Articles by Bankingontips The Bankingontips Blog

The spread of coronavirus across the globe has created a big dent on the financial conditions of everyone. With pay cuts, salary delays and even lay-offs, there is hardly any money coming in people’s bank account. In this situation, people who forget to maintain a minimum balance in their accounts get charged with hefty fines.

Amidst all this, top banks such as Axis Bank, Kotak Mahindra Bank and Bank of Maharashtra have announced a revision in the penalty charges of non-maintenance of minimum balance. The penalty has increased and so has the troubles of common people.

The Best Way Out: Open A Zero Balance Savings Account

One of the best ways is to open a zero balance savings account. If you are a salaried employee, chances are high that you already have it. Otherwise, you can also open one online.

Be it SBI, HDFC or ICICI or Kotak Mahindra, almost all the leading banks offer this zero balance savings account that offers various features and benefits. Some of the best ones include:

·     No Need to Maintain Minimum Balance: As the name suggests, you do not need to maintain a minimum balance, unlike a normal savings account. You will not be charged with any penalty even if you have no balance in the account.

·     Easy Transactions: Zero balance accounts offer net banking, allowing you to make easy cash transactions. You can use this option to pay your bills and make payments online.

·     Free Debit Card and ATM access: A zero balance account also offers you ATM access with Debit card across all the outlets.

·     Mobile Banking: Banks also offer mobile banking services with zero balance account which you can easily access from your smartphone. From checking your bank balance to making transactions and paying utility bills, you can use all these services easily through your mobile.

·     Interest Rates: In some banks, the interest rate on a zero balance saving account is the same as that on a regular saving bank account.

Apart from the features listed above, you can also avail various other benefits such as banking on Whatsapp, Virtual Debit Card, Personalized account number and so on.

Different banks offer different features of zero balance account but one thing that remains the same is that you do not have to maintain a minimum balance.

 For more such articles and updates from the banking sector, keep browsing bankingontips.com.

Apply for Kotak Bank Zero Balance Saving Account: Click Here

Apply for IndusInd Bank Zero Balance Saving Account: Click Here

In his speech of making India 'Atmanirbhar' (self-dependant), Prime Minister announced a boost of Rs. 20 Lakh Crore to the Indian Economy. Out of this Rs. 20 Lakh Crore, around Rs 1.37 lakh crore was sanctioned to MSMEs, under Emergency Credit Line Guarantee Scheme (ECLGS). But, to give relief to a broader set of people, Govt. of India has now announced that this ECLGS scheme will now also cover individual entrepreneurs.

Earlier, this used to cover only loans availed for Micro, Small, and Medium Enterprises, but with this new announcement, personal loans given for business purposes will also be counted under the ECLGS scheme.

Eligibility Criteria

A number of MSME organizations and market chambers suggested to the finance ministry that they should broaden their eligibility criteria to include individual entrepreneurs under this scheme. A great chunk of loan borrowers (around 80-90 percent) who had taken loans from NBFCs for their business tools or vehicles were ineligible for the Emergency Credit Line Guarantee Scheme yet.

With this change, individual business persons like cab or truck drivers, shop owners, lawyers, doctors, engineers, etc. will also be eligible for the loan.

However, the catch is that first-time loan borrowers can not get new loans under this scheme. People who have already taken loans from banks to Non-Banking Financial Companies can stretch their loans.

What Are The Benefits?

Talking about the scope of this new development, Debasish Panda, Secretary of Department of Financial Services said to the media, "A total of around Rs 1.37 lakh crore has been sanctioned under the scheme by member lending institutions to around 40 lakh accounts, of which around Rs 87,000 crore has been disbursed. The changes in the ECLGS scheme are likely to make an additional Rs 1 lakh crore eligible."

Companies that have an annual turnover of up to Rs 250 crore but have an outstanding loan of the amount up to Rs 50 crore can now avail an additional loan of up to 20%. This implies that individual entrepreneurs will now be eligible to get around Rs 10 crore as additional financing, instead of just Rs 5 crore.

To make sure that lenders don't charge too much from the borrowers, the central government has capped the interest rates. For banks and financial institutions, loans under the ECLGS scheme can only charge an interest rate of 9.25 percent per annum, while for Non-Banking Financial Companies, this cap is up to 14 percent interest rate per annum

According to market insiders, if executed before the prescribed date, this scheme can boost the economy enough that it can gain a stable momentum afterward.

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Owning a home is a dream every person wants to fulfill. And if you have been planning to buy your home, now is the time. Thanks to LIC, people can turn this dream into reality even in the times of COVID-19. The company’s housing finance arm is offering the lowest ever interest rates on home loans.

Recently, LIC Housing Finance has announced a 6.9% rate of interest on new home loans. People who have a CIBIL score of 700 or more can get home loans of up to Rs 60 lakhs at a 6.9% interest rate. In addition, for the same CIBIL score, the rate of interest is 7% onwards for loans above Rs. 50 lakh.

Talking about it, Siddhartha Mohanty, MD & CEO, LIC Housing Finance, said, “Home loan interest rates are at an all-time low for the company, thereby resulting in low EMI payment. Attractive price points and affordable EMIs will aid in addressing the demand side for buying homes.”

He also added that through this product, the company is trying to create demand in the market. He said, “There is no dearth of liquidity what is lacking is consumption demand through this product we are trying to create that.”

Griha Varishtha: Another Surprise

It is not just the low-interest rates but another special surprise that is ready to charm the people. LIC Housing Finance is launching a special home loan product for pensioners - Griha Varishtha.

The home loan product will cater to retired or serving employees of government, PSU insurers, defense, banks, and railways who are entitled to a pension under Defined Benefit Pension Scheme.

As far as the tenure of this product is concerned, it is either till the attainment of 80 years or maximum up to 30 years, whichever comes earlier.

The Bottomline

In the midst of the Covid-19 pandemic, many banks are reducing the interest rate two to three times. The State Bank of India, the largest bank in India, has also reduced the interest rate by 6.95-7.0 percent on home loans up to Rs 30 lakh. This is giving a ray of hope to those who were planning to buy a home.

If you wish to know more about the LIC home loans, click here.

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The largest part of India's taxpayer group is of salaried persons. They pay the highest amount of taxes that ultimately help in basic infrastructure like roads and provide good health services and education systems. But this transaction is not only one way. The government also says Thanks by giving them monetary relief.

They are exempted from a portion of the tax for different kinds which are called allowances. If a salaried person takes reimbursements from the employers, a large chunk of money will be saved by the end of the year.

An employer's salary is made up of many components. The total salary package of employers is called Cost to Company (CTC). While the money that gets credited into account is called in-hand salary, which is lower than this CTC. It happens because employers deduct various kinds of taxes imposed by the governed. While some of these taxes are fixed, a few can be reimbursed if employers’ claim for allowances.

Here's a list of major deductions and allowances given by the government:

1.    House rent allowance (HRA)

2.    Telephone reimbursement

3.    Books and periodicals allowance

4.    Meal coupons

5.    Interest on higher studies loan

How to Reimburse Them:

The name of these allowances is pretty explanatory. If an employee is living in a rental house, then he/she is eligible for HRA. The same logic applies to other allowances. What these allowances basically mean is that salaried people should get some relief on their basic needs of working like housing, traveling, reading, and eating.

The process of asking reimbursements of these allowances is very simple. Salaried people have to give bills for using these basic services and commodities.

For HRA, one needs to submit rent receipts including the PAN of the employer (PAN is compulsory if the rental payment is above INR 1 lakh annually). For books and periodicals allowance, one has to submit newspaper bills, bills of books, and magazines. The same rule applies to telephone reimbursement, meal coupons, and Interest on higher studies loans.

However, one allowance that deviates from the same logic is Standard Deduction. In the last budget, it was decided that a standard amount of Rs 50,000 would be deduced from IT for salaried employees. It actually replaced transport allowance and medical reimbursement.

These tax allowances may sound small to a middle-middle-class or a higher- middle-class person. But when all of these allowances are accrued, the sum money almost looks like a monthly saving that has accumulated after a year. Basically, if you get reimbursement for all these allowances, you'll start getting more money than your present in-hand salary.

For more details about the changes in Income Tax exemption, click here.

Want to save more of your hard-earned money? Keep reading BankingOnTips Blog.

The month of June is about to end and there is something very important all PAN Card holders must do. Otherwise, they will have to pay Rs. 10,000. Many people know that June 30, 2020 is the last date to link PAN cards with Aadhaar cards. But, not many know that if they fail to do this, they will have to pay this massive amount as per Section 272B of the Income Tax Act.

Earlier, the deadline for linking PAN with Aadhaar card was March 31, 2020. However, due to the nationwide lockdown, the government shifted the last date to June 30.

What Will Happen?

As per reports, if PAN Card holders fail to link their PAN and Aadhaar, then their PAN cards will be declared as ‘inoperative’. This will mean that they will not be able to hold any financial transactions linked with PAN.

Now, the Income Tax (IT) Department has released a new notification. According to this notification, PAN card holders will face strict consequences like paying penalty of Rs.10,000 if they miss the deadline.

Therefore, if you are among those whose Aadhaar is not linked, make sure you complete the step before it is too late.

How To Link You PAN card with Aadhaar Card?

To help you save both your money and PAN card, we have listed below a step-by-step guide about how you can link both of your cards. Read carefully.

There are two methods for the linking process:

1.  Through e-Filling Website

1. First, visit the official website of the Income Tax Department at https://www.incometaxindiaefiling.gov.in/home and choose “Link Aadhaar” option from the left side panel.
2. Now, enter your details like PAN card number, Aadhaar number and Name as mentioned on the cards.
3. Tick the square box if you have mentioned your birth year on Aadhaar Card.
4. Now, enter the computer-generated Captcha code. For visually-impaired, the site has an option of sending OTP on the registered mobile number.
5. Click on the “Link Aadhaar” option and you are done.

2.  Through SMS

1. Send an SMS UIDPAN<SPACE><12 Digit Aadhaar Number><SPACE><10 Digit PAN> to 567678 or 56161 from registered number.
2. An example would be – UIDPAN 987654321000 ABDBE3445E. There is no charge for sending this SMS by NDSL or UTI. But, you may have to pay the SMS charge to the mobile operator.

To ensure that you do not face any complications or pay hefty amount of Rs. 10,000, link your PAN and Aadhaar today.

For more details and updates, keep reading BankingOnTips.

Earlier this financial year, a lot of controversies stirred around company directors’ salary, whether a GST should be collected or not. Putting an end to that, the Finance Ministry has released a circular saying that Goods and Services Tax (GST) will not be levied on the salaries of the directors who are employees of the company.

The issue was examined for two categories. The first one referred to the independent directors and the others referred to the whole-time directors like Managing Directors treated as the employees of the company.

Important Points Of The Circular

The circular was released by the Central Board of Indirect Taxes and Customs (CBIC), the policy making body for indirect taxes under the Finance Ministry. It stated, “The part of director's remuneration that are declared as ‘salaries’ in the books of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for services by an employee to the employer in the course of or in relation to his employment in terms of Schedule III of the CGST Act, 2017.”

However, there are other factors that can be subjected to GST. Below are the conditions under which the directors’ remuneration will be taxable:

·     The remuneration that is not declared as ‘salary’ in the company’s accounts and is subjected to TDS under Section 194J of the IT act as fee for professional and technical services.

·     The remuneration paid to independent directors or those directors who are not the employees of the company on reverse charge basis. These lie clearly outside the scope of Schedule III of the CGST and are taxable.

As per the media reports, at least 18 per cent GST will be charged on the payments. Also, it is the responsibility of the company to collect the GST and give it to the government.

The Controversy

The controversy around company directors’ began earlier in this financial year when Advance Ruling Authorities held different views on the levy of GST on remuneration paid to Directors of a company.

In the case of M/s Clay Craft Indian Private Limited, ARA Rajasthan held that company directors cannot be treated as the employees of the company and their remuneration should be taxable. This was later troubled when ARA, Karnataka stated the contrasting statement. It said that all the remuneration paid to the directors cannot be said to be leviable under GST.

These contradictions caused a lot of stir in the industry and everyone was keenly waiting for a judgement by the higher authorities. The new circular has now given relief to all taxpayers by interestingly intertwining the Income Tax Act and the GST provisions and ending the controversy.

For more such articles and updates, keep browsing BankingOnTips.