Hurry, get a new cheque book!

Hurry, get a new cheque book!

Check your cheque status, only those in new format will be honoured from 1st January 2013

  

With the implementation of the new Cheque Truncation System (CTS-2010), you may not be able to use your old cheques from next year.

The new Cheque Truncation System (CTS-2010) will eliminate physical movement of cheques for clearing. Instead, only their electronic images, along with key information, will be captured and transmitted.

It will make the clearing process more efficient, secure and quicker.

Some transitory period, may be from 1st January 2013 to 31st March 2013, could be given during which both types of cheques will be accepted.

What you need to do

CHECK YOUR CHEQUE'S STATUS

If you have ordered your cheque books recently, say, a month ago, you may have already received CTS-compliant cheque leaves, since most banks have already migrated to the new system.

However, if you have received the cheque book more than two or three months ago, you need to run a status check. For instance, the compliant ones will have the new rupee symbol inscribed near the numerical 'amount' field.

The CTS-compliant cheque leaves will have the "Please sign above" mentioned on the cheque leaf on the right had side bottom; and, void pantograph (wavelike design) is embossed on the left hand side of the CTS cheque leaf.

GET YOUR OLD CHEQUE BOOKS REPLACED

If you haven't received the new form of cheque books already, speak to your bank immediately.

Banks will not charge any fee for replacing the old cheque leaves.

ISSUE NEW POST-DATED CHEQUES FOR EMIs

If you have issued post-dated cheques (PDCs) for your home or auto loan EMIs, you will have to issue fresh cheques.

For those of you who have opted for the ECS (electronic clearing system) mode for EMI payments the new system will not have any impact.

Source: - The Economic Times

Now Check Your PF Balance Online

Now Check Your PF Balance Online

E-Passbook Service for Provident Fund Balance

The Employees Provident Fund Organization (EPFO) has recently launched an e-passbook service for PF accounts. Using this feature, you can check your PF accounts online.

What Would the PF E-Passbook contain?

• Your PF e-Passbook would contain details of all the transaction in your PF account – this includes all credits to and all debits from your account.

• The details would be available for months where the details have been provided by your employer and has been processed in the new software at the PF field offices.

How to Access Your PF E-Passbook?

The e-passbook facility is available on EPFO’s website http://members.epfoservices.in/

You do not have to create an user ID and password – you can use your mobile number along with an identification proof like PAN, AADHAR, Bank Account Number, Voter ID, Passport or Driving License to register and access your PF details.

In fact your PF account details (PF account number, where it is located etc.) are not required while registering for the e-passbook service.

Please note that you would be able to register only one account per mobile phone number.

Restrictions on the E-Passbook Service for PF

• Your PF account would be accessible online only if your employer has already uploaded your electronic challan cum return for May 2012 onwards.

• If you work for an establishment that is currently exempt, you would not be able to see your PF account online (because your PF account is not with EPFO in this case).

• You can see details of only one PF account per employer.You can see the details of a maximum of 10 PF accounts (each for a different employer).

• You can’t see the details of inoperative PF accounts (provident fund accounts where no deposit has been made for the past 36 months) as of now.

More Details on PF E-Passbook

For more information on the provident fund e-passbook feature, please visit EPFO’s E-Passbook FAQ page http://members.epfoservices.in/faq.php

Petrol or Diesel Car?

Petrol or diesel?

With the rise in petrol prices there is a mad scramble to replace petrol cars with diesel options. Even the manufacturers have jumped into this game to launch new diesel versions of successful models to ramp up sluggish sales.

Choosing between petrol and a diesel car is quite difficult. Petrol models are cheaper to buy. However knowing which is going to cost you more in the long run is a bit more difficult.

This is because the overall running costs of petrol and diesel cars are affected by so many factors, including fuel prices, servicing bills and mileage.

Click here for a simple calculator that can help you to decide.

http://fineadvice.in/site/dvsp/index.php

The calculator takes initial purchase price, interest on loan, fuel costs and mileage into account. It should give you an idea of how many years’ driving it will take to make buying a diesel the better cost-effective choice - if indeed the diesel will ever be cheaper.

The 'diesel payback' period could take much longer than you would think - especially for lower mileage users.

While routine maintenance costs are similar for petrol and diesel, it is potentially more expensive to repair a diesel car if anything serious goes wrong.

With manufacturers asking a premium for diesel models, and the development of super-economical petrol engines, is diesel still the answer to cheaper motoring?

Due date for filing returns extended

Relax! The 'due date' of filing of returns of income for the Assessment Year 2012-13 has been extended to 31st August.

On consideration of the reports of disturbance of general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and HUF has been made mandatory, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, has extended the 'due date' of filing of returns of income for the Assessment Year 2012-13 to 31st August 2012 in respect of assessees who are liable to file such returns by 31st July 2012 as per provisions of section 139 of Income Tax Act, 1961.

Mutual fund ratings

Star ratings of mutual fund schemes can be misleading!

Most of the information that a normal investor relies on before investing in mutual fund schemes comes from self-styled industry experts, the pink papers and mutual fund houses that share perspectives and assumptions and in some cases monetary incentives.

Fund Houses, Advisors, Wealth Managers and Brokers aggressively market funds awarded 5-stars by rating agencies like Value Research, Morningstar and Lipper.

Unfortunately investors respond to industry hype and buy heavily into the 5-star funds. The advisors as well as mutual fund houses showcase and hard-sell 5-star schemes and induce buying and selling that reduces overall investor returns.

Now the obvious question, can past performance be predictive?

Most of the star ratings are based on past performance, average AUM (Assets Under Management), portfolio concentration, corpus size, portfolio turnover, subjective analysis, hunches and opinions. Well, some of them are based on outright biases.

Very few ratings are simple, objective, and independent. They fail to assess the decision-making capability of fund managers and neglect the qualitative parameters which are also of great importance.

 

Then how to select funds based on past performance to ensure market beating results for the coming year?

How ratings work….

A rating is a report card of a fund. It gives us an idea as to how a particular fund performed over a given timeframe against other funds in the same category or the benchmark index.

It certainly is a good starting point in the fund selection process. However it cannot be treated as the sole basis for selecting a scheme to invest in.

Ratings are based on past performance and there is no guarantee that this past performance will be repeated in the future.

There are several instances where funds with 1 or 2-star ratings have subsequently leaped to the 5-star category and vice-versa.

Some of the rating parameters that are quantitative in nature are based on the fund’s risk-adjusted return performance over various time periods. There are instances where funds which are highly volatile or risky could get an average rating even if they are yielding good returns.

What should your strategy be?

Apart from the most recent rating of a scheme you need to check the past ratings. A fund’s rating is not permanent in nature and can change.

If the rating of a fund in which you have invested falls below a certain level (say from 5-star to 3-star) you should keep the fund on your negative watch list. However you should wait for at least 2-3 quarters before redeeming from the fund.

In today's world one year has become ‘long term’! Hence investors are in the habit of regularly churning their investments to be in the latest 5-star fund. Rather than chasing top-performers, it is more important to look for consistent performers and avoid non-performers.

A major part of your portfolio needs to be in a few solid schemes with long and consistent track record. These schemes should form the core of your portfolio and should be in the ‘buy and forget’ mode.

Investors have the tendency of pouring money into the ‘5-star’ schemes. They are always on the look-out for the hot fund and in the process jump from one scheme to another that has recently moved from a 2 or 3-star to a 5-star category. After a few months this 5-star scheme becomes a 3-star and they exit at a loss to invest in the latest 5-star scheme. Moving money always costs money.

How many schemes rated 5-star one year back have retained their rating today?

Very few! A classic example is the Sundaram Small & Midcap Fund. It was a 5-star rated fund for a long time and was the first choice of investors. This resulted in huge amount of money getting invested in the fund. That was the beginning of the downfall. The huge amount of inflows left the fund manager with very little opportunities in the midcap space and this hampered the performance.

The investors who jumped into the scheme attracted by the 5-star rating were a disillusioned lot. Then the money started moving out of the scheme due to gross under-performance. Well, it looks like a blessing in disguise. Performance slowly improved and today it is a 4-star fund.

Why do most advisors then recommend 5-star funds?

The problem is that most financial advisors also recommend the 5-star funds that are the flavour of the day. Reason? Well it is easy to sell a 5-star fund vis-à-vis a 3-star fund and nobody wants to walk the extra mile.

Why are you telling me to buy a 3-star fund? This is the normal retort from investors. Why should an advisor work hard on research and recommend a 3-star fund where he may face several objections with no extra incentive for the sale?

Are we suggesting that ratings are useless?

Not at all! Rating agencies provide a valuable service to investors and keep the fund managers on their toes with constant scrutiny. However while ratings are important they can be deceiving. We are just suggesting that ratings can only be a starting point in the decision making process and should not be used as the basis for churning investments from one fund to another in the short term.

What are the pitfalls in ratings?

During a long term bull market the rating agencies as well as investors become complacent. Fund managers are tempted to enhance performance by risky momentum stock picks or by simply taking aggressive cash calls. Both these factors can lead to rogue trading or even outright fraud. The performance of JM Core 11 scheme as well as some other schemes of JM Mutual Fund in the recent past are classic such examples.

What should an investor do?

Investors should research a fund's past results. The investor needs to ask some questions to themselves or their advisors before investing or churning schemes. 

• Did the fund manager deliver results that were consistent with general market returns?
• Was the fund more volatile than its benchmark index (meaning did its returns vary dramatically throughout the year)?
• Was there an unusually high turnover of stocks in the scheme?

This will help the investor understand how the fund performed under different conditions, as well as what historically has been the trend in terms of turnover and return.

Bottom Line….

Selecting a mutual fund may seem like a difficult task, but defining your objectives and risk tolerance is half the battle. If you follow this bit of due diligence before selecting a fund you will increase your chances of success. Question your advisor on the logic of suggesting 5-star funds and whether the suggested 5-star schemes would remain in the 4 or 5 star category one year down the line.

Salaried class gets relief from filing returns!

Are you a salaried person? Relax……..…….. You need not file IT return if your income is less than Rs. 5 lac in FY 2011-12……

As per notification number 9/2012 issued by the Central Board of Direct Taxes (CBDT) Income Tax Return is not required to filed by salaried employees if their total Income is less than Rs.5,00,000/- after allowing all deductions, during the Financial Year 2011-2012 provided they satisfy certain conditions.

Who can Claim Exemption? 

1.   This exemption is available to an individual assesse only. The individual may be resident or not.

2.   The total income after deductions under sections 80C to 80U must be up to Rs. 5,00,000/-

3.   Income must be earned from Salary and/or Saving Bank Interest up to Rs.10,000/-. Pension is also covered under the head salary.

4.   The individual must have reported his/her PAN to the employer.

5.   The individual should have earned salary only from one employer during the year.

6.   The assesse should have reported his income from saving bank interest to his employer for TDS deduction purposes and the employer should have deducted the tax on the full income (salary plus interest from savings bank account) and the TDS should have been deposited into the Government Account by the employer.

7.   No income tax refund is due to the individual and he/she should have received the Form 16 from the employer clearly mentioning the PAN, Income detail and TDS details.

Who cannot claim exemption? 

1. If your total taxable income after deduction u/s 80C to 80U is more than Rs. 5,00,000/-
2. If income tax refund is due to you.
3. If  your total income includes  any one of following: 

1. Income from House property.
2. Income from Business/profession
3. Income from capital gain
4. Income from Interest other than Interest from saving bank up to Rs.10,000/-. Suppose you have earned interest from FDR then you cannot claim exemption from return filing.
5. Saving Bank interest is more than Rs.10,000/-.
6. Any other Income under "Income from other source"

4. If you have not disclosed your earnings from Saving Bank interest to your employer for tax deduction.
5. If you have discharged your tax liability through advance tax or self-assessment challan.
6. If you have received salary from more than one employer during the year.
7. If you have not submitted your PAN to your employer.
8. If Form 16 has not been issued to you by your employer.
9. If notice u/s 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has been issued to you.

Some clarifications…..

This exemption is optional

Even if you satisfy all the conditions given in the notification, you can choose to file your return.

Salary should be the only source of income

An employee will be required to declare his PAN to his employer and obtain a certificate of tax deductions in Form No 16. Further the individual should not have any income from sources other than his salary and interest on Savings Bank account (maximum Rs.10,000/-). So, if you have income from fixed deposits, mutual funds, shares, property etc. you will be required to file the returns.

Single employer

The income must accrue from a single employer. In case you have changed jobs or worked in two or more jobs during the year you will have to file the IT return even if your salary income is below Rs. 5 lac.

No interest income over Rs. 10,000/-

In case you have interest income of more than Rs. 10,000 from your savings bank account you cannot claim the exemption from filing returns. However, in case your interest income from savings bank account is less than Rs.10,000, you must declare it to your employer and have the tax deducted, so as to be eligible for the exemption.

You should keep in mind that the interest income limit of Rs. 10,000/- during the year is also restricted to saving bank interest only. If you have FDR Interest or other Interest income you cannot avail of this exemption.

Not applicable in case of refund claim

In case you want to claim a refund, you will have to file the return. The exemption will not be applicable in cases where notices are issued for filing the income tax returns under Section 142(1), Section 148, Section 153A or Section 153C of the Income Tax Act.

Not applicable in case of loss claim

In case you have incurred some losses or have carried forward losses of any prior year, you will be required to file returns before the due date. If you fail to do so you will forfeit the right to carry forward the losses.

The exemption is effectively for income up to Rs. 6,50,000/- in the FY 2011-2012

Let’s take an example:-

1.   Suppose you have income of Rs. 6.5 Lac

2.   Now you can invest up to Rs.1 Lac u/s 80C (EPF, PPF, Mutual funds, Insurance etc.)

3.   You can also invest Rs.20,000/- in infrastructure bonds u/s 80CCF

4.   Health insurance is also deductible from taxable income – Rs.15,000 for self and Rs.20,000 for parents under section 80D

5.   After taking the above into account, you are left with a taxable salary of Rs.4.95 Lac and there is no need for you to file return for taxable income below Rs.5 Lac