Look Beyond Bank Fixed Deposits

• If you sell a house, you will have to pay tax ( Capital Gain Tax ) on it at the rate of 20 % after deduction for inflation ( indexation benefit ) plus cost of repair, renovation, brokerage etc - these are allowed if proper record of such expenses are kept. 
• If value of property is more than Rs 50.00 lakh, it is mandatory for buyer to deduct 1 % from amount payable to you and deposit it with income tax department - you have to take a TDS certificate from buyer for this. Amount paid is to be adjusted as TDS while filing return.
• One can save taxes if you invest the proceeds in another house property. But house should be bought within one year before or two year after from date of sale of property. This exemption is also allowed if a new house is constructed within three years of sale of property. But this exemption is not allowed if you have more than one house in your name.
• But if you buy a house property then money will again get blocked - rental income in India is about 2-3 % of cost of house. But if you are in need of money, there is better way - invest capital gains in govt of India Capital bonds of certain companies which give 5.25 % return per annum and money is returned to you after 5 years, which you can then invest to get a return of about 12 % per annum. Also no tax is deducted on interest from these bonds by these companies ( TDS ). But investment in these bonds are required to be made within 6 months of sale of property.
• If you are in 30 % tax bracket then buying & selling of house property can be a good proposition as this brings down rate of tax on such income from 30% to 20 %. But conditions are - (a) you don't own more than one house (b) Propertyis with you for more than 2 years.(c)you don't sell the property bought from proceeds of old house within three years.

• Further benefit is that you can deduct losses from sale of shares or mutual fund with income from sale of house property.
• Remember, if value of property is more than Rs. 30.00 lakh, it is mandatory for Registrar to report the transaction to income tax department. Again, no transaction of more than Rs 20,000 is allowed in cash and deposit of Rs more than 10.00lakh in bank account is reported to tax authorities.
• Also, Capital Gain tax is charged on amount which is greater of (a) circle rate fixed by collector (b) actual selling cost - so, if circle rate or market rate of property is Rs.50.00 lakh and you are insisting that you have sold property for Rs 30.00 lakh, then that will not be accepted - you will have to pay tax on Rs 50.00 lakh.

So, for a normal employee, there is no sense in holding a second property - your children may not be living with you after sometime for reasons of employment etc. Also, design and facilities in house evolve with time - so, your old house may be useless for them. It is also not true that house property gives the maximum return. Therefore sell your second house and enjoy money you get from selling the house - and bequeath the remaining amount to your children so that they can buy house of their choice of design & place. You can even sell a big house and  move into a small house.

New Pension Scheme ( NPS ) can create wealth for you & your family which Old Pension Scheme ( OPS ) of government cannot do. Some advantages of NPS are - 

• In NPS, you can invest up to 75% of your contribution in equity schemes which means that your corpus can grow at least 4 times more than what you can accumulate in Old Pension Scheme.
• If you want to go into details of calculation, let us consider that in OPS, you are contributing Rs 10,000 per month to GPF ( Government Provident Fund ) - after 30 years your  GPF will grow to Rs 1.18 cr. at 8 % per annum. If you opt NPS, your contribution of Rs 10,000 (say) wil have matching contribution of Rs 10000 from employer ( now Rs 14000) - meaning Rs 20,000 contribution per month. The corpus here will grow to Rs 4.32 cr in 30 years @ 15 % per annum - meaning a pension of Rs 1.40 lakh per month at the rate of withdrawing 4 % per annum - as is norm.
• So, in old pension scheme you get  GPF of Rs 1.18 cr and monthly pension of Rs 1.00 per month. In New Pension Scheme, you get Rs 4.00 cr  - which you can manage to get a pension of Rs 1.40 lakh per month in addition to 90 % of your corpus being intact.
• Other advantages are  - In old Pension Scheme if employee dies, spouse will get only 40 % of pension and if both die, offspring gets no pension. This can be particularly disadvantageous if employee dies early. In New Pension Scheme, total amount received remains in family, no  matter when employee dies.
• Also in Old Pension Scheme, in case of enquiry or court case- employee does not get full pension or GPF. No such deduction is allowed in NPS.
• In addition to this, subscriber to NPS get Rs 50000 extra deduction in income so that  total deduction comes to Rs 2.00 lakh.
• Only problem is that, govt employee are not allowed to invest 75% of contribution in equity which reduces the amount you get on retirement. 

Therefore, if employee wants to create wealth for family in several crores , New Pension Scheme is the option. This is not difficult if you contribute regularly for 30 years in equity schemes..

No, father and not the mother is the first and natural guardian of minor legitimate children - sons or daughters according to Hindu Minority and Guardianship Act 1956. A father cannot be deprived of the natural guardianship of a minor children  unless he has been found unfit. If father is incapable or fails or refuses to perform the functions, then mother can be the guardian. A minor is one who has not attained the age of 18.

• But mother is the natural guardian of an illegitimate child, even if father is alive. Similarly husband is the natural guardian of minor wife.
• Not only this, if father wants he can appoint a guardian for his minor  child, other than mother by will. In addition to this, there is also concept of "Defacto Guardianship" - he is a person who looks after the minor in a selfless manner without any authority of law.
• In addition to this, if there no natural guardian to look after the minor - district court can appoint guardian to minor. Not only this, court can appoint separate guardian for upbringing of minor and other person as guardian for looking after property.
• Duties of guardian include --

1. Taking custody of the child and provide a place for the child to live.
2. Being personally acquainted with the child and maintaining enough contact with child to know his or her abilities, limitations, needs, opportunities and physical and mental health.
3. Taking care of property.

• Provision of this Hindu Minority Act applies to Jain, Budh & sikh in addition to Hindus. Natural guardianship provisions are different for Muslim, Christian & Parsee community.

                   So, father not the mother is the first guardian of minor. However, in case of divorcee, the situation can be different

• Do you have a house and you need money in retirement days but don't want to sell the house then Reverse mortgage loan is the solution. During our working live, we tend to make big house keeping in view the residential needs of our children along with ours. But later on children leave the house to earn livelihood. Now the house becomes the liability.
• There can be other situations when you need money, but you cannot sell your house because of emotional attachments or because house cannot be partitioned and sold. 
• Reverse Mortgage is custom made financial arrangement designed to fulfill the funding needs of senior citizens. Now after retirement you can mortgage your house with bank or other lending institutions and obtain lump sum  money or you can receive it in monthly installments. 
• For this you should be minimum of 60  years of age and that of your spouse be of 55 years at least. Amount you receive will be equal to 80 % of  residual value of property at the time of sanction of amount. Also income from mortgage is tax free.
• In lieu of payment received from bank, one has nothing to pay to bank during his life time. However the death of owner  or owner moving out of property, bank takes over the property and auctions it to recover the loan.However legal heir of property can reclaim the property after paying the mortgage value.
• For property to be mortgaged, it should be self-occupied by beneficiary - let out property are not eligible for reverse mortgage loan.Also the property should have at least 20 years of lifetime left.  
• Also payment period is maximum of 20 years , so if the owner outlives this period, he will not receive any payment but he will not be evicted from house.
• So, Reverse Mortgage can be a significant source of steady income , if you have a house at retirement.

Credit card user beware, if you don't pay credit card dues in interest free period you can easily end up paying 150 % of amount due. It is 3 times the interest ( about 15 % per annum ) you pay if you take personal loans from banks, than what you pay on credit card dues ( about 30 to 60 %). So, it is important that one should know the various fees charged by  credit card companies - both private and public bank are equally guilty.

• Annual maintenance charges - or Annual fee, this is normal and legitimate charge. It varies from Rs 500 to Rs 5000 per annum. If you opt for annual fee free credit card, then minimum amount you will have to spend using credit card will be substantially higher or minimum account balance you are required to maintain would be very high. Either way credit card is not free.
• Interest rate - This charge is the severest one and is the bread-butter of credit card companies. If you don't pay outstanding amount in interest free period , bank can charge an interest which can range from 30 % to 60 % per annum.
• Cash Advance Fee - If you withdraw cash from ATM using credit card , transaction charge is 2.5 % on amount withdrawn with a minimum which ranges from Rs 250 to Rs 500. Also there is no interest  free period- interest on cash drawn is clamped from day one till you return the amount. Also the interest range from 2.5 %  to 3.5 % per year. There is also late payment fee if amount is not returned in specified period which can again range from 15 to 30 %.
• Goods & services tax - GST at the rate of 18 % is charged on annual fee, interest payments and processing fees on EMI.
• Over Limit Fee - If you spend over the limit assigned to you even by Rs 10, over limit charge at the rate of 2.5 % is charged on over drawn amount subject to minimum of Rs 500.
• Late Payment Charges - If you don't pay the "minimum payment due" by due date additional penalty is levied in addition to interest on due amount.
• Foreign Currency Mark up Fee - If you use credit card for buying in foreign currency, you will have to pay additional fee of 3.5 % plus GST on such amount - converted into Indian currency.

In contrast Debit cards are issued against your money in saving banks account , therefore none of above charges are levied on debit card transaction. Actually banks bait that sooner or later you do not pay amount due in interest free period, and then bank will charge you an interest of 3 % per month- this along with other charges can amount to almost 50 % per annum on amount due. In addition to above charges there are a number of other charges for which you should see the terms and conditions of your  credit card.

This is not to frighten you from using Credit Card - what is of utmost importance is that you should pay amount due in interest fee period which can range from 20 to 50 days.Remember there is nothing like free lunch

Recently a person requiring education loan for his ward for study in prestigious US education institute visited a reputed public sector bank. Obviously public sector bank was first choice as rate of interest on loan was at least 5 percent lower than in private sector. As loan amount was big, he was asked for collateral in the form of bank fixed deposit. Bank refused to accept mutual funds as collateral. Bank was right but problem for the person was that while bank was offering 4 % on fixed deposit ( after deducting income tax on interest ), mutual fund schemes were generating 15 % per annum. So, even after paying 5 % more on education loan from private lender, person was earning 2 to 3 % more on his investment. ( return on mutual fund 15 % - interest on education loan from private bank 12 % ). Feather in the cap was that none of his asset was blocked  as collateral in education loan. So let us now know the nitty-gritty of education loan - 

• Education loan reduces the strain on family savings and eliminate the need to liquidate your savings like fixed deposits, bonds and funds.
• Best feature of education loan is - re-payment starts after the education is complete and student pays it from his own income after completion of study.
• A range of expenses are covered - This includes not only tuition fee but also living & other expenses like laptop, hostel, travelling, insurance etc. No other loans cover consumption expenses at such low rate of interest.
• Low interest rate and long payment period - Interest rate on education loan is as low as 7.5 % from public sector banks, from private sector without collateral it is about 12 %.Repayment period  varies from 5 to 15 years. 
• No margin, no collateral - Upto loan of Rs 4.00 lakh, no margin is required. Similarly no collateral is required upto Rs 7.00 lakh even from public sector banks. From private sector lending institutions, generally no collateral is required up to Rs 40.00 lakh.
• Income tax benefits - Interest from education loan qualifies for deduction from taxable salary just as those provided u/s 80 C of income tax act. This is particularly beneficial to people in high tax bracket. Also there is no upper limit on claim amount.
• Loan application is online - Vidya Bharti is online education loan platform of govt of India where one can apply for loans from banks. Here you can compare rate of interest from different banks, can  also choose the bank.
• Collateral or collateral free loan -  Public sector banks ask for collateral for loans above Rs 7.00 lakh, whereas private sector lending institutions give collateral free loans upto Rs 40.00 lakh. Obviuosly loan amount depend on reputation of institute. As discussed in opening remark, one can go for collateral free loan if his saving is giving more than 12 % per annum return.

               So, going for education loan and for that matter collateral free education loan can be a wise decision.  

WILL can be challenged if -

1. If it does not give true description of every property.
2. If it can be proved that WILL was obtained by force, coercion or undue influence.
3. If the witnesses of the WILL fail to prove that WILL was signed by the testator in their physical presence or the witness has signed on WILL without reading or understanding  what is mentioned in it.
4. WILL was not kept in safe custody and envelope was not sealed properly.
5. WILL was not registered with sub-registrar. Although it is not compulsory but in the absence of registration there is always chance of WILL being destroyed, mutilated, lost, stolen or tempered.
6. After death of testator probate is not obtained from court certifying that the WILL is genuine. Supreme court has fixed a time limit of three years for applying to court for probate.
7. WILL can be revoked either by making a new WILL or by conduct - a testator may bequest the property in his WILL to a person but executor appointed by the court cannot collect or realize estate of the deceased to distribute among heirs. Or, for example the testator has sold the land in his lifetime which he has mentioned in his WILL to be distributed to heirs. Such action is treated as revocation of WILL by conduct.

Ans - After landmark judgement of Supreme Court on 11 Aug 2020, there is no difference whatsoever between son or daughter's right in ancestral property. If daughter was alive on 2005, she or her offspring can claim equal rights in ancestral property of her father - it does not matter whether her faher was alive in 2005 or not.

So now the position of daughter in ancestral property is as follows -

• A daughter can claim equal rights in her father's ancestral property at par with his brother.
• Ancestral property is that property which has descended in a family for three generations. A father cannot disinherit his daughter or son in ancestral property.
• Property earned by father from his resources is treated differently. If a father wishes he can disinherit his son or daughter from property earned from his resources by making will. But if father does not make a will, his property will be shared equally.
• Women can claim share of her property in his father's property and can enforce partition to get her share. It does not matter whether her brother agree to it or not.
• But position of women in her husband's property is different. She has no seperate claim in her husband's proparty and she cannot enforce partition as long as her husband is alive. She is to get her husband's share in his ancestral property after her husband's death.
• But most unique thing is that now daughter of daughter can now claim equal right with her male counterparts in ancestral property of both his father and mother.

                   So,  if any one believe that giving dowry or gifts, jewelleries to daughter in marriage extinguishes her claim in her father's property - he is certainly wrong.