Avail INR 10,14,200 deductions & exemptions in F.Y 2015-2016

DEDUCTION	AMOUNT (INR)	WHAT ALL IS COVERED
TAX SAVINGS INVESTMENTS UNDER SECTION 80 C	1,50,000	PF, PPF, MUTUAL FUND ELSS, LIFE INSURANCE PREMIUM, PENSION PLANS, 5 YEAR BANK FD, NSC, SCHOOL FEE, HOME LOAN PRINCIPAL PAID, SCHOOL FEES ETC.
CONTRIBUTION TO NPS UNDER SECTION 80CCD(1B)	50,000	THE ADDITIONAL DEDUCTION ALLOWED THIS YEAR
HOME LOAN INTEREST UNDER SECTION 24B	2,00,000	INTEREST PAID ON LOAN FOR SELF OCCUPIED HOUSE
HEALTH INSURANCE PREMIUM PAID UNDER SECTION 80D	25,000	THE DEDUCTION LIMIT FOR THIS HAS BEEN RAISED THIS YEAR
TRANSPORT ALLOWANCE	19,200	THE LIMIT OF THE TAX FREE ALLOWANCE HAS BEEN INCREASED THIS YEAR
CONTRIBUTION TO NPS BY EMPLOYER UNDER SECTION 80CCD(2)	1,00,000	UP TO 10% OF BASIC PAY+DA INVESTED BY EMPLOYER ON BEHALF OF EMPLOYEE IN NPS IS TAX DEDUCTIBLE
TAX FREE MEDICAL ALLOWANCE	15,000	PAYABLE TO MOST SALARIED PEOPLE ON SUBMISSION OF BILLS
MEDICAL INSURANCE OF PARENTS	30,000	AVAILABLE IN ADDITION TO THE DEDUCTION FOR INSURING HEALTH OF YOUR SENIOR CITIZEN DEPENDENT PARENTS
LEAVE TRAVEL ALLOWANCE	25,000	GIVEN EVERY TWO YEARS AND LINKED TO THE INDIVIDUAL’S BASIC PAY
BASIC EXEMPTION IN INCOME	2,50,000	ZERO TAX FOR INCOME UP TO INCOME OF INR 2,50,000
TAX FREE REIMBURSEMENTS	1,50,000	GIVEN AGAINST ACTUAL BILLS FOR CONVEYANCE, NEWSPAPERS & PERIODICAL, TELEPHONE & COMMUNICATIONS, MEAL COUPONS ETC.
TOTAL	10,14,200	TOTAL INCOME THAT IS ALLOWED AS DEDUCTION OR AS AN EXEMPTIONS FOR BEING OUT OF TAX NET IN FY 2015-2016

Thanks and Regards

Manish Kumar Pandey

CEO & Founder Director 

Fern Wealth Advisors Private Limited

www.fernwealth.com

# +91-9830040603

Save for Girl Child - Save Girl Child's Future

Prime Minister Narendra Modi on 22nd January 2015 launched a small deposit scheme 'Sukanya Samridhi Scheme' for the girl child, as part of the "Beti Bachao Beti Padhao" campaign. This scheme is specially designed for girls higher education or marriage needs

Here below we present all parents of girl child with details and comparison of Sukanya Samridhi Scheme with PPF, Bank RD and SIP in Mutual Funds for parents to make a better choice by picking right product and create wealth to secure future of your girl child .

CRITERIA	SUKANYA SAMRIDHI ACCOUNT	PUBLIC PROVIDENT FUND (P.P.F)	RECURRING DEPOSIT (R.D) BY BANKS	MUTUAL FUNDS – S.I.P (SYSTEMATIC INVESTMENT PLANS)
ON WHOSE NAME ACCOUNT CAN BE OPENED	ONLY FOR GIRL CHILD	ANYONE	ANYONE	ANYONE
AGE ELIGIBILITY	0-10 YEARS	ANY AGE	ANY AGE	ANY AGE
WHERE CAN YOU OPEN ACCOUNT	POST OFFICE / PUBLIC SECTOR BANKS	POST OFFICE / BANKS	BANKS	MUTUAL FUND COMPANIES
FREQUENCY OF DEPOSIT ALLOWED	UNLIMITED	12 IN A YEAR	ONE A MONTH	DAILY, WEEKLY, FORTNIGHTLY, MONTHLY AND QUARTERLY
HOW MANY ACCOUNTS CAN BE OPENED FOR ONE PERSON	SINGLE ACCOUNT PER CHILD	SINGLE ACCOUNT ALLOWED	UNLIMITED	UNLIMITED
INTEREST RATE	9.1% (2015)	8.70%	7-8% (DEPENDS ON TENURE)	(ESTIMATED APPROX. RANGE) ·         9-10% IN DEBT FUNDS ·         10-12% IN BALANCED FUNDS ·         12-15% + IN EQUITY FUNDS
MINIMUM AND MAXIMUM CONTRIBUTION	RS 1000 PER YEAR TO RS 150000 PER YEAR	RS 500 PER YEAR TO RS 150000 PER YEAR	DEPENDS ON LIMITS DECIDED BY RESPECTIVE BANKS	RS 500 AND UPWARDS NO LIMIT
TAX BENEFIT ON CONTRIBUTION AMOUNT	EXEMT UNDER 80C	EXEMPT UNDER 80C	NIL	NIL
TAX BENEFIT IN INTEREST EARNED	TAXABLE	EXEMPT FROM TAX	TAXABLE	TREATED AS CAPITAL GAINS
TAX BENEFIT ON MATURITY AMOUNT	EXEMPT	EXEMPT	TAXABLE	CAPITAL GAIN AND INDEXATION BENEFITS
PARTIAL WITHDRAWAL ALLOWED	YES – AFTER 18 YEARS	YES- AFTER 7 YEARS	ANYTIME	ANYTIME
MATURITY TENURE	21 YEARS	15 YEARS	AS PER TENURE SET. CAN BE BROKEN ANYTIME	ANYTIME IN NEED
ONLINE PAYMENT ALLOWED	NO	YES	YES	YES
LOAN FACILITY	NO	YES- LIMITED	YES	LOAN AGAINST SECURITIES
LIQUIDITY	LOW	MODERATE	EXTREMELY HIGH	EXTREMELY HIGH

Thanks and Regards

Manish K Pandey

Fern Wealth Advisors Private Limited

Navi Mumbai

www.fernwealth.com

# +91-9830040603

fernwealthadvisors@gmail.com

"Health and Wealth Golden Rules" - A must to follow for healthy and wealthy life

     HEALTH                                                                          WEALTH

Get up early in Morning                                                 Start Investing Early in Life
Have balance diet                                                            Have proper diversification
Avoid anger                                                                     Have Patience and avoid fear and greed
Exercise Regularly                                                          Invest regularly
Drink enough water                                                         Have enough liquidity
Have enough sleep                                                          Have enough risk coverage
Don't Diagnose yourself                                                 Take professional help and advise in investing
Periodic check, reports & visit Doctor                            Do Financial health check get your financial                                                                                            plan Periodic review and re-balancing with                                                                                              your Financial Planner & Advisor
Have qualified family doctor                                          Hire and appoint family financial planner
Stay healthy and life peacefully                                     Stay wealthy and live peacefully always




Thanks and Regards
Manish K Pandey
CEO & Founder Director
Fern Wealth Advisors Private Limited
Navi Mumbai
www.fernwealth.com
# +91-9830040603
fernwealthadvisors@gmail.com

Buying a Home on Loan - Some calculations demystified

Note on Buying a Home on Loan

Buying a home does not only ensure financial security for you and your family, but also saves plenty of money that you would otherwise pay just for living in a rented house. Banks have, in fact, simplified the entire process of home loan financing in a bid to ride this wave, which comes with a huge sentimental aspiration.

Banks make money on the interest they charge on loans. Typically, up to 85% of the property value is provided as loan, while 15% margin has to be borne by the borrower using his/her own savings/resources.

ü  A majority of home buyers take their purchase decision taking into consideration the EMI as their affordability factor. However, one pertinent question that usually haunts a home buyer is: 'How much do I actually pay for my dream home?'
We are trying to answer this question with a practical example and for this we are decoding home loans under two heads -- one is principal and interest, while the second one is tax implications.

ü  Mr. M. Cool decided to buy a 3 BHK flat in Navi Mumbai. The total cost of the flat, including amenities, was INR 63 lakhs. As per norms, he paid 15% of the down payment amount using his cash reserves, which came to around INR 9.45 lakhs. He approached two different banks (One PSB and other is Private) for availing a loan of INR 53.55 lakhs. One bank offered him the loan at 10.25% interest rate while the other loan was available at 10.15%. Obviously he decided to borrow from the bank which offered him loan at 10.15%. Duration of loan is 20 years and EMI is at around INR 52,210/-

Home Loan	INR 53,50,000/-
Interest Rate	10.15% p.a.
Duration of the Loan	20 years
EMI	INR 52,210/-

ü  At the end of the loan tenure of 20 years - presuming that the interest rate remains the same, Mr. M. Cool would pay INR 53.55 lakhs as the principal amount, while a whopping sum of INR 71.75 lakhs would be paid as interest. This means he would pay 135% of the total borrowed amount as interest alone

The below table illustrates this

Time Frame	Interest Paid (INR)	Principal Paid (INR)	O/s. Balance (INR)
1 year	5,39,560	86,861	52,68,039
5 years	25,94,942	5,37,671	48,17,329
10 years	48,36,315	14,28,910	39,26,090
15 years	64,91,618	29,06,221	24,48,779
20 years	71,75,453	53,55,000	NIL

ü  From the table it is clear that the major component of EMIs paid to the bank in the early years of loan repayment is deducted as interest. At the end of the 5th year, Mr. Cool would pay an amount of Rs 25,94,942 as interest, while the principal component is only Rs 5,37,671. If he continues to repay the loan over a span of 20 years, then the total amount to be paid to the bank comes out at around Rs 1,25,30,453.

ü  Now let us consider a situation where He has some surplus amount with him. Then he would have two options:

1. One, he can foreclose the loan by pre-paying it with his surplus amount. By pre-paying the loan amount, he will reduce the number of EMIs and can invest the amount saved from EMIs into diversified portfolios until he repays the loan.

2. The other option is he can continue with the same EMI and invest his total surplus amount into diversified portfolio.

Scenario 1

In this scenario let us consider that he prepays an amount of Rs 5,00,000 at the end of the 5th year. Then his outstanding principal amount (ie, Rs 48,17,329) will get reduced to Rs 43,17,328 and the EMI of Rs 52,210 will get reduced to Rs 46,791 where he can save Rs 5,419 every month, which he invests into diversified portfolios. At the end of the loan tenure, he will save an amount of Rs 22,64,732 (assuming the rate of return at 10%) from the invested amount. Additionally, he will also save Rs 4,75,420 on interest. So, on the whole, he will save Rs 27,40,152 at the end of the loan tenure.

Scenario 2

In this scenario let us assume that Mr Cool invests his surplus amount of Rs 5,00,000 into diversified portfolios and continues with the same EMI for loan repayment. In this case he will save Rs 20,88,642 (assuming the rate of return at 10%), which is lesser than the amount saved in the first scenario.

Therefore, out of the two options, it's advisable to choose the first option because that will not only help you save more amount, but also reduce your liability to a great extent.

What is more, home loan repayments also attract tax benefits. So, under Section 80C of the I-T Act, tax deduction up to Rs 1.5 lakh can be availed for repayment of the principal amount. Under Section 24B, tax deduction of up to Rs 2 lakh can be availed on the interest paid for home loan for a self-occupied home. In case a loan is availed for a second home or property which is not self-occupied, then the actual interest paid for the year is allowed for deduction under Section 24B

Conclusion

Taking a home loan is a long-term debt commitment. So, it is advisable to go for a home loan which you can manage with your existing finances. Although a lot of efforts are being made by the banks to make borrowing lucrative, but care should be taken to understand that there are a lot of hidden costs involved like pre-payment charges, processing charges, and foreclosure charges, among others. It is, therefore, always wise to choose a home loan which will not  disturb your financial health.

Chirag Chordia

AIR CA, CS, B.Com

Can be reached at +91-8384805324

Email – chiragb.chordia@gmail.com

Professional Indemnity Insurance Policy - A must in today's world for Professionals and Self Employeed

HIGHLIGHTS:

This policy is meant for professionals to cover liability falling on them as a result of errors and omissions committed by them whilst rendering professional service. The policy offers a benefit of Retroactive period on continuous renewal of policy whereby claims reported in subsequent renewal but pertaining to earlier period after first inception of the policy, also become payable. Group policies can also be issued covering members of one profession. Group discount in premium is available depending upon the number of members covered.

The policy covers all sums which the insured professional becomes legally liable to pay as damages to third party in respect of any error and/or omission on his/her part committed whilst rendering professional service. Legal cost and expenses incurred in defense of the case, with the prior consent of the insurance company, are also payable, subject to the overall limit of indemnity selected. Only civil liability claims are covered. Any liability arising out of any criminal act or act committed in violation of any law or ordinance is not covered.

WHO SHOULD HAVE IT AS MUST MANDATE TO BUY THIS INSURANCE / POLICY:

The policy is meant for professionals. Insurance companies issue 'Professional Indemnity' policies to the following group of professionals:-

1.     Doctors and medical practitioners - which covers registered medical practitioners like physicians, surgeons, cardiologists, pathologists etc.

2.     Medical establishments - which covers legal liability falling on the medical establishment such as hospitals and nursing homes, as a result of error or omission committed by any named professional or qualified assistants engaged by the medical establishment.

3.     Engineers, architects and interior decorators.

4.     Lawyers, advocates, solicitors and counsels.

5.     Chartered accountants, financial accountants, management consultants.

SUM INSURED:

In Professional Indemnity Policy, the sum insured is referred to as Limit of Indemnity. This limit is fixed per accident and per policy period which is called Any One Accident (AOA) limit and Any One Year (AOY) limit respectively. The AOA limit, which is the maximum amount payable for each accident, should be fixed taking into account the nature of activity of the insured and the maximum number of people who could be affected and maximum property damage that could occur, in the worst possible accident.

In the case of Professional Indemnity policy issued to engineers, architects, interior decorators, lawyers, advocates, solicitors, counsels, chartered accountants, financial accountants and management consultants, the Any One Accident (AOA) limit is restricted to 25% of the Any One Year (AOY) limit.

CLAIMS:

The term "liability" means responsibility and "legal liability" means responsibilities which can be enforced by law. Legal Liability may be classified into Criminal Liability and Civil Liability. Only Civil Liability claims are payable.

Civil Liability claims will arise if there is prima facie evidence of negligence by the insured resulting in injury or death to any third party or resulting in damage to property belonging to a person other than insured.

Negligence will be proved only when following conditions are satisfied:

1.     Existence of duty of care

2.     Breach of this duty

3.     Injury suffered by a person or property damaged as a result of that breach.

In case of any event likely to give rise to a liability claim as described above, insurance company should be informed immediately. In case any legal notice or summons is received, it should be sent to the insurance company. The company has the option of arranging the defence of the case.

The event giving rise to the claim should have occured during the period of insurance or retroactive period and the claim first made in writing against the insured during the policy period. The maximum amount payable including defense cost will be the AOA limit selected. The Any One Year limit will get reduced by the amount of claim or indemnity paid for any one accident. Any number of such claims made during the policy period will be covered subject to the total indemnity not exceeding the Any One Year limit.

Most of the policies do not pay for claims arising out of contractual liability, intentional non-compliance of any statutory provision, loss of goodwill, slander , fines ,penalties , libel , false arrest , defamation , mental injury etc.

TYPES OF OTHER LIABILITY POLICIES / INSURANCE:

Other then Professional Indemnity Policy their are many other type of liability policies / Insurances are in offer by Insurance Companies. To name some:

1- Public Liability Policy

2- Product liability Policy

3- Directors and Officers Liability Policy

4- Liability Insurance Act Policy

5- Employer's Liability Policy

6- Third Party Insurance

7- Carrier's Liability Insurance

8- Golfer's Indemnity Insurance

We shall talk about each one of them in future in our blog. So keep reading this space for knowing more on this subject of Liability Insurances.

Manish K Pandey

CEO & Founding Director

Fern Wealth Advisors Private Limited

Email - fernwealthadvisors@gmail.com

Website - www.fernwealth.com

# +91-9830040603

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