Leave home not liability when you are not around!

We have tried to enlist some guidelines that you need to consider while borrowing for a house.

Generally, you should not borrow above 50% of your take home salary. The other monthly payments such as insurance premium must be deducted while calculating repayment capacity. You also need to consider the tax benefits of home loan and the rate of interest on home loan while deciding how much to borrow.

Also Read : Never change house before 3 years

IDEAL HOME LOAN –
What is an ideal home loan?
A Home loan of Rs. 16 lakhs @10% for 15 years is an ideal position to optimize on tax benefits. EMI comes to Rs. 17,194 X 12 = Rs. 2,06,328.
Out of this, interest payable during the financial year is Rs. 1,57,817 and principal repayment is Rs. 48,511.
In case of joint home loan, the limit of 16 lakhs will be doubled. Interest deduction is allowed to each co-owner to the extent of his/ her share. The loan amount also depends on the value of the house you are buying as the banks typically allow only up to 85% of the total cost.

Also Read : Why not to buy a second house

You need to remember to take term insurance to cover home loan. One should take life insurance plan to ensure repayment of home loan in the event of untimely death. Generally, banks include insurance premium in your EMI, which makes it convenient to pay. So even if you are not around to pay off the installments, your family will never have to be without a home. Term plan is mostly cheaper and advisable than mortgage insurance. Term Plan continues even if you prepay the home loan whereas mortgage insurance reduces the risk cover every year.

About the Author: Manoj Harchandani is a certified TRP (Tax Return Preparer), authorized by Income Tax Department, Government of India. He is a tax planner and investment advisor. If you need ITR filing assistance, tax advice, tax saving tips, short term/ long term investment advice, please write him at manojh.trp@gmail.com

Other Posts:
Importance of filing Income Tax Return (ITR)
Know ITR (Income Tax Return) Forms
Belated ITR fling rules and other aspects
Tax saving thru’ Medical Insurance Policies u/s 80D
Benefits of Income Tax Return (ITR) Filling
Never buy a second house
Invest in Spouse’s name to cut Tax
Never change house before 3 years
Tax Saving through Home Loan
Enjoy hassle free online PF transfer & withdrawal from July 1, 2013
Leave home not liability when you are not around!
Check EPF (Employee Provident Fund) balance online
Why home loan is better than renting
Even home loan prepayment/foreclosure charges eligible for tax benefit now!
How to know status of Income Tax REFUND
Transfer and withdraw Provident Fund in just 3 days

Continue

Check EPF (Employee Provident Fund) balance online

How to check employee provident fund EPF online?

Last year, employee provident fund office (EPFO) has launched provident fund account details online. With this new initiative all employees in India can now get to know the provident fund balance on their fingertips. How to check provident fund EPF online or how to know the claim status in EPF online? This process is very simple and you get the info in seconds.



Process on how to check provident fund EPF online

Visit the EPF online website link (http://www.epfindia.gov.in/)

Select PF office state (e.g. Delhi, Rajasthan etc.,)

Select the employee provident fund office (EPFO) (e.g. Delhi or Rajasthan where your PF account is operating)

Employee provident fund no. – There would be 5 fields and first 2 fields are populated with State and City. You need to enter the information in 3rd, 4th and 5th fields

3rd field – Enter the establishment code.

4th field – Enter the extn number and leave it blank if not applicable

5th field – Enter provident fund number

Enter the name appearing in EPF slip

Enter your mobile no. Mobile number is recorded in provident fund account number now.

Once you check “I agree” button and click on submit button, the details are sent to your mobile number through SMS
How to know the claim status in EPF online?

Also Read : Enjoy hassle free online PF transfer & withdrawal from July 1, 2013

If you are an EPF member/subscriber, and submitted the claim, you can check the status by following below process.

Visit the EPF online claim status page (http://EPFoservices.in/homepage_claim_status_new.php)

Select PF office state (e.g. Delhi, Rajasthan etc.,)

Select the employee provident fund office (EPFO) (e.g. Delhi or Rajasthan where your PF account is operating)

Enter the EFPO (employee provident fund office). The region code and office code would get retrieved by system automatically

3rd field – enter the establishment code. It would be generally 7 digits.

4th field – enter the extn code if any. The extn code would be normally 3 digits

5th field – enter the provident fund number

Click the submit button

Status would appear online

Do you have any grievances, visit this page and submit your issue (EPFgms.gov.in/homepage.aspx)

About the Author: Manoj Harchandani is a certified TRP (Tax Return Preparer), authorized by Income Tax Department, Government of India. He is a tax planner and investment advisor. If you need ITR filing assistance, tax advice, tax saving tips, short term/ long term investment advice, please write him at manojh.trp@gmail.com

Other Posts:
Importance of filing Income Tax Return (ITR)
Know ITR (Income Tax Return) Forms
Belated ITR fling rules and other aspects
Tax saving thru’ Medical Insurance Policies u/s 80D
Benefits of Income Tax Return (ITR) Filling
Never buy a second house
Invest in Spouse’s name to cut Tax
Never change house before 3 years
Tax Saving through Home Loan
Enjoy hassle free online PF transfer & withdrawal from July 1, 2013
Leave home not liability when you are not around!
Check EPF (Employee Provident Fund) balance online
Why home loan is better than renting
Even home loan prepayment/foreclosure charges eligible for tax benefit now!
How to know status of Income Tax REFUND
Transfer and withdraw Provident Fund in just 3 days

Continue

Enjoy hassle free online PF transfer & withdrawal from July 1, 2013

One of the painful problems an employee faces when he/she changes the job is, transferring or withdrawing Provident Fund amount from old employer. Employee Provident Fund Office (EPFO) has announced few days back about automating the process of PF transfer and withdrawal / settlement. In this article we would discuss about this new process and how it would run and benefit subscribers or EPFO or employees.



Long awaited process for EPFO subscribers
EPFO subscribers have been waiting for this new process for long time. There are 50 million subscribers of retirement fund body EPFO who would get benefitted with this new process. EPOF would set-up a central clearance house to take care of the online PF transfers or settlements, which would be operational from July 1, 2013.

Also Read : Invest in Spouse’s name to cut Tax

Currently, if anyone changes the job, he/she needs to approach the previous employer for PF transfer. This is so painful that it would take several months to get clearances and transfer the amount. Since several individuals move from one company to another company for better career, transferring the PF from previous employer to current employer is a night mare.

How the Online PF transfer and withdrawal would work?

An EPFO subscriber needs to log into www.epfindia.com and provide his PF number and other relevant details online.

Once he submits his request for either transfer or withdrawal, a tracking number would be generated. This number would be used to track the status of the application.

The PF transfer request would be sent to previous employer and EPFO. Since the onus is on the EPFO to verify the same with previous employer, there is strict deadline by them to employers. EPF would verify the data with previous employer and with current employer and makes the PF transfer.

Also Read : Tax Saving through Home Loan

In case, anyone is applying for withdrawal of the Provident Fund amount, EPF would take the responsibility of verifying with previous employer and settles the Provident Fund amount to the subscriber.

There is no further involvement of an employee during this transfer.

The above process looks simple as the onus lies with EPFO and entire process is through online.
In the long run, EPFO want to provide permanent account numbers for their subscribers so that there would be only one PF number for an employee irrespective of the number of employers he is working for.

Conclusion: This new process would definitely benefit an employee and save time and energy. An employee can concentrate on better things rather wasting his time on this avoidable activity.

About the Author: Manoj Harchandani is a certified TRP (Tax Return Preparer), authorized by Income Tax Department, Government of India. He is a tax planner and investment advisor. If you need ITR filing assistance, tax advice, tax saving tips, short term/ long term investment advice, please write him at manojh.trp@gmail.com

Other Posts:
Importance of filing Income Tax Return (ITR)
Know ITR (Income Tax Return) Forms
Belated ITR fling rules and other aspects
Tax saving thru’ Medical Insurance Policies u/s 80D
Benefits of Income Tax Return (ITR) Filling
Never buy a second house
Invest in Spouse’s name to cut Tax
Never change house before 3 years
Tax Saving through Home Loan
Enjoy hassle free online PF transfer & withdrawal from July 1, 2013
Leave home not liability when you are not around!
Check EPF (Employee Provident Fund) balance online
Why home loan is better than renting
Even home loan prepayment/foreclosure charges eligible for tax benefit now!
How to know status of Income Tax REFUND
Transfer and withdraw Provident Fund in just 3 days

Continue

Never change house before 3 years

Key Highlights:
• Selling house before 3 years will attract short term capital gain. Short term capital gain must be avoided on house property.
• Selling house before 5 years will not attract short term capital gain, however deduction claimed u/s 80C for principal repayment in earlier years will be withdrawn and you will have to pay tax as per current income tax slabs.
• It is recommended to hold house for at least 5 years after purchasing in order to avoid unnecessary tax exposure.



Detailed Article:
The cost of selling a house is high. If you sell a property before three years, sale will attract short term capital gains tax chargeable at the rate of 30%. In addition, you will have to pay stamp duty (6-8%), and brokerage (1-2%) on purchase of a new house. Therefore, a house should be purchased and held on to for at least 3-5 years.

Also Read : Why not to buy a second house

Liquidity is another factor to consider before you decide to change your house. It can take time to sell a house at your desired price. Even if you want to change your house, wait for at least three years so that your profit becomes long-term capital gain. Because, if the gain is long-term capital gain, you can save tax by investing it in another house. Short term capital gain must be avoided on house property. If you have transferred/sold any land/building for an amount lesser than the value adopted by state government stamp valuation authority, then the value adopted by the authority will be considered as the sale value for the purpose of computing income tax.

Selling your house even before 5 years is not tax efficient! If you sell the house property before 5 years, then the deduction claimed under section 80 C for principal repayment in earlier years will be withdrawn. This amount will be added to your income and taxed as per your income tax slabs.


About the Author: Manoj Harchandani is a certified TRP (Tax Return Preparer), authorized by Income Tax Department, Government of India. He is a tax planner and investment advisor. If you need ITR filing assistance, tax advice, tax saving tips, short term/ long term investment advice, please write him at manojh.trp@gmail.com

Other Posts:
Importance of filing Income Tax Return (ITR)
Know ITR (Income Tax Return) Forms
Belated ITR fling rules and other aspects
Tax saving thru’ Medical Insurance Policies u/s 80D
Benefits of Income Tax Return (ITR) Filling
Never buy a second house
Invest in Spouse’s name to cut Tax
Never change house before 3 years
Tax Saving through Home Loan
Enjoy hassle free online PF transfer & withdrawal from July 1, 2013
Leave home not liability when you are not around!
Check EPF (Employee Provident Fund) balance online
Why home loan is better than renting
Even home loan prepayment/foreclosure charges eligible for tax benefit now!
How to know status of Income Tax REFUND
Transfer and withdraw Provident Fund in just 3 days

Continue

Tax Saving through Home Loan

An interesting tax saver can be your home loan!



Interest on home loan is deductible from your salary, provided you have possession of the house. If your house is under construction, then interest will be accumulated till you get possession. Thereafter, deduction will be allowed in five equal instalments for next five years, along with the interest of that financial year.

Also Read : Never change house before 3 years

The total interest deductible is limited to ` 1.5 lakh for self-occupied house. The interest rate of home loan has been on the rise. However, even today the effective interest rates are attractive i.e. home loan interest at 10% effectively gets reduced to 7% assuming you are in 30% tax bracket. Therefore, you should take a home loan if you have the opportunity and the risk capacity to invest in equities and mutual fund. The average return of equities is higher than 7-8% effective interest rate on home loan. You can prepay home loan if the interest being charged is @12% or more, instead of keeping your money in fixed deposits, bonds etc. (@9%).

Another way of saving money is to take home loan with overdraft facility so that you can save interest by depositing additional funds in the home loan account. Banks like SBI, HDFC, and HSBC offer these loans as home saver, smart home etc. You can claim full interest as deduction in the case of let out property, even if it exceeds ` 1.5 lakh. You can take loan from your friends and relatives and claim interest deduction, however the principal payment will not be eligible for deduction under section 80C.

Also Read : Why not to buy a second house

The Direct Tax Code (DTC) is expected soon in India and the deduction for principal payment of home loan may be withdrawn. However the interest deduction may remain as before. Home loan interest is deductible on an accrual basis, hence even if the interest has not been paid to your relative/friend but accrued, then too the deduction is allowed.


About the Author: Manoj Harchandani is a certified TRP (Tax Return Preparer), authorized by Income Tax Department, Government of India. He is a tax planner and investment advisor. If you need ITR filing assistance, tax advice, tax saving tips, short term/ long term investment advice, please write him at manojh.trp@gmail.com

Other Posts:
Importance of filing Income Tax Return (ITR)
Know ITR (Income Tax Return) Forms
Belated ITR fling rules and other aspects
Tax saving thru’ Medical Insurance Policies u/s 80D
Benefits of Income Tax Return (ITR) Filling
Never buy a second house
Invest in Spouse’s name to cut Tax
Never change house before 3 years
Tax Saving through Home Loan
Enjoy hassle free online PF transfer & withdrawal from July 1, 2013
Leave home not liability when you are not around!
Check EPF (Employee Provident Fund) balance online
Why home loan is better than renting
Even home loan prepayment/foreclosure charges eligible for tax benefit now!
How to know status of Income Tax REFUND
Transfer and withdraw Provident Fund in just 3 days

Continue