Tag: financial Planning for armed forces Officers

20 Apr 2017
Are you ready for ITR Filing?

Are you ready for ITR Filing?

We’re ready to file your Income Tax Returns (ITR) for the Financial Year (FY) 2016-17 [that is, Assessment Year (AY) 2017-18]. You may not have received your Form 16 so far from your employer, but you can send us all the other details – we’ll get everything ready for you since the Govt has introduced a few new check items for filing ITRs; as soon as you get your Form 16s, please send them to us at the earliest.

 

This year we’re starting a new tax service for which there has been a persistent demand – Advance Tax service along with regular Income Tax filing. Hence, you have the option of:-

  • Filing only the ITR for the FY 2016-17, ie, for the period 1st April 2016 – 31st March 2017, as regularly done by you.
  • Combination of getting your Advance Tax for the Financial Year 2017-18 (ie the current financial year which has started from 1st April 2017) along with the ITR for FY 2016-17 at a small extra nominal charge. Please note that Advance Tax service for FY 2017-18 is not available if you do not file your ITR for FY 2016-17 through us.
  • If you haven’t filed your ITR for FY 2015-16 (for the period 1st April 2015 – 31st March 2016), that can also be done right now.

Please let us know what service would you like to go ahead with us, and either give us a mail on incometax@humfauji.in or whatsapp/SMS the requirement on Phone number 09999 053 522. We would revert back to you with a detailed mail on how to go ahead with the service you’ve chosen.

Our charges for the Advance Tax and ITR filing are as below. Do not miss out details of the concession given by us to our existing Investment Clients given later in this mail. Please remember that we are referring to Advance Tax service for the FY 2017-18 (01 Apr 2017-31 Mar 2018, the current financial year) while ITR filing is for the FY 2016-17 (01 Apr 2016-31 Mar 2017, which has just got over):-

 

Category of IT Return ITR Charges Advance Tax charges
Individuals with income from Salary/Pension only, normal HRA calculations and rentals from a maximum of one property [ITR-1] Rs 1000/- Rs 250/-.

For all our existing Mutual Fund Investment Clients, these are waived off if they get their ITRs filed by us.

Armed Forces JCOs/OR (Personnel Below Officer Rank, PBOR) with income from Salary/Pension only and rentals from maximum one property [ITR-1] Rs 500/-
For Individuals having house property income from more than one house and/or capital gains computation from stocks, mutual funds, property sale etc. (We assume moderate calculations of Capital Gains. If calculations are very time-consuming, charges may be higher) [ITR-2] Rs 1500/-
Professional Income (With Income Expenditure statement) Rs 2500/-
Professional Income (With Income Expenditure statement, Capital account statement and Balance Sheet) Rs 5000/-
For NRIs (for Indian Income, simple tax return) Rs 2500/-

 

For the clients who have reposed a huge faith in us and entrusted us with their large savings, we are grateful to them for it and wish to give the following complementary services to them:-

 

Current Mutual Fund Investments with us (As on 30th  April 2017) No ITR Filing Fee or Advance Tax fee

[The complementary ITRs need to be only of ITR-1 or ITR-2 categories. Difference chargeable for other categories]

Above Rs 1.5 Crores Complementary ITR filing for Self, Spouse and 2 more persons (unmarried Children / parents only)
1.0 – 1.5 Crores Complementary ITR filing for Self and Spouse
75 Lakhs – 1.0 Crores Complementary ITR filing for Self.

 

A large number of people are not very clear about what is Advance Tax. A write-up on the same is given below.

 

What is Advance Tax?

 Contrary to common perception, your Income Tax due for a financial year is required to be calculated in advance and is to be paid throughout the year in instalments as laid down by the Govt. To explain this, say your income for the financial year 2017-18 (ie, income earned from all sources from 01 Apr 2017 – 31 Mar 2018) is Rs 12,00,000 (12 Lakhs). Total Income Tax on this comes out to be Rs 1,72,500. Without considering any complications like tax savings, education cess etc, let’s see how the Govt expects you to pay this tax:-

 

Due Date for Advance Tax Instalment Percentage Advance Tax Payable Amount Payable in our Example
On or before 15 June 2017 Not less than 15% of total tax Rs 25,875
On or before 15 Sep 2017 Not less than 45% of total tax Total Rs 1,03,500 including amount paid earlier, if any
On or before 15 Dec 2017 Not less than 75% of total tax Total Rs 1,29,375 including amount paid earlier, if any
On or before 15 Mar 2018 100% of total tax liability Total Rs 1,72,500 including amount paid earlier, if any

That’s the reason, your employers, whether fauji or corporate, deduct your tax every month from your salary so as to keep it very simple and not to cause undue sudden financial burden on you. Thus, if your tax is being deducted as above and you have no other income, there’s no additional advance tax to be paid by you.

However, while calculating advance tax, people generally forget the income generated from rent, interests received from FDs (bank FDs, company FDs), regular pay outs from PO MIS (Post Office Monthly Income Scheme) or SCSS (Senior Citizen Savings Scheme), interest received from builders or money lent out etc. Thus insufficient tax gets paid which results in an interest penalty later.

 

 Who has to pay Advance Tax?

 Following categories of people have to pay advance tax or additional advance tax:-

  1. Salaried people whose employer does not deduct full quantum of advance tax as due.
  2. Salaried people whose employer deducts correct advance tax every month but they have income other than salary, like House Rent, interest from FDs, HRA, etc where proper advance tax deduction is their own responsibility.
  3. Those receiving pension but their bank deducts only 10% advance tax (TDS) on pension while they themselves may be in a higher tax bracket.
  4. People working as consultants to companies and no/less advance tax is being deducted by the company.

 

What is the penalty if Advance Tax is not paid, if due?

 Advance tax has to be paid by people whose total tax liability for a year exceeds Rs 10,000. If advance tax due, as per the table above, is not paid in time, simple interest of 1% per month (or part thereof) is payable under various sub-sections of Income Tax Section 234. Thus, if no advance tax is paid, at the time of filing the ITR (Income Tax Return), not only a large amount of tax due has to be paid but also the interest that would’ve built up due to non-payment of advance tax. If advance tax is paid in due time, the penalty interest is avoided as also the tax due is comfortably spaced out over the year, avoiding the sudden burden of paying a large amount of Income Tax.

 

Please remember that the First advance tax instalment of 15% of total tax for FY 2017-18 is due on 15th June 2017.

For more information, feel free to reach us on, contactus@humfauji.in or call + 011 – 4240 2032, 40545977, 49036836 or

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27 Jul 2016
Decomplicate your life

Decomplicate your life

There’s too much of financial ‘wisdom’ being branded about. Too many words telling you too less. Don’t get overwhelmed with it – here’s the gist of it.

Financial planning is simple. One sincere Sunday sitting with your wife and you can pretty much simplify and sort a lot of your financial issues.

Generally you can’t help or control how much you earn. However what you do with the money after it is earned, is fully in your control. Most of us worry more about what they have no control on, and neglect what they have full control on, in financial matters.

You’re paying a lot of tax on your salary. Agreed. But there’s nothing much you can do about it. Stop worrying about it, therefore.

There’s a lot of tax you can save on the investments that you do after you get your salary. Worry about that. It is in your control!

If you want to save yourself future financial hassles, save for specific requirements (‘financial goals’) like children education, their marriage, a house etc, rather than saving in general. You’re more likely to stick to the savings plan if you know what is coming up in future.

Insure yourself, your house, your car, your business, your health against things that shouldn’t happen but can happen. It doesn’t cost much.

Don’t be proud of a big balance in your savings bank account or in FDs. Your banker is celebrating it more than you.

Don’t be proud of so many insurance policies you have. They’re creating a lot of wealth – for your insurance agent and the insurance company.

The big balance in your credit card statement is not your gain but what you owe. Settle it in full – always and every time.

Pay slip is not as complicated as you think. Understand it as also your taxation and the concept of inflation. There’s no bravado in not knowing about them.

Start healthy SIPs in a good bouquet of mutual funds. Great if you can do it yourself. Otherwise, don’t have an ego issue in going to a financial planner to manage your financial worries.

Build an emergency fund equal to about 3 – 6 months’ expenses. Put it away in a bank FD or better still, in a liquid fund.

You’ve never thought about WILL. It’s not that only others die prematurely. Get that protection umbrella over your family – you owe that much to your loved ones.

For more information, feel free to reach us on, contactus@humfauji.in or call + 011 – 4240 2032, 40545977, 49036836

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16 Jul 2014
Financial planning for people in their 70s and 80s-humfauji.in

Financial planning for people in their 70s and 80s

Financial Planning in the 70s and 80s is much more than merely managing your money, though money supply does remain a major requirement for most of the Indians. Issues like estate planning, withdrawal strategy from the accumulated corpus, medical management, getting the asset allocation right and catering for emergencies may become more important now than in any other stage of life. Also, anticipating future income and lifestyle needs is essential to make these years truly the golden years of one’s life. In fact, these later retirement years can pose sophisticated challenges to retirement planning and saving.

As per the Census of India organisation, current life expectancy of an average Indian is approximately 70 years at birth which, by the age of 60 years, increases to 80 years and by 70 years of age, it is 82 years. This data is for an average Indian. For an urban and more health-conscious Indian, it could be much more. Thus, purely from funding point of view, a bigger question that may stare large number of Indians at this age, especially those who do not have a good pension scheme for an adequate regular income, is whether they will outlive their corpus money? Nuclear families and shrinking habitats have also seen more and more elders living separately and catering to their equally elderly spouse on their own – support system afforded by the younger generation is evaporating fast. How can such elder investors anticipate and manage their family’s changing financial needs? The answer lies in a proper planning customised to each such couple.

It is very important to realise that the basic retirement problem has changed. Due to the longevity of life, there is a very active need to counteract inflation, thus needing a much higher return on investments than a pure fixed income portfolio can give. While fixed deposits, Government and post office schemes, and conservative pension schemes may have their own share in the portfolio, over the long haul, just these will not do. A certain amount of equity percentage in the investments is necessary at this age too if the purchasing power of one’s money is to be maintained against the eroding effects of inflation. Robert J Lovejoy, a US based Certified Financial Planner advices his clients that, “if you think you may live for more than five years, you don’t necessarily want to move all your retirement money out of stocks”.

Apart from the money question, nurturing own estate and ensuring that it passes to the intended beneficiaries in a manner as actually desired by the elderly couple, is also an important question. A carefully crafted Will preferably registered in a court, periodically passing on the assets to your loved ones through suitable gift deeds if the estate is surplus to one’s needs, catering for finances for medical needs which may become almost a weekly requirement, creation of Trusts through suitably worded Trust Deeds in case a relative or charity needs to be supported later, etc are all part of a sound estate plan. Help of suitable lawyers and financial planners needs to taken to ensure that whatever is planned and desired, does get executed when one is no longer around.

Thus, financial planning for the people in their 70s and 80s primarily boils down to the following:-

  • Simplify your life by a clear financial asset allocation strategy and simple plans. While diversification is good to an extent, entangling oneself in managing too many properties, deposits, stocks, bonds, and other asset options may take sheen off an otherwise peaceful and stress-free retirement required at this age.
  • Reconcile your cash flows and budget by realistically catering to the life you can actually live from now on. While lofty travel and entertainment plans will not work out, over-looking medical requirements and social commitments may cause financial and mental distress.
  • Prepare realistic withdrawal plans. Act as if you’ll live forever! Make sure your monthly withdrawals from the retirement corpus and pension, if any, cater to the lifestyle and other requirements like home maintenance for a long time, at least another 20 years. This can become a balancing act between drawing down your savings too quickly and being left with little to live on in your 80s or 90s, or the opposite scenario of spending your income too slowly and needlessly crimping your standard of living.
  • Leverage your house if the need be. Reverse mortgage is a very good option if you find that you are falling short of your requirements. Continually lowering your lifestyle just because you wish to leave the house for your children may not be the best strategy for you and your spouse. For all you know, they may not even need it!
  • Design a sound estate plan that can protect you, your spouse, and your heirs no matter what life brings. Such a plan ensures that your assets go to the people you choose when you pass away or are permanently disabled. It may involve preparation of Will and keeping it updated, Gift Deeds, Trust Deeds, Power of Attorneys and nominations in investments. Ensure that there is a list of emergency information like medication, persons to contact, location of important documents etc available at hand and is known to all concerned.

Every investor’s situation is different. They may consider meeting with a financial advisor when doing their future retirement and estate planning so that the 70s to 90s become the most carefree period of one’s life.

Col (retd) Sanjeev Govila, SEBI Registered Investment Advisor,

CEO, Hum Fauji Initiatives

You can either call us on 9999 022 033 or write to us at contactus@humfauji.in to schedule a tele meeting with our financial planner and investment advisor.

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11 Jun 2014
The benefits of having a financial planner-humfauji.in

The benefits of having a financial planner

In a country where event managers are paid for organising weddings and nutritionists are paid for making diet plans, financial advisors struggle to make a case for earning a fee. Only a small segment has managed to break through the resistance. Investors continue to save, invest, and borrow without any framework or process in place and assume they can manage their money. Why does one need a financial advisor at all?

There was a time when getting a job meant meeting “commitments.” There were siblings who needed college education; there were marriage expenses; and, there were elderly parents to take care of. Today, a young earner begins financial life on a firm footing – a regular surplus income. He acquires a bank account and a debit card with the job. By the end of his first year of earning, he has bought some tax saving products and applied for loans. He has not engaged a financial advisor, yet.

If the earning class wants to focus on enhancing its income, it needs someone to take care of its surplus and keep its financial life in order. Engaging a financial advisor is not a felt need when the power to be able to spend keeps one confident and fearless about the future. But, soon enough, our young earner begins to default on that education loan, does not file tax returns in time, does not know where his tax-saving policies are, and finds himself locked into a house at a location where he is no longer working. It is rare to find earners with well-ordered financial lives. This is why anyone who earns, needs a financial advisor. Someone who will walk with you and work for you, and ensure that your finances are in order. Let me list a few simple things an advisor can enable every earner to do.

First, they should be encouraged to save a portion of their earnings. Just as a personal trainer will motivate you to hit the gym every day, a financial advisor will ensure that you have set aside a portion of your income for yourself. Many earners believe that they can do it themselves, and see this as too simple a task for an advisor. Many advisors think that unless they get a complete account of all income and all expenses, including the electricity bills and payments at restaurants, they cannot determine the earner’s saving potential. A simple engagement that asks a percentage of the income to be saved is a good starting point.

Second, earners should have a default choice to convert their savings into investments. Many of us save regularly in our Provident Fund (PF) and are not even aware that a fixed amount from our salary goes into a basket of fixed income investments. Earners need to realise that such default choices help them in the long run. If 12 per cent of the salary is already saved in the PF, setting up another 12 per cent in a diversified equity mutual fund would do no harm. A monthly SIP (systematic investment plan) into few such funds, chosen at the start of the year and, reviewed every year, is adequate for most purposes. The earner needs an advisor so that this allocation happens after careful consideration of choices, and so that a good fund is selected.

Third, they need tools to deal with the unexpected. There are times when unexpected expenses hit the family budget; there are times when unexpected income comes in, in the form of bonus and gifts. Borrowings hurt the saving ability; poorly allocated funds may end up in losses. An advisor should be the first port of call, when taking such important financial decisions. But, investors think they need not involve the advisor since it amounts to discussing private details, and advisors keep away assuming that investors will be reluctant to let them in. Unless the advisory relationship extends beyond investment advice, its ability to deliver value will get compromised. Over a period of time, the advisor should be able to evaluate loans, manage repayment crises, arrange liquidity as needed by the client, and smooth out contingencies for him.

Fourth, earners fail to see the impact of life cycle changes on their finances. Many believe that as long as they accumulate assets, they are doing fine. Over a period of time, their incomes, expenses, and their needs change. Without providing for these changes, a household would have to compromise on goals such as higher education and retirement. The biggest contribution of the financial advisor to a client is advice on asset allocation. It is the advisor who is able to orient the savings and investments of the earner towards specified financial goals and aspirations.

While DIY (Do-it-Yourself) is tempting, earners are likely to find themselves locked into property and gold, when what they need might be assets that are more divisible and liquid. An advisor is an asset allocation specialist who should help you align your assets to your goals.

Fifth, earners are prone to errors that they are loath to admit. Investing in the next big thing; selling out of an investment out of fear; buying a share based on a tip; being taken in by a sales pitch; leaving money idle in the savings account; failing to sell off what is not working; and, choosing the easy over the optimal are all routine mistakes investors make. A combination of inertia, lack of time, lack of information, need for control and overestimation of abilities, leads to a situation where investors manage their money inefficiently. Bringing an advisor is worth it, just to ensure that someone is in charge and is accountable.

If earners begin by describing what they want and, are willing to hold their advisors accountable, we will see the beginning of a process of engagement. Investors see advisors as sellers; advisors see investors as transaction-oriented. With one side being secretive and the other being scheming, we have dissatisfaction as the outcome. In the interest of their own long-term wealth, earners-investors should demand a process for their financial well-being and, advisors who lay it down and implement it, would have earned their fee.

 

[Source: Uma Shashikant; She is Managing Director, Centre for Investment Education and Learning]

You can either call us on 9999 022 033 or write to us at contactus@humfauji.in to schedule a tele meeting with our financial planner and investment advisor.

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31 Oct 2013
4 things to remember about Sensex at 21000

Four Things to Remember about Sensex at 21000

The benchmark BSE-Sensex is back at 21,000 levels. And suddenly there seems to be a rush of enthusiasm amongst market participants. Just to recall, the first time the Sensex had touched the 21k level was in January 2008. Then as we know, the markets crashed in response to the global financial crisis. Then again in November 2010, Sensex again hit the 21k level. And again the markets tanked after scaling that level…

So the one obvious question on everyone’s mind is ‘ Where will the Sensex go from here? Will it tank? Will it scale new highs?

What is the answer? We beg to differ in our perspective of this entire situation. In our view, the question itself is flawed.

For one, the 21k level denotes nothing more than a mere psychological point. Investors have seen the Sensex scaling this level and then correcting sharply. So there is a collective memory associated with the 21k level and a resultant bias.

In reality, the current 21k level cannot be compared with the 21k mark attained in 2008. Or for that matter even 2010. An article in the Times of India rightly points out this fact. During these six years, inflation has gone up by 70%! So to make a fair comparison between the 2008 21k level and the current one, you have to adjust the current market level for inflation. In that sense, the Sensex is actually around 13k level relative to the 2008 level.
Secondly, it would be wrong to gauge the overall Indian stock markets purely by the Sensex level. Yes true, it is a benchmark index. But it comprises just 30 large cap companies. Moreover, the composition of the index and the weightage of its constituents also changes from time to time.

Thirdly, the performance across sectors and market caps remains highly skewed. Consider this statistic as reported in the said article- Just 133 stocks out of the BSE 500 index of 2008 have surpassed the peak levels achieved then. This means that while some stocks have scaled new highs, a majority of the stocks still continue to underperform.

Fourthly, the Sensex level alone says nothing about the value of the underlying stocks. It has to be seen in conjunction with earnings and other fundamentals factors. The point we are trying to drive across is that making investment decisions looking at the current Sensex level is a flawed approach to start with. This is the reason we do not assign too much importance to index levels.

Instead of focussing on stock prices and predicting their movements, we prefer to focus on finding value. And there is a reason why we see merit in this time-tested approach. Many proponents of this value investing approach, Warren Buffett being the foremost among them, have built immense wealth over the long term. The philosophy is simple but demands discipline. Find great businesses that are well-managed and are available at a fair price. Our experience says you are quite likely to see wealth accruing into your bank account, irrespective of where the Sensex is headed.

 

(Courtesy: http://www.equitymaster.com/5MinWrapUp)

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