Dec 232013
 

The Government of India has decided to issue Inflation Indexed National Savings Securities which is aimed at an alternative instruments to hedge the rate of inflation. This issue is intended for Retail Investors and are linked to the Consumer Price Index (CPI) (Base : 2010=100).

The FAQs of Inflation Indexed National Savings Securities are given below :-

1. Who is eligible to invest in the Inflation Indexed National Saving Securities-Cumulative (IINSS-C)?

  • Only retail investors would be eligible to invest in these securities. The retail investors would include individuals, Hindu Undivided Family (HUF), charitable institutions registered under section 25 of the Indian Companies Act and Universities incorporated by Central, State or Provincial Act or declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956).

2. What is the interest rate on these securities?

  • There will be two parts in the interest rate. One, fixed rate of 1.5% per annum and second, inflation rate.
  • For example, if inflation rate during the six months is 5%, then interest rate for this six months would be 5.75% (i.e. fixed rate -0.75% and inflation rate -5%).

3. Is there any floor as inflation may turn into deflation at times?

  • Yes, fixed rate of 1.5% would act as a floor, which means that 1.5% per annum interest rate is guaranteed if there is deflation.
  • For example, if inflation rate is (-) 5%, then interest rate should be (-) 3.5% by simple calculation. But in such case, negative inflation will not be recognised and investors would get fixed rate of 1.5% (please see example 2 at 23).

4. When do I get interest?

  • Interest will be accrued and compounded in the principal on half-yearly basis and paid along with principal at the time of redemption.

5. What will I get on redemption?

  • On redemption, investors will get principal and compounded interest

6. What is the inflation index to which inflation rate will be linked?

  • Inflation rate will be based on the final combined Consumer Price Index [(CPI) base: 2010=100].
  • The final combined CPI will be used as reference CPI with a lag of three months. For example, the final combined CPI for September 2013 will be used as reference CPI for whole of December 2013.

7. What will be the process of investing?

  • Investors can invest through the authorised banks and Stock Holding Corporation of India (SHCIL).
  • They will fill an application form and submit the same along with other documents and payment to the bank.
  • On receipt of money, the bank will register the investor on the RBI’s web-based platform (E-Kuber) and on validation, generate the Certificate of Holding.

8. What will be the form of these securities?

  • These securities will be issued in the form of Bonds Ledger Account (BLA) The securities in the form of BLA will be issued and held with RBI and thus, RBI will act as central depository.
  • A certificate of holding will be issued to the holder of securities in BLA.

9. Which are the authorised banks?

  • The authorised banks are SBI & Associates, Nationalised Banks, HDFC Bank, ICICI Bank, and Axis Bank.

10. Should the customer apply through the bank in which he/she has an account?

  • Customers can approach any of the authorised banks, including SHCIL for such investment irrespective of whether they hold an account or not with that bank.

11. Who will provide the other customer services to the investors after issuance of securities?

  • The banks through which these securities have been purchased will provide other customer services.
  • Investors can approach the banks for other services such as change of address, early redemption, nomination, lien marking, etc.

12. Whether joint holding will be allowed?

  • Yes, joint holding will be allowed.

13. What is the minimum and maximum limit for investment?

  • The minimum investment limit is Rs. 5,000/- (five thousand).
  • The maximum limit is Rs. 500,000/- (five lakh) per applicant per annum.

14. Whether premature redemption is allowed?

  • Yes premature redemption is allowed.
  • For senior citizens above 65 years, the premature redemption is allowed after one year. For others, it is allowed after 3 years.
  • Penalty at the rate of half of the last payable coupon will be charged from the investors. For example, if last payable coupon is Rs. 1,000/-, then Rs. 500 would be charged as penalty.

15. How do I redeem these securities?

  • In case of redemption prematurely before the maturity date, investors can approach the concerned bank few days before the coupon date and apply.
  • In case of redemption on maturity, the investor will be advised one month before maturity regarding the ensuing maturity of the bond advising them to provide a Letter of Acquaintance, confirming the NEFT account details, etc. If everything is in order the investor has to be paid within maximum five days of the maturity (to take care of any payment in the form of physical instrument).

16. Whether these securities transferable?

  • Transferability is allowed to the nominee(s) only for individual investors on death of holder.
  • Transferability is not allowed for other investors

17. Can I use these securities as collateral for loans?

  • Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC).

18. What are the tax implications?

  • Existing taxation applicable to Government of India securities issued as part of the market borrowing will be applicable to these securities.

19. Whether TDS will be applicable?

  • Existing taxation applicable to Government of India securities will be applicable to these securities.
  • Sub-section (iv) of the Section 193 of the Income Tax Act, 1961 stipulates that no tax shall be deducted from any interest payable on any security of the Central Government or a State Government, provided that nothing contained in this clause shall apply to the interest exceeding rupees ten thousand payable on 8% Savings (Taxable) Bonds, 2003 during the financial year.
  • As per the above Section, TDS shall not be deducted from any interest payable on IINSS-C, until and unless notified by the Government of India otherwise.

20. Who will do the KYC?

  • As customers will be owned by the banks, KYC will also be done by the banks.

21. When will customers be issued securities?

  • The customers should be issued the securities after receiving clear money. After receiving clear money, banks should register the customer on CBS and generate Certificate of Holding.

22. Where can investors get the application form?

  • The application form can be downloaded from the RBI’s website. However, banks shall also get forms printed and made available to the investors.

23. An example of cash flows/ compounding of principal for illustration purpose is as under:

Example 1: Fixed rate 1.5% per annum

Issue/ Coupon/ maturity date

Fixed rate

CPI

Inflation rate

Interest rate (Compounding rate)

Principal

I

II

III

IV

V=II+IV

VI=VI*V

25-Dec-13

150

5000

25-Jun-14

0.75

160

6.67

7.4

5371

25-Dec-14

0.75

166

3.75

4.5

5613

25-Jun-15

0.75

175

5.42

6.2

5959

25-Dec-15

0.75

185

5.71

6.5

6344

25-Jun-16

0.75

190

2.70

3.5

6563

25-Dec-16

0.75

200

5.26

6.0

6958

25-Jun-17

0.75

210

5.00

5.8

7358

25-Dec-17

0.75

218

3.81

4.6

7693

25-Jun-18

0.75

228

4.59

5.3

8104

25-Dec-18

0.75

235

3.07

3.8

8414

25-Jun-19

0.75

246

4.68

5.4

8870

25-Dec-19

0.75

255

3.66

4.4

9262

25-Jun-20

0.75

265

3.92

4.7

9694

25-Dec-20

0.75

280

5.66

6.4

10316

25-Jun-21

0.75

290

3.57

4.3

10761

25-Dec-21

0.75

305

5.17

5.9

11399

25-Jun-22

0.75

316

3.61

4.4

11895

25-Dec-22

0.75

330

4.43

5.2

12512

25-Jun-23

0.75

340

3.03

3.8

12985

25-Dec-23

0.75

355

4.41

5.2

13655

 

Example 2: Fixed rate 1.5% per annum

Issue/ Coupon/ maturity date

Fixed rate

CPI

Inflation rate

Interest rate (Compounding rate)

Principal

I

II

III

IV

V=II+IV

VI=VI*V

25-Dec-13

150

5000

25-Jun-14

0.75

160

6.67

7.42

5371

25-Dec-14

0.75

166

3.75

4.50

5613

25-Jun-15

0.75

160

-3.61

0.75

5655

25-Dec-15

0.75

150

-6.25

0.75

5697

25-Jun-16

0.75

160

6.67

7.42

6120

25-Dec-16

0.75

165

3.13

3.88

6357

25-Jun-17

0.75

168

1.82

2.57

6520

25-Dec-17

0.75

175

4.17

4.92

6841

25-Jun-18

0.75

170

-2.86

0.75

6892

25-Dec-18

0.75

175

2.94

3.69

7146

25-Jun-19

0.75

180

2.86

3.61

7404

25-Dec-19

0.75

190

5.56

6.31

7871

25-Jun-20

0.75

188

-1.05

0.75

7930

25-Dec-20

0.75

195

3.72

4.47

8285

25-Jun-21

0.75

200

2.56

3.31

8559

25-Dec-21

0.75

205

2.50

3.25

8837

25-Jun-22

0.75

215

4.88

5.63

9335

25-Dec-22

0.75

220

2.33

3.08

9622

25-Jun-23

0.75

230

4.55

5.30

10131

25-Dec-23

0.75

220

-4.35

0.75

10207

Courtesy :- www.rbi.org.in

Jun 262013
 

The Income-tax Department has notified the ITR-5 efiling utility for e-filing the Income tax return in respect of Partnership firms.

This utility can be used by the following assessees :-

– a person being a Firm (Including LLP),

– AOP ,

– BOI,

– Artificial Judicial Person referred to in Section 2(31) of Income-tax Act,1961 ,

– Co-operative society and

– Local Authority

Click the link below to download the excel efiling utility provided by www.incometaxindiaefiling.gov.in

 

Jun 142013
 

The Income tax department has released the e filing utility ITR-4 for filing returns of Individual having income from Proprietorship Business.

Click the link below to download the excel efiling utility.

May 282013
 

The Income-tax efiling website (www.incometaxefiling.gov.in) has released the utility for filing the returns using ITR-2.

This return form is to be used by an Individual or a HUF (Hindu Undivided Family) whose Total Income for Assessment Year 2013-14 includes-

1) Income from Salary/pension. or

2) Income from House property ; or

3) Income from Capital Gains; or

4) Income from other sources ( including winning from Lottery and Income from race horses)

In case where the Income of any other person (spouse/minor child, etc) is to be clubbed with the income of the assessee, this return form can be used where such income falls in any of the above categories.

Assessees having “Income from Business/Profession” cannot use this form.

Click the link below to download the form ITR-2 e-filing utility.

ITR2_2013

May 032013
 

The following are the Various Statutory Obligations for the month of May 2013.

Payment of Service Tax

The last date for Payment of Service tax pertaining to the month of April 2013 is 5th of May 2013. In case of e-payment, the due date is 6th of May 2013.

In case of payment by Challan GAR 7, click here to download the Challan

In case of e-payment of Service Tax, Click here to make the payment online.

 

Remittance of Tax Deduction at source

The due date for remitting Tax Deducted at Source (TDS) on Salary & Non-salary payments during the month of Apr 2013 is 7th of May 2013.

Click here to pay the TDS online.

 

 Monthly Return and Payment of Tax under TNVAT

The monthly returns filing and the payment of TNVAT has to be complied on or before 20th of May for the month of April 2013.

 

 Quarterly Return of TDS for the Quarter Ending March 2013

The Quarterly returns (Form 24Q/26Q/27EQ) pertaining to the quarter ended March 2013 (Jan-Mar 2013) has to be filed on or before 15th of May 2013.

Issue of TDS Certificates

TDS Certificates in Form 16A (Other than salaries) for the Quarter ended March 2013 shall be issued on or before 30th of May 2013

TDS Certificates in Form 16 (Salaries) for the financial year 2012-13 shall be issued on or before 31th of May 2013

 

Click here to send your enquiries/suggestions , if any.

Apr 282012
 

The Income-tax Department has started accepting e-filing returns for the year 2011-12 (A.Y.2012-13).

ITR-1 which is applicable for assessees having income from salary and income from other sources (only interest income or family pension) can be filed now using the utility provided in the Income tax department website.

Click here to download the ITR-1 for A.Y.2012-13 (F.Y.2011-12).

 

Apr 182012
 

The Reserve Bank of India vide its Monetary Policy statement has announced the reduction of repo rate by 50 basis points.

Consequent to this announcement, it is likely that the banks shall reduce the rate of interest on Car,Housing and other loans which are offered under the Floating rate of Interest.

Mar 232012
 

Nowadays,large number of NBFC’s have started giving loans against the Gold Jewellery and the size of the Loan Portfolio is in increasing trend day by day. In order to regulate the same and as a prudential measure , the reserve bank of India vide its Notification dtd 21st March 2012 has imposed certain restrictions on the issue of Gold Loans. As per this notification , all NBFCs shall :-

1) maintain Loan-t0-Value ratio not exceeding 60% for Loans against Jewellery ; and

2) Disclose in their Balance sheet the % of such loans to their total assets.

These NBFCs shall maintain a Tier I Capital of 12% by 1st April 2014.

They shall not grant any advance against bullion/Primary Gold and Gold coins.

Click here to download the relevant Notification.

Mar 132012
 

Every person holding Deposits with Banks/Financial Institutions/Companies must have heard about these forms 15G & 15H. As a depositor, you will be required by the bankers/financial institutions/Companies to submit Form 15G/15H for non deduction of tax at source (TDS). But, how many of us really know, what this Form 15G/15H is and what are the implications of filing the same? This article is aimed at throwing some light on the facts and procedures with regard to these Forms.

What is Form 15G/15H ?

Form 15G/15H is a declaration to be filed by an Individual or a person (not being a company or a firm) for the purpose of claiming certain payments (Dividends/Interest on Securities/Interest other than interest on Securities/National Savings Scheme/Interest on Units) without the Deduction of Tax at Source (TDS).

Who can give Form 15G/15H

Form 15H shall be given by persons above 60 years of age.

Form 15G shall be given by persons below 60 years of age.

“Person” means Individual (or) a person (not being a company or a firm). Hence even HUFs and Association of Persons can also make use of these forms.

What are the other Conditions for submission of Form 15G/Form 15H

a)      The income of the declarant should be below taxable limits during the previous year.

 

For Example for the year 2011-12, the taxable limits for various types of assessees are as follows :-

 

In case of resident Individuals below 60 years of age-    Rs. 180000/-

In case of resident Women below 60 years of age      –    Rs. 190000/-

In case of resident Individuals 60 years or above age –    Rs. 250000/-

In case of resident Individuals 80 years of above age –   Rs. 500000/-

b)      The tax on estimated total income for the previous year should be “Nil”.

c)      Type of Payment and declarant

Interest on Securities        –           Other than Company or firm

Dividend                           –           Resident Individual

Interest other than

Interest on Securities        –           Other than Company or firm

National Savings Scheme –           Resident Individual

Interest on Units               –           Other than Company or firm

d)     PAN (Permanent Account Number) is mandatory for making declaration using Form 15G & 15H w.e.f 01/04/2010.

Consequences of False/Incorrect Declaration :-

Any person making a false statement in the declaration shall be liable to prosecution under section 277 of the Income-tax Act, 1961, and on conviction be punishable –

(i)                 in a case where tax sought to be evaded exceeds one lakh rupees, with rigorous imprisonment which shall not be less than six months but which may extend to seven years and with fine;

(ii)               in any other case, with rigorous imprisonment which shall not be less than three months but which may extend to three years and with fine.

Myths & Facts about Form 15G & Form 15H

Sl. No.

 

Myth

Fact

1

Anybody who wishes to avoid tax deduction can make use of Form 15G/15H Only persons with income below taxable limits and Nil Tax liability can only make use of this form.

2

Once declaration is given in Form 15G/Form 15H, there is no need to declare this income in return of Income. Irrespective of the fact whether the Form is used or not, the respective income should be compulsorily declared in return of income.

3

Once declaration is given in Form 15G/Form 15H, there is no need to pay tax on the same. As per the provisions, only persons with NIL tax liability only can give these forms. But if there is a tax liability, they have to necessarily pay the requisite tax. On the other hand, by payment of tax they run the risk of giving a wrong declaration. Hence before giving Form 15G/15H, please be doubly careful.

4

Form 15G & 15H are submitted only to the banks/Financial Institutions/Payer. This is partly correct. The person who receives the Form 15G/15H is required to submit one copy of the Form to the Commissioner of Income-tax . Hence the information is passed on the Income-tax department and the Income-tax Department can make further enquiries on the same.

5

Submission of Form 15G/15H once is sufficient. No. These forms shall be submitted every Financial year at the beginning of the Financial year.

6

It is enough that irrespective of the fact that deposits are held in different branches, a single Form is sufficient. No. These forms should be submitted to each and every branch where you hold the deposits. For example, if you hold deposits in 3 different branches of State Bank ofIndia, this declaration shall be given for each branch separately.

7

Since my Income is below taxable limits and tax is NIL , I do not have to submit the PAN details with the declaration No. Every person giving declaration using Form 15G/15H shall compulsorily provide the PAN details along with the declaration irrespective of their Income/Tax status. Otherwise tax will be deducted @ 20% on the Interest (w.e.f 01/04/2010)

8

Form 15G/15H can be used for not deducting TDS for all types of payments (viz.,) Contract payments, Professional fees, rent,etc., These forms can be used only for payments in the nature of Interest of Securities, Dividend, Interest other than Interest on Securities (Bank/Company Deposits) , NSS & Interest on Units. For other types of payments, these forms cannot be used.

Click here to send our enquiry/suggestions/comments.

Nov 052011
 

As per the recent RBI Notification No RBI/2011-12/251 DBOD.AML BC.No.47/14.01.001/2011-12 dtd. 4th Nov 2011, the RBI has instructed the member banks that , from 01.04.2012 onwards , the Cheques bearing dates more than 3 months will not be paid by the banks. This is being done to curb the practice of circulating the same like cash for 6 months. At present these instruments are being honoured by the banks for a period of 6 months from the date in the instrument.

The relevant Notification is reproduced below.

Source :- www.rbi.org.in

Download (PDF, Unknown)

 

Contact us @ 91-44-45540180 / 91-91505 75680. 

For Quick Response email :- sridharca@gmail.com

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