Plan your Windfall Receipts Well

Last week, a fellow train traveler was discussing with me her marriage ceremony focusing with all the week long “rasam” and about all the unusable home appliances she had received. She was not sure if she should start using them or store it away for gifting it to others. I was tongue tied for a moment, thinking “Oh My God, she wants to get rid of her presents which are indeed her loved ones’ blessings and good wishes.”  However, it came to me as a revelation that she got three food processors and five hand blenders, also couple of dinner wares. I sympathize with her situation; she is in no position to command her desired gifts and has no choice but to pass on her gifts forward.

Financial windfalls can come in varied forms, such as an inheritance, large gifts, structured settlements, retirement lump-sums or even lottery winnings.  Upon receipt, most are not prepared to handle such a large sum and often make many mistakes. It is not uncommon that we are also gifted with unexpected or irrelevant gifts/ assets from our loved ones, which have some financial value, attached to it i.e. like your mother’s designer wear saris or traditional jewelery. Some of the other common gifts received include:

1. Expensive artifacts or paintings
2. Collection of stamps or coins
3. Old home in home town or tier II cities
4. Non dematerialized  Shares & bonds

The most common question we find asking ourselves on receiving them is, “What will I do with this?” or even more confused with the situation “Why me?” In order to find a feasible solution to your query, we would recommend you to follow a three point simple agenda:

1. Bifurcate between ‘I need it’ and ‘I don’t need this’ – Make a quick decision about your gift whether you find it useful or not. If it is usable by neither you nor your near ones, it is best to dispose it at the earliest and best possible price.  However, if want to own the gift, it would be recommended to plan the right utilization of it to maximum growth.
2. Get the latest value of Investible Assets – Accept the ownership titles of the acquired assets and add the latest valuation to your net worth to give you a correct picture of your financial worth. Bring the acquired assets in usable format.
3. Maintain the acquired assets well – Plan a suitable investment plan for the gained asset in the most feasible manner that can help you in wealth creation in long run. Avoid the temptation to splurge the amounts for a temporary gratification.

Windfall receipts are not regular and free of encumbrances, we should be very careful in planning out the utilization of proceeds from the receipts. Take your financial planner in confidence to plan if you are anticipating any such receipts.

Thanks and Regards

Team

Saarthi Financial Planner

Email: saarthifp@gmail.com

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Do you know about easy tax filing services by Income Tax Department ?

It is a well known fact that tax filing has never been a simple job even however SARAL the government claims it to be. Kudos to the less known, convenient and almost, free service initiated by Income Tax department.It is true; you can file your tax return in a correct form and convenience of your home. In 2007, The Tax Return Preparer Scheme was conceptualized by the Income Tax Department (ITD).The purpose of the same was to propagate and increase the number of tax filing individuals, who earlier shied from filing their Income Tax Returns.

In order to facilitate these individuals, the department has trained fresh graduates to help file your returns online.They not only file your returns but also compute the taxable income for you. They attach their name and details on the IT return to authenticate the entire return computation.This would be helpful in case of future queries. The fees charged by them are nominal at Rs 250 for regular tax payers. If however you are filing taxes for the first time and 3% of the tax liability if more than Rs 250 will be borne by the Income tax Department else the difference would be paid by the assessee to reimburse the Tax Return Preparer. But it is a nominal fee to be paid to avoid all the hassles and confusion over tax filing.

So, next time you delay your decision to pay your tax liability you can take help of your local Tax Return Preparer.The details of your local TRP are made available on the website http://www.trpscheme.com/locate-trps.aspx?mpgid=12&pgid=12 . Also you can take the onus to spread the good word among your other salaried colleagues or from non accounting background, who detest the jargons forms involved in tax filing.

Pay your taxes on time and contribute to your country’s revenue.It will help you build a more strong economy for ourselves.

You can get more details about the scheme from the following link:-http://www.trpscheme.com/default.aspx

Thanks and Regards

Team

Saarthi Financial Planner

Email: saarthifp@gmail.com

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Buying Health Insurance ... Remember to Check these points

Health Insurance is an important risk cover which majority of individuals need to avail of considering the present conditions we live in and it plays a crucial role it plays in our Financial Life. Basically Health Insurance is taken to protect you and your family against Medical Expenses incurred in case of hospitalization.

The spiraling cost of Medical expenses (i.e Hospital charges, diagnostic expenses, medications, surgical procedures and above all Doctors fees) leaves behind an indelible mark on an individual’s finances if a medical emergency were to arise and the insurance / funds are not planned for.

 Points to be considered while taking a Health Insurance

 a)   Take adequate cover - There is no fixed formula / method to determine the exact amount of health cover required but as per existing general parameters it is suggested for individuals between the age of 25 – 45 years to have a health cover of anywhere between Rs.5.00,000/- Rs.10,00,000/-. Children / Teenagers / Youth should have a cover of Rs.1,00,000/- Rs.5,00,000/-. It is advisable to increase the health cover substantially before you turn 40 and stretch it to the maximum years possible, as the older you get it becomes difficult to get a substantial health cover. While deciding the health cover amount, the general family health history also needs to be considered

 b) Be aware of the riders and fine print - The fine print and features of the intended Health cover to be taken, need to be understood by the individual prior to finalization of the policy as there could be many exclusions / clauses  stated by the company. If not understood properly, it could cause financial discomfort while the policy is being executed in time of need. You should also look out for value added benefits such as ambulance charges, hospital cash, domiciliary hospitalization, as these benefits come handy at the time of trouble.

c) Don’t suppress any medical history - You need to be candid while disclosing your medical history while filling up the Health Insurance for.

d) Check the network of hospitals covered and also available in cashless mode of hospitalization in your locality.

          e) Check the insurer background – Although the regulatory body keeps a good amount of scrutiny and check on the insuring company providers, it is always better to re verify ourselves or take an expert’s advice. There are certain things such as the claim settlement ratio and the solvency ratio.

Health Insurance is an annually renewable Insurance policy which can lapse if premium is not paid on time. It is too costly a lapse for one to overlook and could have serious implications on one’s wealth and finances if neglected.

Thanks and Regards

Team

Saarthi Financial Planner

Email: saarthifp@gmail.com

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Tax Planning Beyond the Regular 80C Deductions

There is a general tendency among individual tax payers to be curious about additional ways to save tax and avail of eligible deductions. Most of the times we are unaware of such less popular deductions or in certain cases our chartered accountant might unintentionally overlook these details while computing our tax liability. Generally we limit our deductions to popular 80C. We would like to share some of the uncommon deductions which one can avail as per applicability.

•  Section 80D: Since A.Y 2013-14, a sub-limit has been introduced in Sec 80D to claim benefit of preventive health checkup up to Rs.5,000/- p.a.This benefit is in addition to the deduction you get under the medical insurance premium payable for yourself, spouse and parents. The health premium payment deduction for senior citizens is Rs 20,000/- pa under Sec 80D. The same can also be claimed by the person who pays premium for them. i.e. their children.

• Section 80TTA:An individual can claim up to a maximum of Rs. 10,000/- p.a as deduction in respect of interest earned in savings account with a bank.

• Section 80E: The entire amount of interest paid on an education loan taken for higher studies or vocational curses qualifies for deduction. The deduction benefit on interest is allowed for maximum eight years, or till the interest is fully paid.
•     Section 80GG :A Deduction to the extent of Rs 2,000 per month or 25 per cent of total income (whichever is less) is available under Section 80GG of the I-T Act in respect of rent paid by an individual on his accommodation, provided the individual does not get any House Rent Allowance (HRA) from his company. 
• Section 80U: An individual who is certified by a prescribed medical authority to be a person with disability shall be allowed a deduction of Rs 50,000 and an individual, who is certified as a person with severe disability, shall be allowed a deduction of Rs.1,00,000/-.

Hence, we would suggest that as you start collecting your investment proofs for tax saving for the current financial year, also remember that there could be more tax benefits like above you can avail.However, the applicability and usefulness of each benefit is subjective and may vary with every individual.  Please contact your planner today to get a more personalised tax plan for yourself.

Thanks and Regards

Team

Saarthi Financial Planner

Email: saarthifp@gmail.com

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