Financial Planners in Bangalore
Your World of Finance Matters made Easy
Tax planning and tax saving options
Financial Planners in Bangalore
Your World of Finance Matters made Easy
Tax planning and tax saving options
A home is a ‘once-in-a-lifetime’ investment for many of us. It is natural that we want to make it as big and better as practically possible. But the shooting cost of property nowadays makes it difficult to acquire your desired property. No doubt, having the possibility of availing a home loan has improved affordability. It is difficult to buy a dream house entirely with our savings. Availing a home loan not only increases our affordability but also give us a huge savings in our tax liability too. The home loan is one of the most efficient tax saving instrument, which not only helps us to acquire an asset, but also gives the tax benefit on the principal as well as the interest amount we re-pay to the loan. There is no other loan like home loan which gives this much of tax befit to an individual, especially to the salaried class.
So, let’s look at what are the tax benefits an individual can enjoy by availing the home loan.
Our government has always shown a great inclination to encourage citizens to invest in house. Many schemes like Pradhan Mantri Awas Yojana are flashing green light on the Indian housing sector by striving to bring down the issues of affordability and accessibility. And when you buy a house on a home loan, it comes with multiple tax benefits too that significantly reduce your tax outgo since home loan is eligible for tax deduction under different sections of Income Tax Act (IT ACT). The tax benefit from a home loan can be availed in two ways:
Tax benefit on registration and principal repayment. Under Sec (U/S) 80C
On the registration of the property: – Whenever you buy a property, it has to be registered in your name to transfer the rights of the property from the builder/seller to you. For registering a property in India, you have to pay a certain percentage of the value of the property to the government as the stamp duty and certain expenses in respect of the registration. Stamp duty & registration charges and other expenses which are directly related to the transfer are allowed as a deduction under Section 80C. The maximum deduction amount allowed under this section is capped at Rs.1,50,000. This deduction can only be claimed in the year the actual payment is made towards these expenses. If you buy the property on 15th Dec 2017, then you can claim this deduction U/S 80c only in the FY 2017-18.
The principal Repayment:- As a home loan buyer, Sec 80C can bring you relief as you are required to pay hefty Equated Monthly Instalments (EMI). The EMI paid by you every month has two components – principal and interest. The principal portion of the EMI paid for the year can be claimed as a deduction from gross total income under section 80C before calculating the net taxable income. The maximum amount that can be claimed is up to Rs 1.5 lakh. One can get a loan certificate from the lending bank’s branch or go online. The certificate will show how much of the total EMI paid in a year was repayment of the principal amount borrowed.
But Sec 80C (5) also states that in case the assesse transfers the house property, on which he has claimed tax deduction under Section 80C, before the expiry of 5 years from the end of the Financial Year in which the possession has been obtained by him, then no deduction and tax benefit on Home Loan shall be allowed under Section 80C.
The interest payment towards the home loan usually arises in two situations
Pre-construction:- When you pay the interest only on the home loan when the property is under construction.
Post-construction:- When you pay the interest along with the regular EMI after the completion of the property.
Pre-construction (Under construction):- This is the time when your property is under construction and you pay only the interest for the portion of loan you have availed. This is otherwise called as Moratorium period in the loan terms. The interest paid during this period cannot be claimed for tax deduction on that Financial Year (FY). But, your eligibility to claim interest on the home loan as a deduction begins only upon completion of construction or immediately if you buy a fully constructed property. The income tax law provides deduction for such interest in five equal instalments starting from the year in which the property is acquired or construction is completed. The maximum eligibility remains capped at Rs.2 lakh per FY.
Post-construction:– The income tax act provides tax deduction on the interest portion of your EMI which you pay towards your home loan. The interest portion of the EMI paid for the year can be claimed as a deduction from your total income up to a maximum of Rs.2 lakh under Section 24. For Assessment Year 2018-19, maximum deduction for interest paid on Self Occupied house property is Rs.2 Lakh. In case of a let out property, there is no upper limit for claiming interest. For claiming this benefit, the loan must be taken for the purchase/construction of a house and the construction of the house must be completed within 5 years from the end of financial year in which loan was taken. You can claim this deduction for interest repayment on loans taken from anyone provided the purpose of the loan is purchase or construction of a property. You can also claim deduction for money borrowed from individuals for reconstruction and repairs of property. It does not have to be from a bank. “For tax purposes, the loan is not relevant, the usage is”. This Deduction can be claimed from the year in which construction of the house is completed.
The Section 8EE of the income tax provides the first time home buyers a further deduction of Rs.50000 in a FY over and above Sec 24 towards the interest payment on home loan EMI. The section also says that the deduction will be available only if the individual met the following conditions.
As per the income tax law, the processing charges paid for the home loan are considered as interest and therefore deduction on the same can be claimed. “Under the Income Tax Act, Section 2(28a) defines the term interest as ‘interest payable in any manner in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation)’. This includes any service fee or other charge in respect of the loan amount.
If you have purchased the property jointly, the co-owners can claim these expenses in their respective income tax returns based on their share in the property. Each of the loan holders can claim a deduction for home loan interest up to Rs.2 lakh each under sec24 and principal repayment under sec 80C up to Rs 1.5 lakh each in their individual tax returns. To claim this deduction, they should also be co-owners of the property taken on loan. So, loan taken jointly with your family can help you claim larger tax benefit.
For Eg:-Mr. Sharan Shetty have taken a home loan of Rs. 35,70,000 along with his wife Gauri. When they generate the home loan statement for the FY2017-18, the total principal payment towards home loan amounted Rs.71051 and the interest amounted Rs.300724. For this financial year along with above they have a pre-construction interest of Rs. 55565 also. The property is owned jointly with 50% ownership each.
The following are the deductions available while computing the income tax.
The total deduction availed by both of them jointly is Rs. 427340. In the same case if Sharan was the only owner then the maximum deduction they can avail will be limited to Rs. 271051. So, it will be better if you can avail the home loan jointly and if the co-owner is a women you will get interest reduction also.
Once the loan is fully paid and the borrower gets the complete ownership, it becomes an asset that can help to guard from future troubles. So, now a days investors started seeing home loan not only as a loan but also as a great tool to create asset and save tax on his hard earned money.
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Product Categorization as per SEBI Rule – Research Desk Dilzer. Dear Clients some of your schemes have undergone product categorization changes. We are aware of this change and will need to see if firstly there is a category and attributes change in the scheme and also monitor its performance and suggest changes if it does not fall in line with the stated objective, and your goals. We will revert to you individually should there be a change after monitoring the scheme attributes.
Dilzer Research Desk
Once you’ve thought about your goals, considered your time horizon and risk tolerance, researched your options and made your investments. Now you can just sit back and relax, right? Not so fast. In order to maximize the performance of your investments (both individually and across the board) and ensure you’re staying on track with your specific goals, you need to monitor your portfolio – making changes and reallocation is needed.
A typical portfolio evaluation will have the below parameters-
1. Risk Profile and Asset Allocation – Evaluate if your portfolio will be – Conservative / Moderate / Aggressive based on the asset mix and proportions.
2. Portfolio Risk-Return against benchmark – Analyse your current portfolio mix across asset classes – Debt / Equity / Cash / MF / Alternate. The returns on a portfolio should be evaluated with the risk associated with the investments. It is obvious to expect higher returns from a riskier portfolio. Compare your risk return with a similar product of similar allocation mix. Compare the Standard Deviation of your risk to the Standard deviation of a market standard product.
3. Historical return of Portfolio – Individually and collectively as an asset class, compile and compare the returns of investments over the same time frame. Returns of each stock and also as a part of an asset class / sector is examined.
4. Stock Portfolio Diversification Risks – Is an analysis of the Diversification of your portfolio and tests if the portfolio is on the efficient frontier. Diversification reduces the company specific risks in your portfolio.
Using Mean Variance Optimization ( MVO ) or the Sharpe Ratio . Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.
Sharpe ratio = (Mean portfolio return − Risk-free rate)/Standard deviation of portfolio return
Treynor Ratio = (Average Return of a Portfolio – Average Return of the Risk-Free Rate)/Beta of the Portfolio.
So you’ve established an asset allocation strategy that is right for you, but at the end of the year, you find that the weighting of each asset class in your portfolio has changed. What happened?
Over the course of the year, the market value of each security within your portfolio earned a different return, resulting in a weighting change. Portfolio rebalancing is like a tune-up for your car: it allows individuals to keep their risk levels in check and minimize risk.
The optimal frequency of portfolio rebalancing depends on your transaction costs, personal preferences, and tax considerations—including what type of account you are selling from and whether your capital gains or losses will be taxed at a short-term versus long-term rate.
Usually, about once a year is sufficient; however, if some assets in your portfolio haven’t experienced a large appreciation within the year, longer time periods may also be appropriate.
Rebalancing your portfolio will help you maintain your original asset-allocation strategy and allow you to implement any changes you make to your investing style. Essentially, rebalancing will help you stick to your investing plan regardless of what the market does.
A good rule of thumb is that you check your portfolio once each year to rebalance it and stay in line with your target asset allocation.
Dilzer Consultants Pvt Ltd
Please find our in-house analysis of Dividend vs Systematic Withdrawal Option as per the new tax regime effective Budget 2018.
IN the below analysis a real life example of a funds Net Asset Value, Dividend paid and Growth is assumed. In the Dividend Payout illustration, dividends paid out are assumed after DDT in the new tax regime. In the SWP illustration, a fixed withdrawal is assumed and capital gains under the new regime (FY18-19) is considered.
Under the new tax regime LTCG rate of 11.96% or 11.44% & DDT rate 11.648% are almost similar, hence the post tax returns are also almost similar- assuming similar cash flows are considered in both the situations.
Geeta C and Dilzer Research Team.
The portfolio performance evaluation primarily refers to the determination of how an investment portfolio has performed relative to its comparison benchmark in the specified category. The evaluation can indicate the extent to which the portfolio has outperformed or under-performed, or whether it has performed at par with the benchmark.
What is a Portfolio?
A combination of various investment products like bonds, shares, securities, mutual funds and so on is called a portfolio.
In the current scenario, individuals hire well trained and experienced portfolio managers who as per the client’s risk-taking capability combine various investment products and create a customized portfolio for returns in the long run.
It is essential for every individual to save some part of his/her income and put into something which would benefit him in the future. A combination of various financial products where an individual invests his money is called a portfolio.
What is Portfolio Evaluation?
The art of changing the mix of securities in a portfolio is called as portfolio evaluation.
The process of addition of more assets in an existing portfolio or changing the ratio of funds invested is called as portfolio revision. The sale and purchase of assets in an existing portfolio over a certain period to maximize returns and minimize risk is called as Portfolio evaluation.
The evaluation of portfolio performance is important for several reasons. First, the investor, whose funds have been invested in the portfolio, needs to know the relative performance of the portfolio. The performance review must generate and provide information that will help the investor to assess any need for rebalancing of his investments. Second, the management of the portfolio needs this information to evaluate the performance of the manager of the portfolio and to determine the manager’s compensation, if that is tied to the portfolio performance.
Why is portfolio evaluation needed?
Evaluation of the performance measurement is necessary for investors and portfolio managers both. However, the need for evaluating may be different for these two sets of people. Performance evaluation also shows the areas of effectiveness as well as improvements in the investment scheme. Some of the benefits for evaluating the portfolio performance include the following:
The return performance of the investment over time (performance measurement)
How the observed performance is attained (performance attribution)
If the performance is due to investment decisions (performance appraisal)
An individual at certain point of time might feel the need to invest more. The need for portfolio revision arises when an individual has some additional money to invest.
Change in investment goal also gives rise to revision in portfolio. Depending on the cash flow, an individual can modify his financial goal, eventually giving rise to changes in the portfolio i.e. portfolio revision.
Financial market is subject to risks and uncertainty. An individual might sell off some of his assets owing to fluctuations in the financial market.
Methods of portfolio evaluation
There are two broad categories of portfolio performance evaluation methods:
1. Conventional Method
The conventional method of performance evaluation doesn’t take into account the risks taken by the portfolio manager. In this method, the performance of a portfolio is evaluated by comparing the portfolio returns to the returns of a benchmark, which can be a market index, such as S&P 500, or another similar portfolio.
Comparing only the returns, your portfolio has given better returns (20%) than the market index, which gave 15%, irrespective of the fact that it had higher risk than the market.
2. Risk-adjusted Methods
In these methods, the returns of the portfolio are compared to the returns of the benchmark, considering the difference in their risk levels. The most common methods to do this are:
The Sharpe ratio is defined as the risk premium of the portfolio per unit of total risk in the portfolio. Risk premium calculated by subtracting risk-free returns from the portfolio returns. The risk-free returns are measured as the risk-free interest rate of Treasury bonds.
The Treynor ratio of a portfolio is calculated by dividing the risk premium by the systematic risk of the portfolio. It assumes that no diversifiable risk is present in the portfolio.
Here are 5 tips on evaluating your investment portfolio performance-
1) Review your present net worth and particularly, the value of your investment portfolio regularly. Knowing where you stand is the first step to gauging how well you’re doing overall.
2) Check how your portfolio is doing against its benchmarks. With the markets, everything is relative. You’re doing very well if you’re investments are performing at least as well as their respective indexes. Check each of the asset classes that are represented in your portfolio and see how they’re doing against their comparative index and if there are discrepancies, figure out why!
3) Compare the individual investments in your portfolio against their peers in the same asset class. Each of your funds or stocks is part of a bigger universe of like investments. Compare how your individual fund or stock is behaving relative to other funds or stocks that are in the same industry or sector. You’ll have to be careful about comparing apples to apples though, but if you note some glaring differences or a pattern of underperformance, it may be time to do some switching.
4) Ensure that your investments remain on target according to your established goals. Evaluate how each investment is doing and confirm its place in your overall plan. Since our lives shift and turn with the years, it is also quite possible that our investments may need to be revisited and perhaps adjusted accordingly.
5) Make the necessary updates and tweaks to your portfolio on a regular basis. If need be, take action and do the necessary work to readjust your portfolio. If your portfolio has shifted from its desired allocation, or your life plan has put a monkey wrench on your financial picture, then make the changes.
Dilzer Consultants Pvt Ltd
|Plan||ICICI Lombard Home Insurance Policy||HDFC Ergo Home Insurance||Bajaj Alliance my Home Insurance Plan||TATA AIG Insta Choice||United India|
|Protection||Structure & Contents||Structure & Contents||Structure & Contents||Structure & Contents||Structure & Contents|
|Coverage||The policy covers losses to the structure and content of your home, that might occur due to a number of natural and/or man-made calamities like fire and special perils like missile testing and explosion, earthquakes, storm, theft and burglary.||Fire & allied perils and Burglary including theft and larceny under one policy. Covers risk against Fire, Lightning, Explosion, Implosion, Flood, Inundation, Storm, Riot, Strike, Earthquake, Terrorism (optional), Burglary, Theft and, Larceny||Loss or damage to content, Loss or damage to portable equipment anywhere in India, Loss or damage to jewellery and valuables, Loss of or damage to “curios, works of art and paintings” whilst stored or lying in your Building||Offers a burglary cover for jewellery, Covers domestic appliances as old as 8 years making it an instant hit amongst home owners and non-owners alike, fire and special perils||Any loss/damage to the building and its contents, jewelry and valuables, domestic appliances such as TV, VCR, audio systems or PC, baggage while on travel,|
|Additional coverage||If you are forced to shift into an alternative accommodation because your home is destroyed or damaged by any insured peril, the policy will cover your additional rent expenses. The maximum coverage is upto ` 1 lakh, for upto 6 months. This cover is available only if you are insuring the structure of your home.||Terrorism||Loss of Rent Cover, Temporary Resettlement cover, Key and Lock Replacement cover, ATM withdrawal Robbery cover, Lost Wallet cover, Dog Insurance cover, Public Liability cover, Employee’s Compensation cover||Rent for alternative accommodation, Public Liability, Baggage Loss, Breakdown of Domestic Appliances, Personal Accident, Purchase protection||Additonal cover for accidental injury causing death/disability, liability to third parties due to injury to third party or damage to third party property|
|How is Sum insured of structure determined||The sum insured is calculated by multiplying the built up area of your home with the construction rate per sq. feet||Property valuation is done by multiplying the built up area of the property with the cost of construction per square feet.||Agreed Value Basis: Under this method, the insured can cover the structure of their property on the value they and the insured agree upon which could be higher than the market value. This is applicable only for structure and not content. Reinstatement Value Basis: If the insured decides to purchase the House Insurance policy under reinstatement value basis, there will be no depreciation imposed at the time of claim and the insured will be paid the total cost of replacement depending on the sum insured. This is applicable only for structure and not content.||Reconstruction Cost||No specific information available|
|How is Sum insured of content determined||The contents of your home – furniture, durables, clothes, utensils, jewellery, etc., is to be valued on market value basis, that is the current market value of similar items after depreciation.||Market Value||Indemnity Value Basis: Indemnity value basis, commonly known as market value basis is a method used to insure structure that considers the depreciation amount as per the age of the building, at the time of claim. New for old basis: When this method is chosen for insuring content, the item damaged beyond repair will be replaced with a new one or the insurer will pay out the cost for replacement of the item in full, regardless of its age.||Market Value||No specific information available|
|Age limit of Property||buildings not more than 50 years old on a case-to-case basis||40 years||Any flat/apartment/independent building which is more than 30 years old and which is of kutcha construction||No specific information available||No specific information available|
|Discount on premium||3 year and 5 year cover with 15% and 25% discount respectively||Discount up to 25% and additional 15% discount for security features under Burglary section||You get to avail upto 20% discount on the total premium. Discount percentage is calculated according to the tenure years of the policy||No specific information available||No specific information available|
|Exclusions||Willful destruction of property, Loss, damage and destruction caused by war, wear and tear etc||Willful destruction of property, Loss, damage and destruction caused by war, wear and tear etc||Misrepresentation, mis-description or non-disclosure of any material information, Damage which is pre-existing in nature (applicable to contents and building), Manufacturing defects in electrical, mechanical and electronic items, Contents and valuables of a flat/apartment/independent which is not occupied by a tenant for residential purpose||Willful destruction of property, Loss, damage and destruction caused by war, wear and tear etc., First 250 for fire and special perils and burgalary loss occured while home is unoccupied||War and war like perils, wear and tear depreciation consequential loss, nuclear group of perils, gross and willful negligence of insured, violation of policy conditions, loss/damage/liability where insured’s family or insured’s employee are involved as principal/accessory, intentional act/self-injury/ influence of drug/intoxicant.|
|Quotation||Policy sum assured : Rs 1,30,00,000 ( structure and contents)
Premium for all risks: 31,388 ( 1 year )
3 year premium : 80,039
5 year premium : 1,17,705
(Protection against Earthquake, Floods, Fire & allied perils, Cyclone, Storm,Terrorism, All Risk Jewellery cover)
Note: contents value cannot exceed 30 lakh of which jewellery is only 25%)
|Policy sum assured : Rs 1,25,00,000 ( structure and contents)
Premium for all risks: 28,886 ( 2 years )
3 year premium : 37,977
5 year premium :57,348
(Protection against Fire, Lightning, Explosion, Riot, strike, malicious damage, Storm, Tempest, Flood, Inundation, Earthquake, Terrorism)
Note: contents value cannot exceed 25 lakh and jewellery is covered only upto Rs 5 lakh
|Policy sum assured : Rs 1,20,00,000 ( structure and contents)
Premium for all risks: 32,893 ( annual )
3 year premium : 79,678
(Protection against Fire, Lightning, Explosion, Riot, strike, malicious damage, Storm, Tempest, Flood, Inundation, Earthquake, Terrorism)
Note: contents value cannot exceed 20 lakh and jewellery is covered upto Rs 5 lakh
|NO QUOTE AVAILABLE ONLINE||Policy sum assured : Rs 1,50,00,000 ( structure and contents)
Premium for all risks: 64,688 ( 1 year)
Premium for fire + theft: 20,700
Premium for fire: 6,900
|Jointly Prepared by Members of Financial Planners Guild of India|
What is financial independence? While there are many opinions to this answer, basically, being debt free and creating a nest egg that will allow a person to live the rest of his/her life in comfort; forms the cornerstone of financial independence. Everyone would love to live a life where they do things that they enjoy without having to work at a job only for the financial security it provides. The ability to support oneself financially without relying on a job while maintaining the same lifestyle as in the past is the key.
This is easier said than done. With easy access to credit cards and personal loans and the comfort of purchasing expensive products on EMI, remaining debt-free is a challenging task. Yet, many people do manage to achieve financial freedom with savings and investments that exceed any liabilities. But is that enough? To maintain financial independence, a financial plan is essential.
A financial plan that preserves one’s wealth earned should always include a mix of equities, bonds, gold and real estate, but in a judicious mix that does not blind one to risks of any one asset class. Asset allocation also involves distributing assets taking into consideration not just the risk appetite, but also the overall financial goals. Age should also be a primary criterion while taking risky decisions since, the older one gets, the lesser the capacity to stomach a downturn. One other factor to keep in mind is the stability of income and its growth potential – a self-employed person needs to plough savings into less risky ventures since income levels may not be stable.
By ensuring not all wealth is in one asset class, we can hedge the risks of a class not providing adequate returns. In addition to risk being distributed, one also earn more if any one class performs superlatively. Asset allocation ensures the overall returns are superior than the rough ups-and-downs of investing in only one asset class.
In India, many people may start investing in equities, but invariably turn to the ‘safety’ of fixed deposits, gold or real estate to preserve wealth as they get older. However, these options may not be as safe as assumed. FD returns cannot match inflation growth and are taxed heavily, so real returns are low. Real estate rental yields are generally minimal, so it cannot be a source of wealth creation. . While a house is essential for security, keeping a majority of assets in an illiquid investment like real estate that cannot be divested very easily is not advised. Gold is another safe investment option for Indians but it is at best a wealth preserver and also a hedge against falling markets. Money invested in gold does not rise in value like equity, and a rise in gold value is always driven by a fear that other investments will fall Asset allocation should therefore also include a healthy mixture of equities since they are the best means to increase one’s wealth.
From the above table, we can see that equities have provided the best return in 2017, far above most other assets. In the long term, equity returns have averaged around 16% over the past 15 years exceeding other asset classes’ returns.
Our in house calculation of Returns from various asset classes and their co-relation over a 20-year period provides an in-depth analysis on performance of various asset classes. More Information here
What happens after the financial goals are achieved? What are the steps people take for preserving their hard-earned wealth? These are the questions that invariably follow.
The rich in India have three main goals in mind; to safeguard, preserve and grow wealth. While preservation happens through investing in debt instruments, the growth ensues through investing in businesses.
Creating a financial plan that allows people to prioritize wealth preservation should be the next action. To safeguard the estate and ensure that the wealth accumulated is passed on to the next generation wisely is the idea that most wealthy people work toward.
Traditionally, people used to ”WILL” assets to the next generation, however, nowadays, wills are often contested by family members unhappy with the distribution of the assets. So, the wishes of the Testator are often ignored and family disputes become messy leading to legal cases.
One method to avoid this situation, is the creation of family trusts.. Family trusts help wealthy families ring fence their assets from future liabilities – by creating strict conditions under which assets are transferred and insulating them against legislations and taxation changes. A trust can protect assets from nasty divorce proceedings, bankruptcy filings or family disputes by allowing the settlor (or creator of the trust’s assets) to exercise control on how the assets are to be distributed. When should one set up a Trust – More Here
Once assets are in the hands of the inheritors, often the sudden influx of wealth leads to impulsive and rash financial decisions. If the capital inherited needs to be grown and nurtured to generate a steady income, then alternative investments are vital. These go beyond the usual equity and debt options to invest in other assets such as commodities, collectibles including works of art, vintage cars, or even race horses and sports teams. Other alternative investments can include close ended funds where the pooled resources are invested in startups, infrastructure or social ventures.
Family offices is another major trend. These are private wealth management arms of the wealthy, that deal with investments, succession planning, taxes and philanthropy. They invest a portion of the assets in alternative ventures like those mentioned above. In addition, assets may also be put into small, early-stage investments in start-up firms, or larger stakes in recognised businesses that are fast growing. Thus, wealth is not just preserved, but also increased.Family office is also involved with social investments such as charity which is often the next goal of the very wealthy after succession planning.
Philanthropy is a complex process as evidenced by the myriad efforts of Bill Gates. Wealthy people have plenty of options to help, but in India, this has been quite minimal due to a belief that the entire wealth has to be left for the next generation. Although this mindset has begun changing, philanthropy in India is mainly about opening educational or medical institutions than actually attempting to make a difference in specific areas. Still people like Azim Premji have begun making an attempt to shed these ideas and focus attention on philanthropy as the biggest goal.
Dilzer Consultants Pvt Ltd
The Aadhar card is a 12-digit unique-identity number issued by the Unique Identification Authority of India (UIDAI) to all the residents of India based on their biometric and demographic data.
The Aadhar is provided to all residents of the country – that is, they should have been resident in India for more than 182 days. This automatically means that Non-Resident Indians (NRI) are not eligible for the Aadhaar card if they have not stayed in India for 182 days or more in the last 12 months, preceding the date of application.
Procedure to apply for Aadhar
• Locate an Aadhar enrolment center by logging into https://appointments.uidai.gov.in/centersearch.aspx and search for the center closest to you
• Book an appointment online or visit the center directly with the required documents.
o The main documentation needed are copies of identification proof, address proof and proof of birth.
• The following are any of the documents that can be submitted as identification proof. These need to be in the correct name and contain a photograph.
2. Ration card or PDS photo card.
3. PAN card.
4. Driving license.
5. Voter ID.
6. NREGS job card.
7. Government photo ID cards or PSU issued service photo identity card.
8. Arms license.
9. Photo ID issued by a recognized educational institution.
10. Photo credit card.
11. Photo bank ATM card.
12. Kissan photo passbook.
13. Pensioner photo card.
14. Freedom fighter photo card.
15. ECHS/ CGHS photo card.
16. Certificate of identity that has photo issued by gazetted officer or tehsildar on a letterhead.
17. Address card that has name and photo issued by the department of posts.
18. Disability ID card or handicapped medical certificate that is issued by the respective state or union territory government or administrators
• Apart from ID proof, one also needs to provide proof of residence though any of the following documents:
1. Bank statement or passbook.
2. Ration card.
4. Post office statement or passbook.
5. Voter id.
6. Government photo id cards or PSU issued service photo identity card.
7. Driving license.
8. Water bill (not more than 3 months old).
9. Electricity bill (not more than 3 months old).
10. Property tax receipt (not more than 1 year old).
11. Landline telephone bill (not more than 3 months old).
12. Credit card statement (not more than 3 months old).
13. Signed letter with photo from the bank on a letterhead.
14. Insurance policy.
15. Signed letter with photo issued by a recognized educational institution on a letterhead.
16. Signed letter with photo and is issued by a registered company on a letterhead.
17. Arms license.
18. NREGS job card.
19. Pensioner card.
20. Kissan passbook.
21. Freedom fighter card.
22. Income tax assessment order.
23. ECHS/ CGHS card.
24. Certificate of address issued by the head of village panchayat or an equivalent authority
25. Certificate of address with photo issued by a MLA or MP or tehsildar or gazetted officer on a letterhead.
26. Vehicle registration certificate.
27. Registered lease/ sale/ rent agreement.
28. Caste and domicile certificate with photo issued by the state government.
29. Address card with photo issued by the department of posts.
30. Gas connection bill (not more than 3 months old).
31. Disability ID card or handicapped medical certificate issued by the respective state or union territory government.
32. Passport of parents
33. Passport of spouse.
34. Marriage certificate with address issued by the government.
35. Allotment letter of accommodation that is issued by the state or central government and is not older than 3 years
• Proof of birth is also necessary and some of the documents that can serve as proof of date of birth include
1. SSLC Book/Certificate
3. Certificate of Date of Birth issued by Group A Gazetted Officer on letterhead
4. PAN card
5. Mark sheets issued by Government Board or University
6. Government Photo ID Card
• Fill the enrollment form either by printing it from https://uidai.gov.in/resources/enrollment-docs/downloads.html or getting it from the enrollment center
• At the enrollment center your bio metrics – your fingerprints from all fingers of both hands, iris scan of both eyes and facial photograph – are taken.
• Once this is done, and the documents are submitted, you will get an acknowledgement slip of your enrollment which has a unique 14-digit enrollment number to help keep track of the application status.
• The data that you have provided will be confirmed and on successful verification, the Aadhaar number will be sent to your address through post. It can take up to 90 days for the Aadhaar card to be sent.
• You can also download your e-Aadhaar by clicking “Download Aadhaar” on https://uidai.gov.in . This document has the same validity as the printed version and can be used as a proof of identity.
How does one change details on the Aadhar card?
Nowadays the Aadhar has become essential to avail many essential services and errors on the card can lead to problems in linking to other databases or receiving facilities.
Some of the information that can be changed or corrected includes:
3. Date of Birth
5. Mobile number
6. Email Id
The following procedure details how to make corrections in the above fields of the Aadhar card.
• Go to the nearest Aadhar center and get a Aadhar card correction form.
• Fill the form and submit it along with the copy of the Aadhar card and some identity proof such as a PAN card.
• Give the required bio-metric details verification such as fingerprints and/or iris scan .
• An acknowledgment slip will be provided and changes will be made in a few days.
• An Aadhaar holder looking to correct or update the address though post can download the form from the UIDAI website and after making the required changes, post it along with the supporting documents to the following address:
Post Box No. 99
• Login to the UIDAI updation website https://ssup.uidai.gov.in/web/guest/update with your Aadhar and the OTP sent to the registered mobile number
• Choose the field that needs updation
• Upload scanned copies of supporting documents
• Select BPO Service Provider and submit request
• You can check the updation status with the help of your Aadhaar and URN (Update Request Number).
Points to be noted regarding biometrics:
• If a child below the age of 5 has been enrolled for Aadhar, all biometric information has to be updated after the child turns 5 years. The card issued to such minor children will be blue in colour. The Aadhar number will however continue to be the same as before the re-enrollment.
• A child has to furnish all biometrics for updates when he/she reaches 15 years
• Residents are recommended updation of their biometric data every 10 years
Linking with other identity proof documents
The Aadhar card needs to be linked with various other government identifications, most importantly the PAN card, ration card etc.
In order to link Aadhaar with PAN, your demographic details should match. If there are differences in name, gender or date of birth, then the details need to get updated/ corrected in one of the ID documents before the linking is attempted.
How to link Aadhar with PAN card?
• Visit https://incometaxindiaefiling.gov.in/e-Filing/Services/LinkAadhaarHome.html and submit the correct PAN and Aadhar numbers along with the OTP to link the two identity documents
• The name, date of birth and gender will be validated across both documents and so needs to be identical.
• If the name has minor variations, a One Time Password will be sent to the mobile registered with Aadhaar. However, the gender and date of birth should be the same.
• A major difference in names means the two IDs will not be linked. In such a case, the name in one of the documents should be corrected before proceeding with the linkage.
• In case linking problems persist, one needs to contact the IT department helplines https://www.incometaxindia.gov.in/Pages/Tax-helpline.aspx
Permanent Account Number (PAN)
The PAN or Permanent Account Number, is a unique 10-digit alphanumeric identity issued by the Income Tax department of India to all tax payers. The PAN has been made mandatory for almost all financial transactions, so as to track taxable transactions.
Why Get a PAN?
Anybody who earns a taxable income in India or who needs to file a return, including foreign nationals and business entities must have a PAN card. PAN cards are mandatory for the following:
• Individuals whose total income exceeds the threshold amount which is not chargeable to tax.
• Charitable Trusts,
• Individuals carrying on any business or profession whose total sales, turnover, or gross receipts are or is likely to exceed Rs 5,00,000 in any financial year.
• For obtaining Import Export code by Importer/Exporter.
• Individuals who are entitled to receive any sum or income after deduction of tax at source (TDS).
• Individuals who intend to do specified financial transactions where PAN is compulsorily required such as purchase of real estate, gold or vehicles, investments in stocks or mutual funds, banking transactions such as opening a new account, availing loans or applying for credit cards.
• NRIs also need to apply for PAN if they fall into any of the above categories.
Procedure to apply for PAN Card
The income tax department allows PAN applications through two agencies: NSDL (National Securities Depository Ltd) and UTIITSL (UTI Infrastructure Technology and Services Ltd).
Procedure for PAN application
1. Form 49A is the application form for Indian citizens (to be filled online on the NSDL website at https://tin.tin.nsdl.com/pan2/servlet/NewPanAppDSCb) or on the UTIITSL website (https://www.myutiitsl.com/PAN_ONLINE/PANApp ) while 49AA is the form foreign nationals need to use ( fill online at https://tin.tin.nsdl.com/pan2/servlet/NewPanAppDSC ).
2. There are detailed guidelines available on the NDSL website on procedures to fill in the form
3. One can opt to submit all documents either physically, through E-KYC or E-sign methods.
4. Documents to be submitted with the forms include the following:
a. Proof of Identity (any of the following can be submitted)
i. Aadhaar Card issued by the Unique Identification Authority of India;
ii. Voter ID card;
iii. Driving License;
v. Ration card having photograph of the applicant;
vi. Arm’s license;
vii. Photo identity card issued by the Central Government or State Government or
viii. Pensioner card having photograph of the applicant;
ix. Central Government Health Service Scheme Card or Ex-Servicemen Contributory Health Scheme photo card
x. Certificate of identity in Original signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted officer
xi. Bank certificate on letter head from the branch (along with name and stamp of the issuing officer) containing duly attested photograph and bank account number of the applicant
b. Proof of Address (any of the following can be submitted)
i. Aadhaar Card issued by the Unique Identification Authority of India;
ii. Elector’s photo identity card;
iii. Driving License;
v. Passport of the spouse;
vi. Post office passbook having address of the applicant;
vii. Latest property tax assessment order;
viii. Domicile certificate issued by the Government;
ix. Allotment letter of accommodation issued by Central or State Government of not more than three years old;
x. Property Registration Document;
xi. Electricity Bill
xii. Landline Telephone or Broadband connection bill
xiii. Water Bill
xiv. Consumer gas connection card or book or piped gas bill
xv. Bank account statement
xvi. Depository account statement
xvii. Credit card statement
xviii. Certificate of Address in Original signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted officer,
xix. Employer certificate in original
c. Proof of Date of birth (any of the following can be submitted if they bear the name, date, month and year of birth of the applicant)
i. Aadhaar card issued by the Unique Identification Authority of India;
ii. Elector’s photo identity card;
iii. Driving license;
v. Matriculation certificate or Mark sheet of recognised board;
vi. Birth certificate issued by the municipal authority;
vii. Photo identity card issued by the Central Government or State Government or PSU;
viii. Domicile certificate issued by the Government;
ix. Central Government Health Service Scheme photo card or Ex-servicemen Contributory Health Scheme photo card;
x. Pension payment order;
xi. Marriage certificate issued by the Registrar of Marriages;
xii. Affidavit sworn before a magistrate stating the date of birth
d. For a company, trust, body of individuals, local authority or artificial juridical person all the relevant documents need to be submitted;
i. Copy of certificate of registration issued by the registrar of companies, firms, LLPs or cooperative society (competent authority)
ii. Partnership deed
iii. Trust deed
5. Under the E-sign facility, one is required to upload the photograph, signature (in black ink) and supporting documents in a prescribed format.
6. After the form is submitted along with all relevant documents, an acknowledgement with a unique 15-digit number will be displayed.
7. This acknowledgement should be printed, signed and affixed with 2 recent colour photographs and sent to NSDL within 15 days of online submission at
Income Tax PAN Services Unit,
NSDL e-Governance Infrastructure Limited,
5th floor, Mantri Sterling,
Plot No. 341, Survey No. 997/8,
Model Colony, Near Deep Bungalow Chowk,
Pune – 411016
The UTIITSL addresses are mentioned on their website https://www.myutiitsl.com/PAN_ONLINE/IPGguidelines.html
Payment can be either made online or a demand draft should be attached to the acknowledgement posted.
If communication address is within India, Rs 110 is the cost of the PAN card processing. Payments can be made by credit or debit card or net banking or DD while submitting the application online.
If communication address is outside India, Rs 1020 is the cost of processing the application and payments can only be made via credit/debit cards or through DD.
While filling the PAN application form online, there are three options to choose from for submitting documents; submit digitally through e-KYC and e-sign, submit scanned images through e-Sign and forward application documents physically. The e-sign and manual processes have been described above, but if one has an Aadhar number, then the paperless option is the easiest way to file for a PAN.
The paperless facility is called e-KYC and e-sign where Aadhar details are used to authenticate the person’s identity. Here, one does not need to upload images such as photo, signature or other supporting documents since the Aadhar will be used to get this information.
The Aadhar will need to be authenticated via OTP sent to the registered mobile number and once this is done a receipt is generated. Take a print out of the receipt with the 15-digit acknowledgement number, sign it and send it to NSDL at the address mentioned earlier.
In case the authentication is not successful, post the acknowledgement receipt with signature, photographs, and a photocopy of the documents uploaded to NSDL within 15 days of online application.
How to make changes in the PAN?
In the past, many people simply used to apply for a new PAN if any corrections had to be made. However, it is illegal to have more than one PAN so an application for correction or reprint needs to be made on the NSDL website to correct the first PAN. One can surrender any new PANs by filling the correction form and mentioning all other PAN(s) that may have been allotted. The form https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html should be filled and relevant amendments to the data should be made if required.
The remainder of the process is the same as applying for a new PAN; i.e. online submission of the form along with the relevant documents, payment of the processing charges, and posting the acknowledgment.
If the old PAN has been lost or misplaced, then the same process can be followed for a reprint of the PAN. But first, the loss should be reported at a police station to safeguard against any misuse of the document.
Research Desk Dilzer Consultants Pvt Ltd
|Details||ETF(Exchange Traded Fund)||MF(Mutual Fund)|
|Exit Load||ETFs do not charge exit load. Instead, investors pay broker commissions when they buy and sell share units of ETF.||MF charge Exit load.If redeemed before certain period the exit load is 1% before 1 year|
|Valuations||ETFs trade throughout the trading day, like stocks||mutual funds, trade only at the end of the day at the net asset value (NAV) price.|
|Basic Requirements||You need to have Brokerage Account(DMAT)Account for ETF sell or Buy||Offline or online option|
|Regular Management Charges||Investment management fees for exchange-traded funds (ETFs) are deducted by the ETF company, and adjustments are made to the net asset value (NAV) of the fund on a daily basis. These management fees are never directly seen on any investor statements and are handled in-house by the fund company. Exp for ETF can vary from 0.1% to 1.5%||A Mutual Fund’s Operational expense fees is knnown as the expence ratio.Exp Ratio in MF is predefined and communicated to Customers as follow: Upto 2.50%|
|Details of Fees charged are:||Details of Fee charged are:|
|1: Trustee fee||1: Trustee fee|
|2: Audit fees||2: Audit fees|
|3: Custodian fees||3: Custodian fees|
|4: RTA Fees||4: RTA Fees|
|5: Marketing & Selling expense incl. agent commission||5: Marketing & Selling expense incl. agent commission|
|6: Cost related to investor communications||6: Cost related to investor communications|
|7: Cost of fund transfer from location to location||7: Cost of fund transfer from location to location|
|8: Cost of providing account statements and dividend redemption cheques and warrants||8: Cost of providing account statements and dividend redemption cheques and warrants|
|9: Costs of statutory Advertisements||9: Costs of statutory Advertisements|
|10: Cost towards investor education & awareness (at least 2 bps)||10: Cost towards investor education & awareness (at least 2 bps)|
|11: Brokerage & transaction cost over and above 12 bps and 5 bps for cash market transactions and derivative transaction respectively||11: Brokerage & transaction cost over and above 12 bps and 5 bps for cash market transactions and derivative transaction respectively|
|12: Service tax on expenses other than investment and advisory fees||12: Service tax on expenses other than investment and advisory fees|
|13: Investment Management & Advisory Fee||13: Investment Management & Advisory Fee|
|14: Service tax on brokerage and transaction cost||14: Service tax on brokerage and transaction cost|
|15: Other Expenses||15: Other Expenses|
|Cost||Annually 0.1% to 1.5%||Annually 1.0% to 2.5%|
|Fund Management Strategy||There is not active investment management by Skilled fund manager as ETF replicates specific Benchmark and invest passively based on Benchmark||There is active investment management by Skilled fund manager as a motive of MF is to outperform the market and invest actively based on In-house research and find objective|
|Suitability||Suitable or short run investments so will be able to save exit loads and will have good return trade-off||Those who wish to remain invested for the long run|
|Performance Snap||Reliance ETF Nifty BeES – Performance Snapshot as on Mar 05, 2018|
|Period||Absolute Returns (%)|
|Here We are taking Large cap ETF ad Large Cap MF from the same AMC we can see the returns difference in MF and ETF get created due to active management…|
|Mirae Asset India Opportunities Fund – Direct Plan (G) – Performance Snapshot as on Mar 05, 2018|
|Period||Absolute Returns (%)|
|Conclusion||An investor who is looking for Active investment management and better returns in the long run Mutual fund is most suitable as the historical returns are better after all Management changes and Exp ratios are deducted. One condition is that before making MF investment be assured that you are selecting a good fund based on expert advice and that your advisor monitors the same for you.ETFs are suitable in a market condition where no one can outperform so one can save expense charges from AMC and in short run load and fees.|
|Para Planner – Dilzer Consultants Pvt Ltd|