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Importance of Travel Insurance post COVID

Not many people realize this but travel-related insurance is easily one of the most ignored aspects of international travel and with the entire COVID-19 scenario running roughshod on international travel, it will become all the more important. This kind of insurance has always been essential to cover travel-related risks like missed connecting flights, lost baggage, injury or illness abroad, loss of travel documents, loss or damages caused by weather-related problems, etc. With the evolving Corona Virus situation, however, things will continue to remain exceptionally unpredictable for the foreseeable future, leading to any factors which will lead to increased need and importance of insurance for travel purposes.

 

Factor 1: The lingering risk of Corona Virus infection:

There will be a few long months, maybe more than a year, before you can expect an effective vaccine for coronavirus infection. News shows that while some medicines have shown promising preliminary results in the treatment of Covid-19, a vaccine is always the best choice because it is a preventive measure and as the old adage goes, prevention is always better than a cure. International travel takes place in planes which are enclosed environments and people are too close for comfort in the planes. Did you know that even if you fly business class, you are still not far enough from other people in a plane for sensible social distancing to be possible? Imagine flying a coach in such a scenario! This means that ​travel ​insurance​ is going to be extremely necessary for everyone.

 

Factor 2: Airlines services will continue to be shaky

Airlines are trying very hard across the globe to keep their systems operational but the situation was so bad that they were not even able to find enough parking spaces for all the grounded planes. The fact of the matter is that airlines always run at paper-thin margins because of the highly competitive industry and extremely volatile cost structure. Once they are going to get things in the air once more, there will be a lot of turbulence. Many systems were working by duct tape and hammer blows and getting back these systems to operational level in an understaffed and risk-bearing situation will mean many people will miss connections, luggage will get lost many times and all such risks will be very high, creating a strong need for everyone to buy travel insurance online before they fly to anywhere out of the country.

 

Factor 3: You might get stuck out of India during lock-down

Let there be an assumption that you were able to travel to any country out of India and you landed there all safe and sound, but just before you were supposed to travel back, your host area encountered a sudden rise in infections, making it necessary for the government of that area to suspend all travel activities in and out. In such a situation, you will be stuck in your host country until the government of India can arrange for your return. Travel insurance will be your only help in such a case. It will cover all the extra expenses which you will have to bear during the lockdown.

 

All things said and done, in the coming few months, international travel will change like never before.

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Gold Monetisation Scheme

Thought that the gold you own is only to wear in high-end weddings and is of no use to you. It is definitely considered as one of the best forms of Emergency Funds but beyond that what. How about we tell you that there is a way to earn interest in a safe way on your gold via Gold Monetisation Scheme. This scheme helps you to monetize the gold that you have and earn interest on the same.

The Gold Monetisation Scheme allows you to earn interest on the gold you own. It also saves the storage cost for gold. To gain benefit from the scheme, you need to deposit gold in any physical form, jewelry, coins or bars. This gold will then earn interest based on its weight. You get back your gold in the equivalent of 995 fineness gold or Indian rupees, as you desire (this option is to be exercised at the time of deposit).

Eligibility -  Restricted for sale to resident Indian entities, including individuals, HUFs (Hindu
undivided families), trusts, universities, charitable institutions

Tenure -  One to three years (short term); Five to seven years (medium-term); 12–15 years (Long term)

Interest: Both principal and interest to be paid to the depositors of gold are ‘valued’ in gold. For example, if a customer deposits 100 gm of gold and gets one percent interest, then, on maturity, he has a credit of 101 gm. The interest rate is decided by the banks concerned.

Minimum Deposit - 30 gram (any form bullion or jewelry)

Interest & Taxation - Interest paid in gold terms. Fully tax-exempt, no capital gains

Remember that since the gold that you deposit will be melted, you won’t get back the gold in the same form as you had deposited.

How to Open an Account - You need to first go to a collection and purity-testing center to ascertain the purity of your gold. You can deposit your gold if it clears the criterion set for gold content. You will be provided with a certificate of purity and gold content. You will need to present the certificate to the bank where you want to open the account.

Redemption - you can take back gold or cash at redemption but the preference must be stated at the time of deposit.

Wealth Cafe Actionable - In the scheme, you give your gold to the bank which is then melted so if its jewelry ensure that you won't get it back. Also, it is bank-specific so be sure to go to a good bank for this scheme to be sure of getting your returns and money/gold back.

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Investing in Gold Online - Digital Gold

In today's time when we can do every other transaction online then why not invest in Gold. Almost all the wallets and payment portals let you invest in 1 gram 99.99% finesse gold.

What is Digital Gold:

Digital Gold is relatively new in the market. It is a simple way to buy and sell gold instantly. With physical gold one has to save enough, go to the store and buy the same. In physical gold, you either buy it as jewelry or coins. Digital Gold as the name suggests can be bought online in digital form online. The same is in your online account. You will have to sell the same to buy gold jewelry, coins or get cash in return.

How to buy Digital Gold

You can get digital gold via any of the following portals:

  1. GooglePay
  2. Paytm
  3. Phone Pe
  4. HDFC Securities
  5. Motilal Oswal Securities
  6. Stock Holding Corporations of India

Where is your Gold kept?

You gold is stored in vaults of MMTC-PAMP tagged in your name. MMTC - PAMP is a joint venture between Switzerland based bullion brand, PAMP SA, and MMTC Ltd, a Government of India Undertaking.

Features:

  1. A customer using either of the two platforms can buy 24 Karat / 999 fineness gold.
  2. Some of these portals allow you to buy gold with a minimum value of INR ONE.
  3. You can buy & sell gold anytime even on public holidays and weekends.
  4. There is a limit of tenure up to which you can invest in digital gold after that you can either convert it to jewelry or cash.
  5. It is important to keep your account with these portals active - Paytm has a time period of 6 months. Without any transactions for 6 months your account is inactive.
  6. Non-cancellation - Once you have placed a transaction (buy or sell) on these platforms, you cannot cancel the same.

What to do with digital gold

You can use your digital gold to buy gold jewelry with partner jewelers of the portals you are using to buy digital gold, sell and get cash on prevailing rates or get gold coins in return.

However, the price at which a customer can sell the digital gold back to Paytm is slightly less than the price at which he can buy the gold, says Hegde. This is due to various transaction-related costs including taxes, bank charges for processing your payment, technology costs and hedging costs since the market prices may fluctuate between a customer placing an order and MMTC-PAMP buying the gold. Similar costs are involved while selling of gold by MMTC-PAMP, too, when a customer sells gold on the Paytm. The same must be rechecked with other portals as well.

It is important that you check the costs that you have to bear when you sell your digital gold for cash or the making charges for coins and any other charges that may be applicable.

Is digital gold safe?

There has been some debate around it being a safe investment option or what guarantee does an investor have?  One of the biggest risks of investing in digital gold is that it is not regulated yet. All these platforms - Paytm, Phone Pe, Google pay and others act as a platform or payment portals to help you buy gold which is safely kept with MMTC PAMP, it is not with these portals. Hence, it is very important to know where and how you are investing because if tomorrow any of these portals, you as an investor should have a redressal system in place to go to or approach MMTC PAMP directly. There are some grey areas on this right now. The convenience of investing in gold through these portals comes at a cost and you must be aware of the same.

Wealth Cafe actionable - Digital gold is a very interesting new addition to the world of investing in gold and it allows you to invest in smaller proportions in gold. However, there are more regulated means of investing in gold where the risk is relatively less.  

 

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Sovereign Gold Bonds

Global gold prices have risen 20% in the last one year and are reaching a new high of approximately 39,000 INR.

Gold, typically, flourishes as a safe haven in times of uncertainty, where people are unsure of the movements in the Equity /Debt Markets. India is not immune to these conditions. “A number of global issues have surfaced such as the Iran conflict and trade wars, and gold serves as a store of value in such situations. With investor interest rising in the yellow metal, we tell you about some of the options available for investing.

Instead of going for physical gold investments, there are other ways of investing in gold like the Sovereign Gold Bonds, Golds Exchange Traded Funds (ETFs), Gold Monetisation Scheme, Indian Gold Coins, and Mutual Funds.

With the intent to provide gold-like returns, along with some interest, the government has launched the Sovereign GoldBond Scheme. Sovereign Gold Bonds (SGBs) were
introduced in tranches. The first tranche was offered in November 2015. In the financial year 2019-20, four tranches of SGBs will be issued every month from June 2019 to September 2019.

Price of SGB - The price of the Gold Bond is linked to Gold Prices. If the gold prices go up, then your bond value will increase and if not, then another way around. Gold Bonds are issued in multiples of 1 gram of gold. You can hold these bonds in paper physical form. The risks and costs of storage are eliminated. The risks and costs of storage are eliminated.SGBs bonds are free from issues like making charges and purity. These bonds are held in the Demat form, eliminating the risk of loss of scrip.

Interest Payments - Given that these are bonds i.e paper form of gold investments, an interest of 2.5% is paid semi-annually on the initial amount of investment. This Interest is taxable.

Eligibility - Restricted for sale to resident Indian entities, including individuals, HUFs (Hindu undivided families), trusts, universities, charitable institutions.

Investment Amount - Investors are required to buy a minimum of one gm of gold. The maximum limit that can be subscribed is four KG of gold for an individual in a financial year.

Tenure - The bond is of eight-year with an option to exit after the fifth year onwards. However, gold bonds can be transferred to the stock market.

Taxation - Capital gain tax arising on the redemption of SGB to an individual has been exempted. The indexation benefit will be provided to LTCG arising to any person on the transfer of bonds.

Where & How to Buy - Gold bonds can be bought through banks, post offices and the Stock Holding Corporation of India. They are available both in Demat and paper forms. Know-your-customer (KYC) norms are the same as those for the purchase of physical gold.

The main objective of the Sovereign Gold Bond Scheme is to reduce the demand for gold in the physical form by encouraging people to buy it in the paper form. The rate of interest for 2019–20 is fixed at 2.50 percent per year, payable on a halfyearly basis.

Wealth Cafe Actionable - Gold Bonds are a great form of Investments for individuals who want to make long term 'Investment' in gold for a period of more than 5 years and do not want to go through the hassle of purity, safety, and other risks.

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Income-tax Rates FY 2020-21 (AY 2021-22)

Before knowing the tax rates, it is very important to understand the terms Financial year (FY) and Assessment Year (AY).

The below-mentioned tax rates/ slab is on the income earned for the period 1 April 2020 to 31 March 2021. FY stands for the ‘financial year’ which is from 1 April 2020 to 31 March 2021. AY stands for Assessment year which 2021-22.

For individuals, the due date to file the income tax return for the income earned from 1 April 2020 to 31 March 2021 is 31 July 2021. However, this year due to COVID 19 economic relaxations, the due date is pushed to 30 November 2021

Income tax Rates 

  1. Income Tax Rate & Slab for Individuals & HUF:
    1. Individual (Resident or Resident but not Ordinarily Resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year & for HUF:

 

Taxable income Tax Rate
(Existing Scheme)
Tax Rate
(New Scheme)
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 5% 5%
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Above Rs. 15,00,000 30% 30%

 

  1. Resident or Resident but not Ordinarily Resident senior citizen, i.e., every individual, being a resident or Resident but not Ordinarily Resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:
Taxable income Tax Rate
(Existing Scheme)
Tax Rate
(New Scheme)
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 3,00,000 Nil 5%
Rs. 3,00,001 to Rs. 5,00,000 5% 5%
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Above Rs. 15,00,000 30% 30%

 

  1. Resident or Resident but not Ordinarily Resident super senior citizen, i.e., every individual, being a resident or Resident but not Ordinarily Resident in India, who is of the age of 80 years or more at any time during the previous year:
Taxable income Tax Rate
(Existing Scheme)
Tax Rate
(New Scheme)
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 Nil 5%
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Above Rs. 15,00,000 30% 30%
  1. Surcharge:
    a) 10% of Income tax where total income exceeds Rs.50 lakh
    b) 15% of Income tax where total income exceeds Rs.1 crore
    c) 25% of Income tax where total income exceeds Rs.2 crore
    d) 37% of Income tax where total income exceeds Rs.5 crore
  2. Note:Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).
  3. Education cess:4% of income tax plus surcharge
  4. Note: A resident or Resident but not Ordinarily Resident individual is entitled to rebate under section 87A if his total income does not exceed Rs. 5, 00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less. rebate under section 87A is available in both schemes I.e. existing scheme as well as new scheme.

 

  1. Income Tax Rates for AOP/BOI/Any other Artificial Juridical Person:
Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,001 to Rs. 5,00,000 5%
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Surcharge:
a) 10% of Income tax where total income exceeds Rs.50 lakh
b) 15% of Income tax where total income exceeds Rs.1 crore
c) 25% of Income tax where total income exceeds Rs.2 crore
d) 37% of Income tax where total income exceeds Rs.5 crore

Note: Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).

Education cess: 4% of tax plus surcharge

 

  1. Tax Rate for Partnership Firm:

A partnership firm (including LLP) is taxable at 30%.

Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore

Education cess: 4% of Income tax plus surcharge

 

  1. Income Tax Slab Rate for Local Authority:

A local authority is Income taxable at 30%.

Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore

Education cess: 4% of tax plus surcharge

 

  1. Tax Slab Rate for Domestic Company:

A domestic company is taxable at 30%. However, the tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year.

Particulars Tax Rate(%)
If turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year 2018-19 25%
If the company opted section 115BA (Note 1) 25%
If the company opted for section 115BAA (Note 2) 22%
If the company opted for section 115BAB (Note 3) 15%
Any other domestic company 30%

 

Note 1: Section 115BA - A domestic company which is registered on or after March 1, 2016 and engaged in the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it and also It is not claiming any deduction u/s 10AA, 32AC, 32AD, 33AB, 33ABA, 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB), 35AC, 35AD, 35CCC, 35CCD, section 80H to 80TT (Other than 80JJAA) or additional depreciation, can opt section 115BA on or before the due date of return by filing Form 10-IB online. Company cannot claim any brought forwarded losses (if such loss is related to the deductions specified in above point).

Note 2: Section 115BAA - Total income of a company is taxable at the rate of 22% (from A.Y 2020-21), if the following conditions are satisfied:
- Company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA).
- Company is not claiming any brought forwarded losses (if such loss is related to the deductions specified in above point).
- Provisions of MAT is not applicable on such company after exercising of option. company cannot claim the MAT credit (if any available at the time of exercising of section 115BAA).

Note 3: Section 115BAB - Total income of a company is taxable at the rate of 15% (from A.Y 2020-21), if the following conditions are satisfied:

- Company (not covered in section 115BA and 115BAA) is registered on or after October 1, 2019 and commenced manufacturing on or before 31st March, 2023.
- Company is not formed by splitting up or reconstruction of a business already in existence.
- Company does not use any machinery or plant previously used for any purpose.
- Company does not use any building previously used as a hotel or a convention center, as the case may be.
- Company is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it. Business of manufacture or production shall not includes business of -

  • Development of computer software;
  • Mining ;
  • Conversion of marble blocks or similar items into slabs;
  • Bottling of gas into cylinder;
  • Printing of books or production of cinematographic film; or
  • Any other notified by Central Govt.

- Company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA and 80M).

- Company is not claiming any brought forwarded losses (if such loss is related to the deductions specified in above point).

- Provisions of MAT is not applicable on such company after exercising of option. company cannot claim the MAT credit (if any available at the time of exercising of section 115BAA).

Surcharge:
a) 7% of Income tax where total income exceeds Rs.1 crore
b) 12% of Income tax where total income exceeds Rs.10 crore
c) 10% of income tax where domestic company opted for section 115BAA and 115BAB

Education cess: 4% of Income tax plus surcharge.

 

  1. Tax Rates for Foreign Company:

A foreign company is taxable at 40%

Surcharge:
a) 2% of Income tax where total income exceeds Rs. 1 crore
b) 5% of Income tax where total income exceeds Rs. 10 crore

Education cess: 4% of Income tax plus surcharge.

Taxable income Tax Rate
(Existing Scheme)
Tax Rate
(New Scheme)
Up to Rs. 10,000 10% -
Rs. 10,001 to Rs. 20,000 20% 22%
Above Rs. 20,000 30% -
  1. Income Tax Slab for Co-operative Society:

Surcharge:

  1. a) 12% of Income tax where total income exceeds Rs. 1 crore
  2. b) In case of Concessional scheme, surcharge rate is 10%

Education cess: 4% of Income tax plus surcharge.

Disclaimer: - The articles are for information purposes only. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. You must consult a financial advisor who understands your specific circumstances and situation before taking an investment decision.

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Why you should avoid investing all your money in a FIXED DEPOSIT?

First job – first income – first savings – first investment is always a fixed deposit. The moment there is any lump sum savings in our bank account, we make a fixed deposit.

Recurring deposits are also a type of fixed deposits where a fixed amount is invested monthly in the deposit account.

Most either invested in a fixed deposit or a recurring deposit once in our lifetime. Fixed Deposit is the stepping stone to our investment journey.

Fixed Deposit is a low risk – low return investment product.

Return: A fixed deposit currently gives a return of 7%-7.5% before tax and after taking into an account the tax rate of 30% on the income from fixed deposit. It would be anything between 5.75% - 6%.  Hence, the return from a fixed deposit is not a lot.

Risk: Investors assume that Fixed Deposit is the safest investment option and nothing can go wrong with them. It is important to note that a small amount of risk is always associated with every investment. The RBI ensures a balance of Rs. 1 lakh per account holder in case of default by any scheduled bank. Anything more than that in any bank is not insured and hence, is at risk, if the bank was to shut down. So, if you have a deposit of 5 lakh rupees with a scheduled bank and it was to go bust, RBI will only pay you back 1 lakh rupees. Also, it is important to know that the banks are governed by RBI and the big banks will not just shut down tomorrow, there is a relative risk which we all bear when we take a fixed deposit.

Co-operative Banks: Co-operative banks are not scheduled banks. They generally give a return of 1% or 2% more than the other private/public banks making a fixed deposit with these banks a  very lucrative investment option. However, a higher return means higher risk. Co-operative banks are notoriously known for shutting down without any prior notice and the government may not come to rescue these banks. So, the amount of risk that you take for 1% extra return is not justifiable and it is not a MEASURE RISK and hence, you should try and avoid the same.

Why do you invest?

  1. You can own what you cannot own today
  2. You can own more than what you want to own today but cannot.

Basically, your investments should beat inflation. Because with time, things keep getting more expensive at the rate of inflation, so your money today has to grow at a rate higher than the inflation rate for you to be able to afford what you cannot afford today.

The current rate of inflation is 5% - 5.5% and hence, your investments must fetch you more than this to help you get whatever that you want to own.

Are your fixed deposits giving you a return higher than the inflation rate?

We have tabulated below to explain how your money grows in a fixed deposit versus in a mutual fund. This growth in money is compared to the price of movie tickets and how the same has grown expensive over a period of time.

In this table, you can see the difference in the price of a movie ticket, 10 years ago and today. The same is compared to the growth in your fixed deposit investment @current rate of 6%.

Whereas, if you invest in mutual funds, your money would grow @15% and after 10 years, you will have 4 times the value and in 20 years, 10 times the value you get from a fixed deposit.

You should just not invest your money, but you should invest it right to get more than what you can today.

If you can 10 years from today exactly what you can today, what is the point of investing. This is what fixed deposit does to your money. It does not make it work hard enough for you to be able to enjoy life. By investing in a fixed deposit, you will only be able to own what you have today, tomorrow, not really a lot more.

Wealth Cafe Actionable - Invest in fixed deposit when you are closer to your goal and cannot afford to take a risk. You can also invest for your emergency fund in a fixed deposit as the returns are similar to a liquid fund but fixed deposits are safer. The only problem with fixed deposits is that they are illiquid and you have to bear a penalty for premature withdrawal of a fixed deposit.

Image Credit: Wooden Earth

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Why do Women need Financial Education and Money Management Skills?

Apart from the fact that everyone (men and women alike) should be aware of how to manage their money appropriately. The socio-economic situation around us increases the need to know how to grow one’s wealth for women.

1. The cost of being a woman - Spendthrift nature

Women have always been considered as spenders. The temptation to shop and hoard things is perceived as a common womanly trait. Moreover, it is considered okay for women to do the same. Statistically, women are the best buyers - so things are marketed towards women including the men's products. Discounts, offers and sale days such as Women’s Wednesday Bazaar are specifically women-oriented because we make the most of such days.

Due to this innate spendthrift nature, even the banks have introduced special ‘Woman’ bank accounts with special ‘Debit/Credit card’ which allows them additional points for shopping. Women are encouraged to let their purse loose at every other step.

2. The cost of being a Woman - More expensive things

A study from New York – has shown that woman pays thousands of dollars (equivalent to lakhs of INR) over their lives to purchase similar products as men. Women’s products cost 7 percent more on average than similar products for men across toys, clothing, accessories, personal care, home, and health. The report also pointed out that although gendered products often differ in branding, construction, and ingredients, shoppers do not have control over those factors and must purchase what is available at a higher cost. Women have no choice but to buy expensive products.

Apart from this price differential treatment, there are certain expenses that we have to incur such as sanitation, hygiene, skin care because of our body, biology, and gender.  These are certain basic expenses which cannot be avoided.  So, how do we continue to afford everything? We cannot stop using the basic things which have become a part of our life just because it's more expensive as compared to men. Should we just start buying men’s products which are similar to ours?

3. The disparity in the pay scale

According to The Global Wage Report 2016-17 published by the International Labour Organization, the gender pay gap in India amounts to 30%. To put in simple terms, men get paid 30% more just for being born as men.

Apart from getting paid less, the number of paid working days are lesser than men, women tend to take more leaves over their working career as compared to their men. They do so during their pregnancy, marriage, taking care of their children and elderly in the house resulting in lost income and depleted savings.

4. Longer life expectancy

Women live longer than men by an average of 5 years. So, we need more money for our retirement and insurance for a longer duration than men. Further, a woman has a 50per cent chance that at some point in her life, she will need long-term care - meaning a period of at least 90 days when she requires assistance with activities like dressing, eating, and bathing.

5. No support to fall back on

Most of us are used to being dependent on our families or partners for financial support. We have always had someone to fall back on in case of a financial emergency. 

Women who are suddenly single, like divorcees and widows, obviously are at an immediate disadvantage. They do not have that financial backing. 8 out of 10 women are responsible for taking care of their finances at some point in life.

6. Ability to take decisions

Researchers have proven that women have the ability to make smart decisions under pressure and are not carried away by market trends and investment biases. Women's behavior with respect to handling money is very stable. This is also the reason why women asset managers for mutual funds are very sought out for.

Wealth Cafe :

Women have limited income and a list of unavoidable expenses.

The only way to deal with this is to grow your wealth by yourself. Learn about the farfetched world of finance.

Our workshops are designed to you (women) acquire the skills of financial planning and money management. Rather than leaving the money matters to the other members of the family, money education will make you more independent and empowered to make smart money decisions confidently. 

Don't just be a feminist, be a 'fe-money-ist'.

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Atal Pension Yojana - Things you must know

To inculcate a habit of compulsory saving for retirement, the government of India in 2015 announced the Atal Pension Yojana for Private sector employees or employees working with such an organization that does not provide them a pension. The goal of the scheme is to ensure that no Indian citizen has to worry about any illness, accidents, or diseases in old age, giving a sense of security.  It is an extension of the recognized National Pension Scheme and replaces Swavalamban Pension Yojana which wasn’t accepted well by the people.

The Government would also make a co-contribution of 50% of the total contribution, or Rs. 1000 per annum, whichever is lower, to all the subscribers who are not a part of any other statutory social security schemes (For eg: Employee’s provident fund), or should not be paying income taxes.

1. How does the scheme work?

Under this scheme, you can choose how much pension you want after you turn 60 and your contribution amount would be determined as per the table below. You contribute that fixed amount till 60 and then post you are 60, you would get the pre-selected pension amount till you are alive. After your death, your spouse would get the pension amount. Post your spouse's death, your nominee would get the lump sum amount. 

Let us understand this with an example, For instance, Riya is 23 and she decides that she will contribute for a pension of INR 5000, so she would have to contribute INR 346 per month till she is 60 and post that she would get a pension of INR 5000 from APY.

There is an option of getting a fixed pension of Rs 1000, Rs 2000, Rs 3000, Rs 4000, or Rs 5000 on attaining an age of 60.

The following table tells you how much you need to contribute per annum based on your age and pension plan.

2. Eligibility

To avail of benefits from the Atal Pension Yojana, you must fulfill the below requirements:

  1. Must be a citizen of India.
  2. Must be between the age of 18-40
  3. Should make contributions for a minimum of 20 years.
  4. Must have a bank account linked with your Aadhar
  5. Must have a valid mobile number

Those who are availing of the benefits of Swavalamban Yojana will be automatically migrated to Atal Pension Yojana.

3. How to Apply?

Follow these steps to avail the benefits of APY

  1. All nationalized banks provide the scheme. You can visit any of these banks to start your APY account.
  2. Atal Pension Yojana forms are available online and at the bank. You can download the form from the official website.
  3. The forms are available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil, and Telugu.
  4. Fill up the application form and submit it to your bank.
  5. Provide a valid mobile number, if you haven’t already provided to the bank.
  6. Submit a photocopy of your Aadhaar card.

You will be sent a confirmation message when the application is approved. Also, you can apply for it online from your bank’s official website.

4. How to Exit From Atal Pension Yojana?

Following are the 3 withdrawal rules :

Subscriber's Death

Upon the death of a beneficiary before 60 years of age, here are the two options one can follow:

  • Close the APY Account

If the spouse is keen to close the APY account, he/she will get the accumulated corpus. In case a spouse is not present, the nominee will get the pension amount.

  • Continue the APY Account

If the spouse wants to continue the APY account, one can maintain the account in his/her name. The spouse will get the same amount as that of the beneficiary until death.

Voluntary Exit

The scheme offers flexibility in providing a voluntary exit from this scheme. In this case, the Government will only refund your accumulated contributions and earned interest over the years. You are not eligible to get the Government co-contributions in case of voluntary withdrawal.

Exit Due to Illness

You can withdraw from this scheme based on specified illness. Accordingly, the Government will refund your accumulated pension corpus to your bank account.

5. Tax Benefits

Tax exemption is available on contributions made by individuals towards Atal Pension Yojana under Section 80CCD of the Income Tax Act, 1961. Under Section 80CCD (1), the maximum exemption allowed is 10% of the concerned individual’s gross total income up to a limit of Rs. 1,50,000. An additional exemption of Rs. 50,000 for contributions to the Atal Pension Yojana Scheme is allowed under Section 80CCD (1B).

As you would notice, the contribution amount is very low, but you can consider the same while you are investing in NPS for the additional 50,000 tax deduction under section 80CCD(1B).

6. Some things you must know about APY

  • The Atal Pension Yojana scheme is passed by the Parliament of India in the budget session. The scheme will not be discontinued if there is a change in the Government, and your contribution is safe. Any succeeding Government has the right to only change the name of the pension scheme.
  • Since you will be making periodic contributions, the amounts will be debited automatically from your account. You need to make sure that you have a sufficient balance in your account before each debit.
  • You can increase your premium at your will. You just have to visit your bank and talk to your manager and make the necessary changes.
  • The Indian Government does not permit the opening of multiple accounts for Atal Pension Yojana. Therefore, you are eligible to open only 1 account.
  • APY Helpline Number:- 1800-110-069/ 1800-180-1111/ 1800-110-001

7. Account Maintenance charges

These charges are very minuscule and should not really be considered as a major deciding factor for this investment. We have shared it for your information. 

8. Penalty Terms

If you delay the payment of the contribution, then the below-mentioned penalty will be charged:

  • Rs.1 per month for contributions up to Rs.100 per month.
  • Rs.2 per month for contributions up to Rs.101 to 500 per month.
  • Rs.5 per month for contributions between Rs.501 to 1000 per month.
  • Rs.10 per month for contributions beyond Rs.1001 per month.

If there's a continuous default for 6 months, your pension account will be frozen and if there's a continuous default for 12 months, the account will get closed and whatever balance is left after the above-said deductions will be given to the subscriber.

It is best if you set up an auto-debit from your bank account to avoid these penalty charges.

Wealth Cafe Advice

We understand the pension received each month is a small amount, however, it is a great pension (and the only government security pension scheme) available to Indians. And also, the numbers are based on an average return of 8%. APY is a great investment option for you to start your investing journey and develop the habit of saving for your retirement, especially where your employer has no EPF and other retirement options available. Further, where you and your spouse both apply for it, a fixed pension of INR 10,000 post-retirement is also set so you just have to work towards the balance amount. In conclusion, there are no negatives to these schemes, with very small early contributions, you can get a fixed pension and insurance for your nominee with a government guarantee. We would highly recommend everyone to apply for this scheme and make the most of it. 

If you have any concerns with respect to this scheme, you can email us your queries at iplan@wealthcafe.in

You can use the calculator provided by the government to calculate your corpus in comparison to your Invested amount - APY CALCULATOR

You can also check for other benefits provided by the government:

  1. Pradhan Mantri Jan Arogya Yojana (PMJAY)
  2. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
  3. Sukanya Samriddhi Yojana
  4. Pradhan Mantri Shram Yogi Maan-Dhan
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Pradhan Mantri Shram Yogi Maan-Dhan - Eligibility and Criteria

Pradhan Mantri Shram Yogi Maan - Dhan (PMSYM) is a pension scheme launched by the government on 15th February 2019. It is a new pension scheme for the unorganized   sector. Some of its features are similar to Atal Pension Yojana (APY). However, it is important to note the important features and the eligibility criteria of this scheme.

Such schemes are very welcomed in India, given that there is no proper pension plan being managed by the government.

Eligibility of PMSYM

Features of PMSYM

1. Minimum Pension– Each subscriber under the PM-SYM, shall receive the minimum assured pension of Rs.3000/- per month after attaining the age of 60 years.

2. Family Pension– During the receipt of the pension, if the subscriber dies, the spouse of the beneficiary shall be entitled to receive 50% of the pension received by the beneficiary as a family pension. Family pension is applicable only to a spouse.

If a beneficiary has given a regular contribution and died due to any cause (before age of 60 years), his/her spouse will be entitled to join and continue the scheme subsequently by payment of regular contribution or exit the scheme as per provisions of exit and withdrawal.

3. A default of Contributions-If a subscriber has not paid the contribution continuously he/she will be allowed to regularize his contribution by paying entire outstanding dues, along with penalty charges, if any, decided by the Government.

4. Pension Pay out-Once the beneficiary joins the scheme at the entry age of 18-40 years, the beneficiary has to contribute till 60 years of age. On attaining the age of 60 years, the subscriber will get the assured monthly pension of Rs.3000/- with a benefit of a family pension, as the case may be.

5. Matching contribution by the Central Government – PM-SYM is a voluntary and contributory pension scheme on a 50:50 basis where prescribed age-specific contribution shall be made by the beneficiary and the matching contribution by the Central Government as per the chart. For example, if a person enters the scheme at an age of 29 years, he is required to contribute Rs 100/ – per month till the age of 60 years. An equal amount of Rs 100/- will be contributed by the Central Government.

How to enroll in PMSYM?

The subscriber will be required to have a mobile phone, savings bank account, and Aadhaar number. The eligible subscriber may visit the nearest Community Service Centre (CSC)s and get enrolled for PM-SYM using Aadhaar number and savings bank account/ Jan-Dhan account number on a self-certification basis.

Later, the facility will be provided where the subscriber can also visit the PM-SYM web portal or can download the mobile app and self-register using Aadhar number/ savings bank account/ Jan-Dhan account number on self-certification basis.

The enrolment will be carried out by all the Community Service Centers (CSCs).  The unorganized workers may visit their nearest CSCs along with their Aadhar Card and Savings Bank account passbook/Jandhan account and get registered themselves for the Scheme.  Contribution amount for the first month shall be paid in cash for which they will be provided with a receipt.

All the branch offices of LIC, the offices of ESIC/EPFO and all Labour offices of Central and State Governments will facilitate the unorganized workers about the Scheme, its benefits and the procedure to be followed, at their respective centers.

How to exit or withdraw from Pradhan Mantri Shram Yogi Maan-Dhan?

Considering the hardships and erratic nature of employability of these workers, the exit provisions of the scheme have been kept flexible. Exit provisions are as under:

  • In case subscriber exits the scheme within a period of less than 10 years, the beneficiary’s share of contribution only will be returned to him with savings bank interest rate.
  • If subscriber exits after a period of 10 years or more but before superannuation age i.e. 60 years of age, the beneficiary’s share of contribution along with accumulated interest as actually earned by the fund or at the savings bank interest rate whichever is higher.
  • If a beneficiary has given regular contributions and died due to any cause, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit by receiving the beneficiary’s contribution along with accumulated interest as actually earned by the fund or at the savings bank interest rate whichever is higher.
  • If a beneficiary has given regular contributions and become permanently disabled due to any cause before the superannuation age, i.e. 60 years, and unable to continue to contribute under the scheme, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit the scheme by receiving the beneficiary’s contribution with interest as actually earned by fund or at the savings bank interest rate whichever is higher.
  • After the death of the subscriber as well as his/her spouse, the entire corpus will be credited back to the fund.
  • Any other exit provision, as may be decided by the Government on the advice of NSSB.

Who will manage the Pradhan Mantri Shram Yogi Maan-Dhan Fund?

PM-SYM will be a Central Sector Scheme administered by the Ministry of Labour and Employment and implemented through Life Insurance Corporation of India and CSCs. LIC will be the Pension Fund Manager and responsible for Pension payout.  The amount collected under PM-SYM pension scheme shall be invested as per the investment pattern specified by the Government of India.

Wealth Cafe tip - PMSYM is another pension scheme for the unorganized sector similar to Atal Pension Yojana (APY)  and NPS scheme. Instead of investing in 2 different pension schemes, it is advisable to stick to one pension scheme.

You can also check for other benefits provided by the government:

  1. Sukanya Samriddhi Yojana
  2. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
  3. Pradhan Mantri Shram Yogi Maan-Dhan

 

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