Do you Know Bank Charges on Saving Accounts, QAB, MAB?

Do you Know Bank Charges on Saving Accounts, QAB, MAB?

Leave a Comment / Finance / By / January 10, 2024

Do you Know Bank Charges on Saving Accounts, QAB, MAB?: Did you know that banks levy excess charges on their customer’s savings bank account? The standard charges include taking DD or demand drafts, online fund transfers, and non-maintenance account balances.

RBI or Reserve Bank of India mandates the banks to disclose their customer’s charges based on the account and the amount. Banks have to update their statement on their websites.

This article will guide you through the bank charges, the revision of bank charges, like, cheque returns, discussion of Average Quarterly Balance and Average Monthly Balance, Debit cards, and ATM withdrawals.

Revision of Bank Charges

Major Indian banks such as the Axis bank, SBI, HDFC, and ICICI bank have decided to charge customers for cash transactions for a few facilities and above specific limits, free until March 6, 2017.

The list of the banks to entail the suit goes longer. The new bank charges aim to discourage acts of cash transactions even though banks might benefit hugely from the costs.

SBI

On April 1, the State Bank of India permitted SBI account holders to approve savings and to deposit cash three times a month without taxation of the additional amount. Beyond that, the bank charges Rs. 50/- plus service taxes for every transaction made, and in the case of a current account, the tax levy could be as high as Rs. 20,000/-.

The State Bank of India account holders were also given a minimum balance limit in their accounts; failing the limit would result in a fine. However, the fine will be lower for rural areas. At the same time, those in metropolitan cities will be levied a fine of Rs 100 plus service tax if the account holder fails to maintain below 75 percent of the available balance of Rs 5,000.

If the customer’s account falls short of 50 percent or even less, the SBI will charge a fine of Rs. 50+ service tax. SBI has also revised their charges on other bank services that come inclusive of its ATM.

Withdrawal of cash from ATMs will attract a fine of Rs. 20+ tax service. However, this happens only if the number of ATM transactions of other banks exceeds three and Rs 10 for more than five withdrawals from the SBI ATMs.

There is an exception as SBI will not charge a fine on withdrawals from any of its ATMs if the customer’s balance exceeds  Rs 25,000. In withdrawals from other bank ATMs, no charges will be levied if the credit exceeds Rs 1 lakh.

State Bank of India also levies Rs. 15 for SMS alerts per quarter from debit cardholders. This helps them to maintain an average quarterly balance of up to Rs 25,000 for three months. However, the holders will have no charge for UPI or USSD transactions of up to Rs 1,000 cash withdrawals.

HDFC Bank

HDFC Bank levies Rs 150 per transaction if the holder goes beyond four free deposits or/and withdrawals each month. The new charges are also applicable for accounts and savings.

HDFC bank also allows deposits or/and withdrawals of up to Rs 2 lakh for home-branch transactions without any charges at one go per day. However, beyond this, the bank charges Rs 5 per Rs 1,000, or Rs 150.

For non-home branches, the number of transactions beyond Rs 25,000 a day will attract Rs 5 per Rs 1,000, or Rs 150.

ICICI Bank

ICICI bank leverages no charge for its account holders for four transactions a month only at branches in its home city. However, the holders will attract Rs 5 per Rs 1,000 to a minimum of Rs 150 in one month. The third-party limit on the transactions would attract a charge of Rs 50,000 per day.

However, for non-home branches, ICICI Bank offers no tax charges for the first cash withdrawal of a calendar month and a fine of Rs 5 per Rs 1,000 to after that subject to a minimum of Rs 150.

In cash deposits from anywhere, ICICI Bank charges Rs 5 per Rs 1,000 at branches. While for those deposits at cash acceptance machines remain free of charge for the first cash deposit of a calendar month and Rs 5 per Rs 1,000 after that.

Axis Bank

Axis bank account holders are given the choice of five free transactions every month, inclusive of withdrawals and cash deposits. However, beyond the limit, account holders will attract an acceptable fee of Rs 95 per transaction.

For non-home branch transactions, customers will get up to five free transactions, subject to a maximum per-day deposit of Rs 50,000. However, in more significant deposits or the sixth transaction, Axis bank attracts a charge of Rs 2.50 per Rs 1,000, or Rs 95 per transaction, whichever is higher.

Bank Charges

Bank charges vary from one bank to another and sometimes within the same bank with differing balance requirements depending on the customer’s account location- whether urban, Rural, or Semi-rural. It can also differ based on the account category- Normal, Privilege, Platinum, etc. A few charges are enlisted below-

  • Requests that go beyond the usual monthly or quarterly account statements necessitate charges.
  • The first three or five cash deposit or withdrawal transactions each month at other ATMs are usually considered free but are charged after that.
  • The cheques that are returned without being paid, either deposited or issued by the account holder, will necessitate a cost.
  • If the account holder needs the bank to attest the photograph or signature or even confirm the holder’s address, too, the individual should be ready to pay.
  • If the individual requests cheque, books that go beyond the allowed quota also attract charges.
  • Several banks also charge an amount for ATM card replacement in case of loss and pin regeneration if the account holder forgets it.
  • Standing instructions that debit the holder’s account carry charges too. The holder will have to pay for setting up a standing instruction and each cash withdrawal and deposit transaction.
  • Banks have also started charging for their online money transfer to third party accounts.
  • Banks made hold charges for creating a Demand Draft.
  • Banks often levy a payable amount on those that remain fixed in terms of dormant and closing accounts.
  • The current and savings account holders are typically asked to maintain a minimum balance in their bank account. This is not the minimum balance offered daily but works like the average balance in the fund over the month of the quarter. Hence, this process is known as the average quarterly balance (QAB) or Average Monthly Balance (MAB).

Do you Know Bank Charges on Saving Accounts

All About Quarterly Average Balance and Monthly Average Balance

Savings and current account holders are typically required to maintain a minimum account balance. However, this is not applicable as the minimum balance, which is to be held every day but is considered the average account balance over the quarter or month. Hence, the terms- average quarterly balance or QAB and the Average Monthly Balance or MAB.

What is Quarterly Average Balance (QAB)?

If the Average Quarterly Balance is Rs 10,000, the account holder holds an average of Rs 10,000 that must be maintained daily. However, the individual does not have to maintain a balance of Rs 10,000 every day but on average.

Under the Average Quarterly Balance, the bank computes the average account balance once in three months. For instance, to calculate the Quarterly Average Balance from January to March, the balance at the end of the day in that quarter is totaled and divided by the total number of days present.

What is Monthly Average Balance  (MAB)?

The Average Monthly Balance is similar to that of the Average Quarterly Balance.  For the monthly average balance, the bank adds an account balance by EOD os every day in the month and then, the total is divided by the number of days in the month. So the most significant difference between the QAB balance computation is that the account is calculated for a quarter, that is, for three months at a time, while for MAB, the account computation is done every month.

What is the Difference Between Quarterly Average Balance and Monthly Average Balance?

Though Quarterly Average Balance and Monthly  Average Balance requirements for the same amount might look the same, they differ significantly.  There are chances of acceptable charges for non-maintenance of the minimum balance is much higher under the MAB.

So, when the question pops out, Which is better- the Average Quarterly Balance or Average Monthly Balance. This depends on the individual’s perspective, which answers the question is either the bank or customers.

While the Average Quarterly Balance changes to the Average Monthly Balance is negative for all the retail customers, this change makes significant business sense for all the banks.

The change does not only increase the fees income for the bank in the form of Monthly Average Balance charges, but it is also a deployable CASA or Current Account Savings Account balances leading to an increase.

In simple terms, it can be stated that when the account balance calculation takes place every month, the probability of account holders maintaining a certain minimum balance more consistently is significantly higher.

Conversely, when the calculation is done every quarter, even if the individual maintains a balance of Rs 900,000 for just one day, assuming 90 days in the quarter, theoretically, it is ruled out as a Nil. Credit for the rest of 89 days. This helps the account holders still meet the minimum balance requirement.

Banks gain from the charges levied when the account holders maintain the balances consistently over the fluctuated balance. Credits that are usually carried always enable the banks to deploy the same for longer at higher margins. In contrast, that which fluctuates widely deploys the same for shorter tenors where margins tend to be lower.

Banks and QAB and MAB

Reserve Bank of India has stipulated any minimum balance that needs to be maintained in savings accounts or the charges applicable for the non-maintenance of the credit to any bank.

The Reserve Bank of India guidelines states that account holders should receive a month’s notice detailing the change in the minimum balance limit norm from their respective banks.

Quarterly Average Balance or Monthly Average Balance?

  • Some private banks, such as HDFC Bank or ICICI Bank, have switched their process from the Average Quarterly Balance to the Average Monthly Balance. This metastases that account holders will have to keep higher balances, which in turn impacts the small savings account holders, the maximum. However, this change undertaken increases the Fees income for the bank in the form of Monthly Average Balance charges.
  • Public Sector Undertaking or PSU banks, such as Allahabad Bank and Bank of India, generally have a lower Quarterly Average Balance maintenance in terms of the saving bank account.
  • However, the SBI imposed charges for non-maintenance of minimum balance that now is back and has withdrawn the ordeal to charge anything.

The Minimum Balance and Penalty Applicable for Non-maintenance of QAB or MAB

  • ICICI Bank’s minimum monthly average balance requirement is Rs 10,000 at metropolitan branches, while Rs 5,000 at semi-urban branches and Rs 2,000 at rural areas branches.
  • Axis Bank and HDFC Bank hold their minimum monthly average balance requirement at metro and urban areas branches to be Rs 10,000, while for semi-urban areas branches, it’s 5000. The rural area branches for HDFC Bank is Rs 5,000, while for Axis Bank is Rs 2,500.
  • The applicable charges for HDFC Bank and ICICI Bank typically fluctuate between Rs 250 and Rs 350. While for Axis Bank, the cost is Rs 750, suitable for both metro and semi-urban area branches and Rs 500 in rural area branches.
  • For the Union Bank for Savings Bank Account with Cheque facility, the minimum average quarterly minimum balance is Rs. 250 for rural areas Rs. 500 for Semi-urban areas, Rs. 1000 for Urban areas, Rs. One thousand for metropolitan branches, and Rs. 250 for pension accounts. However, the charges for a non-maintenance account is Rs. 110.00 per quarter.

How Can an Employee Update the Date of Exit in EPF in UAN Himself Without an Employer?

Leave a Comment / EPF / By / January 10, 2024

How Can an Employee Update the Date of Exit in EPF in UAN Himself Without an Employer?: EPF has introduced a new feature from January 2020 on the Universal Account Number (UAN) website for employees. According to this, an EPF member can update his date of exit (DOE) on the UAN website without the help of an employer after two months of leaving the job. The date of departure gets upgraded instantly. For this, employer approval, EPFO approval is not mandatory. Have a look at the Terms and conditions before you mark the date of departure.

Employee Update the Date of Exit in EPF in UAN

How Can an Employee Mark the Date of Exit on the UAN Website?

Step 1: Login into your UAN member portal. Click on the menu Manage and select Mark Exit.

Step 2: Select your Employment, which is your latest Member ID.

Step 3: Select your exit date in two places, but the exact date might not be needed. You can keep the date within 15 days after the date of leaving of job.

Check the last contribution month on the page (shown by the red box in the image) or download your passbook and find the latest Provident Fund contribution month.

Select the exit date as the last date of last month’s contribution month.

Check that the last contribution month in the passbook is the same as shown on the page.

Step 4: Select the specific reason for the exit from the reasons listed below. Generally, one would choose Cessation (Short Service)

  • Retirement- When the employee takes voluntary retirement
  • Superannuation- After completing 58 years of age
  • Permanent Disablement- When permanent disablement happens to an EPF member.
  • Cessation (Short Service)- When you resign from your job.

Step 5: Click on the Request OTP option, after which a one-time password (OTP)will be sent to the registered mobile number on the website. Provide this OTP as received on your number.

Step 6: Click on the checkbox for Terms and Conditions after reading and understanding the provided terms and conditions given below.  After that, you can click on the date of exit.

Errors that occur while updating the Date of Exit in EPF

Errors might occur while trying to update the date of exit in EPF. Such errors can be listed below:

Processing your request, please wait: This is a new feature on the UAN website. It is a technical glitch in the UAN portal itself, which implies that the server is busy, and the individual can try after few minutes.

The exit date can Only be Updated After 2 Months of the Last Contribution Made by the Employer: According to the EPFO rules, the employees can withdraw their PF amount only two months from their last working date. You will get an error if two months have not been completed.

How to Fill FATCA and Additional KYC for Mutual Funds Online or Offline through CAMS, Karvy or Directly

How to Fill FATCA and Additional KYC for Mutual Funds Online or Offline through CAMS, Karvy or Directly

Leave a Comment / Finance / By / January 10, 2024

How to Fill FATCA and Additional KYC for Mutual Funds Online or Offline through CAMS, Karvy or Directly: Effective from November 1st, 2015, all new investors who are looking forwards to purchasing units of mutual funds need to provide additional KYC related information, which is required for the Foreign Account Tax Compliance Act (FATCA)/CRS compliance.

Starting from January 1st, 2016, even existing investors who are willing to make new purchases have to complete the additional KYC requirements. In this article, we talk about What is FATCA? How to make FATCA declaration Online? How to fill the FATCA declaration offline? How to do it directly or via CAMS & Karvy.

What Form Has to be Filled?

Supplementary KYC, FATCA, CRS self-certification form has to be filled by the investors in order to comply with the additional KYC requirements.

Who Needs to Fill the Form?

  • The form has to be filled up by all joint holders, the guardian of a minor, and the power of the attorney holder.
  • It is necessary to be provided by all the individual investors, irrespective of whether they are Indian residents or not.
  • Non-individual investors need to submit a separate form that provided the ultimate beneficial owner (UBO) information about similar lines.
  • You need to do FATCA with all the Mutual Funds you have invested in (AMCs) along with some for each folio. KARVY and CAMS have come out with PAN-based online filling of the FATCA form, which will update all the details in all fund houses they manage. However, for other fund houses such as Franklin Templeton, you need to contact them separately.

Why Does One Need to fill Supplementary FATCA, KYC, CRS Self-certification form?

The Inter-Governmental Agreement (IGA) between the US and India, signed in July of 2015 as part of the FATCA implementation, required the Indian Financial Institutions to provide all the necessary information for Indian tax authorities is then transmitted to the US automatically.

What is FATCA? How to be a FATCA Compliant for Indian Residents?

FATCA is an act that focuses on instances of deliberate tax evasions by US citizens/residents on income generated in overseas locations.

This implies parking funds outside the US using foreign banks or failing to disclose their assets and investments that are owned abroad, including in the countries of origin, avoid paying taxes to the IRS. This is different from tax avoidance that is a legal way of reducing taxes.

In some countries, including India and the United States, their citizens are taxed on the basis of global income. They have double taxation avoidance agreements within each other.

US citizens who have been reporting income or paying taxes on the income earned in these countries will not be seen as tax evaders under FATCA.

The Act HIRE (Hiring Incentives to Restore Employment) had been enacted in the year 2010 by Unites States legislation has a distinctive chapter 4.

This chapter, known as The Foreign Account Tax Compliance Act (FATCA) and the Section 1360 of the Internal Revenue Service (IRS) code, gives details on the compliance of the rules related to and reporting foreign earnings and assets of the people of the US.

FATCA puts the obligation of reporting on the foreign financial institutions (FFI) that dealing with them. Non-financial foreign companies (NFFE) operating in the US are also expected to report on their holdings.

FATCA in a Nutshell

The FATCA provisions are imposing a 30% withholding tax on the payments to a foreign financial institution (FFI) for not complying with the rules of IRS, which in turn will be placing withhold payments to clients.

US people residing in India will have to continue to report foreign income under the FBAR. They might disclose the previous overseas money under the Overseas Voluntary Disclosure Program (OVDP) 2014.

FATCA doesn’t affect in any way the existing tax rights of the US citizens in India or the Indian tax residents in the United States. Nor does it require the reporting agencies to act as tax collectors for the IRS.

Who are all Covered Under FATCA?

Those whom the United States government considers a ‘US person’ is going to be covered under the act. The following fall under the category of US person.

  • A citizen or resident of the US (including a green card holder).
  • A corporation, partnership, estate, trust incorporated or created under the US law (US incorporated entity)
  • A non-US incorporated entity that has a shareholding of 10% or more or the ownership (Substantial Ownership) held by:
  • A person who was born in the United States or is a US citizen or a US resident (including green card holder) or has a US address or US mailing address or US in care of’ or ‘hold mail’ as the sole address.
  • The United States incorporated entity as described above.

Where is the Supplementary KYC, FATCA, CRS forms Available?

You can fill this form Online and physically (offline). You don’t need to do both. These forms are also available at the mutual fund house or Registrar and transfer agent (R & R&T) such as CAMS/KARVY branch counters, or you can also download from their offline websites.

Online: The R&T agents like CAMS and KARVY offer the facility of filling up an online form. PAN needs to be submitted to generate the, and an OTP is sent to the registered email ID and the mobile number. It will be updating details in all the fund houses that they manage. However, for the other fund houses, you need to contact them differently.

Offline or Physical submission: The said form, duly signed by the investor, and necessary documents, may be submitted at any of the AMC branch or investor service centre.

What will be Happening If one does not fill the FATCA, Supplementary KYC Form?

If you meet this compliance requirement, then fresh investments (SIP or Lumpsum) will not be accepted from 1st January 2016. One can only redeem their existing mutual fund units.

To lower the reporting burden, few tops and sizeable mutual fund houses like HDFC, ICICI, Birla, Reliance, etc., have stopped accepting fresh investments from US residents and NRIs based in the US. NRIs based on other countries (other than the US/Canada) can invest in all the mutual fund schemes.

Any financial institution that fails to comply will need to pay a 30% penalty on all its United States revenues, including the dividend, fees, interest, and sales. If one is an Indian base in the US and trying to hide the information from the Indian government, then under the new Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, individuals having unaccounted overseas assets were allowed to come clean by declaring that their assets till September 30th, 2015, and paying tax and penalty of 60%.

Those who are unable to declare their unaccounted overseas wealth during the voluntary compliance period will now have to pay tax and penalty of 120 percent and face a jail term that could be extending up to 10 years.

Reporting The Financial Institution (RFI) in India and its Role

RFI involves the custodial and the depository institutions, the specified insurance companies and the investment entities.

This means mutual fund companies, banks, trust companies, brokerage firms, hedge funds, insurance companies, savings and loan associations, credit unions, NBFC, and superannuation and retirement plan administrators.

For the purpose of FATCA reporting, an RFI is either registered or a resident in India and includes its Indian branches. It also covers the Indian branches of foreign financial institutions.

A company that provides trading and investing services on the behalf of one of the particular customer and insurance companies which only deal with general and term life insurance or indemnity reinsurance doesn’t have to report accounts.

No financial institutions are currently exempt by the US authorities. However, this could change in the future.

  • Follow particular procedures to confirm the status and identity of a new customer.
  • Check the existing accounts for confirming their FATCA status. Ask for the documentation and extra information from the current customers.
  • Register themselves with the Indian Tax authorities (CBDT) and the Internal Revenue Service (IRS) portal under the inter-government agreement signed by the United States and India.
  • Complete any reporting required that CBDT and RBI specify RBI regarding the FATCA.
  • They will review the financial accounts of individuals and entities and will provide information on ones that meet the specific threshold limit for the savings/investment balance.
  • Banks need to provide income reports on the highest daily value in U.S. dollars in any year and the transaction details of each such account.
  • Corporations that are not listed or any business entity that is registered outside the U.S. but has U.S. Person/s on board with at least 10% stake in ownership have to provide relevant details about them.
  • FII must also be required to withhold 30% of certain payments to these account holders who are unable to provide self-certification or submit form 8938 for the foreign income under FATCA.

* The RBI has clarified income reports of the United States persons with Indian assets and income will be in rupees.

How to Submit FATCA Declaration form Online?

You will have to provide information to CAMS once for all funds it services, Karvy, for all its benefits. For example, suppose you have invested in HDFC Balanced Fund, HDFC Equity Fund, Reliance Gold Fund, Franklin Templeton Short Term Fund, ICICI Prudential Blue Chip, then through CAMS.

In that case, you could provide details to the HDFC Fund for HDFC Balanced Fund, HDFC Equity Fund, ICICI Mutual Fund for the ICICI Prudential Blue Chip. Through Karvy, you could update your details to Reliance Mutual Fund and Franklin Templeton Investments to Franklin Mutual Fund.

  • Karvy Mutual Fund Services
  • CAMS
  • Sundaram BNP Paribas Fund Services
  • Franklin Templeton Investments

Filling the FATCA Details Online on CAMS

If one has invested in mutual fund schemes that were served by CAMS such as  DSP BlackRock Mutual Fund, HDFC Mutual Fund, HSBC Mutual Fund, JP Morgan Mutual Fund, Kotak Mutual Fund, Birla Sun Life Mutual Fund,  IIFL Mutual Fund, SBI Mutual Fund, IDFC Mutual Fund,  L&T Mutual Fund, ICICI Prudential Mutual Fund, PPFAS Mutual Fund, Shriram Mutual Fund, Tata Mutual Fund, Union KBC Mutual Fund

  • Visit the official website of CAMS.
  • Select the AMC name, provide your PAN details, Bank Account details and Date of Birth details. You will be receiving OTP (One Time Password) on the registered mobile number.
  • For field Country of the Tax Residency apart from India, select No if you are a resident of India. If your selection is ‘YES’, you will have to provide other details.
  • On submission at CAMS, you will get the submission details. It mentions clearly that you have to submit FATCA details about the fund CAMS services only once. Acknowledgement is sent to the email id.

Filling the FATCA Details Online on Karvy

If one has invested in mutual fund schemes that are serviced by Karvy, stated below.

Baroda Pioneer Mutual Fund, AXIS Mutual Fund, Deutsche Mutual Fund, BOI AXA Mutual Fund, Edelweiss Mutual Fund, Canara Robeco Mutual Fund, Goldman Sachs Mutual Fund, Indiabulls Mutual Fund,  IDBI Mutual Fund, LIC Nomura Mutual Fund, Sahara Mutual Fund, M Financial Mutual Fund, Motilal Oswal Mutual Fund, Peerless Mutual Fund, Quantum Mutual Fund, Mirae Asset Mutual Fund, DHFL Pramerica Mutual Fund, Reliance Mutual Fund, Principal Mutual Fund, Religare Invesco Mutual Fund, Taurus Mutual Fund, UTI Mutual Fund

  • Visit the official website of Karvy
  • Enter the PAN Number and click on Generate OTP.
  • Enter OTP details and click on submit
  • Please submit the details as they have been mentioned earlier

Submit the FATCA Declaration Form Offline

Submitting the declaration of FATCA to CAMS offline: One is able to download the CAMS FATCA Declaration form and submit the finished form at any of the CAMS customer service centres or post it to the address given.

M/s. Computer Age Management Services Pvt. Ltd.

Unit Of – The Central Projects, The Rayala Towers, 158 Anna Salai, Chennai – 600002

Submitting the FATCA declaration to Karvy offline: One can download the Karvy FATCA Declaration Form and post the finished form to the address given.

Karvy Computershare Pvt. Ltd., Karvy Selenium Tower B,

Unit Of – FATCA / CRS / UBO / Supplementary KYC,

Plot Nos. 31 & 32 | Financial District | Nanakramguda,

Serilingampally Mandal | Hyderabad – 500032 | India.

EPF Balance SMS Check | Service Number, ER, EE, EPF Calculation

Leave a Comment / EPF / By / January 10, 2024

EPF Balance SMS Check: Employees’ Provident Fund Organisation which is popularly known as EPFO is a legal body outset by the Indian government officials. The main objective of EPFO is to encourage individual employees to save some money after retirement. As per the PF Act, any organization having more than 20 individuals and drawing Rs.15,000 per month even on a contract basis must mandatorily register and contribute money towards the EPF account. Therefore some amount of money is automatically debited and credited to the individual’s EPF account by the employers from time to time. Whenever the  EPF amount is credited to the employee, the funds will be updated in the employee’s EPF account. And any individual can check their PF balance to know how much they have saved to date.

To help you on checking with EPF Balance through SMS here is a detailed article on how to check EPF balance through SMS, what is EE & ER in PF balance, and withdrawal limit. Also in the below section, we have provided how EPF is calculated and credited to an individual’s account. Read on to find more.

How To Check EPF Balance by SMS?

There are many ways to check EPF balance such as online, through mobile number, etc., Any individual who wants to check PF balance without a UAN number can check EPF balance via SMS. The steps to check EPF passbook balance through SMS has been given below:

EPF SMS Balance Check Number 7738299899
EPF Balance SMS Format EPFOHO UAN
EPF Balance SMS Service Available 24/7
EPF Balance SMS Languages Supported English, Hindi, Telugu, Punjabi, Gujarati, Marathi, Malayalam, Tamil, Kannada, and Bengali

Forgot UAN Password? Reset Here

How To Send SMS To Check EPF Balance?

The steps to check EPF Balance through SMS with example has been provided below:

  1. Firstly the individual who needs to check the balance must have the mobile number under which the UAN is registered.
  2. Now the users should open the SMS application on their mobile phone and type “EPFOHO UAN ENG”. (ENG stands for English).
  3. Upon sending the message, the individuals will shortly receive their EPF balance on their mobile phones.

EPF SMS Balance Checking | Regional Languages

Also, EPF users can check their balance in 10 regional languages. Users willing to check their balance through their regional languages must replace ENG with any of the supported languages from the following table.

Code Language Supported
BEN Bengali
ENG English
GUJ Gujarati
HIN Hindi
MAL Malayalam
MAR Marathi
PUN Punjabi
PUN Punjabi
TAM Tamil
TEL Telugu

EPF Balance SMS Received Message

Once you send an SMS to check your EPF balance, the officials of EPF will shortly notify your balance which indicates the following things:

  1. PF Account Holder Name
  2. Date of Birth of Account Holder
  3. Last Contribution made by Employee
  4. Last Contribution made by Employer
  5. Available balance

Decoding EPF SMS Balance Details

The EPF officials will not exactly mention the details in the format which is specified above. They just simply send you that “EPF Balance in A/C No.XXXXXXXX  is EE Amt: Rs. 67009, ER Amt: Rs. 47000 as on 27-04-21 (Accounts updated upto 31-03-2021)-EPFO.” They use the terms EE, ER etc., and to  understand what is EE and ER, check the section below:

  1. A/C No is nothing but your EPF account number.
  2. EE Amt: EE amount indicates Employee contribution. The total contribution which you have made to your EPF account is known as the EE amount.
  3. ER Amt: ER amount indicates Employer contribution. The total contribution which has been made by your employer to your account is known as ER amount.
  4. As On: As on indicates the last date when the EPF account was updated.
  5. Accounts Updated: Usually, the account gets updated by the end of the financial year.

EPF Balance Through SMS | Points To Be Noted

  1. EE Amt i.e., an employee contribution will be always more than the ER Amt.
  2. ER Amt or Employer contribution will be always less since it is divided into two halves such as Pension Fund  (EPS) and Provident Fund (PF).
  3. SMS will not show the information about Pension Fund (EPS) but the EPF passbook will show the balance of EPS.

EPF Balance Checking SMS | Basics of EPFO

Now you understood how to check EPF online balance check through SMS. Now let’s understand how the EPF amount is calculated and credited to the individuals’ accounts.

  1. EPF account actually consists of Provident Fund (PF) and Pension Scheme (EPS).
  2. Generally, 12% of basic salary and DA (if available) is contributed to the EPF account by both employee and employer.
  3. And this entire 12% of the employee contribution is directly added to PF account.
  4. Now again the 12% of contribution in the EPF account is divided into two parts: EPS/Pension scheme takes a share of 8.33% whereas Provident Fund/PF takes a share of 3.67%.
  5. For the EPF funds whichever you have in your account, the officials will provide the interest and this interest rate is decided annually by the Central Board of Trustees. For the year 2020-21, the interest rate is decided as 8.5%. At the beginning of the financial year, your PF balance is calculated using the following formula
Old Balance + Monthly Contribution + Interest

Note: The interest rate is not applicable for EPS since it is a pension scheme.

EPF SMS Balance Check | EPF Calculation Example

  • Let’s assume an employee’s basic salary and dearness allowance equal to Rs. 14,000
  • EPF contribution by employee =  12%  X 14,000 = Rs.1680
  • EPF contribution by employer = 3.67% X 14,000 = Rs. 514
  • EPS Contribution by employer = 8.33% X 14,00 = Rs. 1166
  • So now the total contribution made by employee and employer to EPF account is Rs.1680 + Rs.514 + Rs.1166 = Rs.2194
  • Monthly interest calculated as 8.5% divided by 12 = 0.70833%.
  • So, the EPF contribution is = Monthly contribution X 0.70833%.

FAQ’s On EPF SMS Balance Check

The frequently asked questions on EPF SMS balance check are given below:

Question 1.
How can I check my EPF balance?

Answer:
The EPF balance can be checked in 4 ways and they are the following:

  • Though Umang App
  • EPFO Online Portal
  • Sending SMS For EPF Balance
  • Through Miss Call Service

Question 2.
How can I check my PF account balance on mobile?

Answer:
Any individual can check the PF account balance on mobile by simply sending SMS to 7738299899 in the format of EPFOHO UAN.

Question 3.
How can I check my EPF balance without a UAN number?

Answer:
By sending SMS through a registered UAN mobile number, individuals will be able to check the EPF balance.

We hope this detailed article on EPF Balance checking through SMS is helpful to you. If you have any queries on this article or in general about EPF Balance checking SMS, ping us through the comment box below and we will get back to you as soon as possible.

CAMS and Karvy Registrars & transfer Process

CAMS & KARVY | Registrar and Transfer Agent, Mutual Funds

Leave a Comment / Finance / By / January 10, 2024

CAMS and Karvy: In today’s era, mutual fund investment is increasing by springs and limits, with a propensity to generate high returns. Due to the number of investors, the transactions in mutual fund companies are increasing from day to day. And to maintain this investor’s data, the officials outscore their back-end transactions to companies called registrars and transfers (R&T Agents). These RTAs are responsible for the enormous customer data and are solely responsible for keeping records on behalf of the mutual fund companies for all transactions. In this article, let’s understand what are RTAs & their role, and what is CAMS and Karvy. Read on to find out more about Cam’s online statement Karvy, How To Get Mutual Fund Statement From Karvy, How To Get Consolidated Mutual Fund Statement From Karvy, How To Download Mutual Fund Statement From Karvy?.

What are Registrar And Transfer Agents Mutual Funds?

RTAs Full Form: The full form of RTA is Registrar and Transfer Agents. Basically, investors in mutual funds undertake numerous transactions such as purchasing and selling mutual funds, changing funds, redeeming mutual funds, or updating their personal data (e.g., contact details, email id). Any changes made by investors must be recorded accurately for future communication processes. And thus to record all the data and activities process by the investor, the officials of mutual funds ask the RTAs to undertake this data and ensure them that they are maintaining this data in relation to such back-end transactions.

What is the Role of Registrar and Transfer Agent?

The main role of Registrars and Transfer Agents is to provide investors with service information relating to Mutual Funds, such as Maturity dates, Unit details, monthly Mutual Fund performance, and all other investor-friendly information in one place.

Also, the Registrar and Transfer Agents doesn’t only provide service to investors but also provides service to other stakeholders involved in mutual funds such as distributors and mutual fund companies.

What is CAMS & Karvy?

CAMS and Karvy are some of the most popular Registrar and Transfer agents that are widely used in India. Also, Computer Age Management Services in short CAMS and Karvy are the most leading companies which provide services to investors on behalf of mutual fund organizations.

First, let’s understand what is CAMS and then go through the Karvy registrar & transfer process.

CAMS

CAMS – Computer Age Management Services

CAMS Full Form: The full form of CAMS is Computer Age Management Service. CAMS is an Indian mutual fund transfer agency based in Chennai, Tamil Nadu which was found in the year of 1988. NSE Strategic Investment Corporation (a subsidiary of NSE Ltd), HDFC Bank Group, and Acsys are the three shareholders of CAMS.

With over 300 Customer Service Centers across India, CAMS has a large network (CSCs). All of these Customer Service Centers are in real-time communication with one another. CAMS is a prominent RTA intermediary that provides back-end services to Mutual Fund Companies, Private Equity, and Venture Capital Fund Companies, KYC Registration Agencies (KRA), and their investors.

To ease the work of CAMS investors and clients, they have also launched an online portal and mobile application which allows them to complete their transactions without visiting a customer service center or contacting a distributor.

What are the Services offered by CAMS?

Right from account creation to regulatory, CAMS offers a variety of services to its stakeholders. The list of services offered by CAMS are given below:

CAMS Account Creation Services

  • Creation and verification of the investor
  • Activation of an investor account with full access to all information
  • Scanning and archiving of investor documents

CAMS Transaction Processing Services

  • Formal customer acceptance of any or all transactions
  • Forms verification
  • Processing of Transactions
  • Settlement of Financial Transactions
  • Payment to Intermediaries Commission or Fees Payment to Intermediaries Reconciliation with the bank regarding money received and confirmation to the customer
  • Balancing all orders and deliverables

CAMS Customer Services

  • Maintenance of customer data
  • Whitelabel website to access all the customer services at one window
  • Call center services

CAMS Data Recording & Regulatory Services

  • Maintenance of customer data
  • Maintenance of customer transactions
  • Reporting suspicious transactions of money

KARVY

KARVY

The Karvy Group is a global corporation based in Hyderabad, India, that was founded in 1983. Karvy is India’s largest Registrar and Transfer Agent, with approximately 500 blue-chip firms as clients and over 70 billion accounts under management.

Karvy is a leading provider of integrated financial services. It is a member of the following three stock exchange companies:

  1. National stock exchange
  2. Bombay stock exchange
  3. Hyderabad stock exchange

What are the Services Offered by Karvy?

Since its beginnings, Karvy has been a customer-focused services firm. It provides a single-window platform for all of its customers’ financial needs. Most of the clients of Karvy are investors from Corporate and retail customers.

Stockbroking, registrar and transfer agent, depository participant, distribution of financial products, wealth management, personal financial advice services, market research, and other services are all provided by the Karvy Group.

Mutual Funds Registrars CAMS & Karvy

In order to keep up with the global competition, Indian markets are freeing up to digitization and finding ways to make themselves available to their customers 24/7. And these mobile applications and online web space are proving to be the greatest solutions for businesses.

Both CAMS and Karvy, being major Registrars and Transfer Agents in India, place a strong emphasis on their clients. Both firms have always placed a high priority on customer service and happiness. Both CAMS and Karvy have an Online Portal and a Mobile App whose primary goal is to provide services to their clients at the touch of a button.

Karvy CAMS
Web Portal Address https://karvyonline.com/ https://www.camsonline.com/mycams.aspx
Mobile App Name KarvyOnline Trade MyCams
Download At Google Play, Apple App Store, and Windows Phone Google Play, Apple App Store

What are the Features of MyCams App?

  1. It’s a one-time registration process
  2. The investor has access to all statements about his investments, including all consolidated Account Statements for all CAMS-managed funds.
  3. All service-related forms can be downloaded from myCams by the investor.
  4. The one-stop site where investors can learn about all of their investments by just inputting their PAN card number.
  5. Customer care service is available 24/7, and they may chat with an expert at any time as per their convenience.
  6. Interoperability across desktop and mobile versions, i.e. if you register on the website, you can log in using the same user id (investor email id) and password on your mobile device.
  7. The investor may manage his investment account and conduct a variety of transactions such as viewing Portfolio Valuation Statements, SIP Status, Changes in Dividend Payment Options, and so on.
  8. The investor can do operations such as Purchase, Redemption, Switch, and monitor all transactions related to his investments through myCams.

What are the Features of the Karvy Online Trade App?

  1. With a single registration using an email address and a password, you may access your account from both the desktop and the mobile app.
  2. There are advanced charts available for the performance of an investor’s portfolio.
  3. Portfolio tracking for investors
  4. Money transfer that is safe and secure
  5. Market Watch Online Trading allows you to buy and sell stocks, as well as cancel and alter orders, on the BSE and NSE while you’re on the road.
  6. Instant access to your existing investment holdings as well as the status of your application.
  7. Users will be able to consult with an expert who is well-versed in the industry’s trends to clarify users doubts.

FAQ’s on R&T Agent for Mutual Funds CAMS, Karvy

Question 1.
Is Karvy a good broker?

Answer:
Karvy is India’s most prominent stockbroking firm. It excels at providing a wide range of high-quality financial products and services to all of its consumers.

Question 2.
Are Karvy and CAMS are same?

Answer:
No, Karvy and CAMS are two different registrar and transfer agents offering services to investors who are investing in mutual funds.

Question 3.
What is the difference between a registrar and a transfer agent?

Answer:
The transfer agent is in charge of mutual fund share purchases and redemptions, while the registrar is in charge of keeping records.

Commission on Post Office Schemes, Insurance, Stocks, Mutual Funds and ETF, Stocks

Commission on Post Office Schemes, Insurance, Stocks, Mutual Funds and ETF

Leave a Comment / Finance / By / January 10, 2024

Commission on Post Office Schemes, Insurance, Stocks, Mutual Funds and ETF: Commission can be a baffling topic for anyone, whether one is excellent with money or not. Maybe one taking-into-account a job with a structure of commission or are presently in a field where a commission is a big clump of one’s compensation or reward. If one is unsure about how all of this works in the world of business, we’ll dissect the concept into small parts so that anyone comes out a little wiser than they were before.

What is Commission?

The commission is extra or added compensation that’s reaped based on performance in the job. When you agree to a commission structure (often by signing an agreement), or commission-based role or an individual agree to be paid a certain amount of money that’s reliant on hitting some goal—goods sold, hires placed, meetings closed, to name a few examples.

When an individual thinks of commission, their mind immediately goes to a sales-type role (think of a retail or market salesperson trying to get you to buy that extra pair of jeans). Commission bearing financial products, such as insurance policies and mutual fund schemes, expose-oneself-to mis-selling by traders who push products that optimise to maximise their incomes in preference to the welfare of the client. Now the market is cloven into chemists and doctors.

The commission is prevalent in most sales jobs because their responsibilities and liabilities are heavily bound to a company’s revenue goals. Having the fortuity to earn a commission—sometimes a massive amount—motivates or stimulates those individuals to reach or get close to their every-quarter or annual goals. But the commission can crop up in other places, too. In enlisting, an individual is often provided with a commission on each candidate the person successfully places—usually a percentage of their yearly salary.

As an account manager, one can earn a commission on clients you boost or renew for the year. And in real estate, an individual can get a cut of the money the person can make by selling a property. In fact, in some jobs, the commission makes up almost all of the person’s compensation, meaning if one’s income is inconsistent and highly dependent on their output.

Commission Charged on Mutual Funds Scheme

Mutual Fund companies pay a good amount of commission to a distributor(one who sells or distributes the mutual funds) and are of various types.

There is a paid-out expense ratio of the Mutual funds, which are expressed as a percentage figure. Currently, there is no in-force entry load system. So the investor gets the units meted to them at the Net Asset Value (NAV), and there are no charges added of the fund to this figure.

But, one-time charge for the transaction: It is Rs 150 for fresh investors and Rs 100 for enduring investors of a mutual fund. This is the cost that will be deducted from your invested amount by the govt.

To get the initial investment into the fund, the upfront commission is the amount received. In the first year, the mutual fund’s company (AMC) pays the upfront commission to an agent. This is the figure that is usually a percentage figure, and the distributor will earn immediately, which is based on the amount that is imparted in. Sometimes for a large number of applications, there is also a flat payment, especially in case of an offer for a new fund.

Trail commission: when the investor remains with the fund for a specified period of time on a continuous basis, this is the figure earned by the distributor. On an annual basis, this payment is usually made by the fund to the distributor. Since these are calculated on the net property, distributors get benefitted from the rise in the form of the higher NAV of funds or the sale of more units in their assets. In the long run, this is the most important part of commissions and the main earning of mutual funds agents.

Mutual Funds regulator SEBI says the distributor has to inform about the commission that is earned on a trial basis both at the time of investment as well as later to the investor.

Equity schemes charge as close as 2.75 of percentage (limits were enhanced in 2012, up from the earlier 2.50 of total percentage) every year to its unitholders while debt funds charge up to about 2.50% of total percentage. Typically equity funds pay about 0.50% as trail fees and another 75-100 bps(.75% – 1%) as upfront commission. Debt funds pay about 40-50 bps as trail fees and another close to 50-75 bps as upfront charges. The Direct Plan, as compared to existing plans in the same schemes, has a lower expense ratio, as, under this plan, there is no commission to be paid to the distributor.

After the regulator of capital markets, the Securities and Exchange Board of India, from August 2009, abolished entry loads with effect and made it compulsory for mutual funds distributors to disclose the fee that they earn from Mutual Funds. Also, as a result of this, distributors were also ordered to charge their consumers directly, which some distributors do follow and some didn’t. By various distributors, the commission earned by selling mutual funds and can be found webpage commission disclosure at AMFI.

Commission Charged on the Insurance Policies

Insurance Agent Commission Charged varies from company to company. Let’s discuss how the Insurance Agent Commission is defined by companies in India.

First, let us acknowledge who insurance agents are? So Insurance agents work as the middleman between those who endeavor to purchase insurance policies and insurance companies. Insurance agents may sell a variety of insurance policies or may concentrate on providing their consumers with one distinct type of insurance. Various types of insurance include life, equity, inability, and health insurance.

The main objective of paying Commission on Insurance Policies is to increase insurance density and penetration in the country. Life insurance policies follow a front-loaded commission structure where a fat clump of the premium of first-year is paid upfront as a commission to the agents. Commission on various policies of insurance depends on the type of insurance, such as Life Insurance, Non-Life and Pension.

In life insurance policies, the commission allowed to the agents comes under the notice of Premium Allocation Charge. This charge is recurring, which means this is deducted from every premium one pays. Usually, charges remain constant for the remaining term and are highest in the first year.

The Commission is reaped by all the insurance middlemen or intermediaries such as corporate agents, web aggregators, insurance marketing firms and insurance brokers. If the policy is acquired directly by an insurer, then no remuneration or commission will be paid to an insurance agent by the company or an insurer.

For term insurance plans, only a plain quote is given with no illustrations of detailed benefit. The commission structure is not quite visible. However, consumers can bypass this problem by vying the cost structure of the version of online term insurance from the same company. Though the precise commission will not be available, any individual can get the cost differential.

The IRDA-I or Insurance Regulatory and Development Authority of India brought down the illustrative rates from 6% and 10% earlier to 4% and 8% now.

Commission Charged on Life Insurance Policies

From April 2017, for selling life and non-life insurance policies, insurance agents will get a higher commission. A notification sent by the Indian Regulatory body named: Insurance Regulatory and Development Authority of India about the new rate of commissions which is to be paid to insurance intermediaries.

In a single premium category, an agent of life insurance will get:

  • 7.5% allocated for Term Plans or individual pure risk products,
  • 2% allocated for selling individual product for life(other than Term plans),
  • 2% allocated for individual deferred and immediate annuity products (like pension plans)
  • 5% allocated for a group of products of pure risk. (Group Term Plans).

For all the commodities under the regular premium category, there are specifically two categories: those other than pure risk or those bundled with investments and pure risk.

In the first year, 40% of the commission for a pure individual term plan or risk will be given, and the agent for every renewal premium will be paid 10% of the commission.

In the case of non-term plans or non-pure risk cover, the 15% will be the commission for the policy for up to five years, and for policies over 12 years, the commission will rise up to 35%.

Besides, the insurance company’s agent will also be provided with a renewal premium of 7.5%, which will be given annually.

So, an agent will get a commission of 35% for the policy in which the individual has a premium for 12 years in the first year and 7.5% in subsequent years.

Commission Charged from 1 Jan 204 to 31 Mar 2017 on Life Insurance Policies

The commission from 1 Jan 2014 to 31 Mar 2017 was:

Now the premium paying term (the tenor for which the policyholder pays premium regularly) of a policy will be linked by Agents’ incentives.

For five years of a premium paying term, agents will get up to 15% of the premium as commissions in the first year.

This first-year 15% commission will increase to a maximum of 35% in case the insurer is more than ten years old and 40% commission for insurers that are less than ten years old if the premium paying term is 12 years or more.

In the case of a single premium, 2% of the single premium will be provided as remuneration.

The maximum allotted remuneration or commission by IRDA-I for brokers shall be:

(i) with premium paying-term of 10 and above, shall get 30% in the first year for policies;

(ii) for all premium paying, terrific shall be paid 5% in the subsequent years.

During the first ten years for all intermediaries, except for brokers, a life insurer’s business shall be 40% in the first year for premium paying term policies with 12 years and above.

Comparison Between the Commission Charged on Mutual Funds and ULIPs

How does any individual compare the commission structure of ULIPS and mutual funds?

While in the initial years for Ulips, the commission was high, and it grew in mutual funds over the years.

This has happened because insurance companies were observed to pay commission only on new premiums, while mutual funds sweeten commission for the accumulated corpus.

Commission Charged on Pension Insurance Policies

In the case of a single premium,

2% allocated concerning single premium.

In cases other than single premium:

  • 7% allocated regarding the first year’s premium.
  • 2% allocated regarding each renewal premium.

The IRDAI mandates all life insurance companies to provide a ‘Benefit Illustration’ (BI) to the prospective buyers of unit-linked insurance plans (or Ulips). The idea is to help the buyer of the insurance take a look at the investment of the premium, how and what deduction of charges will be applied and most essentially, how the growth will happen for the value of the fund. It not only shows how the investment will grow over the years but also how much charges get deducted each year from the premium.

In the ‘Benefit Illustration’, the total investment return and the underlying hypothesis of it will get 4% and 8% according to currently stands and has been mandated by the regulator. It will be demonstrated individually, running into several columns.

Remember, these calculations (based on benefit illustrations of 4% and 8% growth rates) are due to regulatory terms, and investors should not feign that this is the return they will get.

Commission Charged on Non-Life Insurance Policies: Health and Auto

The commission completely depends on the type of insurance in non-life policies.

For Auto Insurance Agent, 10% is the maximum commission payable on the premium part paid of the cover only for the own damage component. On the premium cover, there is no commission for third-party.

In the case of Health Insurance, the commission is capped at 15% of the premium amount. The commission on renewals is also payable at the same rate.

The maximum remuneration or commission as a percentage of premium offered by stand-alone health insurers or general insurers as the allowed for health insurance products.

Commission Charged on Motor Insurance

The commission structure in personal damage motor or general insurance policies has progressed to 15% of the premium. This commission generated only towards own damage(OD) will be on the premium charged. Also, for the first time, on third-party motor insurance, a commission of 2.5% of the annual premium has been introduced.

Commission Charged on Marine and Fire Insurance

Insurance Regulatory and Development Authority of India has also changed the commission structure for marine and fire insurance. In the retail fire segment, 15% commission will be provided with the annual agent premium, and in the case of an intermediary, the commission will be 16.5%. The commission payouts in marine insurance diverse policies remain unchanged for agents, which was a yearly premium of 15%. However, for intermediaries, it has been raised to 16.5% of a yearly premium.

Commission Charged on the Post Office Scheme

The remission of commission to agents of the scheme of Senior citizens Savings and Public Provident Fund (PPF) has been ceased, with ramification from first Dec 2011. Commission underneath all alternative schemes (except MPKBY Agents, which stands for Mahila Pradhan Kshetriya Bachat Yojana) has been diminished from 1% to 0.5%. However, commission to MPKBY agents can sustain at the present rate of 4%.

The Committee originated by the govt. An associate overall review of the National tiny Savings Fund (NSSF) had inter-alia, recommended rationalization of the structure of commission rate. Supported the exhortation, the govt has set to abolish/reduce the agency commission, the most purpose that is to create these schemes a lot of capitalist central than agent-centric.

Commission Charged on ETF, Stocks

When an individual buys a stock, they usually get charged or a percentage of the trade value as additional charges, which called brokerage:

  • Securities Transaction Tax (STT): allotted percentage of 0.125% of the total trade value paid to the government of India.
  • Service Cess and Tax: on the brokerage, a 10.3% tax shall be paid to the government of India.

Stamp Duty, or the Turnover Charges: Regulatory fees payable to the state, SEBI or exchange, usually a small percentage of trade value.

Besides, per transaction, some brokers charge a Demat fee and account charges or annual demat.

LTA - leave travel allowance

Leave Travel Allowance (LTA) : Full Form, Leave Travel Allowance Calculation, Eligibility, Exemption

Leave a Comment / Income Tax / By / January 10, 2024

Leave Travel Allowance (LTA): The full form of LTA is Leave Travel Allowance. LTA is one of the best tax-saving tools which an employee can avail. LTA is a tax exemption offered to employees by employers. LTA is an allowance that is paid to the employees by the employer when he/she is traveling.  Also, it is be noted that the Leave Travel allowance paid to the employee by the employer is tax-free. This Leave Travel Allowance (LTA) comes under section 10(5) of the Income Tax Act. However, one will have to follow certain rules in order to avail of the LTA tax-free which is explained in detail below. Read on to find out more about how to claim LTA in Income Tax returns.

What is LTA Exemption?

Leave Travel Allowance exemption is only applicable for the employee’s travel cost. Whereas the LTA tax exemption is not applicable for other expenses such as food, shopping, or any other matters. Also, the LTA exemption is also not applicable for more than 2 children.

LTA exemption is valid for two trips in a four-year span.  The current block year is between 2018-2021. If one doesn’t use this block, then it can be carried forward to the next block year. For journeys inside India, the LTA tax-free can be claimed for both self and family members.

Leave Travel Allowance – LTA Rules

There are certain rules set by officials to claim the LTA. The list of rules to claim LTA are given below:

  1. LTA is not applicable for all employees. The LTA is allocated to employees based on various factors such as their Pay Scale, Grade, Position, etc.,
  2. The employer will allocate a certain amount under LTA and the employee will be able to claim the LTA amount under the specified or allocated money only.
  3. LTA is applicable for travel within India only.
  4. The mode of travel can either airways, railways, or recognized public transportation.
  5. International travels are not covered under LTA.
  6. LTA can also be claimed if an employee travels alone or with family.
  7. Leave Travel Allowance is applicable only on ticket fares.

Expenses Exempted Under Leave Travel Allowance

The list of expenses exempted under Leave Travel Allowance is given below:

  1. Travel by Airways: The airfare via the shortest route or the amount spent, whichever is less, will be exempted.
  2. Travel by Railways: A.C. first-class fare via the shortest route or the amount spent on travel, whichever is less, would be exempted.
  3. The source and destination locations of the journey are linked by railways, but the journey is completed by another means of transportation.
  4. The source and destination locations of the journey are not linked by railways either partially or fully but are connected by an additional public transportation system.
  5. Source and destination are either not connected by railways or another public transportation system.

Leave Travel Allowance – LTA Proofs To Be Provided

Usually, the tax authorities will not ask employers to submit the travel expenses proof while assessing the travel allowance claims. However, the employer has the right to demand the travel expenses proof. Thus it is important for employees to secure the travel expenses proofs to submit the same whenever required. The list of proofs which an employee will have to secure or submit is given below:

  1. Travel Boarding Pass
  2. Flight Tickets
  3. Invoice of Travel Agent
  4. Duty Pass
  5. Other relevant documents which an employer might demand for

Leave Travel Allowance – LTA Calculation

Any employee will able to claim the Leave Travel Allowance (LTA) for any 2 journeys in a slab of 4 years. This 4 years slab or blocks are designed by the officials of the Income Tax department and completely different from Financial Years (FY). At present, we are in the slab or block of 1st January 2018 to 31st December 2021. Thus any employee will able to claim the Leave Travel Allowance which took place between the year 2018 to 2021.

However, if an employee fails to claim an LTA, then the LTA exemption gets forwarded to the consecutive year but not to the next block or slab. The LTA is applicable only for ticket charges or travel prices. Other expenses such as food, accommodation, or any other liabilities are not covered under LTA.

How To Claim LTA?

Is LTA Deducted from Salary? Leave Travel Allowance is not a general part of the employee salary structure. Thus it is important for one to check their salary pay structure before claiming the LTA. Leave Travel Allowance amount varies from one employee to another and thus before applying for LTA, one will have to check with the employer if they are eligible or not.

If you find that you are eligible to claim LTA, then you will have to submit the necessary bills to your employer. Usually, the employer will announce the time frame within which the employee will have to submit the LTA Claims. This process is usually carried out by the admin/HR/accounts team in any office. Despite the above process, the employees are advised to check with their employers or HR team to know, How TO Claim Leave Travel Allowance in ITR since each organization operates the process in different forms.

Leave Travel Allowance Example

To understand the LTA, here is an example with the help of which you can understand how Leave Travel allowance is approved to the employee.

Let’s consider an employee named ABC who has provided an LTA of Rs.40,000 by his/her employer under the salary structure. Now ABC has traveled and spends only Rs.35,000 on travel costs. So here the employee exemption is limited to only Rs. 35,000 though the ABC had Rs. 40,000 to spend. Leave Travel Allowance Exemption Limit For Ay 2021 22 is Rs. 35000.

How To Claim LTA Without Travelling?

Due to the spread of COVID-19, most people are not in the situation to travel. Thus claiming LTA under these circumstances is highly difficult. To help with this, the officials have come up with certain conditions, where employees will be able to claim LTA without traveling.

LTA Covid Rules

  1. 3x the amount of LTA gained or obtained in the salary structure should be spent.
  2. Purchases must be made from a licensed GST dealer, and all payments must be made solely through digital channels.
  3. All the purchase invoices must be sent to the employer.

FAQs on LTA – Leave Travel Allowance

The frequently asked questions on LTA are given below:

Q. Can I claim LTA without Travelling?
A. Yes, due to the pandemic in the country, the officials have come up with new rules to claim LTA. All the employees will have to meet certain conditions to claim the LTA. You can check how to claim to Leave Travel allowance without traveling from the above section of the article.

Q. Can I claim LTA if I traveled by my own car?
A. No, he/she won’t be able to claim to Leave Travel Allowance if he/she travels by his own car or taxi as the mode of transport.

Q. Can I claim petrol bills in LTA?
A. No, LTA cannot be claimed for Petrol or other expenses expected the travel ticket fare or price.


Now that you are provided with all the necessary information about LTA and we hope this detailed article on Leave Travel Allowance is helpful to you. If you have any queries on this page, ping us through the comment box below and we will get back to you as soon as possible.

UAN Help desk

UAN HelpDesk | Solution to Lost Password, Mobile Number, Wrong DOB, Name

Leave a Comment / Saving Schemes / By / January 10, 2024

UAN Helpdesk: UAN is the Universal Account Number consisting of 12 digits provided to each individual that opts in for the Employee Provident Fund programme provided by companies to their employees in India. This UAN can be used to check the accumulated balance in your EPF till the present date, and also for seeing employer and employee details relating to your EPF accounts. An online UAN help desk, especially at a time where the Coronavirus has taken over the offline world, is very important for all Provident Fund holders. In this article, we will solve the common problems that can arise with the UAN system.

How to Register for the UAN Unified Member Portal?

You need not register for the UAN by yourself as there are two ways to do it and this is only one of the ways. It is generally your employer that allocates you a UAN number that you can use to check all the details of your Employee Provident Fund. The employer should give this number to you while he or she offers you the EPF and you take it. If this does not happen for some reason, such as if you start working in a new company and choose to opt out of the EPF at that company, you will not receive the UAN number from your employer. In this case, you can generate the UAN number yourself using Aadhar.

Here are the steps you need to follow to generate a UAN number for yourself using the details on your Aadhar card:

  1. First, go on to the UAN Unified Member Portal (this is the new UAN portal which is in use as of 28th December 2016).
  2. On the bottom of the page, towards the right-hand side, you will find that there is a link there to attain an Aadhard-verified allotment of a UAN 12-digit number, click on that link.
  3. Enter your Aadhar card number where it requires you to, after which the portal will send you an OTP on the mobile number which is registered with your Aadhard card.*
  4. Enter the OTP once you receive it on your mobile phone or the registered mobile phone.
  5. Once your Aadhar ID has been verified via OTP, your details will auto-fill (please make sure your Aadhar details are correct before you do all this. If not, please get the details updated by applying for Aadhar Card Correction at the nearest Aadhar verification centre).
  6. You will receive the UAN number allotted to you via SMS, or after clicking on ‘submit’.

*Note: If the mobile number linked to your Aadhar is not your own and is someone else’s, please make sure that you have access to it when you are carrying out this process, otherwise it’ll only be a problem for you.

What to Do When You Forget Your UAN Password and Lose Access to Your Registered Phone Number

Before 28th December 2016, the process to change your UAN password required going through the UAN helpdesk. Now, all you need to do is go through the unified portal for UAN offered by the Employee Provident Fund Organisation (EPFO). You can easily change the password using an OTP that you can receive on your mobile phone on the registered number. If you don’t have access to that phone number anymore, you can follow the steps mentioned below.

Here are the steps required to change your password:

  1. Get to the Unified Portal for UAN provided by EPFO and where it asks for your login credentials, select ‘forgot password.
  2. The next page will ask for your UAN number and a captcha. Enter both and remember that the captcha is case-sensitive.
  3. Next, you will see your name, date of birth and gender, which you are required to verify via your linked Aadhar card or PAN card.**
  4. Once verified, you can set a new mobile number for your account. Make sure that it is the correct number and that you have access to it. You will receive an OTP on this number to allow you to set a new password.
  5. When you see the sign that says “password successfully changed” you can use your new password to log into your UAN account.

**Note: If it says “incorrect details” then kindly check with your employer which Aadhar card or PAN card is linked with your UAN to get the correct number for verification.

What to Do When Your Details on UAN Are Wrong

The most inconvenient situation arises when we know our correct details, but they’re fed into the system in the wrong manner and you do not know how to change this and correct it. Don’t worry, we’re here to help you out with just that.

Given below are the steps that you are required to follow when trying to change your details on the UAN unified portal:

  1. Log into your UAN account and look for the ‘manage’ tab.
  2. Under the manage tab, there will be three options: contact details, KYC and modify basic details. Please click on “modify basic details.”
  3. Once you arrive at the page, there will be an option for you to fill out your Aadhar card number. Enter the 12-digit number of your Aadhar card in the required space, and allow the system to do its work. It will auto-fill in your details based on the information on your Aadhard card.***
  4. Once this is done, simply click on “update details” at the bottom of the page, and your details will be sent to the employer for approval.
  5. If and when approved by the employer, the application will then go to the Dealing Assistant, Section Supervisor at the EPFO Field Office. From here on, the final approval lies with the Assistant Provident Fund Commissioner (APFC) or the Regional Provident Fund Commissioner (RPFC).

***Note: Please make sure that all the details on your Aadhar card are correct. If they are not, they will go on your UAN account linked to your provident fund, and this may become a problem later on. Sometimes your name can be spelled incorrectly on the Aadhar card, or even gender – make sure to get all these errors corrected in the Aadhar before correcting on the UAN portal.

What to Do if I’m Not Being Able to View My EPF Passbook?

Most of the time, new things, especially new technology, can end up confusing us more than helping us. You may be facing some difficulties in trying to view your EPF passbook on the new UAN portal. However, this is not a problem, because we shall help you figure this problem out.

Here are the steps you need to follow to view your EPF passbook on the new UAN portal:

  1. Make sure that you are registered on the UAN portal. If you aren’t registered, please register yourself referring to the first section mentioned above.****
  2. Go to the EPF website (http://www.epfindia.gov.in).
  3. Find the section which is labelled “Our Services” and click on it.
  4. Under this, there will be four sections: for employers, for employees, for international workers, and for pensioners. Please click on “for employees”.
  5. The second option upon clicking “for employees” will be “Member Passbook” so click on that option, which will take you to a login page.
  6. Enter your UAN account credentials and it will, by default, open to the passbook page.

****Note: If you have registered yourself on the UAN portal very recently, you might have to wait before you can view your passbook. The e-passbook for your EPF becomes available only six hours after you register yourself on the UAN portal.

UAN Helpdesk

Conclusion on UAN Helpdesk

All in all, the problems that may arise on the UAN portal are very easy to resolve, and you just need to find the right guidance to help you through it. Checking your EPF balance has never been easier seeing as how it has simply cut the red tapes in its by moving online. Even the processes to get your details changed have become very simple and easy to understand. If you’re having any more trouble with your UAN account, you will be able to find more articles written by us to help you through them.

 

 

Income Tax Interest Penalty Sections 234A, 234B, 234C

Income Tax Interest Penalty for Late Filing | Sections 234A, 234B, 234C

Leave a Comment / Income Tax / By / January 10, 2024

Interest Penalty Under Sections 234A, 234B, 234C: Paying Income Tax is a must for all individuals who are qualified to pay the tax. Any individual failing to pay income tax online is liable to pay the penalty or fine. Thus it is important for all individuals to pay income tax within the time frame specified by the officials.

However, many of the individuals might end up not paying the income tax on time due to some or other reason. And if any individual comes across this situation, then he/she will have to pay an interest penalty. This interest penalty is calculated namely under 3 sections namely 234A, 234B, and 234C. Income Tax sections 234A, 234B, and 234C vary from to another and we have explained each section in detail on this page. Read on to know what is the Income Tax Penalty Interest For Late Filing is calculated under Sections 234A, 234B, 234C.

How Much Is Interest And Penalties On Taxes?

The interest and penalties on taxes are calculated under sections 234A, 234B, 234C. Each section varies from one to another. So before calculating the interest or penalty of income tax, one will have to check the section under which they are falling for. The details of each section are given below:

  1. Section 234A – For delay in filing the income tax
  2. Section 234B – For incomplete payment of tax
  3. Section 234C – For delay in periodic payment of tax

Free 234A 234B 234C Interest Calculator

Section 234A of Income Tax Act For AY 2020-21

Any individual who files the income tax after the timeline specified by the officials will have to pay the income tax interest penalties as per section 234A. Basically, the income tax should be paid by the individual before the end of a financial year. Thus it is important for individuals to pay the outstanding tax and file the Income Tax Returns on or before the specified time frame.

However, if an individual misses the timeline specified by the officials, then he/she is imposed with a simple interest charge of 1% per month for the outstanding tax amount. This simple interest is calculated from the due date of filing IT returns till the date of the return is filed.

Note: The interest under Section 234a is calculated on the basis of simple interest only.

Section 234A Calculation of Interest Penalty

Let’s understand how income tax penalties and interest are calculated under Section 234A with an example.

How is 234A Calculated?

Assuming, Mr.Kumar is an individual who has to pay the outstanding tax amount of 3 Lakhs. The due to file his tax return was on 31st July. But Mr.Kumar missed to file the ITR on 31st July and now he is filing the ITR on 15th January. Here Kumar is late by 6 months to pay the income tax. Now the penalty for Kumar is calculated as follows:

Interest = 300,000 x 1% x 6 = Rs. 18,000

As per the calculation, now Mr.Kumar will have to pay Rs.18,000 extra as a penalty or interest above the income tax amount.

Section 234B of Income Tax Act for AY 2020-21

If any individual is liable to pay a tax of Rs. 10,000 or more in a particular financial year, then the advance tax is applicable. Here the term “advance tax” refers to paying your tax debts in advance of the income tax department’s deadlines (usually quarterly). Failing to pay advance tax on time will subject to interest or penalty under section 234B if you do not pay advance tax.

These Advance taxes are tax liabilities that are incurred at a certain time interval and are administered by the Income Tax Department. Advance tax is payable by businessmen, self-employed professionals, and salaried workers when the tax payable exceeds Rs 10,000.

Basically, here the individual should have paid at least 90% of the total tax payment before the financial year ends. Any individual failing to pay the tax whose amount is more than 10% of the liability, then 1% of simple interest or penalty is charged by the officials under the Income-tax act section 234B.

However, any individual who liable to pay tax can opt under computing business income whose turnover expected to be 8 percent can be exempted from paying the advance income tax. Also, senior citizens or 60 years+ who don’t have income will also be exempted under this section.

Section 234B Calculation of Interest Penalty

Let’s understand how income tax penalties and interest are calculated under Section 234B with an example.

How is 234B Interest Calculated?

Pavan was supposed to pay a total tax of 2 Lakhs for the current financial year. TDS  equal to the income tax of Rs.1,82,650 was deducted from Pavan’s income regularly. In the month of March, Pavan paid Rs.8000 and the remaining balance amount of Rs. 9,350 was paid in the month of June. Now the penalty or interest on income is calculated under section 234B is given below:

Assessed Tax = Total Tax – TDS

= Rs 2,00,000 – Rs 1,82,650

= 17,350

90% of 17,350 = 15,615

Out of 15,615, Pavan has already paid 8000

Now the interest penalty is calculated as:

Rs. 15,600 x 1% x 3 months

= 468

Now, Pavan is liable to pay Rs.468 as a penalty under section 234B on the interest of the assessed tax.

Note: Here we have considered Rs.15,615 as 15,600 since calculations are considered as round figures. 

Section 234C of Income Tax Act for AY 2020-21

As discussed above any individual will have to pay income tax on time before the financial year ends. Failing to pay income tax on time will cost penalty interest of the assessed tax. The important dates within which the advance tax can be paid for the particular financial year are tabulated below:

Category Income Tax Due Date
Corporate taxpayer – 15% of advance tax Before 15th June
Corporate (45% of advance tax) and Noncorporate taxpayer (30%) Before 15th September
Corporate (60% of advance tax) and Noncorporate taxpayer (75%) Before 15th December
Corporate and Noncorporate taxpayer  – 100% tax advance Before 15th March

Section 234C Calculation of Interest Penalty

Simple interest of 1% per month is imposed who fail to pay the tax on time till the date of actual payment. After the tax deductions under Sections 90, 91, and 115JD, the amount to be paid is determined. Under Section 234C, the interest penalty is determined as follows:

How do you calculate 234C?

The calculation of 234C for Corporate and Non-Corporate are explained in detail below:

Section 234C Calculation for Non-Corporate Taxpayer

  1. For advance tax less than 30% of the amount payable on or before 15th September, a 1% interest rate per month for a period of three months is calculated.
  2. If the amount of advance tax paid on or before December 15 is less than 60% of the taxable amount, interest of 1% per month will be charged for the next three months.
  3. A basic interest rate of 1% per month is calculated for amounts less than 100% of the advance tax paid on or before March 15.

Section 234C Calculation for Corporate Taxpayer

  1. If 15% of the sum is deposited on or before 12th June and the advance tax is less than 12%, an interest rate of 1% per month for three months will be levied.
  2. If 45 percent of the tax is deposited on or before September 15 and the advance tax is less than 36 percent, a penalty of one percent of the interest per month is levied for three months.
  3. When a tax of 75% is paid before December 15 and the payable amount is less than 75%, a simple interest rate of 1% per month is calculated for a period of three months.
  4. A simple interest of 1% is levied when the amount of advance tax to be paid is less than 100% of the amount already paid as tax.

FAQ’s on Sections 234A, 234B, 234C

The frequently asked questions on interest penalty on Income Tax are given below:

Q. Where do I find the advance tax penalty calculator?
A. The officials of Income Tax India have come up with a free advance tax penalty calculator service on their official website. Any individual will be able to calculate their advance tax with the help of the official calculator. To access the advance tax penalty calculator, Click Here.

Q. What if the advance tax due date is Sunday?
A. If you find the due date is Sunday or a government holiday, then he/she can deposit the tax on the next working day.

Q. What is 234a 234B 234C interest?
A. 234A, 234B 234C are the sections of the Income Tax Act, which is applicable for any individual who fails to pay the tax on time. Each section varies from one to another and a detailed explanation about each tax can be found on this page.

Now that you are provided with all the necessary information on calculating interest 234a, 234B, 234C with an example. We advise you to pay all the advance tax on time to avoid penalties. If you have any questions about income tax interest penalties, ping us through the comment box below and we will get back to you as soon as possible.

Maintenance of Accounts Section 44AA

Maintenance of Accounts Section 44AA | Who Need to Maintain Account Books for Income Tax?

Leave a Comment / Income Tax / By / January 10, 2024

Maintenance of Accounts Section 44AA: The Income Tax Act specifies the books of accounts that must be kept for the purposes of income tax. Under the Income Tax Act Section 44AA and Rule 6F, maintenance of books is mandatory. These accounts are official documents that show how much money your company has made and spent over the years it has been in operation. In addition, the data you collect can be used to calculate your total tax liability.

These account books will be scrutinized by the income tax department officials from time to time. In this article, let’s understand what is Section 44AA under the income tax act, who is required to keep records, what goes into those documents, and how long those records must be available for inspection.

What is Section 44AA?

Section 44AA specifies who is needed to keep books of accounts for the purposes of income taxation. For income tax purposes, businesses and professions are required to keep books of accounts. Section 44AA specifies the specific conditions for various transactions which need to be maintained in the account books.

Who is Liable to Maintain Accounts as per Section 44AA?

A large number of professions are required to keep books of accounts in order to be audited by an Assessing Officer for income tax purposes. Individuals who should maintain the account books for income tax inspection by an Assessing Officer is specified by the officials of income tax. The list of persons in the following professions are required to keep books of account under Section 44AA and Rule 6F:

  • Accountancy
  • Architectural
  • Engineering
  • Film Artists
  • Interior Decoration
  • Legal
  • Medical
  • Technical Consultancy

However, the officials of the Central Board of Direct Taxes can add more professions to the above list from time to time. Apart from the above-mentioned profession, individuals meeting the following criteria will also have to maintain the account books:

  • These rules apply to you if you are a freelancer in one of the mentioned professions and your gross receipts exceed Rs. 1,50,000.
  • If the gross receipts for an existing profession were higher than Rs. 1,50,000 in the previous three years.
  • This also applies to a newly established profession with estimated gross receipts of more than Rs. 1,50,000.
  • Any person who is subject to Sections 44AD, 44AE, or 44AF and has declared less income than the profits calculated under these sections must maintain the account books.

What Accounts Need To Be Maintained Under Section 44AA?

The term “keeping account books” refers to keeping track of all transactions made by an individual or company during a given assessment year. As per the rule 6F, individuals will have to maintain the following books:

  1. Cash Books: All cash receipts, payments, and cash balances are recorded on a daily basis.
  2. Ledger: A ledger contains details of all accounts and can be used to produce financial statements because all entries flow from the journal.
  3. Journal: If you’re using the Mercantile Accounting format, keep a journal.
  4. The assessee issues carbon copies of bills and receipts with serial numbers. This is only applicable if the transaction amounts to more than Rs. 25,000.
  5. Medical professionals must also keep a daily case register in Form 3C, as well as an Inventory Book of their supply of medicines, drugs, injections, tools, and other consumables.
  6. Original bills and receipts for the assessee’s expenditures. If bills and receipts aren’t accessible and the amount spent is less than Rs. 50,000, the user can make payment vouchers or enter the transaction information into the cash book.

How Long You Should Maintain Books of Accounts?

All essential account books and papers must be held at the profession’s place of business, or at the profession’s main office if there are multiple branches, or at each branch office. After the end of the relevant assessment year, these records must be retained for a period of six years. The major objective of keeping these records is to guarantee that you are not involved in tax fraud or evasion, and if your case is under investigation for income tax, the Assessing Officer may examine your transaction records.

Who Needs To Audit Their Accounts?

A Chartered Accountant is legally required to audit the accounts of the following types of taxpayers:

Taxpayer Category
Audit Necessary For
An individual involved in a profession
The gross profit is more than Rs.25 lakh (Rs.50 lakh from FY2016-17)
An individual involved in a business
Exceeding Rs.1 crore in gross collections, turnover, or total sales (Rs.2 crore from FY2016-17)
An individual under Section 44AE’s presumptive income scheme
If your company income is less than the presumed income under Section 44AE, you can deduct the difference.
An individual under Section 44AD’s presumptive income scheme
If the individual’s total income exceeds the tax-free minimum income, the business income is lower than the presumed income under Section 44AD.

Due Date for Audited Records & Audit Report Submission

The deadline for having your records audited and submitting your audit report is tabulated below:

Taxpayer Statement Form Audit Form Audit Due Date
Submission Due Date
An individual involved in a profession or business who has to get audited compulsorily Form 3CD Form 3CA September 30 of that AY
September 30 of that AY
Any individual other than in the above category Form 3CD Form 3CB September 30 of that AY
September 30 of that AY

Penalty for Non-Maintenance of Books of Accounts

  1. A penalty may be imposed under section 271A if the taxpayer fails to keep accounting records as required by Section 44AA. A maximum penalty of Rs. 25,000 can be imposed.
  2. A penalty may be imposed under section 271B if the taxpayer fails to have the accounting records audited or provide an audit report as required by Section 44AB. A minimum penalty of 0.5 percent of total sales, turnover, or gross receipts can be imposed. A maximum fine of Rs 1,50,000 is imposed.

However, if the taxpayer has a good justification for not having an audit done, a penalty may not be imposed.

FAQs on Books of Accounts and Audit Requirements

Question 1.
When Assesses should maintain books of accounts compulsory?

Answer:
According to Section 44AA, if the income from a business is more than Rs.250,000 in any of the three preceding years, then books of account are required to be kept compulsorily.

Question 2.
Is an insurance agent required to maintain books of accounts?

Answer:
Insurance agents are required to keep books of accounts in order to claim expenditures. However, small insurance agents, whose yearly commission income does not exceed Rs. 60,000, are exempted from keeping a full account of expenses.

Question 3.
What is meant by books of accounts for company?

Answer:
The term “books of accounts” refers to the documenting of a company’s financial condition. It keeps track of all financial transactions.

Tax On BuyingSelling Of An Immovable Property Below Stamp Duty Value

Tax On Buying/Selling Of An Immovable Property Below Stamp Duty Value

Leave a Comment / Income Tax / By / January 10, 2024

Tax On Buying/Selling Of An Immovable Property Below Stamp Duty Value: In India, selling or buying properties (Building and Land) at a valuation lower than the stamp duty amount is widespread to avoid the Stamp Duty on registration, which generates a loss of revenue to the Government. Such losses are not only just on Stamp Duty revenue but also of Income Tax revenue that is to be repaid by an assessee on Income under Capital Gain head.

Under Section 43CA, Section 50C, Section 56(2)(x) states any immovable property is sold below the stamp duty value (or circle rate), then double taxation shall apply on such cases on the difference in the transfer price and stamp duty value.

What is Stamp Duty Value?

Stamp duty value proposes any value approved by any authority of the State Government or the Central government to pay stamp tax for the immovable property.

A Consequent Sale Of Such Property

If the property is considered as Capital Asset:

According to Section 49(4), the cost of acquisition for the objective of calculating capital gains on succeeding sale in the hands of the buyer (i.e. seller in the subsequent sales) where the capital assets shall be the stamp duty value.

If the property is considered as Stock (Other Than Capital Asset)

Under section 56(2)(x), there is no particular section that allows the assessee to take advantage of the enhanced cost on which tax has been settled at the time of purchasing of property. If such immovable property is being treated as stock in trade by the assessee, then for the purpose of calculating profit and gains from a business on the subsequent sale, the original transfer price (not stamp duty value) shall be used.

Taxability Of A Buyer

Finance Act 2017 (which was applicable from 01st April 2017)

Any person earns an immovable property for a consideration which is less than the value of stamp duty of the property by an amount exceeding fifty thousand rupees, then as per Section 56(2)(x), stamp duty value of such property passes such consideration shall be chargeable and taxable as income or earning in the hands of the buyer under the head Income from Other Sources.

Finance Act 2018 (which was applicable from 01st April 2019)

According to Section 56(2)(x), any individuals gains an immovable property for a consideration that is less than the value of stamp duty of the property and such excess is more than:-

  • the sum equal to five percent of the consideration, and
  • the sum of fifty thousand rupees

then as per Section 56(2)(x), the stamp duty value of such property passes such consideration shall be chargeable and taxable as income in the buyer’s hands under the head Income from Other Sources.

Section 56(2)(x) shall not be applicable in cases where any property received: –

  1. from any relation; or (which means Relative)
  2. on the moment of the marriage of the person; or
  3. by way of inheritance or under a will; or
  4. in consideration of the death of the donor or payer, as the case, maybe; or as defined in the Explanation to Clause (20) of section 10 that states -from any local authority; or
  5. from any university or other educational institution or from or by any trust or institution registered under section 12AA or section 12A; or foundation or fund or hospital or other medical institution or any trust or institution referred to in clause (23C) of Section 10, or
  6. by any institution or any university or other educational institution or any hospital or other medical institution or fund or trust referred to in sub-clause (iv) or sub-clause (vi(a)) or sub-clause (v) or sub-clause (vi) of Clause (23C) of section 10; or
  7. by the method of transaction not considered as transfer under clause (vi(a)) or clause (vi(a)) or clause (vi(b)) or clause (vi(c)) or clause (vi(c-a)) or clause (vi(c-b)) or clause (vi(d)) or clause (vii) clause (i) or clause (iv) or clause (v) or] clause (vi) of section 47; or
  8. from a person by a trust established or created solely for the benefit of a relative of the individual.

Where the date is not the same for an agreement fixing of the amount of consideration and the date of registration for the transfer of the capital asset, then for the purpose of computing the total value of consideration, the stamp duty value as on may consider the date of the agreement and not as on the date of registration for such transfer. However, this exception shall apply only when a part of the amount of consideration, or the full amount has been received by way of an account payee draft or account payee cheque or by using the system of electronic clearing through a bank account, on or before the date of the transfer agreement of such immovable property:

Note:- Similar choice of referencing to valuation officer (as prepared under Section 50CA) is also open to the assessee.

Taxability Of A Seller

When the immovable property is considered as a capital asset

If a capital asset, being building or land or both, is sold for remuneration below the stamp duty value, then according to Section 50C, such stamp duty value for the purpose of calculating capital gain under Section 48 shall be the deemed value of the consideration. The original payment paid for the alteration shall not be regarded for the purpose of capital gain in the heads of the seller.

However, if the date is different for an agreement fixing of the amount of consideration and the date of registration for the transfer of the capital asset, then for the purpose of computing the total value of consideration, the stamp duty value as on may consider the date of the agreement. Provided that a part of thereof the amount of consideration or the total amount has been received by way of an account payee draft or account payee cheque or by using the system of electronic clearing through a bank account, on or before the date of the transfer agreement.

Finance Act 2018 (relevant with impact from 01st April 2019) has improved the applicability of Section 50C only in those cases where the stamp duty value surpasses one hundred and five percent of the total payment so accrued or received for the transfer of the being land or building or both or capital asset.

When the immovable property is considered an asset other than a capital asset such as stock in trade

When an asset (other than a capital asset), being building or land or both, is sold under the stamp duty value, then as per section 43CA, such stamp duty value shall be used for the purpose of computing profit and gains from transfer of such assets and deemed value of the consideration.

However, if the date is different for an agreement fixing of the amount of consideration and the date of registration for the transfer of the capital asset, then for the purpose of computing the full value of consideration, the stamp duty value as on may consider the date of the agreement.

Provided that a part of thereof the amount of consideration or the total amount has been received by way of an account payee draft or account payee cheque or by using the system of electronic clearing through a bank account, on or before the date of the transfer agreement.

Finance Act 2018 (relevant with impact from 01st April 2019) has improved the applicability of Section 50C only in those cases where the stamp duty value surpasses one hundred and five percent of the total payment so accrued or received for the transfer of the being land or building or both or capital asset. Also, if the date is different for an agreement fixing of the amount of consideration and the date of registration for the transfer of the capital asset, then for the purpose of computing the full value of consideration, the stamp duty value as on may consider the date of the agreement. Granted that a part of thereof the amount of compensation or the full amount has been received by any mode other than cash, on or before the date of the transfer agreement.

A Valuation Officer And the Availability To A Seller

If the stamp duty value exceeds the fair market value of the property as on the date of transfer which is claimed by an assessee claims before any Assessing Officer and then such stamp duty value shall not be disputed in any revision or appeal or no reference will be made before any court or the High Court, or other authority, the Assessing Officer may involve the valuation of the asset to a Valuation Officer.

If the Valuation officer assessed a value that is lower than the stamp duty value, then the assessed value shall be acknowledged as the deemed sale price.

If the Valuation officer assessed a value that is higher than the stamp duty value, then the stamp duty value persists deemed sale price.

So, it may be possible that the stamp duty value may decrease if the recommendation is made to the Valuation Officer. Still, based on the valuation officer, it cannot be increased.