Earlier employer and employee contribution eligible for deduction was within the limit of Rs.1 lac. With the amendment the employer contribution is taken off from within this limit. This translates into higher eligible deduction and is advisable for self employed individuals.
Q. Kindly suggest the most rewarding tax saving option for an individual. Gopal, Ranchi
Ans. Though investing depends on your risk profile, on the basis of previous records, one can safely invest in ELSS (equity linked saving scheme) (a category of mutual fund) for higher returns.

** Banking **

Q. Recently my housing loan application for Rs. 10 lacs was rejected by a private bank. Reason cited was an old outstanding loan of Rs.6 lacs lying unpaid and reflected in my credit report from CIBIL (Credit Information Bureau). I am surprised to receive this feedback as I have never taken any loan before. I am in big difficulty. What shoul I do? Dulal, Ranchi
Ans. CIBIL is an information centre to which all banks refer to prior to sanctioning a loan. If there exists adverse report about you, bank do not sanction fresh loan. In your case, as you state that you have never taken any loan before. I suggest you take your credit report from CIBIL by paying Rs.142/-. On the basis of details therein of any outstanding loan, approach the concerned bank for rectification.

09 April to 15 April 2011

** Taxation **
Q. My parents recently gifted me with shares of TISCO. These shares were bought 5 years ago. I want to sell the shares. Do I have to pay any tax? Sanjeev, Ranchi
Ans. As per Income Tax law, your period of holding of shares shall be deemed to be the date of purchase of shares by your parents. Hence, if you now sell the shares through stock exchange and pay STT on it, the capital gain shall be exempt from tax.

Q. I have salary income of Rs. 3 lacs. I do not have any other income. My employer deducts entire tax from my salary. Do I have to file income tax return? Rajnath, Bokaro
Ans. You are required to file income tax return if your income is more than Rs.1.6 lac (after deduction of tax saving investments and certain other expenses like medical reimbursements, donation) in financial year 2010-11. Even if your tax liability after deduction of tax by employer is nil, you are still required to file return.

** Banking **
Q. I have opened a savings bank account 3 years before, in a nationalized bank. I have completed formalities like address and id proofs, and photo. Now I want to open another savings bank account jointly with my wife where I am introducer. Bank refuses to accept and wants a third party introducer. Please guide if the bank is justified. Deepak, Ranchi
Ans. Bank is not justified in refusing. As your KYC (know your customer) formalities are complete, the purpose of introducer is self served. You are competent to self introduce for the new joint account. You may speak to higher management in the bank for redressal.

** Financial Planning **
I have a 10 year old child. I need to accumulate money for his higher education. Should I buy a child plan? Ratnesh, Bokaro
Ans. Buying a child plan to accumulate fund for your child future needs is not the best way to organize your personal finance. I suggest the following - 
Step 1: Determine the year and amount which you require.
Step 2: Add up the amount with yearly inflation of 9%
Step 3: The amount determined in step 2 is what you require.
Step 4: Assuming a 10% return on balance fund, work out the amount you need to save every month to
             accumulate the required amount.
Step 5: Invest every month on a balance mutual fund of the amount determined in step 4.

02 April to 08 April 2011

**Investing **
Q. Several types of charges are deducted by a financial institution from a financial product like mutual fund, ULIP etc. that it sells. Please guide how what to look for while deciding to purchase.
Ranjit, Ranchi
Ans. Financial products like mutual funds, ULIP have charges in-built in them. An investor should screen the charges while deciding to purchase. Ask these questions to the agent selling you the product, note it and have it signed - The charges are - At the time of purchase : Front Load. In mutual fund it is zero. In ULIP it varies.During the period held by you: These are charges deducted from your fund to maintain your portfolio. In mutual fund it is capped at 2.5% per annum. In ULIP it is capped at 4% per annum for the first 5 years. For subsequent period the charges are capped at 2.25%. At the time of exit : This is the charge you pay when you sell. In mutual fund it falls to zero after 1/ 2 years. In ULIP there are huge charges for first 5 years.

** Insurance **
Q. I have a insurance policy of my car. I have sold off the car and intend to purchase a new car. Please advise whether I need to take a new policy or I can transfer the old policy to the new car.
Umesh, Ranchi
Ans. If there is any no claim bonus (NCB) in your old policy, it is advised to transfer the policy to your new car. Otherwise, purchase a new policy for the new car.

Q. I am required to frequently travel in my employment. I am married and have a child aged 2 years. Please advise which type of policy should I purchase to protect myself from the hazards of travelling. Santosh, Bokaro
Ans. I advise you to purchase a accident policy that provides risk coverage against death, disability, loss of income due to accident and / or medical expenses incurred. 

** Taxation **
Q. My employer has provided me LTA. I have utilized the money in a 3 day trip with my family to Kolkata in a car. Can I claim tax benefit for the expense on car hire? Subir, Ranchi
Ans. Yes, you can. LTA can be utilized for journey by road, rail air.

Q. I made a distress sale of my flat in Patna. I incurred a loss of Rs. 1.25 lac. Can I claim this loss as deduction against my salary income? Arun, Bokaro
Ans. No you cannot. Flat is a capital asset. Loss arising from it cannot be set-off against salary income.

26 March to 01 April 2011

** Financial Planning **
Q. I have recently taken a housing loan of Rs. 10 lac. How does it affects my life insurance? 
Chandan, Ranchi
Ans:- The value of sum assured of your life insurance should be equal to the loans that you have taken plus the amount and period of support required to your family in the event of your untimely demise. Hence, when you have taken a fresh housing loan, you should increase your life insurance by at least half of the loan amount. You may go for term insurance which is the cheapest with maximum coverage.

Q. Is it god to invest in Reliance Gold Saving Fund every month by way of SIP? Dasrat, Ranchi
Ans:- Typically investment in gold should be at around 5-8% of your total portfolio. Investing in gold by way of SIP is good. If you have a DMAT account, you should also consider investing through Gold ETF of Benchmark.

** Insurance **
Q. I intend to buy medical insurance for myself 26, and my mother 50. Please advise
whether it should be family floater or individual policy. Deepak, Dhanbad
Ans:- In family floater plans premium is charged on the basis of age of senior most member of the family.
Hence in your case it is advised to purchase two individual policies.

Q. I intend to go abroad for a vacation with my wife, two children and parents.
Should I take any travel insurance? Sarfaraj, Bokaro
Ans:- You must take travel insurance for the entire group. In some countries this is a precondition for
granting Visa. Further medical cost is very high abroad and more-so in times of emergency.
 

** Taxation **
Q. I have invested in two single premium life policies of LIC. I will receive maturity proceeds
on 2018. Will it be taxable under the new tax regime of DTC commencing from April 2012?
Krishna, Hazaribagh
Ans:- Presently such maturity proceeds are exempt from tax. As per DTC too, investments made before commencement in instruments that are exempt from tax, will continue to be so in DTC too.

19 March to 25 March 2011

** Insurance **
Q. I am 25 year old and my wife is 23 year old. I have just started my career. What type of policy should I take and for how much amount. Subjit, Ranchi
Ans. The first insurance plan you should take is the term insurance. It is the cheapest and the best way to insure against life risks. It should be 8 times your annual Income.

** Taxation **
Q. My Uncle is 75 year old and used to get a pension of Rs.4500/- Due to increase in cost of living he had to give on rent a portion of his house to two tenants. He is presently receiving Rs.35000 per month. What should he do to save tax? Ravi, Ranchi
Ans. Your Uncle has limited options of investments due to his age. He may not invest in options having long lock-in period like NSC, PPF etc. I suggest him to invest in ELSS mutual funds with 3 year lock in and/or Senior Citizen Savings Scheme (2004).

Q. I have received during current year an interest free loan from my employer for Rs. 2 lac for certain personal needs. My company is saying that a notional interest on the same is taxable. Can you please clarify? Rakesh, Bokaro
Ans. Your Company is correct in stating so. Notional interest at the rate equivalent to SBI base rate as on 1/4/10 is presumed to be your income for 2010-11. The employer shall deduct TDS on the said notional income.

Q. My child is a stage artist and receives remuneration from time to time. Do I have to add her income in mine and pay tax on both? Arvind, Ranchi
Ans. Normally minor child’s income is added to the income of one of the parents having higher income. However in your case as the remuneration has received by your child by use of her talent and skill, it will not be clubbed / added to your income. 

** Investing **
Q. I am a 30 year old married and employed in a telecom company. I intend to invest in shares. Please guide me. Altaf, Bokaro
Ans. As you are doing a day job in a fast evolving sector, my advice to you is not to take direct exposure to shares. Investing in shares are risky, require deeper understanding of the industry and monitoring of financials. Instead invest in 5 star rated equity diversified mutual fund.

"You can send your finance related query on address given below, which will be answered by 'Rishi Khator' (Chartered Accountant)"     Jharkhand Classifieds, 55, Baralal Street, Upper Bazar, Ranchi-834001 E-mail:- rncexpress@yahoo.com                 info@jharkhandclassifieds.com