AMAZING returns on your fixed deposit

All you want to know about investing in fixed deposits:
http://getahead.rediff.com/report/2009/aug/21/money-all-you-want-to-know-about-investing-in-fixed-deposits.htm

How to earn AMAZING returns on your fixed deposit ?
http://www.rediff.com/getahead/slide-show/slide-show-1-money-how-to-earn-amazing-returns-on-your-fixed-deposit/20111018.htm

How to get the most out of your fixed deposit ?
http://www.rediff.com/getahead/slide-show/slide-show-1-money-get-the-most-out-of-your-fixed-deposits/20130503.htm

Advice to youngsters

http://www.rediff.com/getahead/slide-show/slide-show-1-specials-rakesh-jhunhunwalas-advice-on-money/20121218.htm

In-depth: A complete pension plan guide for you

http://www.rediff.com/business/slide-show/slide-show-1-perfin-in-depth-a-complete-pension-plan-guide-for-you/20120605.htm

http://www.rediff.com/getahead/slide-show/slide-show-1-money-5-golden-rules-of-retirement-planning/20111226.htm#1 

PF withdrawal process

Last week I submitted forms for withdrawal of PF from my last company. It had to go back in loops two times in the absence of proper information on the process. So now that I have gained information on the PF withdrawal process, I am putting it in detail here for everyone of you who might need it.

Documents required to submit to your last employer

1. Form 19 (for EPF withdrawal)
2. Form 10c (for EPS withdrawal)
3. A blank cancelled cheque (this is required to verify accuracy of MICR Code Number). The cheque should be of you as a single account holder and not a joint account cheque.

Instructions on how to fill Form 19 :

Form 19 Page 1 

Form 19 Page 2 

Instructions on how to fill Form 10c :

Form 10c Page 1 

Form 10c Page 2 

On page 3, you will have to affix a Revenue stamp and sign across it. Thats it. You need not fill any other details.

Revenue Stamp availability in Bangalore

Post offices do not keep revenue stamps. I was able to get it from Koramangala BDA Complex for 5/- Rs. per 1 Re. stamp.

In Bangalore, affixing a revenue stamp is not required so companies in Bangalore accept the PF forms without it.

Know your claim status

Once your application is forwarded to the epf office by your employer, you can check your claim status on epfo website. You will also receive a sms from epfo stating that your application is received and is under process.

With all this information at your hand, I hope you would enjoy the process of submitting PF forms :)

Update: My PF money is transferred to my account electronically within a month of filing the claims.

How to transfer EPF to new employer?

Procedure to transfer the old PF amount to new PF account
1. At the time of joining a new organization, the company’s HR will give you forms for opening an PF account. When new PF account is opened and you would receive a new PF Number.
2. Fill up PF withdrawal form (Form 13) with the details of your previous organization, including your previous PF number, previous employer and regional provident fund office details. 3. Sign and hand over the Form ‘13’ in triplicate to your present employer/HR Department.
4. HR will fill in the details of your current organization and attested it by the authorised signatory (of the new employer).
5. HR then submit it to the regional PF office for transfer.
6. The regional PF office then gets in touch with your previous regional PF office to effect the transfer. Ideally, the process should take around 30 days.

In case you wish to withdraw your PF and the past employer is unavailable, the past employer is not available or the firm has closed down or liquidated. In such cases the employee has to submit an identity proof (Official government identity cards such as a PAN card, voters’ identity card, passport, ration card or an Employees’ State Insurance Corporation identity card are acceptable) and a proof of residence(For address proof, a copy of your electricity, water or landline phone bill or a driving licence would suffice). An attestation will be done by the bank manager (the bank account where your PF savings will be credited).

When should I start transferring PF to new employer?
The transferring process can be initiated after allocation of new PF account number.

How to identify PF No.?
PF is an alphanumeric number on your PF slip. The first two letters indicate the regional PF office, which is in charge of your account. The next five digits are the employer’s code, followed by the employee’s code.

Why to transfer PF account?
1. While you need to wait for two months to withdraw the money, the transfer takes place immediately.
2. You have to pay tax if you withdraw your Provident Fund before completing five years. If you transfer it, you can earn more in the long run in terms of returns.
3. You stand to receive 24 per cent of the amount standing to your account as pension once you are 50 years old, and full pension at age 58 onwards under the Employees' Pension Scheme.
4. Up to now, there was not any problem in doing this because the older account keep accumulating interest income over the period of time. However according to the new rules, after year 2011, after 3 years of inactivity, your PF account will stop earning any interest income.

What if old PF account is not transferred?
If you don’t transfer your previous balance, your previous accounts are live and accessible. You can withdraw or transfer the balance to your current PF account. But according to the new rules, after year 2011, after 3 years of inactivity, your EPF account will stop earning any interest income.

Where to get PF forms?
Provident Fund Transfer Form - 13 Revised - is attached herewith this article or can be down loaded from EPF India website - http://epfindia.nic.in/downloads_forms.htm

Points to remember, while transferring Provident Fund
1. Use the appropriate form for transferring Provident Fund
2. Ensure that all columns of the application are filled completely.
3. Information in the application form relating to name, a/c no. should agree with the details available with Employees' Provident Fund Organization; which were furnished by the employer at the time of enrolling to Provident Fund.
4. Application should be signed by the member/claimant.
5. It should be attested by the former employer. In case attestation by the former employer is not possible, it should be got attested by any other authorized official specified in application form.
6. Application for final settlement can be sent by a member on completion of 2 months from the date of leaving service, if the reason for leaving service is other than superannuation, medical ground, retrenchment and V.R.S./ Female members getting married etc.
7. Desired mode of payment can be given legibly, if the amount involved is more than Rs. 2000/-. The amount will sent by deposit in payees' bank a/c. To facilitate this, Bank a/c no., name and address of the bank should be furnished. An advance stamped receipt should also accompany this application.
8. Application may be supported by the return Form-10, showing the details of leaving service and details of contribution for the year in Form-3A, if not sent earlier by the employer.

LTA( Leave Travel Allowance)

My friend Arijit and Vineet had an query on Leave Travel Allowance. No better place than this , here it goes.

Basically, it is a monetary benefit that you get on the expenses you incur when you travel.
Here's to clearing your doubts.

1. On what basis can I claim LTA?

If you fulfill two criteria, you can do so:
i. You should have taken leave from your company
ii. You should actually travel

You can either travel alone or with your family. However, if your family travels without you, no LTA can be claimed.

2. How often can I claim LTA?
i. Twice in a block of four calendar years
ii. LTA is not related to when you started your employment as the government has fixed blocks of years for the purpose of claim.
iii. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).
iv. The current block is 2010-13, that is, between January 2010 and December 2013.
v. During this time period, a person is entitled to two LTA claims.
vi. A person can get an income tax exemption for two journeys in a block of four calendar years. But he can make a trip only once in year.

3. What if I fail to avail of it?
In case you fail to do so, there is a carry over option.Let's say that in the block of four years, you never did claim any LTA. You can do so in the first year of the next block of four years.

4. What is the proof of travel to avail of LTA?
According to rule 2B, you can produce an air, rail or any public transport ticket.You can even submit the bills issued by the car rental company if you rent a vehicle.However, the travel is applicable anywhere in India  and not abroad. So an international air ticket will not hold.

5. Is LTA taxed?

You can receive LTA as either reimbursement or allowance.
Reimbursement:
In case of LTA as reimbursement, it is not taxable.
Let's say your company offers an LTA of Rs 50,000. For proof of travel, you produce an air ticket of Rs 10,000.In such a case, you can claim only Rs 10,000 as LTA and it will be exempt from tax.
Allowance:
If you do not submit any proof of travel, you will get your LTA but will have to pay tax on it.
If you produce proof of travel, it will not be taxable to the extent your proof of travel is covered.
Let's say you are entitled to Rs 50,000 as LTA as part of your salary. Since you produced proof of travel as Rs 10,000, you will not be taxed on this amount. However you will be taxed on the net Rs 40,000 as per your income tax slab rate.

LTA is not a fringe benefit as the latter are benefits that are usually enjoyed collectively by the employees and cannot be attributed to individual employees.

6. Can both spouses claim LTA?

If both spouses are getting the LTA benefit in their places of work, they can both claim exemption on LTA from their employers and the benefit for four journeys in one block.They do not have to take the precaution of not travelling twice during the same year.Moreover, they can take the same family members or different ones as long as they stick to the definition of the members for this purpose.
Family includes spouse, children as well as dependent parents, brothers and sisters. In respect of children born on or after October 1, 1998, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births (twins or triplets).

7. If I and my wife travel this year, can we both claim LTA simultaneously?

No. You cannot claim LTA twice for the same journey. If both of you take a holiday together and you claim LTA, she cannot.

8. If I am entitled to a particular amount as LTA, but my expenses are higher, can I claim more?
Say in the year 2005-06, you receive on Rs 8,000 as LTA, but spend Rs 50,000 on travel. You can claim exemption only to the tune of Rs 8,000.

5 things to know about the PPF

The Public Provident Fund (PPF) may be one of the most popular tax-saving schemes,which can be opened in a post office or designated bank branches,but do you know the investment limit or the withdrawal time frame Heres how to familiarise yourself with this investment option.

1 How much is the interest rate ?

The interest rate offered on the PPF is no longer fixed,but linked to the market.It is 0.25% above the 10-year government bond yield.This does not mean that the rate will change on a day-today basis.It will be announced every year in April,based on the average bond yield in the previous year.For the current financial year,it is 8.8%,but could recede next year.Bond yields have fallen below 8% in recent weeks and the average for 2012-13 has dropped to 8.25%.Analysts dont expect the PPF rate to be more than 8.5% in 2013-14.

2 How does the interest accrue ?

The interest on your PPF balance is compounded annually,but the calculation is done every month.The interest is calculated on the lowest balance between the fifth and last day of every month.So,if you invest before the 5th,the contribution will earn interest for that month too.Otherwise,its like an interest-free loan to the government for a month.If you are investing through a cheque,make sure you deposit it 3-4 days before the cut-off date.If your bank is lethargic in crediting the amount to your PPF account,your investment might miss the deadline.

3 What are the tax benefits ?

The PPF corpus is tax-free at all three stages.The investment is eligible for tax deduction under Section 80C.The interest earned is also tax-free,and so are withdrawals.The original draft Direct Taxes Code,introduced in 2010,had proposed withdrawal of tax benefit.Though it would have been with prospective effect and existing investments would have been exempt,there was strong opposition to the move.The revised draft DTC nixed the proposal.However,with P Chidambaram back as finance minister,the original DTC proposals may come back in some form.Make the most of this tax-free opportunity before the rules change.

4 How much can you invest ?

The investment limit is 1 lakh in a year through a maximum of 12 instalments.If your minor child has a PPF account,the combined limit for both accounts will be 1 lakh.Dont invest more than the 1 lakh in a year,because if it is discovered,any interest earned by the excess amount will be reversed.There is also a minimum investment required.An investor has to put in at least 500 in his PPF account in a year.You will be levied a small,but irksome,penalty of 50 if you fail to do so.

5  When does it mature ?

A PPF account matures in 15 years,but you can extend the tenure in blocks of five years after maturity.The balance continues to earn interest at the normal rate.The minimum investment of 500 has to be maintained even for accounts extended beyond 15 years.This does not mean your money is locked up for this period.The lock-in period falls with every passing year.In the 14th year,it will only be one year.If you need money,you can withdraw after the sixth year,but it cannot exceed 50% of the balance at the end of fourth year,or the immediate preceding year,whichever is lower.You can also withdraw only once in a financial year.You can also take a loan against it,but this cannot exceed 25% of the balance in the preceding year.The loan is charged at 2% till 36 months,and 6% for longer tenures.Till a loan is repaid,you cant take more loans