Megha Goswami – Page 15

Fair Market Value | Capital Gain Calculations for Property Purchased Before 2001

Leave a Comment / Finance / By Megha Goswami / November 19, 2023 November 20, 2023

Fair Market Value and CII: For assets sold after April 1, 2017, the cost inflation index numbers available from the financial year 2001-2002 must be used to measure the long-term capital gain on the selling of land. Many people who have bought or inherited property before 2001 wonder how to calculate the indexed cost of acquisition. The adjustment in the CII base year from 1981 to 2001 would have a significant impact on the property’s final capital gains number. If the property was purchased before April 1, 2001, the original owner must determine the property’s fair market value as of April 1, 2001, before selling it.

This article discusses what Fair Market Value is, how to calculate it, why the base year was adjusted from 1981 to 2001, and how it affects tax savings on assets acquired before 2001. It then goes on to discuss Registered Valuers and how they calculate FMV.

Fair Market Value

From the financial year 2016 to 2018, the changes in the measurement of long-term capital gains for the property are as follows:

The holding period to apply for long-term gains has been shortened from three to two years.
From 1981 to 2001, the base year for calculating indexed cost has been updated.

For properties purchased before April 1, 2001, the most recent cost inflation figures began on April 1, 2001, one must first determine the property’s Fair Market Value (FMV) as of April 1, 2001.

FMV responds to the question, “How much will a property purchased in 1997 be worth on April 1, 2001?” If the assessing officer (AO) has a different opinion or uncertainty about the stated value, calculating the capital gain based on any arbitrary FMV can get an assessee in trouble.

When you want to buy a property or need it for Sale and Purchase, Refinancing, Legal purposes, Loan intent, Stamp duty collection, Portfolio Management, Family Law/Matrimonial, or Market Valuation, you’ll need Fair Market Value or FMV. FMV aids in determining the reasonable purchase price. It protects you from overcharging. You get actual value for your money. Consider a different scenario if you’re looking for a home loan. You will be unable to obtain a loan from a bank if the property is not accurately priced.

According to the 2009 Income Tax Guidelines for Immovable Assets

Market value is the amount that a willing buyer will pay a willing seller for a property, taking into account all of the property’s current conditions, as well as all of its existing advantages and future possibilities when set out most advantageously.

According to the valuation officer, fair market value is the approximate price that any asset will fetch if sold in the open market on the valuation date.

The terms “Market Value” and “Fair Market Value” are interchangeable, with the exception that “Fair” adds a hypothetical market feature. The phrase “if sold” does not refer to actual sales or market conditions. The term “open market” does not refer to a strictly hypothetical market that is not subject to legal restrictions. The fair market value does not include sentimental value, brokerage, stamp duty, commission, and other costs that may impact the selling transaction.

What is Fair Market Value, and How to Calculate it?

According to the Income-tax Act of 1961, the FMV of a property is the greater of the cost of purchase or the price that the property would typically sell for if sold on the open market. There is no set formula for calculating a property’s FMV. The strategies for calculating FMV are outlined below. Keep in mind that Fair Market Value must be genuinely fair!

Find out the average selling price of similar properties that sold in the same neighborhood in 2001.
It’s a very rudimentary form of estimation. It may or may not provide you with accurate data. Given that real estate is heterogeneous.
market in which properties can differ significantly even within the same neighborhood, determining the FMV of a specific apartment or house, particularly for a date many years ago, is difficult.
Take a look at the circle rates and the Guidance Value. The minimum cost of property prescribed for a specific region is referred to as “circle prices.” The state government or the local development authority set the circle prices. It becomes a benchmark for calculating stamp duty and registration fees. The authorities adjust the rates regularly to keep up with changing circumstances.
The circle rate usually is less than the current market value.
In Bihar, the definition of circle rates was introduced in 1999. It was adopted in other cities, such as Delhi, in 2007.
Real estate indices, such as the National Housing Bank’s (NHB’s) Residex, and two Reserve Bank of India (RBI) indices—Housing Price Index (HPI) and Residential Property Price Index (RPPI), can also be considered. These indices provide insight into current price patterns in different cities. The indices are updated quarterly using transaction data from the revenue department. However, the usefulness of these indices is minimal.
Use the services of a licenced appraiser. It is highly recommended.
Valuers that have been licenced by the government follow a standard procedure and provide a comprehensive report.
They measure the property’s actual value in exchange for a small charge. They usually consider things like the property’s dimensions, whether it’s freehold or leasehold, restrictive covenants (if any), and whether it’s insured or not.
The income tax department will consider the value reported in the valuation report from a registered valuer in the event of an inquiry.

What was the Reasoning Bhind Changing the Base year from 1981 to 2001?

The previous year used as a baseline was 1981.

The determination of this fair value has been difficult because it is based on a timeline that spans more than three decades.
As opposed to the CII or inflation, property prices increased faster between 1981 and 2001.

The owners of properties acquired before 2001 would benefit from substantial tax savings, which are summarised below.

Example of Long-Term Capital Gains Calculation for Property Purchased Before 2001

Let’s say you purchased a house for 1 lakh in 1975 and sold it for 1.5 crores in 2017. Fair Market would be about 2.31 lakhs in 1981, and its indexed cost would be 26,02,193; in 2001, it would be 37.85 lakhs, and its indexed cost would be 99,97,389. Moving the base year from 1981 to 2001 saves more than 15 lakhs in capital gains revenue.

Description	1981	2001
Fair Market Value	2,31,306	37,85,678
Acquisition’s Indexed Cost	26,02,193	99,97,389
Selling price	1,50,00,000	1,50,00,000
Long Term Capital Gains in INR	1,23,97,807	50,02,611
Long Term Capital Gain Tax (20.6%)	25,53,948	10,30,538

Determine FMV or Property’s Fair Market Value using Registered Valuer

It is advisable to have the property appraised by a licenced appraiser. The income tax department will not accept any assumptions to determine worth. In the event of a query, the department will take the value reported in the valuation report from a registered valuer into account. A valuer usually spends 3 to 4 days preparing a valuation report.

Valuers that have been licenced by the government follow a standard procedure and provide a comprehensive report. A valuer considers the area and dimensions of the property, whether it is freehold or leasehold, whether there is any restrictive covenant about the use of the property, protection of the land and property, and whether the land falls under any government development plan when determining the FMV of a property.

To act as a recognised valuer of the income tax department, a valuer must be registered under section 34AB of the Wealth Tax Act, 1957. The department issues each valuer with a licence to work as a valuer. The Act also specifies the fees that a valuer can charge, determined by the asset’s value. For example,

a fee of 0.50 percent of the asset value will be charged for the first Rs5 lakh.
It will be 0.20 percent for the next Rs10 lakh
0.10 percent for the next Rs40 lakh,
0.05 percent further.

If the Income Tax Assessing Officer (AO) has any questions about the study, the valuer must respond, and if necessary, the valuer can also visit the AO for clarification.

The valuation report and all other records related to capital gains should be held for at least eight years after the applicable assessment year.

Finding Registered Valuers

Typically, it’s by word of mouth or a Google search. Many firms, such as governmentapprovedvaluers.com in Delhi and ZippServ in Bangalore and Pune, provide this service.

Below is an excerpt from a sample report of a property valuation. This is an excerpt from a ZippServ sample article.

How to Close Credit Card? | What to do Before and After Closing the Card?

Leave a Comment / Saving Schemes / By Megha Goswami / November 14, 2023 November 16, 2023

How to Close Credit Card?: If you use a credit card, it means that you will be aware of the annual fees that you need to pay for being a holder of the card. Thus, even if you simply stop using the credit card, you will still be charged that annual fee. The same also counts for if you merely destroy or cut up your credit card (which is a practise that most of us partake in once we finish using a card) – the fee will still be charged to you. Now, the reason behind this is that unless you have your credit card closed by the bank that issued it to you, it will still remain on your account. That’s right – you have to get your credit card account closed, and not rely on it going out of use when you stop using it. Unfortunately, this process is not as simple as that.

How to Effectively Close Your Credit Card

What you need to know about effectively closing your credit card is that it does not automatically happen when you destroy your credit card or stop using that. Even if there is no physical card left, you are still a cardholder until and unless you inform the bank that you would like to close your credit card. There is a process that goes behind credit card closure, which will be thoroughly explained to you.

In general, different banks follow different procedures to close a credit card account. Let’s take a look at the process for credit card closing in the main banks in India, which are:

State Bank of India (SBI)
HDFC Bank
HSBC Bank
Axis Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank

These are the banks whose credit card closure processes we will look at. For information about other banks, please check their respective websites to find the process listed out.

Before and After Closing the Card_

Cancelling a State Bank of India (SBI) Credit Card

SBI is the largest bank in India and there are 2 ways in which you can cancel your credit card here – you can either write to the bank or you can call the bank helpline number.

In Writing

Write a letter mentioning the following things:
- Your details (full name, address and contact information)
- Credit card number
- That you want to cancel your credit card
- DO NOT mention CVV and PIN.
Mail the letter to this address: SBI Card, PO-Bag 28, GPO, New Delhi, 110001.
Cut your credit card which you have requested cancellation for, diagonally.
SBI will send you a letter in which they confirm the date that your card will be cancelled.

Via Phone Call

Call the number 1860-180-1290 and give them your credit card number, name, and other details the SBI representative will ask you, and of course, mention that you wish to cancel your credit card.
The representative will give you a reference number. Please note down this number and keep it with you carefully.
Once again, SBI will send you a letter confirming the date of cancellation for your credit card.

Cancelling an HDFC Bank Credit Card

The process for closing an HDFC Bank credit card is fairly simple – here it is:

Download the Credit Card Closure Form from here.
Print out the form and fill it in with the relevant details.
- DO NOT put details like PIN and CVV (it does not ask for these details in any case).
Cut up the credit card you wish to cancel into small pieces and put the filled-in form and the cut-up credit card into a single envelope, and mail it to this address: The Manager, HDFC Bank Credit Cards Division, PO Box 8654, Thiruvanmiyur, Chennai, Tamil Nadu, 600041.
Within 7-10 days, your request for closure will be processed.

Cancelling an HSBC Bank Credit Card

There are three ways in which you can cancel your HSBC Bank credit card:

In Writing: You may go into any branch of HSBC Bank and put in a written request for the closure of your credit card account.
Online: Closing your credit card remotely is also possible. All you have to do is sign into the HSBC online portal with your registered user ID and password and then submit the credit card closure request.
Over the Phone: You call up either 1800-267-3456 or 1800-121-2208 and provide your full name and credit card number, and tell the HSBC representative that you would like to close your credit card.
You are required to cut up your credit card into pieces after sending in your request for cancellation through either of the 3 available methods.

Cancelling an Axis Bank Credit Card

Either of the following processes can be used to cancel a credit card issued to you from Axis Bank:

In Writing: You may write to either premium.cards@axisbank.com or creditcards@axisbank.com and request the closure of your credit card by providing your details, such as your name, address, credit card number, etc. DO NOT share your CVV or PIN.
Via Phone Call: You may call either 1800-209-5577, 1800-233-5577 or 1800-103-5577 to put in a request for the cancellation of your credit card.

Cancelling an ICICI Bank Credit Card

Here is the process through which you can cancel your ICICI credit card:

Put in a request for cancellation via ICICI online banking.
- This will ask for your credit card number, contact number, email address, the reason for cancellation, the city in which you live, and the details of any add-on credit cards to the main credit card.
Within 3-5 business days after you put in your request for cancellation of your ICICI credit card, a representative from the bank will call you on your provided contact number to confirm that you’d like to cancel your credit card.
Once confirmed, within the next 7 business days, your credit card will be closed.
If you are unreachable, i.e. the representative has tried to contact you but you have been unresponsive or unavailable, your credit card will be closed anyway.

Cancelling an IndusInd Bank Credit Card

There are two ways to close your IndusInd Bank credit card, which are listed as follows:

In-Person: You may head to an IndusInd Bank branch that is nearest to you and put in a request for the termination of your card. You will receive confirmation that your request is being processed by the bank in the next few days.
Via Phone Call: You may call up the IndusInd helpline number, 1860-267-7777, provide the relevant details to the bank representative on the phone, and your request for termination of your card will be processed within the next few days.
Cut your credit card into pieces once you have put in the termination request.

Cancelling a Kotak Mahindra Bank Credit Card

Use any of the following processes to close your Kotak Mahindra Bank credit card:

Via Phone Call: You can call the Kotak Mahindra Bank customer care number, which is 1860-266-0811 from where on, the bank representative will guide you as to how you should go about the same.
In Writing: Send a letter to any of the bank branches of Kotak Mahindra Bank stating your name, address, credit card number, and that you would like to close your credit card. After this, the process will be taken over by the bank itself and your card will be cancelled.
Cut your card diagonally once you have put in your request for cancellation of your credit card.

Things to Know and Do Before Closing Your Credit Card

Things to do before closing your credit card:

Redeem your reward points which you will have accumulated over time and can be used to buy a variety of goods and services. This is accredited money that may go to waste if you do not first redeem your points.
Clear all your outstanding payments. This is necessary before the cancellation of the request, and if not done, the bank can straight deny or reject your request (that is if you do not clear your outstanding payment even after repeated requests from the bank).
Cancel any automatic payments which are linked to your credit card to prevent the delay of your cancellation process.
Check your credit statement just to confirm that everything is in order and there are no inconsistencies in the statement.

Things to know before closing your credit card:

Know that when you close your credit card, if there are any add-on credit cards linked with yours, those will also be cancelled. This is important because getting another credit card is not an easy job.
Another important thing to know before closing your credit card is that doing so can negatively impact your credit score. This is because while you have a credit card, your credit capacity is higher, and it reduces when you cancel a credit card, which is seen at the bureau of credit as a reduction in your spending capacity or an increase in your expenditure. Be sure to check your credit report once your credit card has been cancelled.
The bank usually gives you a small window between the cancellation of your credit card and the time given to you to redeem your reward points. After this window, the points will lapse and the bank cannot be held responsible.

Conclusion on How to Close Credit Card?

All in all, it is important to cancel a credit card rather than just stop using it altogether. There is a proper process that goes behind the cancellation of a credit card. Different banks use different processes to cancel credit cards, so be sure to check the methods mentioned above. If your bank has not been mentioned on this page, be sure to go to the website of your bank to check how to go about the closure of your credit card.

Some things to keep in mind before closing your credit card include checking your credit statement, clearing all your outstanding payments, redeeming all your reward points before they lapse, and cancelling any automatic payments linked to this credit card. Also, you should be aware that there is a specific window given by the bank to redeem your points before they lapse. Also, any add-on credit cards you may have will be cancelled when you cancel the primary one. Lastly, you must check your credit report after your cancellation goes through to see how your credit score has been impacted.

Pensioner’s Life Certificate And Jeevan Pramaan Certificate

Leave a Comment / Certificate / By Megha Goswami / November 14, 2023 November 16, 2023

Pensioner’s Life Certificate and Jeevan Pramaan Certificate: Every retired individual who stands eligible for Government Pensions has to produce a Life Certificate document in the respective Bank where their account is, in November. This article elaborates and gives a brief description of the Pensioner’s Life Certificate, Individuals eligible for the pension and an explanation on Jeevan Pramaan, an Aadhar based Digital Life Certificate for retired pensioners.

A Brief On Pensioner’s Life Certificate

A retired pensioner is required to provide a Non – Employment Certificate or Life Certificate, or Employment Certificate to the respective Bank every year in November in the prescribed format to ensure continued reception of the pension from the Government without interruption.

The pensioner can also present themselves at any eligible pension paying bank branch for being identified for issue of the Life Certificate. The primary purpose of a Life certificate is the annual identification in front of the Pension Disbursing Authority (PDA).

However, suppose a pensioner cannot obtain a Life Certificate on account of severe illness or emergency. In that case, the Bank official will visit the pensioner’s residence or the hospital, fulfilling the Life Certificate’s purpose.

Alternatively, a pensioner in possession of the Aadhar number can submit the Jeevan Pramaan, a digital Life Certificate introduced by the Government of India.

Who Is Eligible for Pension?

The Central Government discontinued the pension scheme for all employees recruited from or after January 1, 2004. The individuals have to contribute to the New pension System (NPS), a defined contribution pension system for individuals, where each has to deposit a certain amount every month till retirement.

Rule 2, 49 states that a Government servant appointed in a pensionable establishment on or before December 31, 2003, and has retired from the Government service with a qualifying service of a minimum of ten years or more is eligible for pension.

From January 1, 2006, the pension was calculated at a rate of 50 per cent of payments ( the last pay) or the average payments ( for the previous ten months), whichever is more beneficial to the retiring Government service community (According to Rule 49)

To avail of the pension, the retiring employee must commence the process at least six months before his or her retirement. In the process, the following norms have to be followed-

The employee has to open an account with the respective bank branch where the pension can be credited, if required, with spouse ( a rule permitted now) and has to present the account number to the Department from which the individual is retiring.
The individual has to fill up the account details in the pension papers.
While opening an account, the retiree has to provide his or her mobile number, PAN Card Number, and Email ID (if available). The PAN Card number will enable the correct accounting of the Pensioner’s TDS.
Upon receiving the Pension Payment Order (PPO), the pensioner must visit the respective branch from where the pension benefits.
The individual has to submit an undertaking and the Life Certificate.
Upon receiving the required documents from the prospective pensioner, the required documents will be sent to the concerned Centralised Pension Payment Centre (CPPC) for further processing at their end.
After completing the data entry at the Centralised Pension Payment Centre (CPPC), the pension amount will be credited to the identified account within a period of three to four days.
Pension is taxable and falls under the head Income From salary for the Income Tax payment.
A pensioner holding an Aadhar number can alternatively submit their documents for the Jeevan Pramaan, a digital life certificate introduced by the Government of India.

Jeevan Pramaan Certificate

What Is Jeevan Pramaan Certificate?

Jeevan Pramaan is an Aadhar number-based Digital Life Certificate for retired pensioners. The Jeevan Pramaan was introduced and launched on November 10, 2014, by Prime Minister Narendra Modi.

Jeevan Pramaan is an alternative to Life Certificate. It does away with the pensioner’s retirement of physically submitting the certificate every year in November to ensure the continuity of pension being credited into their account.

Jeevan Praman was initiated and developed by the Department of Electronics and IT, Government of India.

For obtaining the Jeevan Pramaan service, the individual will have to enroll and biometrically authenticate herself or himself by either downloading the application or generating the Digital Life Certificate from the website jeevanpramaan.gov.in. or by visiting the service centres.

Every pension paying bank branch will obtain the required information about the Digital life certificate of the respective pension customers by logging on to the Jeevan Pramaan website and by downloading the Core Banking Systems.

Pensioners will be able to forward to their bank branches via email or through SMS the relative link to the respective Digital Life Certificate.

How To Obtain A Jeevan Pramaan Life Certificate?

Jeevan Pramaan is a Digital Life Certificate, digital service and recognised under the IT Act. According to this pension scheme, the system frees the pensioner from physically submitting the documents and presenting themself before the Pension disbursing Authority proves that the individual is very much alive.

Obtaining a Digital Life Certificate is trouble-free, and the online certificate can be obtained through multiple Jeevan Pramaan Centres or online, which are distributed and operated through-

Banks
Government offices
Citizen Services Centers (CSC’s)
Client applications can be accessed through any electronic device like Personal Computer, Mobile, or Tablet.

However, the individual will need a biometric device to fulfill this process.

Registration Process for Jeevan Pramaan Through Citizen Service Centre

How to create a Jeevan Pramaan without having access to the Internet?

Any individual holding a pension account in any respective bank branch can go to the nearest Citizen Services Centers (CSCs) for the Life Certificate. Visit the nearest Citizen Service Centre (CSC) or any other designated bank branches or offices available on the website of Jeevan Pramaan to create a Jeevnam Pramaan account.

What are the Requirements for the Registration of Jeevan Pramaan?

Pensioners need to know the requirements for the registration of the Jeevan Pramaan. Every pensioner needs to get his or her Aadhaar number updated in the Bank Pension Database and the Bank account by providing the Pension Payment Order (PPO) number and bank account number before the registration. However, the following requirements requested for Jeevan Pramaan registration-

Aadhaar Number
Pension Payment Order (PPO) Number
A bank account number along with branch detail
Full Name, Permanent Address etc.

How to find the Nearest Citizen Services Centers (CSCs) or Designated Offices or Bank B?

Individuals can access Jeevan Pramaan website through jeevanpramaan.gov.in. in the browser and find the nearest centre using the option “Locate A Centre” option.
Individuals can also send SMS to the number 7738299899; the SMS body and must always with the keyword “JPL” and leave some space and write the required pin code. For example, SMS JPL 110003 to 7738299899. The reply message from the portal will include all Citizen Service Centres where the individual can visit for Jeevan Pramaan Life Certificate.

Registration for Jeevan Pramaan Life Certificate Through Downloading The Application

Is it a must that the pension needs to be in India for Jeevan Pramaan Life Certificate?

No, individuals can use an Android or a Windows personal computer-based application at the Jeevan Pramaan portal and may register from any location.

Is the Jeevan Pramaan Application download free?

Yes; however, the individual would need a Windows 7 and above (32 and 64 bit) or Android 4.0 version to download the application for free. Individuals can download the Jeevan Pramaan application from the Download link provided on the Jeevan Pramaan official website.

What are the various biometric devices supported?

Individuals will need a device for scanning the finger or the iris of the eye, i.e. biometric. A few devices like Mantra, SecuGen fingerprint scanner, Morpho, and Iris scanner may be used for registration.

How does the Jeevan Pramaan registration process by downloading applications work?

An individual’s information like the Pension Aadhaar number, the Pensioner Full Name, Pension Payment Order (PPO) Number, Bank Account detail, Permanent Address, Valid Mobile number, etc., are fed into the system through a web-based or client interface feeding.

A pensioner’s personal information is authenticated through the use of the linked Aadhaar number. The pensioner has to place their finger onto the fingerprint scanner or place the eye on the Iris scanner to complete the authentication process.

Upon successful authentication, the transaction number will be displayed on the electronic screen. The same has to be sent to the pensioner’s mobile as an SMS from the web portal. The portal will then generate an Electronic Jeevan Pramaan for the successfully authenticated pensioner, and this information is stored in the central portal database.

However, the Aadhaar number is mandatory. The same is required to be updated in the petitioner’s bank account and Pension Account before the generation of Aadhaar based Digital Life Certificate-Jeevan Pramaan.

Post-registration for Jeevan Pramaan, What Does An Individual Have To Do?

Pensioners have to inform the respective bank about the generation of the Jeevan Pramaan through online registration from Jeevan Pramaan official web portal. The individual banks validate the details updated in the bank records like the Aadhaar Number of the Pensioner, Bank Account number, Pension Payment Order (PPO) Number, and DOB. If the given details match with the bank records, the same is updated in the bank records.

Ex-Showroom Price And On Road Price

Leave a Comment / Finance / By Megha Goswami / November 14, 2023 November 16, 2023

Ex-Showroom Price and On-Road Price: Whenever you go to a car or two-wheeler showroom and enquire about the price, you would see two quoted prices. One of them would be an Ex-showroom price, and another would be an On-road price. The price that you pay while purchasing the automobile is called the On-road price. The On-road price is always approximately 10% more than that of the Ex-showroom price. While making the budget for purchasing a vehicle, one should always look at the vehicle’s On-Road Price.

Most people don’t know the difference between the prices and assume the Ex-showroom price as the final price of the vehicle and get confused. The On-road price of a vehicle differs from its Ex-showroom price depending on the model of the vehicle.

Here in this article, we will discuss the Ex-showroom price and On-road price of a vehicle and the other charges associated with the cost of the vehicle.

Prices Associated With Vehicles

It is prevalent that automobile and vehicle prices vary from one state to another in India. Various factors or charges contribute to this variation. Some of the common factors that contribute to the price change are the Ex-factory price of a car, the Ex-showroom price of a car, and the On-road price of the car or motorbike.

Ex-Factory Price: Ex-Factory price can be defined as that price, which a car or bike dealer pays to the manufacturer to lift the vehicle from them. In simple words, it is the price that the showroom or dealer pays for the vehicle to the manufacturer. This price is not for the public as it is primarily an exchange between the dealer and the manufacturer.

Ex-Showroom Price: The ex-Showroom price can be defined as the price at which a car or motorbike dealer sells the vehicle to the customers. The Ex-showroom price is made up of different charges, such as dealer’s margin, transportation cost, applicable excise, State taxes, and Octroi charges. The Ex-showroom Price of any vehicle is called its base price and excludes registration, insurance, and loading charges.

On-Road Price: The On-Road price of a vehicle is the actual and the final price that a customer pays for acquiring the vehicle. It is also called the Invoice value of the vehicle. It includes certain other charges such as State Registration charges, Lifetime road tax payment, Mandatory insurance and the dealer’s handling or logistics charges. Apart from all these compulsory charges, the On-Road price of a vehicle also includes some optional charges. The option charges that are included are Accessories cost and additional warranty coverage. If a dealer is providing discounts, it will be shown and deducted while calculating the net On-Road price of the vehicle.

More About Ex-Showroom Price

In a more straightforward sense, the Ex-Showroom price is the price that the dealer charges from the customer for procuring the vehicle from the manufacturer and the tax that it pays on procurement. The Ex-showroom price is also known as the supply price of a vehicle. The Ex-showroom price of a vehicle includes State taxes, Octroi, Transportation, and Handling charges. The Ex-showroom price of a particular vehicle differs from state to state, depending upon the laws and cost of transportation. For example, the Ex-showroom price in Mumbai is higher than that of Delhi.

More About On-Road Price

When the Ex-showroom price is added to certain other charges, it constitutes the vehicle’s On-Road price. Apart from the Ex-Showroom price, the extra charges that make up the On-Road are, Registration fees, Lifetime road tax, Vehicle Insurance, and Handling charges of the dealer. Below, we have mentioned the complete details of all the charges that make up the On-Road Price.

Registration Fees

Every new vehicle has to be registered with the Regional Transport Office, and this registration provides the car or motorbike with a unique identity. Registration charge is the amount charged by the Regional Transport Office for the registration of a Vehicle.

All the vehicles are tagged with a licence plate or registration number to provide them with a unique identity. This licence number is issued by the district-level Regional Transport Office in every state. The licence plates in India consist of three parts:

The first two letters of the licence plate indicate the state in which the vehicle is registered.
The following two digits indicate the district number where the vehicle is registered.
The last four digits indicate the unique number given to the vehicle. Due to heavy registrations, these digits are combined with letters at times.

For example, a vehicle registered in West Bengal can have the following format of a licence plate: WB-01-BB-1234.

The licence plate of private vehicles is designed with black letters and numbers on white background. In comparison, commercial vehicles have a yellow background with black text on them.

The Registration charge in a state can differ from another, depending on the cost and type of vehicle.

Lifetime Road Tax: Lifetime Road Tax is the amount of tax that has to be paid by the vehicle owner before using the vehicle on public roads. The Government charges road tax to improve roads and construction of new and better transport systems. Road tax is always subjected to state rules and traffic regulations, so it differs from state to state. When you purchase a vehicle, you pay the road tax for a lifetime in the state in which your vehicle is registered. But, if you shift from one state to another, you have to re-register your vehicle again in that state and pay lifetime road tax once again.

Vehicle Insurance: Vehicle insurance is one of the significant components added to get the on-road price of a vehicle. Vehicular insurance provides financial protection to cars, motorbikes, and other types of vehicles. The vehicle insurance provides financial protection against any physical damage resulting from an accident or fire breakout. It also provides financial assistance against theft of the vehicle. Different insurance providers have different insurance rates depending on the type of vehicle.

Dealer Handling Charges: The dealer claims handling charges from the customers to compensate for its cost of handling the vehicle till the point of delivery. The handling charge includes transportation from the warehouse to the showroom, basic fuel charge, number plate charge, cleaning charge, and other sundry expenses. The handling charge differs for different segments of vehicles and even from dealer to dealer.

Which Price Does A Bank Take Into Account

Now that we have discussed in detail the Ex-showroom price and On-road price. The big question is if a person wants to buy a vehicle through bank finance, which price will the bank consider while sanctioning a loan?

So, if you are purchasing a vehicle on finance, the price considered depends on which bank you select. For instance, if you finance your vehicle from a private bank, you will get loans of up to 85% of the Ex-Showroom price. Private Banks consider Ex-Showroom prices for the calculation of loans. If you finance your vehicle through a Government-owned bank, you can get loans up to 85% of the On-Road price. However, the percentage of loans may differ from bank to bank.

In The End

When you plan to purchase a vehicle, it is essential to look for the On-Road price of the vehicle, as in the end, it would the final price you will pay to acquire the asset. Knowing the On-Road price of a vehicle will help you to plan your finances efficiently.

How Much EPS Pension will you get With EPS Pension Calculator

Leave a Comment / Saving Schemes / By Megha Goswami / November 14, 2023 November 16, 2023

How Much EPS Pension will you get With EPS Pension Calculator: EPS or the Employee Pension Scheme is a savings plan for which money is put forth by your employer into an account every month from your salary. This is the fund that provides different kinds of pension, which are retirement pension, widow pension, disablement pension and lastly, pension for nominees. This was started by Employee Provident Fund Organisation and its conception dates all the way back to 1952. The regulations which are followed by EPS and its sister saving programmes EPF (Employee Provident Fund) and EDLIS (Employee Deposit Linked Insurance Scheme) were decided in 1995. The same can be found on the website for EPFO if any other details are required.

What is the Employee Pension Scheme?

The Employee Pension Scheme or EPS is an amount that is taken from the monthly salary of all employees working in companies affiliated with the EPFO. About 8.33% of the employee’s salary goes into this pension fund. Before October 2014, the regulations stated that 8.33% of a salary up to that of Rs 6500 per month may be taken. This means that a value that would not exceed Rs 541 per month would go into the EPS. As of October 2014, this regulation was changed so that 8.33% of Rs 15000, i.e. Rs 1250 is the maximum value that can go into Employee Pension Scheme per month. One important thing to remember about the Employee Pension Scheme is that you do not avail any interest on this fund – you will receive the amount as it is when you attain retirement at the age of 58 years.

Conditional Pension with EPS

There are four different situations in which you may gain access to the funds in your Employee Pension Scheme.

Superannuation: This is when an employee reaches the age of 58 years and is entitled to his or her provident fund, including the EPS, EPF and EDLIS. The employee is required to have worked a minimum of 10 years by this time. With superannuation pension, employees can continue working out of their own choice, but cannot have any further additions to the EPF, EPS and EDLIS.
Early Pension: This is also called early superannuation and employees cannot continue to work once this has been availed. To be eligible for Early Pension, the employee must have worked for a minimum of 10 years and should be between the ages of 50 and 58 years.
Permanent Total Disablement Pension: If an employee happens to have some kind of accident or becomes very sick, which deems him or her to become totally and permanently disabled at any time and cannot carry forth work, he or she is entitled to this kind of pension.
Upon the death of the employee: There can be many different kinds of situations here. The death can be either while the employee is working, or after the employee has retired. Either way, the employee is required to have worked for a minimum of 1 month before the death. The following are the situations that can arise upon the timely or untimely death of the employee:
- If the employee is married without children: The pension goes to the spouse as a widow pension or widower pension.
- If the employee is married with 1 or 2 children: The pension goes equally to the spouse and the two children.
- If the employee is married with more than 2 children: The pension goes to the spouse and 2 children under the age of 25 years. The next child will get the pension when the 2 older children cross the age of 25 years.
- If the employee is unmarried: The pension will go to the nominated person(s). This is called nominee pension.
- If the employee does not have a nominee: The pension will go to the parents, with it going to the father first, then the mother (in case the father deceases).

How to Calculate How Much EPS Pension You Will Get?

It must be kept in mind that EPS can only be received as a pension if the employee has worked for a period of more than 10 years. If the employee has worked for less than 10 years, the EPS can be withdrawn normally, as mentioned before.

There are 2 situations to keep in mind here: If you started working before 15th November 1995, and if you started working after 15th November 1995.

For Employees Who Started Working Before 15th November 1995

There are 3 components to calculating EPS for people who started working before November 15th 1995, which are:

Past Service: The number of years of service of the employee up until 15th November 1995.
Pensionable Service: The number of years of service from 16th November 1995 onwards.
Proportionate Reduction: This is when the past service is less than 24 years & and also when the past service and pensionable service added together is less than Rs 500.

The formula to calculate EPS pension is as follows:

Total EPS after 10 years of work or more = Past Service + Pensionable Service – Proportionate Reduction

For Employees Who Started Working After 16th November 1995

This will only include the Pensionable Service benefit which has been mentioned above. The formula to calculate this is as follows.

EPS pension = (average salary x months of service) / 70

For example, if the average salary is Rs 15000 per month, person X will be contributing Rs 1250 of this per month to her EPS. Person X has worked for 14 years starting in the year 2000 and retiring in 2014. Thus, the EPS pension which person X will be able to avail will be the following:

EPS pension of person X = (15000 x 14) / 70 = 3000

The EPS pension of person X upon retiring after 14 years of service will be Rs 3000 per month.

We need to keep in mind that if an employee has been in service for 20 years or more, the EPS pension will include a bonus of 2 extra years’ worth of the average salary.

For example, if employee Y has worked for 20 years at the average salary of Rs 14000, here’s how her pension will be calculated:

EPS pension of employee Y = [14000 x (20+2)] / 70 = 4400

Thus, the EPS pension of employee Y will be Rs 4400 per month.

The last thing to note here is that if the salary exceeds Rs 15000, for the purpose of the EPS, the salary will remain maximised at Rs 15000.

For example, the average salary of an employee is Rs 24000 and they have worked for 14 years. The maximum will be taken as Rs 15000 for this purpose (the remaining money will not be touched, it will go to the employee as the monthly salary). Looking at the above equation, the pension will be Rs 3000 a month, even if the salary is higher.

Some Things to Know about EPS

The maximum pension that can be collected from a salary in a month is Rs 3250, meaning that no matter how high your salary, this is the maximum that will be taken from it monthly in contribution towards your EPS. The minimum duration for which employees are eligible for pension is after working for 10 years, and the maximum duration for the calculation of EPS is 35 years. The entire contribution of 8.33% to the EPS is made by the employer to the employee’s EPS account. While you are only eligible for pension if you have worked for 10 years, if it so happens that you haven’t worked for that many years, you can withdraw the EPS amount as a regular savings deposit. According to the maximum amounts of EPS monthly contributions and also the maximum years of service, the highest pension that one may avail is Rs 7500 per month (which would amount to Rs 90000 per annum).

Conclusion

The EPS programme is a purposeful method of allowing people to save for their future. Pension funds are incredibly important because we never know what will happen. This kind of fund is important because it takes straight from your monthly salary and the employee need not do much or worry much about saving. It has a great plan for all employees in companies so that they do not need to worry about their futures at all.

E-KYC Portal of EPF Link UAN With Aadhaar Without Employer

Leave a Comment / EPF / By Megha Goswami / November 14, 2023 November 16, 2023

E-KYC Portal of EPF Link UAN with Aadhaar without Employer: Employee Provident Fund Organization has made multiple provisions for employees to manage their PF accounts online. EPFO launched an online facility in 2017 for its contributors to link unique Aadhaar numbers with UAN. EPFO allocates Unique Account Number through the employer and the employee has to activate it by finishing the KYC process.

KYC stands for Know-Your-Customer. EPF members having KYC details in their UAN, which are approved by the employer, removes employer dependency. One can directly approach the EPFO website to see or add details. The members can log in to the UAN website and then click on manage KYC. Here they can add details like Passport, PAN, Aadhaar, or others. One can see whether Aadhaar is linked and approved by their employer in the approved KYC section. E-KYC lets EPFO employees to link their Aadhaar number online with EPF UAN Number (Unique Account Number).

Is it Necessary to Link the Aadhaar Card With UAN for EPF?

EPF refers to Employee Provident Fund where the employer, as well as an employee, contribute together towards a corpus fund received by an employee on retirement. It is represented by a Unique Account Number (UAN). It is necessary for EPFO members to link their Aadhaar with UAN to file an online claim. If Unique Account Number is successfully linked with the Aadhaar card then claim settlement will be quicker. UAN helps in withdrawing and transferring money from EPF and it is compulsory for all employees. It becomes easy to merge various UAN numbers into a single UAN. Aadhaar number is a vital Proof of Identity and Proof of Address. It lessens the number of documents to upload for verification into a single document.

There are numerous benefits for linking Aadhaar to UAN. It becomes easy for EPFO to verify KYC identifications during the EPF withdrawal process. However, before linking Unique Account Number with an Aadhaar number, UAN should be active. One can follow the steps mentioned below to activate their UAN:

Visit the site unified portal of EPF
Click on the option ‘Activate UAN’
The website will redirect the member to a new page. Here, one has to enter the mandatory details- name, mobile number, date of birth, and anyone of Member ID, UAN, PAN, or Aadhaar.
Enter the captcha code written in the box and click on ‘Get Authorization Pin’
An SMS with PIN or OTP is sent to the registered mobile number. It is necessary to check all the details and enter the OTP Pin.
After clicking on the option ‘Validate OTP and Activate UAN’, UAN gets activated and a password is sent to the mobile number.
This password is used to log in on the unified portal of EPF.
In case, if UAN is already activated, then Portal will display that UAN is activated.

Note: Make sure you’re not disclosing your UAN Password to anyone. However, if you forget your UAN Password, then you can reset UAN Password by visiting the official website of EPFO.

How to Use eKYC Portal at EPFO Website to Link Aadhaar with UAN?

EPFO members can link their Aadhaar card with their Unique Account Number. The details like name, date of birth, and others mentioned in UAN should match with Aadhaar. In case, if there are some differences then the employee should get them corrected either in the Aadhaar card or in UAN. There is no involvement of the employer in this process. Following are the details that show how to verify KYC in UAN:

Visit the EPFO certified site
Select eKYC Portal in the section ‘Online Services’. This portal covers two sections.
The first section is for field officers of EPFO and the other is for EPFO members. Anyone who contributes to EPF becomes its member. Tab ‘Link UAN Aadhaar’ option in the EPFO member section.
When the mobile number linked to UAN gets displayed, EPFO members will be taken to a new page on which they have to enter their UAN.
After clicking on the ‘Generate OTP’ button, an OTP will come, enter it, and provide Aadhaar number.
When the verification is successful and personal details between the Aadhaar card and UAN matches, they will get linked.
One can track whether UAN is successfully linked with Aadhaar by using TRACK eKYC.

How to Use EPFO Portal to link UAN with Aadhaar Number Online?

Go to the EPFO certified web portal
Click on the login section and enter UAN and password to log in
After login, click on the option ‘Manage’
KYC option will appear on the drop-down menu. Click on it
One will land on a new page where they have to click on the option ‘Aadhaar’ for linking their EPF account
Here, enter a unique Aadhaar number along with the name. Click on the tab ‘Save’
The details mentioned in Aadhaar card are cross-checked with the UIDAI’s data.
When the details are accepted, a text ‘Verified’ will appear against the Aadhaar details.

How to Track UAN Linked with Aadhaar Card?

With the help of the eKYC Portal, it is effortless to keep track of whether Aadhaar is linked with a Unique Accounting Number. One has to follow simply given below steps:

Go to the EPFO sanctioned website
Click on the eKYC Portal in the section ‘Online Services’
It will redirect to a new page in which the eKYC Portal contains two sections.
The contributors of EPF should click on the second section, which is for EPFO members. In this section, members have to click on Track EKYC.
By entering the UAN number, one can track eKYC.

How to Link UAN with Aadhaar Number through UMANG App?

One must download the UMANG app from the play store to link the Aadhaar card with UAN. To become eligible, one must be a registered user of this app. Following are the steps to link UAN with Aadhaar number:

Open UMANG App and click on the ‘All Services’ option
Scroll down and select the option ‘EPFO’
In the EPFO section, click on eKYC services
Select Aadhaar seeding option under eKYC Services
Enter Unique Account Number (UAN) and click on ‘Get OTP’ to log in
Enter the One Time Password sent to the registered mobile number to EPFO
After the verification of OTP, the employee has to enter their Aadhaar details
OTP will be sent to the mobile number and email registered with Aadhaar card
Once this OTP verification completes, Aadhaar number will get linked to UAN

How to Offline Link EPF Account with Aadhaar Number?

Not every individual is adept at using computers due to which they might face issues while linking EPF account with Aadhaar using the eKYC portal. Such employees can complete this process by visiting the EPFO office and submitting the application in person. Follow the steps below to link Aadhaar number with UAN:

Fill the form – ‘Aadhaar Seeding Application’
Enter the relevant details including UAN and Aadhaar number
It is necessary to attach self-attested copies of PAN, UAN, and Aadhaar card with the form
Submit the form to the Common Service Centres outlets or to the executive at of the field offices of EPFO

After proper verification, Aadhaar card will get linked to the EPF account and a message is sent on the registered mobile number

What are the Benefits of Linking the EPF Account with Aadhaar Number?

One has to seed the UAN with an Aadhaar card to link the EPF account and avail following benefits:

Once the EPF account gets linked with Aadhaar, an employee can withdraw money without taking permission from the employer.
As the Aadhaar card holds vital information regarding a person’s identity, seeding it with UAN diminishes the chances of error with EPF.
An employee can have a single EPF account linked to Aadhaar, which will prevent misuse in the form of duplicate accounts.

Note: One can also check the PF account balance with the help of EPF balance check through SMS, Mobile, UMANG app and so on with linking the EPF account with Aaadhar number.

Conclusion

To link the EPF account with Aadhaar number through the eKYC portal without an employer, one can choose the option eKYC Portal on EPFO website. The process of linking online is time-saving, convenient, and reliable. Apart from eKYC, one can use the UMANG App for linking the UAN account with Aadhaar.

SMS Alerts for TDS Deduction From Income Tax Department

Leave a Comment / TDS / By Megha Goswami / November 14, 2023 November 16, 2023

SMS Alerts for TDS Deduction From Income Tax Department: SMS Alert for TDS is to resolve the issue of Income Tax Return (ITR) made by individuals due to a mismatch in the TDS deducted in the salary. The Central Board of Direct Taxes (CBDT) launched the SMS Alert service to inform the salaried taxpayers about their TDS against the PAN.

What Is TDS?

TDS refers to Tax Deducted At Source. As per the Income Tax Act, any individual or company making structured payments must deduct the TDS amount of Tax at the source if the cost exceeds certain threshold limits.

Every individual or company deducts TDS at the rates prescribed by the tax department. A company or an individual making the structured payment upon deduction of TDS is referred to as a deductor. The individual or the company receiving the deducted amount is referred to as the deductee.

The deductor’s responsibility is to deduct TDS before cashing the payment and deposit the same with the Government. It is to be noted that TDS is deducted irrespective of the mode of payment- cheque, cash, or credit. TDS is linked to the PAN of the deductor, and then the amount is deducted.

TDS amount is subtracted on the multiple types of payments:

Salaries
Interest payments by banks
Commission payments
Rent payments
Consultation fees
Professional fees

What Is TDS Return?

A deductor has to deposit the deducted TDS amount to the Government, and the details regarding the TDS amount have to be filed in the form of a TDS return. A TDS return has to be completed quarterly, and the different types of TDS amount deductions have to be filed using various TDS return forms. While preparing a TDS return, the process can be done quickly using the ClearTDS software.

Features of Quarterly SMS Alert for TDS Deduction

The CBDT board stated that all employees would receive quarterly SMS alert Service for salaries regarding TDS. Through the SMS alerts, deductees can check the TDS amount through the message received. If any mismatch or errors are flagged, then immediate issues can arise with their employers or the deductors.

Simultaneously, SMS Alerts for TDS will also be sent to the deductor who have either failed to deposit taxes deducted or to e-file their TDS returns by the due date.

The SMS Alert initiative is aimed to benefit around 2.5 Crore salaried taxpayers. The Income Tax Department wishes to expand the SMS Alerts frequency to 4.4 crores for non-salaried taxpayers. The SMS Alerts frequency will be increased once the TDS returns filing process is streamlined to receive any critical information on a real-time basis.

To receive an SMS alert, deductees must update the respective mobile number in the E-filing account. Upon receiving the quarterly SMS Alert for salaried taxpayers on the TDS amount, the deductees will have to cross-check the details with the Form 26AS on priority.

What Is Form 26AS?

The Income Tax Department issues the annual consolidated statement known as Form 26AS. Form 26AS comprises the details of refund, TDS, or TCS facility related to a particular PAN number. The Form will reflect the Government’s Tax on various income sources like Pension income, Salary, or Deposits. Form 26AS is generated on an annual basis, that is, for every Financial year. The Form will be generated whenever the TAx related transactions like Advance tax paid or TDS occurs with the salaried taxpayer.

Where To Access Form 26AS?

The primary source of Form 26AS is the e-Filing portal of the Income Tax Department. To access Form 26AS, log in
with the credentials and invoke the “My Account” tab. From the drop-down menu, select the 26AS option.

The page will be directed to the TDS Reconciliation Analysis and Correction Enabling System (TRACES) website. Upon reaching, input the relevant AY and the format of the report. This allows the deductee to view and download Form 26AS.

The process is straightforward, and the individual will receive Form 26AS in the registered mail ID seamlessly. However, the source is TRACES.

Reasons for TDS Mismatch

There are several reasons for a TDS mismatch to occur, but the most significant reason is the employer’s negligence or deductor. A few other reasons are:

If the employer or deductor has failed to file a TDS return.
Mention of a wrong PAN number of the employee or deductee.
Recognition of a wrong PAN and TAN number of employers or deductors.
Missing out the inclusion of details of TDS payment while filing TDS return.
Mention of a wrong challan identification number.
Error in the amount entered.
Statement of the wrong assessment year.

The Advantages Of SMS Alerts

Mismatches in the TDS amount deducted and details updated in Form 26AS can create errors or problems while filing Income Tax Returns. A mismatch can result in the payment of additional taxes or restriction in the refund of excess Tax for taxpayers.
SMS Alerts helps employees or deductees remain aware of the TDS amount deducted and deposited against their PAN. This facility allows deductees to take immediate and necessary actions to rectify and correct the flagged error or mismatch.
In case of a mismatch or an error, salaried taxpayers should consult the employer or deductor and report the error or mismatch to rectify the necessary corrections.
As per the CBDT press release, the SMS Alert service for direct tax payment has been activated for about 2.5 million salaried employees or deductees in both the private and Government sector. The CBDT department plans to expand this facility to about 44 million non-salaried taxpayers, including professionals like doctors and lawyers and business people.
Similar SMS Alerts will be sent to the deductors who have collected the TDS amount.
The SMS Alerts aims to inform and remind the deductors to file the Tax if left undone and to fill the file necessary for TDS returns by the due date.
According to Income-tax Rules, the TDS deducted needs to be deposited by the seventh day of the corresponding month in which the TDS amount was deducted.
The Income-tax department aims to increase SMS Alerts’ frequency upon which the process for filing TDS return is streamlined, making the alerts go out on a real-time basis.
To receive an update regarding SMS Alerts, the deductees must enter the applicable mobile number in the e-filing account.

Difference Between Zero Rated, Nil Rated, And Non-GST And Exempt Supplies

Leave a Comment / GST / By Megha Goswami / November 14, 2023 November 16, 2023

Non-GST Supply: For the ultimate user, there are numerous types of supplies under GST which create confusion. Although the result of all these supplies is the same (GST is not applicable on the supply or non-GST supply), it is crucial to know the difference particularly for filing the correct GST returns and accurate claims of ITC.

Zero Rated Supply

Zero-rated supplies, according to Section 16 of Integrated Goods and Service Tax Act means:-

Export of goods or services or both; or
Supply of goods or services or both to a special economic zone unit.

Zero-rating tells us that the entire supply chain of a particular zero-rated supply is tax-free both ways. In the International market, the nature of zero-rated goods is to make Indian goods and services competitive by ensuring that there are no taxes added to the cost of export.

These goods and/or services are generally sold within the country as they are not prescribed under any list.

Subsection(3) of Section 16 of the Integrated Goods and Service Tax Act states that a registered individual making a zero-rated supply is eligible to claim a refund under the following options:-

The dealer can export under bond or LUT(Letter of Undertaking) and claim a refund; or
IGST can be paid by the dealer while making supplies and claiming a refund.

Therefore, the dealers are provided the flexibility to choose between the two options at their convenience.

Note: According to Subsection(2) of Section 16 of the Integrated Goods and Services Tax Act, when a registered individual is eligible to claim a refund for zero-rated supplies, that supply is non-taxable and even exempt supply.

Nil-Rated Supply

Nil-rated supply is the supply of goods or services or both on which 0% GST rate is applicable. Nil-rated supply goods are listed under Schedules I of the GST act. Cereals, vegetables, and fruits, salt, milk, etc are examples of Nil-rated supply goods.

No input tax credit of inputs and/or input services used in providing Nil-rated supply is applicable. In layman’s terms, if any GST is paid on the goods or services or both used in providing Nil-rated supply then such GST is not available to the registered dealer.

Non-GST Supply

Non-GST supply is the supply of goods or services or both which are outside the extent of the GST act. In layman’s terms, they are not taxable under the GST act and may be chargeable to tax under any local state tax law.

Petroleum products and Alcohol(for human consumption) are the only products falling under this category.

Exempted Supply

The supply of goods or services or both which engage nil rate of tax are Exempted supply. These are exempted from government notification and include non-GST supply. Hence, it is the supply of goods or services or both which does not allure GST. Cereals, live animals(except horses), religious products, etc fall under this category.

No input tax credit can be claimed concerning inputs and/or input services used for making exempted supplies.

Comparative Table

Particulars	Zero-Rated Supply	Nil-Rated Supply	Non-GST Supply	Exempt Supply
Meaning	It is the Export of goods or services or both or the Supply of goods or services or both to a special economic zone unit.	Supply which attracts 0% GST rate.	Supply is outside the extent of the GST act.	Supply which engages nil rate of tax, exempt from government notification and includes the non-taxable supply.
GST Applicability	(i) The dealer can export under bond or LUT(Letter of Undertaking) and claim a refund; or (ii) The dealer can pay IGST while making supplies and claim for a refund for the same.	GST is not applicable on supply.	GST is not applicable on supply.	GST is not applicable on supply.
Input Tax Credit Availability	The input tax credit can be claimed.	No input tax credit is available.	No input tax credit is available.	No input tax credit is available.
Cost Under GST Ambit	Yes	Yes	No	Yes (for nil-rated and exempt supply) No (for non-GST supply)

Section 11(1) of the GST Act

According to Section 11(1) of the GST Act, the Central/State government has been granted the power to reduce the GST rates. The notification can only be approved and recommended on the decision of the GST council. A general exemption notification is issued and it should be in the public interest. The exemption can be absolute or subject to conditions. The exemption can be in respect to goods or services or both of any specified description.

Export of Goods or Services

Export of Goods: Export of goods is the process of taking goods out of India to a place outside India.

Export of Services: Export of services is the process of supply of any service when

The supplier of service is located in India,
The recipient of service is located outside India,
The place of supply of service is abroad or outside of India,
The payment for the service received by the supplier in relatable foreign exchange, and
The supplier of service and recipient of service are not merely establishments of a distinct person per explanation of 1 of Section 5.

As per explanation of 1 of Section 5

An establishment of an individual in India and any of his establishments outside India, or

An establishment of an individual in a state and any of his other establishments outside that state,

Shall be treated as establishments of a distinct person.

EPF Interest Rate from 1952 to 2021, EPFO and How To Calculate EPF Interest

Leave a Comment / EPF / By Megha Goswami / November 14, 2023 November 16, 2023

EPF Interest Rate from 1952 and EPFO: EPF refers to the Employee Provident Fund which each company is meant to put aside for their employees out of their salaries every month. This is a fund that transfers from one company to another even when you switch jobs, as it is a requirement for the company to provide this service to its employees. It is a method of purposeful saving and this money becomes available to the holder of the account upon retirement.

The interest rate for this account is determined commonly by the EPFO (the Employee Provident Fund Organisation) for the entire nation in every new financial year. This is the body whose board is responsible for setting the EPF interest rate, and the body that is responsible for shelling out interest payments to EPF account holders upon retirement (or before in extraordinary circumstances).

The EPF Interest Rate from 1952 to 2021

Here’s a breakdown of interest rates set by the EPFO starting from the financial year 1952 till the present financial year 2020-21.

Financial Year	EPF Interest Rate	Financial Year	EPF Interest Rate
1952-53	3.00%	1987-88	11.8%
1953-54	3.00%	1988-89	12%
1954-55	3.00%	1989-90	12%
1955-56	3.50%	1990-91	12%
1956-57	3.50%	1991-92	12%
1957-58	3.75%	1992-93	12%
1958-59	3.75%	1993-94	12%
1959-60	3.75%	1994-95	12%
1960-61	3.75%	1995-96	12%
1961-62	3.75%	1996-97	12%
1962-63	3.75%	1997-98	12%
1963-64	4.00%	1998-99	12%
1964-65	4.25%	1999-2000	12%
1965-66	4.50%	2000-01	11%
1966-67	4.75%	2001-02	9.5%
1967-68	5.00%	2002-03	9.5%
1968-69	5.25%	2003-04	9.5%
1969-70	5.50%	2004-05	9.5%
1970-71	5.70%	2005-06	8.5%
1971-72	5.80%	2006-07	8.5%
1972-73	6.00%	2007-08	8.5%
1973-74	6.00%	2008-09	8.5%
1974-75	6.50%	2009-10	8.5%
1975-76	7.00%	2010-11	9.5%
1976-77	7.50%	2011-12	8.25%
1977-78	8.00%	2012-13	8.5%
1978-79	8.25% + bonus 0.5%	2013-14	8.75%
1979-80	8.25%	2014-15	8.75%
1980-81	8.50%	2015-16	8.8%
1981-82	8.75%	2016-17	8.65%
1982-83	9.15%	2017-18	8.55%
1983-84	9.90%	2018-19	8.65%
1984-85	10.15%	2019-20	8.5%
1985-86	11%	2020-21	8.5%
1986-87	11.5%	–

As you’d notice, there is a steady increase in the EPF interest from the year 1952 up until the beginning of the 2000s. There is especially a boom where the interest rate hits an all-time high in the year right before the economy was opened up and the next subsequent decade after liberalisation, privatisation and globalisation. Since 2001, the interest rate has remained more or less stable, fluctuating between 8% and 9.5% and not venturing anywhere below or above this much.

We can remember that the effects of Coronavirus or COVID-19 began to manifest in India in March 2019. Keeping this in mind, the interest rate was set at 8.5% for the financial year 2019-20, and the board had also suggested that the interest payment for that particular financial year be split into two parts. This was suggested keeping in mind COVID and the ‘exceptional’ situation that it brought about.

The EPF interest rate was kept steady for the financial year 2020-21 as well, seeing as how the effects of Coronavirus on the economy are still ongoing. The board speculated that the EPFO may not be able to make any interest payments beyond even 8% because of how COVID-19 has impacted the economy on such a large scale. However, the interest rate cannot be brought down that low, and was, therefore, kept stagnated at 8.5%.

How is the EPF Interest Rate Determined?

The Employee Provident Fund Organisation has a Central Board of Trustees. This is the board that decides the EPF interest rate at the end of each financial year. The board members or the trustees of the EPFO take a look at the country’s economic situation, where the country stands in term of money, and then puts out a recommendation for the interest rate. The board must take into account the capacity of the EPFO to shell out that amount of interest before making the recommendation, while also keeping the economic climate in mind. For example, because of the COVID-19 pandemic and its dire economic effects, the interest rate was slashed and made to stand at a seven-year low. On the other hand, when the economy was opened up in the 1990s, the interest rate was at an all-time high, at 12%. This was first a recommendation that was made possible because the economy was then booming.

How to Calculate EPF Interest?

This interest from the EPFO is credited to the EPF holder at the end of the financial year. This means that it is calculated monthly between March to February every year, and credited in the month of April.

Here’s how the EPF interest is calculated, with the average monthly balance method. This method calculates interest per month and adds up the amount in April when the financial year is ending. This is the system used to calculate the interest, but this interest is yearly compounding. Keeping that in mind, here’s the breakdown of calculating EPF interest.

Since the interest on EPF is counted monthly rather than yearly, we take the annual interest rate and divide it into 12 parts (for the 12 months). The interest rate for 2019-2020 is 8.5%, meaning that the monthly interest for the year 2019-2020 is 8.5/12, which is 0.783%.

Components of Calculating EPF

There are several components to look at while calculating the EPF interest.

The opening balance of an EPF account refers to the amount that has also been collected in the fund.
Contributions are made to this amount monthly as the individual’s salary is given every month.
At the end of the financial year, the interest will be calculated on the total amount, where the total amount = opening balance + monthly contributions made throughout the year.
The ‘total amount’ will be the new opening balance for the next financial year.

Let’s use an example to make this clearer to you. Remember that both employers, as well as employees, contribute to an employee’s provident fund.

For example,

An employee’s salary, including a dearness allowance, is Rs 20,000 per month.
Employee contribution to EPF is 12% (Rs 2400).
Employer contribution to EPS (Employee Pension Fund) is 8% (Rs 1600).
Employer contribution to EPF = Employee EPF contribution – employer EPS contribution = Rs 800.
Taking into account both employer as well as employee EPF contribution, total EPF contribution = Employer contribution + employee contribution = Rs 2400 + Rs 800 = Rs 3200.

Now, to calculate the interest on this monthly contribution of Rs 3200, we look at the interest rate, which is 8.5%. Divided into a monthly basis, it is 0.783%.

Let’s say that we’re calculating the interest for the month of April.

Total EPF contribution for the month of April = Rs 3200.
(Interest is not calculated in the first month of the financial year).

Now, calculating interest for the month of May.

Opening balance = Rs 3200.
Total EPF contribution for the month of May = Rs 3200.
Total EPF balance in the month of May = Rs 6400.
Interest on EPF contribution till the month of May = 0.783 x 6400 = Rs 50.11

Calculating interest for the month of June.

Opening balance = Rs 6400.
Total EPF contribution for the month of June = Rs 3200.
Total EPF balance in the month of June = Rs 8600.
Interest on EPF contribution till the month of June = 0.783 x 8600 = Rs 67.33

Now, the total interest accumulated for the months of May and June is Rs 50.11 + Rs 67.33 = Rs 117.44 and the same process carries on till the end of the financial year, i.e. March in the next chronological year. The interests per month are added up and it is credited to the account as a lump sum in April the next year.

Conclusion on EPF Interest Rate from 1952 and EPFO

The Employee Provident Fund is an important saving mechanism for all the people working in companies under the payroll. In a way, the EPF forces all employees to save money for when they retire, which is very useful, especially for people who do not already have good saving habits. The interest rate for the EPF is recommended by the Board of Trustees of the Employee Provident Fund Organisation whilst keeping in mind the ongoing economical climate. There has been a steady increase in the EPF interest rate from the financial year 1952-53 up until the year 2001-02. After that, it has decreased in the slightest and remained more or less between 8% and 9.5%, neither exceeding this nor going under.

How to Change Password of UAN if Mobile Number is not Changed?

Leave a Comment / EPF / By Megha Goswami / November 14, 2023 November 16, 2023

How to Change Password of UAN if Mobile Number is not Changed?: UAN is a 12-digit Universal Account Number allotted by Employee Provided Fund Organization to each member of the EPF. The number minimises the role of the employer and gives an employee control over Employee Provident Fund. UAN serves as a crucial part to merge multiple EPF numbers allotted to an individual by more than one employer. It links various member IDs of a person to a single Universal Account Number.

Every EPF member has information regarding their UAN number and their password to log in at EPFO online website. However, sometimes, an individual may forget or lost their password due to which they search here and there to know how to change it. It is a trouble-free task to reset the UAN password if the mobile number is not changed once the member registered into the UAN Member Portal. The entire procedure can be completed online within a short time when an individual falls under Forgot UAN Password situation.

When Does Employee Want to Change their UAN Member Password?

India has a special work unification, which helps employees to save for retirement. UAN is a legal number issued to all the contributors of EPF and it cannot be changed. This number helps employees access their saving and EPF services online without visiting the employer or HR. Whether forgotten or changed the job, whatever be the circumstance, once UAN gets issued, it cannot be changed. However, workers can reset their UAN password if they change their mobile number or forgot the old password.

There are three different scenarios under which the employee wants to change their UAN password. First, if they have changed or lost the registered mobile number. Second, if they have forgotten their UAN password but the mobile number is not changed. Third, they have forgotten the previous UAN password and also changed their phone number registered with the UAN member portal.

In any circumstance, an individual can change their password online by following few simple steps. Readout below to know how one can regain access to their UAN member portal credentials.

Steps to Change UAN Password with Registered Mobile Number

In case, if an individual forgot his/her UAN password, it is vital that they remember their Universal Account Number. Following are the steps to change the password of UAN:

Go to the official website of Employees Provident Fund Organization
Click on the below tab ‘Forgot Password’
Enter UAN Number
Enter Captcha in the given box and submit
Click on the option ‘Verify’
It will display the mobile number linked to UAN. A message will display which asks if one wants to get OTP on the above-mentioned mobile number and two options will be there ‘Yes’ or ‘No’. If anyone does not want to change their mobile number, they can click on option No.
Click on the tab ‘Get Authorised Pin’
When OTP is successfully sent, the message ‘OTP is successfully sent’ will appear on the screen. However, a message ‘Failed to send OTP. Please Try Again Later’ will display if the website is unable to send the OTP.
Enter the PIN corresponding to the OTP ID sent on the mobile number registered with UAN to set a new password.
Now, the employee can enter the new password.

It is vital to note that the password should contain a minimum of 4 alphabets, 7 characters, 2 digits, 1 special character, and a maximum of 20 characters. The special characters refer to #, %, !, @, &, and so on. At least one character in the password should be capital and one should be small.

Click on the option ‘Confirm Password’ and then submit
A message will get display on the screen, which says password changed successfully.
Login with Universal Account Number and new password to the EPF link UAN website.

Change UAN Password After Log in to UAN Portal

Go to the official UAN member portal site
Enter login credentials appearing on the right side of the screen. It involves a UAN number, password, and CAPTCHA code, and then click on the login tab. If any of the employees forgot their UAN, then they have to first get it from their employer and then continue further.
Click on the section ‘Menu’ and then go to the Accounts showing on the upper side of the site.
Hit on the ‘Change UAN Password’ from the drop-down menu.
Now, three sections will appear on the screen. In the first section, an individual can type their old UAN password.
The next two sections are for entering the new password and then re-enter it for confirmation.
After setting the new password, hit on the ‘update’ option.
The new password has been sent successfully and a pop-up message displaying ‘Password Updated Successfully’ will appear.

How to Change UAN Password if the Mobile Number Gets Lost?

In case, if the mobile number registered with UAN gets lost, then an individual has to first change their mobile number. After that, they can proceed further to change the password. To change the mobile number in UAN it is essential that UAN should have updated with KYC information. This information involves details of the Aadhaar card and PAN card. In case, if UAN is not updated with all these details and an employee should go to an employer and update their UAN and then follow the further process:

Open the EPFO official website and enter the UAN number
Click on the option ‘No’ appearing below
Now, the employee has to fill in all personal details such as name, gender, date of birth
After entering all these details, click on the option ‘verify’
Once successfully verified, an individual would be asked to validate against the PAN number of the Aadhaar number. One can fill either of them and then tick on verify
When all the given details are verified, it will ask to enter a new mobile number. An individual should enter the new mobile number and then tick on the ‘Get OTP’ tab.
Enter the OTP sent to the phone number registered. In case, if anyone does not receive the OTP, they can click on the option ‘Resend OTP’ and then verify to continue further.
After verifying the One Time Password successfully, the site will ask to enter New Password. As per desire, one can enter the new password and then again enter it in the Confirm Password box.

How to Get EPF Universal Account Number for a New EPFO Member?

New employees have to first register themselves in the Employee Provident Fund and then start saving for the future. The EPFO produces a UAN number and grants it to the employer, who then connects to the employee. This number holds the essential details of the contributor.

Once, the employee receives the UAN number they should visit the official website of UAN.
On the homepage, they have to click on the registration tab and then proceed to activate UAN.
Now, enter the official details such as name, mobile number, date of birth, and email id. Enter the captcha code appearing in the box provided.

It is effortless to acquire a UAN number. Remembering it can be a daunting task for some employees. Some might change their mobile number after some time and can face issues while login to the PF accounts. In such a case, they can follow any of the methods mentioned above to reset their forgotten password.

Conclusion on How to Change Password of UAN if Mobile Number is not Changed?

Universal Account Number holds various benefits for an employee. It lets them attach all their PF from the last years. Whenever workers get new employment, they can open different EPF account and can link all those accounts with UAN. By registering on UAN official website, employees can access their contribution, passbook, and balance effortlessly. The best part is that one can change or reset their UAN member passwords if forgotten but the mobile number is not changed.

EPF Claim Rejected | Reasons and Solutions, Why does the PF Claim Get Rejected?

Leave a Comment / EPF / By Megha Goswami / November 14, 2023 November 16, 2023

EPF Claim Rejected: Many individuals had faced a situation when their EPF claim got rejected by the authorities. Most of them are unaware of the fact that EPF claims can get rejected due to specific reasons, so when they face such situations, they get tensed. In this article, we have tried to bring in some common reasons that might get your EPF claim cancelled; this article will help individuals to avoid such things while applying for the EPF. Below we have listed some common reasons along with the solutions that might help to solve them.

Name Not Printed/Different in Cheque

According to the new rules issued by the government, a person is required to upload a copy of the cheque or passbook while applying for PF withdrawal. This is meant for cross-checking whether the submitted bank details match the details of the person’s bank account or not. If the bank details do not, then the authorities have all the rights to reject the PF withdrawal.

Solution: The person who is applying for PF withdrawal must always upload the cheque and passbook, which have his/her name as the account holder. This will prevent his/her PF withdrawal from getting rejected.

EPF Claim rejected as the Person’s name in UAN account differs from bank record

The authorities might reject one’s PF withdrawal claim if his/her name, which is mentioned in the bank account details, doesn’t match with the name in the UAN account.

Solution: One has to make sure that his/her first name, middle name and last name are the same in both the UAN account and the bank account. If they differ, then he/she should submit an application to the bank to update the name. Once the name in the bank details is updated, the person should apply for a new checkbook and passbook so to upload it on the website after getting it approved from the employer.

Number of Digits in Bank Account Number

People make mistakes while putting up the bank account number; these mistakes lead to the rejection of the PF withdrawal claim.

Almost every bank account number starts with the number zero, but people ignore it while filling up the bank details, thus causing rejection of their claim. This type of mistake happens mostly with people having an account in SBI because, in SBI, the passbook shows an 11 digit account number, but internet banking shows a 17 digit account number.

Solution: One should remember to give all the numbers, including the zeros showing in his/her bank details while he/she is filling up the form for PF withdrawal. So in the case of SBI, one should give the 17 digit account number. Update your bank details in the KYC form and get it approved by the employer.

EPF Claim Rejected as Bank Details are Incorrect

The issue of incorrect bank details occurs when the IFSC code of different bank branches changes due to a merge between two or more banks. Another reason is when a person uses a joint account in the PF KYC. The PF authorities might consider the bank details if the person’s joint account is with his/her spouse. However, in the case of friends, relatives, etc., the PF authorities have all the rights to reject the claim.

Solution: In order to avoid this problem, one can redo the bank KYC when there is any change in the IFSC code and get it approved by the employer. After updating the bank details, the person can consider applying for the PF withdrawal.

EPF is Settled But Returned

In such cases, the PF authorities must have approved the claim, and the PF department might have already initiated the settlement of a person’s PF claim. Still, due to incorrect bank details or wrong IFSC code, the amount received by the bank from the PF department is sent back to the sender.

Solution

To fix this problem, one can either rectify the bank details by updating the KYC or apply for the PF withdrawal again. After updating the KYC, one needs to upload an application to the PF department, informing them that he/she has updated the KYC details and requesting them to re-authorize his/her details.

EPF Claim Rejected due to DOJ/DOL Reasons

This error occurs when a person’s employer makes a mistake while recording the date of his/her joining or leaving the company. This might cause the person to miss out on filling one month’s tax return, thus giving all the authority to the PF department to reject the person’s PF withdrawal claim.

Solution: One can fix this issue by filling up a joint declaration form along with making the new employer correct the mistakes he/she had made while recording the date of joining or the old employer to correct the mistakes he/she had made while recording the date of leaving.

Insufficient Service

Insufficient service rejection comes into the scene when a person has not served his/her service for a minimum duration of 6 months. In this case, the person is eligible to apply for EPF withdrawal by using Form 19 but is not eligible to apply for EPS withdrawal using Form 10C.

Solution: People must remember the fact that if they are keen to withdraw the EPS, then they must consider providing service for the last six months because EPS withdrawal can only be done after the completion of six months of service and not before that.

Multiple PF Numbers

If a person makes a withdrawal from his/her latest PF number and makes a transfer from his/her old PF number, then the person might still have some amount left in his/her PF number. However, the claim gets rejected by the PF authorities. The reason for rejection stated by them is the person’s account is already settled in the past.

Solution: One should constantly update and check the passbook in order to prevent discrepancy. If a person finds any discrepancy, then he/she must immediately contact his/her employer without wasting any time so that the employer can give you an appropriate reason for why your PF contributions are not getting credited.