Navigating the maze that is personal finance

Monday, 23 January 2017

A tool to calculate the impact on returns if you choose a direct plan over a normal plan of mutual funds

There are two ways to invest in a mutual fund: invest with the fund house directly (using direct plans) or investing through an advisor, broker or distributor (using normal plans). The expense ratio of normal plans is higher than that of a direct plan since you go through an intermediary who is paid a commission in the normal plan. On an average this expense is higher by approximately 0.5%, in some cases it is as high as 1%. Why are we discussing this. The expense ration plays a very important part in the returns that you will get from your chosen mutual fund.

So should you invest in a direct plan or a normal plan of mutual fund?
Looking at this question from a purely financial standpoint, you should invest in a direct plan. As mentioned earlier the expense ratio of normal plans is more than that of direct plans. This means that over time, the returns accumulated in a direct plan will be more than that in a normal plan.

I have created a calculator to help you understand the compounding affect of the difference in expense ratio. You need to enter your monthly SIP contribution, expected rate of return per annum, expense ratio of normal plan and the expense ratio of the direct plan you are considering in the calculator.  In the example below I have considered a monthly SIP of  ₹10,000. The expected rate of return per annum is 12% and the expense ratios are 1.4% and 0.8% for normal and direct plans respectively. In this example the expected rate of return for a direct plan is 12% that of the normal plan is 12% minus the difference between the expense ratios of the normal and the direct plans (12% -(1.4%-0.8%) = 11.4%)

As you can see from the image below, the difference between the absolute returns grows with the increase in SIP tenor. The difference in the balance between a normal and direct plan was ₹275,260  at the end of 15 years. This difference increased to ₹764,102 at the end of 20 years.

You can download the direct plan versus normal plan calculator here.

That was the theoretical way of looking the returns from direct versus normal plans. Even if you look at the 3 year historical performance of the top 5 funds (as per Value Research) you can see that the direct plans have performed better than the normal plans.


Expense Ratio (%)

3-Year Return (%)

BlackRock Micro Cap Fund - Direct Plan



BlackRock Micro Cap Fund - Regular Plan



Small & Midcap Fund - Direct Plan



Small & Midcap Fund



Small Cap Fund - Direct Plan



Small Cap Fund



India Smaller Companies Fund - Direct Plan



India Smaller Companies Fund



Asset Emerging Bluechip Fund - Direct Plan



Asset Emerging Bluechip Fund - Regular Plan



But which funds should I invest in?

This is where the argument of investing in a direct plan versus a normal plan gets tricky. Performance of mutual funds varies quite a bit what fund you choose to invest in is critical. This choice can lead to a difference of as much as 4-5 % in the long run. The difference in the expense ratios of a direct versus a normal plan (and the corresponding difference in returns) will be a secondary consideration at best.

In conclusion
So if you know which fund you want to invest in, you should go ahead with a direct plan. If you need to rely on someone’s recommendation then a normal plan would probably make more sense for you.

Tuesday, 17 January 2017

How to check your Aadhaar & bank account linking status

You need to link your Aadhaar number with your bank account in order to receive benefits from schemes such as the Direct Benefits Transfer (DBTL) in which the LPG cylinder subsidy amount is directly credited in the Aadhaar linked bank account. So how can you check your Aadhaar & bank account linking status? There are two ways to check if your bank account and Aadhar number are linked.

Using the Unique Identification Authority of India (UIDAI) website to check your Aadhaar & Bank Account Linking Status

Step 1: Click on the “Check Aadhaar & Bank Account Linking Status” link on the UIDAI website.

Check Aadhar and bank account linking status on UIDAI website

Step 2: Enter your Aadhaar number and security code. Click on "Verify".

Enter your Aadhaar number and security code

Step 3: You will get the status of your Aadhaar and bank account mapping.

You will get the status of your Aadhaar and bank account mapping

Using your mobile phone to check your Aadhaar & Bank Account Linking Status

Step 1: Type *99*99# from your mobile

Step 2: Select option 1: Aadhaar Linking status and click send
Select option 1: Aadhaar Linking status

Step 3: Enter you Aadhaar number and click send.
Enter you Aadhaar number

Step 4: Confirm your Aadhaar number and click send
Confirm your Aadhaar number

Step 5: You will receive the of which bank is linked to your Aadhaar account
You will receive the of which bank is linked to your Aadhaar account

Sunday, 15 January 2017

Atal Pension Yojana (APY) - Contribution calculator

In my previous blog, I have shared the details of the Atal Pension Yojana. I have created an excel based APY calculator which can help calculate the monthly contribution depending on the current age of the subscriber and the expected pension.

You can download the APY calculator here.


Saturday, 14 January 2017

How to get your credit score from Equifax, Experian and CIBIL for free

In September 2016, the Reserve Bank of India (RBI) mandated that that effective January 1, 2017, all Credit Information Companies (CICs) shall provide access, upon request and after due authentication of the requester, to a free full credit report (FFCR) once in a calendar year to individuals whose credit history is available with the CIC. What this means is that you can get to know your credit score for free from the three major CICs in India Equifax, Experian and CIBIL.

What is a credit score and why is it important?
Credit score is an indication of your credit worthiness. Banks and other financial institutions use credit score to evaluate the probability of a person paying back his/her loan. The higher the score the better it is. According to a recent article now your credit score will decide how much home loan EMI you would pay.

You can find your credit score in a credit report which is a record of your credit payment history. A credit report has information about your credit card and loans. For credit cards, your current balance, credit limit, and payment history are all included. For loans balances, original loan amount, and payment history appear on your credit report.

Your credit report also contains personal information such as your home address and where you work. Companies that you take financial products like loan and credit card have regularly send your debt information to the credit bureaus (at least one of them or maybe all three) who then update that information in your credit report.

Where can you get credit reports in India? 
In India, there are three major credit information companies (CICs) which provide credit reports: Equifax, Experian and CIBIL. Given RBIs mandate each CIC will have to provide you with your free credit score every year. Here’s how you can get your free credit report.

Steps to get your free credit score from Experian
Step 1: Go to and click on 'Get Your Free Credit Report'.

Step 2: Enter the required details and click on submit.

Step 3: You will receive a voucher code on your verified email id within 48 hours. You need to follow instructions mentioned in the email to redeem your voucher and avail your free credit report and score.

Steps to get your free credit score from Equifax
Step 1: Download the Equifax App from the Google Play Store.

Step 2: Provide your email address to receive a temporary login PIN.

Step 3: Use that PIN to setup your PIN. This PIN will help you gain access to your account from now on.

Step 4: Login to your account on the app.

Step 5: Complete your KYC. Your Aadhaar number is very important here as it will be used to verify your details electronically.

I have already mentioned the increasing importance of your Aadhaar in today’s world. This is another example of how Aadhaar is being used. 

Step 6: Once your e-KYC is done you can request for your free report.

Step 7: You will be asked to enter additional personal information.

Step 8: Log out and see the status of your free credit report after some time. You will be asked to verify some more details as a part of the 'Knowledge Based Assessment'.

Step 9: You will receive an email once with your credit score/report once it is generated.

Steps to get your free credit score from CIBIL
To get your free credit score from CIBIL, simply download the free credit report form from the CIBIL website, fill it up and send the form at the following address mentioned in the form along with the KYC documents.

TransUnion CIBIL Limited (Formerly: Credit Information Bureau (India) Limited), One Indiabulls Centre, Tower 2A-2B, 19th Floor, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013.

Once received, you will get a confirmation of the receipt of the documents and will also be informed of any discrepancy through email. After verification, your free credit report will be sent to you in about 30 days.

Friday, 13 January 2017

Atal Pension Yojana (APY): All that you need to know

During my research on personal finance I have come across many financial schemes which are not applicable to me. Atal Pension Yojna is one such scheme that addresses the needs of those with no social security and who fall under the low income group. The aim of this scheme is to help develop a social security backbone to enable weaker sections of our society live a financially secure life in their old age by making a small contribution today.

You too can help those who help us in our daily lives. All you have to do is take a print out of the information below and hand it over to your helpers, maids, gardeners, drivers, milk man, laundry man and others.

What is Atal Pension Yojana and who are eligible?

  • It is a social security scheme, providing guaranteed pension after the age of 60 years.
  • It is available to anyone who is an Indian citizen and is working in the unorganized sector.
  • It can be opened by a person who has completed 18 years of age and is below 40 years presently (may be increased to 50) at any public sector bank.
  • They must have a bank account and a mobile phone number registered in the account to enable them to enroll for APY.
  • The person enrolling should fall in the non-tax payer slab.
Exclusion criterion
  • Any person enjoying cover of any other social security scheme does not qualify for the same e.g. those covered under EPF and other PFs such as that of J&K, or seamen’s PF etc.
Fund manager
  • PFRDA (Pension Fund Regulatory and Development Authority) is the fund manager for APY.
Pension amount
  • One can get Rs. 1000,2000,3000,4000 or 5000 as pension depending on the contribution made. Presently maximum pension one can get is Rs. 5000. But the slab may be increased in future (proposed to be increased to Rs.10000).
Years of contribution
  • Presently minimum period for contribution is 20 years before pension can be started.
Early bird offer
  • For those who opened account between 1st June 2015 - 31st Dec 2015 will be benefited by contribution from the government till 2019. The contribution amount would be Rs. 1000 or 50% of total contribution whichever is lower.
Mode of contribution
  • The amount would be auto deducted from the savings account monthly. It is therefore important to maintain the minimum balance in the account to prevent default.
  • In case of default the bank can recover amount whenever there is sufficient balance in the account.
  • All subscribers will get automatic SMS alerts regarding contributions debited and balance in their account.
Payment date
  • Date of first contribution would be taken as the due date for every subsequent month and is not subject to change.
Switching contribution
  • The subscribers can opt to decrease or increase pension amount during the course of accumulation phase, as per the available monthly pension amounts.
  • However, the switching option shall be provided once in year during the month of April.
How to enroll
  • Fill the form of Atal Pension Yojana in your bank.
  • Complete your details with Aadhaar if already enrolled (this helps in completion of KYC).
  • Provide your account details and phone number.
  • Each subscriber will be provided with an acknowledgement slip after joining APY which would invariably record the guaranteed pension amount, due date of contribution payment, PRAN (Permanent Retirement Account Number) etc.
Closure of account
An APY account can be voluntarily closed if the subscriber desires to do so now. Earlier it was mandatory to remain subscribed. The following have been described by PRFDA. (source NSDL)

Exit in case of death of the Subscriber:
In case, the Subscriber dies before the age of 60 years, there are two options:
  1. Closure of APY account– account will be closed and amount settled to spouse (in case the spouse wishes to close the account) or nominee.
  2. Continuation of APY account (only for Spouse) – The spouse would have an option to continue contributing to APY accounts of the subscriber, which can be maintained in the spouse's name, for the remaining vesting period, till the original subscriber would have attained the age of 60 years. The spouse of the subscriber shall be entitled to receive the same pension amount as that of the subscriber until the death of the spouse.
Premature Exit before the age of 60 years:
In case of exit before 60 years, there are two options:
  1. Exit due to specified illness – Exit before 60 years of age may be permitted only in exceptional circumstances such as due to specified illness of the subscriber and the accumulated corpus (subscriber contribution, government contribution and the returns thereon) in the subscriber's account will be returned to the subscriber.
  2. Voluntary exit - In case a subscriber chooses to voluntarily exit from APY before attaining 60 years of age, he/she will be refunded only the contributions made by him/her to APY along with the returns thereon after deducting the account maintenance, investment management etc. charges. The government co-contribution, if any and the accrued income earned on the government co-contribution will not be given to such subscribers.

Default scenario
The subscriber’s savings bank account needs to maintain a minimum balance on the specified date which is equal to the one month’s contribution amount. In case the amount found to be lower than the required, the account will be labelled as default. Banks are given the authority of penalizing those account holders by charging fine on them. The fine amount can be anything between one rupee to ten rupees as the details mentioned below:
  • If the contribution amount is Rs. 100/- per month, the fine charged would be one rupee per mont.
  • For contribution amount from Rs. 101 to 500/- per month, the two rupees per month would be fined.
  • For Rs. 501/- to 1000/- per month, there will be Rs. 5/- per month fine.
  • Rs.10 per month would be fined for the contribution above Rs. 1000/- per month.
  • If for any reason, the payments get discontinued, the account would be frozen after the six months, deactivated after twelve months and would be completely closed after twenty four months.  Government co-contributions, if any shall be forfeited in such cases.
Therefore, it is solely the subscriber’s responsibility to fund the account on the due date of contribution, to avoid penalties in the future.

Below is a table which gives all the important details of the scheme(Source:

Sl. No. Scheme fields Relevant details

Type of scheme Pension scheme (Under the PFRDA)

Date of effect of scheme 1st June, 2015

Age for eligibility to join 18 years to 40 years

Time of maturity of pension scheme When the beneficiary attains 60 years of age

Targeted group of beneficiaries Employees of unorganized sectors, farmers, backward masses, women,
SC/ST etc.

Inclusion of members of Swavalamban Yojana NPS Lite Automatic inclusion

Pension amount options Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000 and Rs. 5,000

Government’s contribution to the scheme 50 per cent of beneficiary’s contribution or Rs. 1,000 per year
for 5 years

Eligibility to get Govt. contribution Must be non tax payer and must join APY before Dec. 2015

Mode of monthly payment to APY account Auto debit process from the bank account linked with APY account

Where to apply for the APY scheme? All nationalized banks

Nomination facility Available

Non payment for 6 months Account frozen

Non payment for 12 months Account deactivated

Non payment for 24 months Account permanently closed

Online download APY application form

Premature exit from scheme Yes you can now do a premature exist. Will have to pay some fine.
Fine amount is yest not clear.

Total number of APY accounts opened so far 2,405,268 (As on 16th April 2016)

Table of contribution levels, fixed monthly pension of Rs. 1,000 per month to subscribers and his spouse and return of corpus to nominees of subscribers and the contribution period under Atal Pension Yojana

Age of
Years of
Indicative Monthly
Contribution(in Rs.)
Monthly Pension
to the subscribers
and his spouse
(in Rs.)
Indicative Return of
Corpus to the
nominee of
the subscribers (in Rs.)
18 42 42 1,000 1.7 Lakh
20 40 50 1,000 1.7 Lakh
25 35 76 1,000 1.7 Lakh
30 30 116 1,000 1.7 Lakh
35 25 181 1,000 1.7 Lakh
40 20 291 1,000 1.7 Lakh

Table of contribution levels, fixed monthly pension of Rs. 2,000 per month to subscribers and his spouse and return of corpus to nominees of subscribers and the contribution period under Atal Pension Yojana

Age of
Years of
Indicative Monthly
Contribution(in Rs.)
Monthly Pension
to the subscribers
and his spouse
(in Rs.)
Indicative Return of
Corpus to the
nominee of
the subscribers (in Rs.)
18 42 84 2,000 3.4 Lakh
40 100
2,000 3.4 Lakh
25 35 151 2,000 3.4 Lakh
30 30 231 2,000 3.4 Lakh
35 25 362 2,000 3.4 Lakh
40 20 582 2,000 3.4 Lakh

Table of contribution levels, fixed monthly pension of Rs. 3,000 per month to subscribers and his spouse and return of corpus to nominees of subscribers and the contribution period under Atal Pension Yojana

Age of
Years of
Indicative Monthly
Contribution(in Rs.)
Monthly Pension
to the subscribers
and his spouse
(in Rs.)
Indicative Return of
Corpus to the
nominee of
the subscribers (in Rs.)
18 42 126
3,000 5.1 Lakh
40 150
3,000 5.1 Lakh
25 35 226 3,000 5.1 Lakh
30 30 347 3,000 5.1 Lakh
35 25 543 3,000 5.1 Lakh
40 20 873
3,000 5.1 Lakh

Table of contribution levels, fixed monthly pension of Rs. 4,000 per month to subscribers and his spouse and return of corpus to nominees of subscribers and the contribution period under Atal Pension Yojana

Age of
Years of
Indicative Monthly
Contribution(in Rs.)
Monthly Pension
to the subscribers
and his spouse
(in Rs.)
Indicative Return of
Corpus to the
nominee of
the subscribers (in Rs.)
18 42 168
4,000 6.8 Lakh
40 198
4,000 6.8 Lakh
25 35 301 4,000 6.8 Lakh
30 30 462 4,000 6.8 Lakh
35 25 722 4,000 6.8 Lakh
40 20 1164
4,000 6.8 Lakh

Table of contribution levels, fixed monthly pension of Rs. 5,000 per month to subscribers and his spouse and return of corpus to nominees of subscribers and the contribution period under Atal Pension Yojana

Age of
Years of
Indicative Monthly
Contribution(in Rs.)
Monthly Pension
to the subscribers
and his spouse
(in Rs.)
Indicative Return of
Corpus to the
nominee of
the subscribers (in Rs.)
18 42 210
5,000 8.5 Lakh
40 248
5,000 8.5 Lakh
25 35 376 5,000 8.5 Lakh
30 30 577 5,000 8.5 Lakh
35 25 902 5,000 8.5 Lakh
40 20 1454
5,000 8.5 Lakh


Thursday, 12 January 2017

Missed Call Banking numbers for all banks in India

There are numerous ways to keep a tab on the balance in your bank account. You can check it online, use the mobile app, visit the ATM or visit your branch. However there is simpler way to get your balance or mini-statement using your mobile phone. Called missed call banking, you need to give a missed call from your registered mobile number to your bank’s toll free number provided for the purpose. Depending on the bank you could do the following transactions using this facility - balance enquiry, mini statement, cheque book request, account statement request, etc. To conduct a transaction you simply call the respective toll free number. Your call will get disconnected after a few rings and you will get a SMS with the required details.

I have compiled a list of the toll free numbers of the banks in India which offer this facility.

Bank Name
Account Balance
Mini Statement
Allahabad Bank
Andhra Bank
Axis Bank
English: 1800 419 5959
Hindi: 1800 419 5858
English: 1800 419 6969
Hindi: 1800 419 6868
Bank of Baroda (BOB)
Bhartiya Mahila bank
Canara Bank
0 9015 483 483
English: 0 9015 734 734
Hindi: 0 9015 613 613
Central Bank of India
95552 44442
95551 44441
Corporation Bank
English: 09268892688
Hindi: 09289792897
DCB Bank
Dena Bank
Dhanlaxmi Bank
Federal Bank
1800 2700 720
Indian Bank
IndusInd Bank
Karnataka Bank
Karur Vysya Bank
Kotak Mahindra bank
Punjab & Sind Bank
Punjab National Bank (PNB)
1800 180 2222/1800 103 2222
RBL Bank
1800 419 0610
Saraswat Bank
South Indian Bank
State Bank of Bikaner and Jaipur
State Bank of Hyderabad
State Bank Of India (SBI)
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore (SBT)
Syndicate bank
UCO Bank
Union Bank of India
Vijaya Bank
1800 103 5525
1800 103 5535
Yes Bank
The finer details
Your mobile number must be registered with your bank for mobile banking services. In my previous blog I have listed the steps you need to take in order to register your mobile number with various banks. Some banks limit the number of times that you can avail this facility in a day.

Wednesday, 11 January 2017

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJY) - How to download your insurance certificate and everything else

The Pradhan Mantri Jeevan Jyoti Bima Yogana (PMJJY) is a life insurance scheme that is a part of the prime minister’s social security scheme. Though I have paid the premiums twice now, I was not sure of the fine print and where I could download the insurance certificate for the Pradhan Mantri Jeevan Jyoti Bima Yogana scheme.  So I have researched and have found the following information about the scheme.

What is Pradhan Mantri Jeevan Jyoti Bima Yogana?
Pradhan Mantri Jeevan Jyoti Bima Yogana is a social security scheme launched in 2015. It provides life insurance cover of Rs. 2 lakhs for an annual premium of Rs. 330.

Claim settlement history
As of 9-Jan-2017 a total of 3.080 crore people had enrolled for the scheme, 52,938 claims were received and 48,928 claims disbursed. Up-to-date statistics about the performance of the Pradhan Mantri Jeevan Jyoti Bima Yogana scheme can be found here.

How does it work?
Renewable every year, the scheme provides insurance cover for death due to any reason. All Indian residents in the age group of 18 to 50 years can join the scheme. The scheme is offered / administered through LIC and other Life Insurance companies willing to offer the product on similar terms, at the choice of the Bank / RRB / Cooperative Bank concerned. If you have multiple accounts in one or different banks you will be eligible to join the scheme through one bank account only.

How can you enroll for Pradhan Mantri Jeevan Jyoti Bima Yogana (PMJJBY)?
You can enroll to PMJJY using online banking services. Your insurance cover will be in force for a one year period starting from June 1 to May 31 of the next year. You can pay the annual premium of Rs.330 from the designated savings bank account anytime during this period.

Please note that if you enrolling to the scheme for the first time on or after 01st June 2016, insurance benefit shall not be available for death (due to any cause other than accident) occurring during the first 45 days from the date of enrolment into the scheme,. Death due to accidental causes will be covered from day one of insurance coverage.

If who wish to continue beyond the first year, you will have to give your consent for auto-debit before each successive May 31st for successive years. Delayed renewal subsequent to this date will be possible on payment of full annual premium subject to changes in terms regarding insurance coverage.

I am listing the steps needed to enroll to the Pradhan Mantri Jeevan Jyoti Bima Yogana using your online SBI and ICICI accounts below.

Enrolling to the Pradhan Mantri Jeevan Jyoti Bima Yogana using SBI online banking
Step 1: Login to your SBI account at:

Step 2: Click on Social Security Schemes on the home page.

Step 3: Select PMJJY from the list and enter the account number from which the premium amount will be debited. Click on submit.

Step 4: You will be asked to enter your Customer Identification (CIF) number. Once submitted you will get a successful registration message and a reference number.

Step 5: You can view the reference number of your application by click on the ‘Status’ tab. 

Enrolling to the Pradhan Mantri Jeevan Jyoti Bima Yogana using ICICI online banking
Step 1: Login to your ICICI bank account.

Step 2: Click on PM Social Security Schemes on the main page.

Step 3:  Click on ‘Enroll’ for Pradhan Mantri Jeevan Jyoti Bima Yogana.

Step 4: Enter the required details and click on submit

How can you download the insurance certificate once you have enrolled to Pradhan Mantri Jeevan Jyoti Bima Yogana?
Different banks have different processes to download the insurance certificate. I am listing the process for SBI an ICICI bank.

Downloading the Pradhan Mantri Jeevan Jyoti Bima Yogana insurance certificate for your SBI bank account:
Step 1: Go to

Step 2: Select PMJJY-COI.

Step 3: Enter bank as SBI, you SBI account number and date of birth.

Step 4: You can download your policy by clicking on the link under the column ‘Customer Id’.

Downloading the Pradhan Mantri Jeevan Jyoti Bima Yogana insurance certificate for your ICICI bank account:
Step 1: Go to

Step 2: Click on ‘Download your policy now’ for Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY).

Step 3: You will be taken to the ICICI Prudential Life web page where you have to enter your account number, date of birth or nominee name. Click on submit to download your insurance certificate.


Monday, 9 January 2017

EPFO has made Aadhaar mandatory – Here’s how you can link your Aadhaar card to EPFO and UAN account

I have already talked about the growing importance of your Aadhaar number in the financial space. Recently the Labour ministry made Adhaar mandatory for all Employee’s Provident Fund Organization (EPFO) account holders. According to this order if you have an EPFO account, you will have to share your Aadhaar details with EPFO. In case you do not have an Aadhaar number you will have to apply for an Aadhaar number and submit proof of application by Jan, 31 2017.  This is important because, if you do not link your EPFO to your Aadhaar number, you will no longer receive the government subsidy of 1.16% of the employee’s salary upto ₹6,500 towards the Employees' Pension Scheme (EPS).

So how can you link your Aadhaar card? 
One option is to do it online on the UAN member portal. Please note that look and feel of the UAN member portal has recently been changed. The new URL to UAN member e-SEWA is I am providing a step wise guide of linking your Aadhaar card using this website.  Keep a self-attested copy of your Aadhaar card ready as you will need to upload it in order to complete the process:

Step by step guide to link to guide your Aadhaar card to your EPFO accountStep 1: Go to the EPFO website and click on ‘For Employees’ in the section ‘Our Services’.

EPFO website main page

Step 2: Click on the link ‘UAN member e-SEWA’ to go to 

EPFO website Employees page

Step 3: Enter your login details (your UAN and password).

Enter your UAN number and password

Step 4: You can now see your EPF account details. Click on the tab ‘Manage’ and choose ‘KYC’.

EPF account main page
 Step 5: Enter the details of your Aadhaar and upload the self-attested copy of your Aadhaar card.

Enter your KYC details

Step 6: Once uploaded, the details will be in the queue for approval. Once approved you can see the details as per the screenshot below.

Updated KYC details


Friday, 6 January 2017

Income Tax Deductions Under Section 80C and other sections - All That You Need To Know

While calculating my income tax for the year I knew the major sections under which I could reduce my liability. I thought of prodding further and was pleasantly surprised to find that there are a number of conditions under which deductions can be claimed. I am sharing with you a comprehensive list of income tax deductions under section 80C and others.

Income Tax deductions under section 80C
Total deduction of  upto Rs. 1.5 lakh is allowed under this section. The section includes contributions to:
  • Public Provident Fund (PPF). You can find all about PPF in my earlier blog post. 
  • Employee Provident Fund (EPF) employee contribution. You can find all you need to know about EPF in my earlier blog.
  • National Pension Scheme (NPS)
  • Home loan principal amount
  • Sukanya Samridhi Yojana (SSY or SSA). All you need to know about SSY can be found in my blog post.
  • Equity Linked Saving Scheme (ELSS)
  • Life Insurance premium
  • Children's tuition fee for up to two children
  • Unit Linked Insurance Plan (ULIP)
  • National Saving Certificate (NSC)
  • Sum paid to purchase deferred annuity
  • Five year deposit scheme Senior Citizens savings scheme
  • Subscription to notified securities/notified deposits scheme
  • Contribution to notified Pension Fund set up by Mutual Fund or UTI.
  • Subscription to Home Loan Account Scheme of the National Housing Bank
  • Subscription to deposit scheme of a public sector or company engaged in providing housing finance
  • Contribution to notified annuity Plan of LIC
  • Subscription to equity shares/ debentures of an approved eligible issue
  • Subscription to notified bonds of NABARD

Income Tax deductions under section 80CCC
  • Premium paid for LIC or other insurance. If surrendered before maturity the surrender value is taxable in the of receipt.

Income Tax deductions under section 80CCD
  • Deduction for self contribution to NPS
  • Section 80CCD(1B) 
    • A new section 80CCD(1B) has been introduced for additional deduction for amount deposited by a taxpayer to their NPS account . 
    • Contributions to Atal Pension Yojana are also eligible. Deduction is allowed on contribution up to Rs 50,000.
  • Section 80CCD(2)Deduction is allowed for employer's contribution to employee’s pension account up to 10% of the salary of the employee. There is no monetary ceiling on this deduction.

Income Tax deductions under section 80CCF
  • Infra bonds as notified by the government from time to time - maximum up to  Rs. 20,000/-

Income Tax deductions under section 80CCG
  • To avail deduction under this section the gross salary should less than be 12 lacs. Deductions under this section are made for contributions to Rajiv Gandhi Equity Savings Scheme (RGESS).
  • A deduction of Rs. 25000 or 50% of the money invested in equity whichever is less is allowed under the section.

Income Tax deductions under section 80D
  • Health insurance for self and/or family up to Rs.15,000 and Rs. 20,000 if tax payer above 60.
  • An additional deduction of Rs. 15000 is allowed for parents if they are less than 60 years of age and Rs. 20,000 if more than 60 years.

Income Tax deductions under section 80DD
  • Disability treatment of self/dependant up to Rs. 75,000 in mild (<40%) to moderate disability (>40% <80%) and Rs. 1.5 lakhs in case of severe disability ( >80%).
  • Also insurance policy premium paid towards such person is deductible under this section.

Income Tax deductions under section 80DDB
  • This section allows deductions against treatment taken towards certain notified diseases, of a sum up to Rs.40,000 if the taxpayer is less than 60 years, up to R. 60,000 for a senior citizen and up to Rs. 80,000 for a very senior citizen (>80years).

Income Tax deductions under section 80E
  • You can get a deduction on the amount of education loan taken for pursuit of higher studies for self or children . It is allowed for a maximum of 8 years or till the interest is paid which ever is earlier.

Income Tax deductions under section 80EE
  • Introduced last year, this deduction id for first time home owners . 
  • This section allows an additional Rs. 50,000 deduction where the value of the property is 50 lakh or less and the loan taken is less than 35 lakhs sanctioned between fiscal year 2016-17.

Income Tax deductions under section 80G
  • The deductions allowed under this section are the donations made to charities or to a social cause subject with proof of payment.

Income Tax deductions under section 80 GG
  • The section allows deduction for people who are not getting HRA as a part of their salary.
  • They should not have any self occupied property in any other place and should be living on rent. the least of the following is allowed:
    • Rent paid
    • 5000 /- per month
    • 25% of total income

Income Tax deductions under section 80GGA
  • Donations made to enhance research or towards National urban poverty eradication fund, by a salaried individuals are eligible for deduction under the section.

Income Tax deductions under section 80TTA
  • This section allows the income from interest from savings bank account up to Rs. 10,000 or actual whichever is less. 
  • It is not applicable on income from FD or RD

Income Tax deductions under sections 80QQB and 80RRB
  • Income for authors by receiving royalty on sales of books (only certain class of books are eligible like literary etc.) or royalty from patents for individual residents up to Rs.300,000 are eligible for deductions under these sections.

Income Tax deductions under section 80G
Donations with 100% deduction without any qualifying limit to
  • National Defence Fund set up by the Central Government
  • Prime Minister's National Relief Fund
  • National Foundation for Communal Harmony
  • An approved university/educational institution of National eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund set up by a State Government for the medical relief to the poor
  • National Illness Assistance Fund
  • National Blood Transfusion Council or to any State Blood Transfusion Council
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
  • National Sports FundNational Cultural Fund
  • Fund for Technology Development and Application
  • National Children's Fund
  • Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund with respect to any State or Union Territory
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund 
  • Swachh Bharat Kosh (applicable from financial year 2014-15)
  • Clean Ganga Fund (applicable from financial year 2014-15)
  • National Fund for Control of Drug Abuse (applicable from financial year 2015-16)

Donations with 50% deduction without any qualifying limit.
  • Jawaharlal Nehru Memorial Fund
  • Prime Minister's Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income.
  • Government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning
  • Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income.
  • Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
  • Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
  • Any corporation referred in Section 10(26BB) for promoting interest of minority communityFor repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

Other sections such as 80CCG/80IA/80J/80LA/80P etc are more specialized and would require a professional to guide you.

Thursday, 5 January 2017

BHIM (Bharat Interface for Money) app – where to download and how to use - a step by step guide

As India has started its journey towards a cashlite/cashless economy, traveling down the road of demonetization we are finding newer apps and technologies rolled at an increasing pace. There are numerous options trying to meet the need of a diverse set of people differing in their access to internet, economic status, purchasing power (deciding use of smart phone) accessibility to technology etc.

Recently we saw a stellar launch of an application by our honorable prime minister. The app is called BHIM (Bharat Interface for Money)  and is dedicated to and named after Babasaheb Dr. Bhimrao Ambedkar.

It is already topping the charts in Google store and has been downloaded almost 5 million times at the time of writing this post.

What is BHIM (Bharat Interface for Money)?
BHIM is a Unified Payments Interface (UPI) based app rolled out by National Payments Corporation of India (NPCI) to address the gap between those having UPI, wanting to transact freely with anyone. It includes all the security features of UPI (such as having a virtual payment address or VPA and hence securing your bank details) while giving freedom to transact with anyone having a bank account and an attached mobile number.

Security features of BHIM
BHIM provides layered security to its users making it transactions highly secure.At the time of download and opening the app for the first time, the app gets bound to the mobile device ID and to the phone number.Only the registered numbers attached to bank accounts can be used to operate the app. The UPI PIN set by the user is required every time a transaction is to be carried out using the BHIM app.And then in the end the app itself can be protected by a password required to open it for use.All these features ensures that even if your mobile is stolen the app cannot be used to make unauthorized transactions.

How is BHIM different from other UPI based apps?
BHIM uses UPI in the back end. However there are a number of key differences with the other UPI based apps. You have to download the UPI app of the bank where you have an account, whereas with BHIM you can add any bank account (which are of course member participants), but only one account can be added at a time and in case you wish to change the account through which you want to transact, you will have to replace the earlier one. Also if more than one account are attached to the same mobile number then only one account can be accessed as mentioned earlier. With BHIM, you can send and receive money to and from any non UPI account or addressee (all they need to have an account in bank with phone number attached to the account; in this case you may need IFSC (Indian Financial System Code)  or MMID (Mobile Money Identifier) code to make the transaction). A facility of scanning QR code and making payment is also available with the app.

How is BHIM different from a mobile wallet like PayTm? 
Unlike a mobile wallet where you have to load money in an external wallet BHIM does away completely with that part while at the same time securing your details (as the other party sees only the VPA). While in a mobile wallet the recipient or the other party too should be enrolled with same wallet to transact BHIM does not require that, i.e. it surpasses mobile wallets when it comes to interoperability.

What are the transaction limits set by BHIM app?
A maximum of Rs 10,000 can be shared per transaction, and a total of Rs 20,000 can be sent within 24 hours.

The list of banks that are a part of this initiative is given below.

- Allahabad Bank
- Andhra Bank
- Axis Bank
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Catholic Syrian Bank            
- Central Bank of India
- DCB Bank                        
- Dena Bank
- Federal Bank
- HDFC Bank
- ICICI Bank
- IDBI Bank
- IDFC Bank  
- Indian Bank
- Indian Overseas Bank            
- IndusInd Bank
- Karnataka Bank                  
- Karur Vysya Bank
- Kotak Mahindra Bank              
- Oriental Bank of Commerce
- Punjab National Bank
- RBL Bank
- South Indian Bank          
- Standard Chartered Bank
- State Bank of India
- Syndicate Bank
- UCO Bank
- Union Bank of India  
- United Bank of India
- Vijaya Bank
- Yes Bank Ltd

So how do you start using BHIM?
Step 1- Go to google store and download BHIM here. (beware of fake apps pretending to be BHIM).
Presently it is available only for Android users.

Step 2- Open the App and choose language (presently available in English and Hindi)

Step 3- Provide the app permission to read SMSes on your phone and to verify your phone with UPI.

Step 4 - In case you have a dual SIM phone, decide which phone number you want to use with the BHIM app. Keep in mind that in order to use the phone number, it must be registered with your bank account.

Step 5 - Once your mobile number is verified decide a passcode for your BHIM app.

Step 6 - Decide which bank you want to use.

Step 7 - You will be shown the accounts which have been linked to your phone number. Select the one that you want to use. You are now ready to begin transact.

Step 8 - In order to send money to another account, click on Send and enter the VPA.

Step 9 - Once the VPS is verified, you will be asked to enter the amount to be transferred.

Step 10 - You will be asked to enter your UPI PIN for the transaction to go through. Once successful, you will be notified accordingly.


Tuesday, 3 January 2017

Should you invest in National Pension System (NPS) Tier 2 account?

What is NPS?

NPS stands for National Pension System. A voluntary contribution scheme(Central Government employees who joined after 1 January 2004 need to compulsorily invest in NPS since they will no longer get defined benefit pensions on retirement) regulated by the PFRDA, it aims to provide retirement income to all Indian citizens that invest in it through safe and reasonable market based returns. 

What is a Tier 2 NPS account?
National Pension System (NPS) has two types of accounts – Tier 1 and Tier 2.

You need to open a Tier I account in case you want to invest in NPS.  You will be assigned a Permanent Retirement Account Number (PRAN) once your NPS account is opened. Keep in mind that you cannot withdraw the amount that you have invested in a Tier 1 account until maturity (except in certain cases).

In comparison a Tier 2 account allows you to withdraw your money as and when you want. So a Tier 2 account operates more or less like a mutual fund with much lower fund management and other charges. According to an Economic times article, “The fund management charges of NPS Tier II plans are barely 1% of the cost of the average direct plan. A direct mutual fund charges 0.75-1.5%—or Rs 750-1,500 per year for managing an investment of Rs 1 lakh, compared with Rs 1,500-2,500 charged by a regular mutual fund. But NPS Tier II plans charge only 0.01%—or Rs 10 per year for managing an investment of Rs 1 lakh.

So should you invest in a Tier 2 NPS account?
There are a number of factors that need to be considered while deciding to invest in a Tier 2 account.
You need to have a Tier 1 NPS account in order to open a Tier 2 account.  In other words only if you have a live Tier 1 account can you apply for a Tier 2 account.

According to Economic Times, NPS Tier II plans have outperformed mutual funds of the same vintage by 70-200 basis points (.7%-2%) across different time frames. I am attaching an image which shows the returns generated by the funds under the NPS Tier 2 option.


You can also take a look at for up-to-date returns of all NPS funds. In fact, according to the Economic Times article,NPS has outperformed PF, in the last six months you would have earned more than what the Provident Fund offers in a full year.

Tier 2 does not offer the tax benefits provided by an NPS Tier 1 account (Rs.1,50,000 as per section 80CCD(1) and Rs.50,000 as per section 80CCD(1b)). In addition, there is still some ambiguity on how the maturity proceeds are taxed for a NPS Tier 2 account. For instance, some believe that even the long-term gains (LTG) from equity funds may get taxed and debt fund investments may not be eligible for indexation benefit. Other believe that the proceeds would be taxed according to your tax bracket.

The fund management charges NPS Tier II plans are barely 1% of the cost of the average direct plan resulting in better returns.

So I think that a Tier NPS 2 account is a good savings and investment option if you are looking for an instrument which is a medium-term investment tool, notwithstanding the taxation ambiguity.

How can you open a Tier 2 NPS account online?
So how can I open a NPS Tier 2 account online? The process is quite simple if you have a live Tier 1 account.

Step 1: Go to the eNPS site: and click on Tier II Activation.

Step2: You will be asked to click on a button to receive a one time password (OTP) on your registered mobile number. Enter the OTP you receive.

Step3: Verify your details

Step 4: Once the complete registration details are provided, you will be required to pay initial contribution through Payment Gateway Service Provider (PGSP). You will be routed to the Bank portal (Internet Banking portal) for initial payment.

Step 5: Print and courier your form to the NSDL office at the following address:

Central Recordkeeping Agency (eNPS)
NSDL e-Governance Infrastructure Limited,
1st Floor, Times Tower,
Kamala Mills Compound, Senapati Bapat Marg,
Lower Parel, Mumbai - 400 013

Select 'Print & Courier' option in the eSign / Print & Courier page.  You need to take a printout of the form, paste your photograph (please do not sign across the photograph) & affix signature.

The finer details
You need to invest a minimum of Rs. 1000 at the time of opening a Tier 2 NPS account. You need to maintain a minimum balance of Rs. 2000 at any time in a Tier 2 account.

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