Changes In PPF, NSC Rules: What NRIs need to know...

Changes In PPF, NSC Rules: What NRIs need to know...

In brief

1)    NRIs are not allowed to invest in small savings schemes like NSC and PPF. However, they were earlier permitted to retain their PPF account if they had opened it before becoming an NRI.

2)    The government notification on PPF dated 3^rd October 2017 states, "Provided that if a resident who opened an account under this scheme, subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident and interest with effect from that date shall be paid at the rate applicable to the Post Office Saving Account up to the last day of the month preceding the month in which the account is actually closed."

3)    This means PPF accounts would be considered closed prior to maturity in case the holder becomes a non-resident Indian (NRI). The investor will be then paid interest at the rate applicable to Post Office savings accounts till the date the PPF account is closed.

4)    Similarly, in a notification dated October 3 on NSC, the finance ministry says: "Provided that if a resident Indian having purchased a certificate, subsequently becomes Non-Resident during the currency of the maturity period, the certificate shall be encashed or deemed to be encashed on the day he becomes a non-Resident, and interest shall be paid at the rate applicable to the Post Office Savings Account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed."

5)    In both the above cases, the interest shall be paid at the rate applicable to the Post Office Saving Account (POSA), from the date of deemed closure/ encashment up to the last day of the month preceding the month in which the same is actually closed/ encashed.

In detail

Background

PPF and NSC are the most popular and common long term saving instruments in which Indians invest for long term financial planning. 

The amount invested in these instruments is eligible for deduction up to INR 150,000 under section 80C along with other eligible investments.

The interest earned on PPF accounts is tax free and NSC interest is eligible for deduction under section 80C.

Besides the tax break, investments in these instruments are safe as they are guaranteed by the Government of India.

Currently, both instruments (PPF and NSC) carry interest at 7.8% per annum and the rate applicable to the Post Office Savings Account is 4% per annum.

The amendment

The Government of India has now made amendments in the PPF scheme and NSC rules, whereby the benefit of investment in such instruments is restricted to resident Indians only.

Where such individuals become NR, anytime during the holding period of such instruments, the PPF account will deem to be closed and/ or NSC certificate shall encashed or deem to be encashed on the day when such individual becomes a NR.

Until the time the PPF account is actually closed or NSC certificate actually encashed, the accumulated money will earn interest at a lower rate, as applicable to POSA (which is presently 4% per annum)

The impact

The amendment is likely to impact a large number of people who become Non Residents when they go on overseas assignments.

If their family members also accompany them, they too will get impacted as they too become NR. If such individuals have parked their funds in PPF accounts/ NSC certificates, they may need to liquidate them.

The amendment indicates that such accounts may need to be closed and/ or NSC encashed and when such individuals come back into India and become residents, they may have to open a fresh PPF account, unless the Government of India provides some mechanism to revive such accounts for such categories of individuals or provides any clarifications

It is unclear whether residency to be determined under the tax laws, i.e., Income-tax Act, 1961 (Act) or under the exchange regulations, i.e., Foreign Exchange Management Act, 1999 (FEMA).

While residency under the Act is determined based on physical presence of the individual in India, residency under the FEMA is determined also on the basis of intention to stay in India.

A clarification on this from the Government is expected.

The link for the notification is given below.

https://consumerresourcesin.files.wordpress.com/2017/10/scheme-would-be-redundant-when-ppf-nsc-holder_s-become-nr_s-before-their-maturity.pdf

E-Book on PAN

All about PAN…. Download e-book.

Quoting of PAN has been made mandatory for most of the financial transactions. It is important to understand these provisions especially those pertaining to the procedures for PAN application, documents required for PAN application and transactions for which quoting of PAN is mandatory etc.

The Income Tax Department has issued a booklet on Permanent Account Number (PAN) to answer all the queries.

To download the Book visit

http://www.incometaxindiapr.gov.in/incometaxindiacr/contents/tpi/TPI_PAN-Book.pdf

How to exchange soiled and mutilated notes?

Facilities for Exchange of Soiled and mutilated currency notes

Many a time we are given soiled or mutilated notes when in a hurry which we accept without checking. It becomes a problem as people refuse to accept these notes. The facilities provided to the members of public for exchange of their soiled, mutilated etc. notes are as under.

Soiled Notes

What is a soiled note?

Soiled notes are those which have become dirty and slightly cut. Notes which have numbers on two ends; i.e. notes in the denomination of Rs.10 and above which are in two pieces, are also treated as soiled note. The cut in such notes, should, however, not have passed through the number panels.

What can the public do?

All these notes can be exchanged at the counters of any public sector bank branch, any currency chest branch of a private sector bank or any Issue Office of the Reserve Bank of India. There is no need to fill any form for doing this.

 

Mutilated Notes

What is a mutilated note?

Mutilated notes are those notes which are in pieces and/or of which the essential portions are missing. Essential portions in a currency note are name of issuing authority, guarantee, promise clause, signature, Ashoka Pillar emblem/portrait of Mahatma Gandhi, water mark.

 

 

 

 

 

What can the public do?

Notes which are in pieces and/or of which the essential portions are missing can also be exchanged. These can also be exchanged at the counters of any public sector bank branch, any currency chest branch of a private sector bank or any Issue Office of the RBI without filling any form. Refund value of these notes is, however, paid as per RBI (Note Refund) Rules.

http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/NRRE140909.pdf

 
Other facilities for exchange

To suit public convenience, the exchange facility for mutilated notes is also offered through TLR (Triple Lock Receptacle) covers. Members of public can obtain from the Enquiry Counter of the Reserve Bank a TLR cover and put their notes in the cover with particulars, such as, name, address, denominations of notes deposited, etc. filled in the columns provided on the cover, close it and deposit it in a box called Triple Lock Receptacle against issue of a paper token.

This box is kept at the Enquiry counter at each Issue Office of the Reserve Bank. The admissible exchange value of the mutilated notes will be remitted by means of a bank draft or a pay order. Mutilated notes can also be sent to any of the RBI offices by registered/insured post.

Excessively soiled, brittle, burnt notes

Notes which have become excessively soiled, brittle or are burnt and, therefore, cannot withstand normal handling can be exchanged only at Issue Office of the RBI. Persons holding such notes may approach the Officer-in-charge of the Claims Section, Issue Department of the Reserve Bank for this purpose.

http://www.rbi.org.in/currency/Exc%20of%20Soiled-Mutilated%20Notes.html

 

 

RBI Directs banks to issue clean notes

Clean Note Policy

Certain branches of banks continue to follow old practices like stapling, writing number of note pieces in loose packets on watermark window of notes disfiguring the watermark impression.

Further, certain bank branches do not sort notes into re-issuable notes and non-issuable notes, and issue soiled notes to public.

Such practices are against the “Clean Note Policy” of Reserve Bank of India.

The RBI has issues a directive on the matter which stipulates that:

a) Banks should do away with stapling of any note packet and instead secure note packets with paper bands,

b) Banks should sort notes into re-issuables and non-issuables, and issue only clean notes to public; and,

c) Banks should forthwith stop writing of any kind on watermark window of bank notes.

For the RBI notification visit......

http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/CCN140513P.pdf

Hurry! Submit Form 15G/15H at the beginning of the year itself and avoid TDS

As per the TDS rules, if interest income exceeds Rs 10,000 in a financial year, 10% tax will be deducted at source. If PAN is not submitted then the TDS rate will be 20%. However, investors with total taxable income below the basic exemption limit can submit a declaration in Form 15G/15H to avoid TDS. These forms have to be submitted in duplicate.

·         Form 15G: This is for individuals below 60 years, HUFs and trusts, etc.

·         Form 15H: This is for Senior citizens and those above 80 years.

To avoid TDS it is advisable to submit the Form 15G/15H at the beginning of the year itself. From FY 2013-14, the IT Department has made some changes in the forms. In the old form one only had to declare that one's income was below the taxable limit and therefore TDS should not be deducted.

The new forms require some additional information on income from all sources and tax deduction availed of during the financial year. One must also mention the expected taxable income in the financial year from all income heads like salary, interest, capital gains, rent etc. The assessee can avoid disclosure of the tax-free incomes like interest from PF, PPF and tax-free bonds.

Now let us check whether you are eligible to submit the Form 15G or 15H. An individual or HUF must satisfy two conditions:

Condition 1: The estimated taxable income for the financial year should be less than the basic exemption limit. This is Rs 2 lac for individuals below 60 years and HUFs, Rs 2.5 lac for senior citizens, and Rs 5 lac for very senior citizens above 80 years.

Condition 2: This is applicable only to Form 15G. The total interest income from all sources should not exceed the basic exemption limit. This condition does not apply to senior citizens because most retired people get their maximum income from interest.

The forms also require the assessee to furnish details of other incomes, like dividend from shares and mutual funds. Although dividend income is tax-free the IT Department still wants to know how much you earned from them.

PF Transfer & Withdrawals will be online from July 1, 2013

To ensure speedy settlement of claims, EPFO has decided to set up a central clearance house which will be operational on 1st July 2013. This will enable subscribers to apply online for settlement of the withdrawal and transfer of funds claims.

Over 50 million subscribers of the ‘Employees Provident Fund Organisation’ (EPFO) will be able to apply online for transfer and withdrawal of their provident fund. Normally the biggest problem faced by the subscribers is transferring their accounts while changing of job etc. Now this central clearance facility will expedite the process. The facility will enable subscribes to track online the status of their applications for transfer and withdrawals.

Under the new online system for transfer and withdrawal claims, the onus of verifying the details of the PF account from previous employers would be on the EPFO. Currently, employees have to get their applications verified from their employers for settlement of claims.

Some FAQs about PAN…..

What are the benefits of obtaining a Permanent Account Number [PAN] and PAN Card?

PAN has been made compulsory for every transaction with the Income Tax Department. It is also mandatory for numerous other financial transactions such as opening of bank accounts, availing institutional financial credits, purchase of high-end consumer item, foreign travel, transaction of immovable properties, dealing in securities etc. A PAN card is a valuable means of photo identification accepted by all government and non-government institutions in the country.

I have lost my PAN card but remember my number. Do I necessarily need to get a fresh card?

With your PAN you can continue to transact with the Income Tax department. However, in respect of other agencies you may encounter constraints without a PAN card since it doubles as a photo identity card.

I have been allotted two PANs. Which number should I use?

You may retain any one of the numbers and surrender the other through a letter addressed to your jurisdictional Assessing Officer.

If I do not surrender the additional PAN number, is there any problem?

Yes. It is illegal to have two PANs and the penalty for such offence is Rs.10,000/-.

By mistake I have been using different PANs for different purpose like one for my D-mat account and another for filing my Income Tax return and payment of taxes. How do I set this right?

It is advisable to retain only one PAN, preferably the one used for Income Tax purpose and surrender the other number immediately. The institutions where the latter number has been quoted should be informed of the correct PAN.

Is it mandatory to file return of income after getting PAN?

No. Return is to be filed only if you have taxable income.

Do I need to apply for a PAN when I move or get transferred from one city to another?

Permanent Account Number (PAN), as the name suggests, is a permanent number and does not change. Changing the address or city, though, may change the Assessing Officer. Such changes must, therefore, be intimated to nearest IT PAN Service Center for required corrections in PAN databases of the Income Tax Department.

Income Tax Department has issued me a PAN card; can I obtain a new tamper proof PAN card?

For obtaining the new tamper proof PAN card a fresh application will have to be made in new form 49A to IT PAN Service Center, in which existing PAN will have to be indicated and old PAN card surrendered.

I had applied for PAN and received PAN number but have not received the PAN card?

Apply afresh in the Form 49A at any IT PAN Service Center quoting the PAN allotted to you.

I had applied for PAN but have not received any communication from Income Tax Department?

In case you had applied prior to notification of new form 49A on 29.5.2003 but have not received the PAN, you will have to apply afresh in new Form 49A at any IT PAN Service Center.

What is the cost of obtaining a PAN card?

The cost is Rs. 96/-

Inflation Hurts!

Nice statistics on the Rise in Price of Rice ……..

Price rise has been a major headache for the common man as well as economists and politicians in India. Elections have been fought, won and lost over onion prices in the past!

Now let us focus on some startling facts by looking at some statistics for the last 18 years.

Why 18 years?

Well that’s the age when a person becomes entitled to vote in our country. That’s the ‘Gen X Voter’. They need to know some hard facts before getting confused with rhetoric.

The price of rice in India (standard) in January 1995 was Rs. 8.62 per kilogram. It is approximately Rs. 30.89 per kilogram today. That’s a rise of 258% in the ‘Price of Rice’. It has risen 3.58 times in the last 18 years.

Compare this to the price of Gold. In January 1995 it was Rs.381.84 per gram. It is approximately Rs.2,958/- per gram today. That’s a rise of 675% or 7.75 times in the last 18 years.

And now about diesel prices during the same period: The price of Diesel in India in January 1995 was Rs. 6.98 per liter. It is approximately Rs.50.98 per liter today. That’s a rise of 630% or 7.30 times in the last 18 years.

What about petrol prices during the same period? In January 1995 it was Rs. 16.78 per liter. It is approximately Rs. 75.03 today. That’s a rise of 347% or 4.47 times in the last 18 years.

Surprised?

Yes the price of rice has gone up the least among the four in the last 18 years!

Conclusion?

We leave that to you. That’s adding to confusion? Well let it be……

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Source

http://www.indexmundi.com

Lessons from the Amity Half Marathon, Kolkata

Lessons from the Amity Half Marathon – the winners and losers….

The 3rd of February, 2013 saw a lot of eager participants in the Amity Half Marathon which was flagged off on this cool Sunday.

Who won? Well all those who participated in the cause of up-liftment of the underprivileged girl child ARE THE WINNERS! All those who made the effort to reach the venue at 7 am and run a few steps to show their solidarity towards the underprivileged girl, in my view are winners.

The financial marathon (plan) of life can be a Dream Run provided you start early, set achievable goals and definitely take the guidance of a financial planner.

Like a pedometer, the financial planner helps you see how many steps you have taken and where you stand in the marathon of your financial life!

So rise early, get to your venue (the planner’s office) and put on your running shoes (disciplined contribution) and be the first to cross the finishing line (achieving your financial goal)!

Image: www.kolkatatoday.com

Malhar Majumder, CFPCM, FCMA, ACS, Dip. IFRS (ACCA), ADMA (CIMA)

Executive Director, Fine Advice Private Ltd.