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Personal Loan

All You Need To Know About Different Risk Factors Regarding Personal Loans

Financial difficulties are a constant issue in life and can strike at any time. Your investments likely get tied up when you run into issues like house renovations, unforeseen trip plans, or medical emergencies. Banks offer no-collateral, no-security personal loans to help with such financial issues. Additionally, you may conveniently use their internet portal to apply for a personal loan. It’s crucial to realise that unsecured loans carry some risk as well. Continue reading to learn more about the potential risks of personal loans. [B-01] What is a personal loan? A personal loan is sanctioned with little to no documentation. Additionally, it does not even require security or collateral. The money can be used for any financial purpose. You must pay it back according to the terms of the bank in simple equivalent monthly instalments over a few months. What is a personal loan used for? You are free to use the money for any financial purpose like vacation, purchasing a gadget, covering medical expenses, renovating your home, financing a wedding, funding your kids’ education, etc. How do personal loans work? The majority of loans function similarly to personal loans. You apply for a loan, and the bank verifies your creditworthiness and then extends an offer to you. The money is deposited to your bank account when you accept it, where you can use it however you like. You must pay back the loan in EMIs, the size of which will vary depending on the loan’s term, amount, and interest rate. Top Advantages of Personal Loans Processing a personal loan takes lesser time than other loans. They are the best option for taking care of your immediate cash needs. Lenders don’t have any trouble approving your loan application if you have a solid credit history. Personal loans are unsecured, i.e., without security. A personal loan will be beneficial regardless of the use, whether for an iPhone purchase, a vacation to Switzerland, or a house renovation. Getting affordable personal loans and making on-time repayments raises your credit score if you have bad credit or no credit history. Only a few documents are required, all of which can be filed online. Risk factors involved in a personal loan Interest Rate You shouldn’t accept a personal loan if you don’t need the same. Personal loans can range in interest rates from a little below 10% to three or four times more. Your credit score determines the interest rates for these loans. However, lenders can set any rate they wish within the applicable regulations. Moreover, exercise caution when contrasting annual percentage rates (APR). One can alter the APR. Instead, consider the full amount you will pay for the loan throughout its entire life, including interest, fees, and principal. Penalties Is it possible to repay the loan early without incurring any fees or penalties? Some lenders will be more receptive to your paying off the loan early than others, depending on the type of personal loan you obtain—from a bank, through peer-to-peer (P2P) lending, or through some other method. If you value an early payoff, as you should, be sure there are no penalties by carefully reading the fine print. Fees How much does a loan cost you? The loan’s up-front origination costs might differ, much like with a mortgage. Make sure to pay a reasonable and consistent upfront fee as per market rates. Do not just accept the first loan that you are qualified for. Privacy Concerns Loans from banks and credit unions will be subject to tight privacy regulations, while other possibilities might be much less formal. While lenders have to abide by privacy standards, many still don’t. Insurance Pitch Some personal loans will include a pitch for extra insurance to cover the debt in case “life’s unexpected occurrences” prevent you from being able to make your payments. Get a general disability insurance quotation by calling a trusted agent if you need insurance. It likely costs less and has better coverage. Precomputed Interest Precomputed interest calculates your interest using the original payment schedule, regardless of how much of the loan you have paid off. Simple interest calculates your interest based on the amount you owe as of the current day. Make sure to find out how the lender calculates the interest. Simple interest helps to repay the loan early. Payday Loans Financial experts and government organisations advise consumers to steer clear of payday loans, a type of short-term personal loan. People are frequently forced to roll over their loans for new terms because of the high-interest rates and restrictive stipulations. Unnecessary Complications A loan is an easy thing to use. You receive money from someone and return it with interest. Understand that if a business provides you with payment vacations, cash-back deals, or other inducements, the business won’t lose money on the transaction. You are the sole potential loser. A personal loan ought to be easy to comprehend. If it is not, it may be a warning sign. [B-02] The Bottom Line Loans are virtually always biased against the borrower because the majority of consumers aren’t adept at arbitrage. Consider saving up for the purchase if you are looking for a loan for a want rather than a need. Be cautious and aware of the hazards before proceeding with a personal loan. You may also make sure you know what to ask for by utilising a personal loan calculator to determine the monthly payment, loan length, and interest rate you are comfortable with. To read more about offers of Home Loans, Secured & Unsecured Business Loans, Corporate Loans and various other loans with lower EMIs at great interest rates, visit Piramal Finance.
08-11-2023
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Personal Loan

How Should You Take a Personal Loan To Buy A Car?

Taking a call on a big purchase is always tough. But you should not worry about the payment when you have many loan options. The best of all is a personal loan. Personal loans are versatile; they serve many purposes, including buying your dream car. Research shows that there has been an increase in the number of personal loan applications in India over the last few years. It is easy to see why borrowers prefer personal loans: they require no collateral and have lower interest rates. [B-01] A personal loan for a car is preferred over a car loan in India. A car loan typically only covers 80% of the total cost of the vehicle. A personal loan, on the other hand, covers the entire cost of the car. What Is a Personal Loan? A personal loan is a sum of money that you can borrow and spend on many things that are for your personal use. For instance, you may use it to pay off your debt or use the personal loan amount for a car. Features of a Personal Loan Unrestricted use of loan amount Minimal paperwork and formalities Quick loan approval Fast loan disbursal Flexible tenure for EMIs No need for collateral Types of Personal Loans Secured LoansA secured personal loan comes with collateral. e.g., an asset like a deposit account, home, or car. The collateral is used as security by the lenders. They have the right to keep the collateral as payment if you default on the loan. Unsecured LoansMost personal loans are unsecured. There is no need for any collateral to get such a loan. Because of the absence of collateral, banks view unsecured loans as risky. So, the interest rate on an unsecured personal loan is higher. Can I use a personal loan to buy a car? Generally, there is a misconception that you can only use a personal loan for certain expenses. Examples include home renovations, emergency expenses to repay debt, vacations, and so on. But in reality, you can use a personal loan for a car instead of taking out a car loan. Personal loans have a quick funding process and involve a simple application process. Personal Loans vs. Car Loans Personal loan for a car Car Loan Loan Type Unsecured Loan.There is no need for collateral. Secured Loan.The car is used as collateral security. Purpose Can be used for many purposes. Can only be used to buy a car. Credit Score The better your credit score, the more you can borrow. There is no need for a credit score. Interest Rates A higher credit score means a lower interest rate. It is determined by the amount of the car loan. Benefits of Getting a Personal Loan for a Car With a personal loan for a car, you have the option to borrow any amount you want. It is not restricted to the cost of the car. This helps you apply for part of the car’s value or the full amount, whichever is feasible for you. You can select a loan tenure of your choice. This means that you can repay your personal loan for a car according to the convenience of your budget. You can avail yourself of a personal loan with a low-interest rate by keeping your credit score high maintaining a strong repayment record. keeping no outstanding debt comparing the interest rates of different lenders You can have complete ownership of your car, unlike with a car loan. How to Take Out a Personal Loan for a Car You can take a personal loan for a car with these steps below: First, you have to compare the annual rates offered by different lenders. This includes the interest rate and all other fees. This helps you find the best annual percentage rate. Then, calculate your credit score to know how much you can borrow as a personal loan for a car. The higher your credit score, the more you can borrow. Next, check if the monthly repayment amount and the total amount you will end up paying the lender to fall within your budget. Finally, calculate the type of interest rate: fixed or variable. Now that you can plan your finances according to the loan, approach the best financial lender. Eligibility Details For salaried applicants For self-employed applicants Age Limit 18-60 years 21-65 years Minimum Income (which may vary across lenders) Rs 15,000 per month Rs 15 lacs per annum Work Experience/Business Continuity 1 year (at least 6 months with current employer) 2 years of business continuity Credit Score 750 or higher Documents for a Personal Loan for a Car PAN Card Identity Proof (any one of the following)PassportDriving LicenseAadhaar CardVoter’s Identity Card Address Proof (any one of the following)Registered Leave and Lease AgreementPassportDriving LicenseAadhaar Card/Aadhar AcknowledgementVoter’s Identity CardUtility bills like telephone bills, electricity bills, etc. (not more than 3 months old) Income Proof Last month’s salary slip Bank Statements from the Last Three Months Adding a Co-Applicant To qualify for a higher loan amount, you need to combine your income with that of a co-applicant. Only your spouse can become a co-applicant. You need to submit all the above documents for the co-applicant too. [B-02] Conclusion Buying a car is no longer a mere dream. With a personal loan, you can turn this dream into reality. But you should always analyse your finances before you get a personal loan for a car. Compare the annual rates, EMIs, and loan terms offered by various lenders. Also, keep your credit score high and have no history of default payments. If you are eligible for a personal loan, then what are you waiting for? Prepare your documents and submit them as soon as possible. Take advantage of your loan and enjoy car rides with your loved ones. To avail of a personal loan for a car quickly or for any queries related to it, talk to the financial experts at Primal Finance. While there, also check out their other products, services, and articles related to such topics.
08-11-2023
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Personal Loan

Know the Pros and Cons of Getting a Personal Loan for Your New Business

One of the most difficult issues which arise when you start a new business is getting money. It is one of the biggest roadblocks that you might face during your business journey. After the creation of a roadmap for the business, financing is the most important element that you require. Most banks and traditional financing institutions are bound by rules. These rules do not allow them to lend money to small or new businesses without greater backing. However, in such a situation, a personal loan for a new business could be the best option for you. [B-01] If your options like banks, investors, community finance institutions or capitalists have failed, you could turn to a personal loan for a new business. It is often unlikely that personal loan lenders check how you will spend your money. However, make sure that you read the fine print so that you could know the prohibitions on the purpose of your business. There are multiple benefits of availing personal loan for a new business. Benefits of personal loans for new businesses 1. Guidance One of the best benefits of getting a personal loan for a new business is that they guide you through the process far better than traditional financing institutions. It is not easy for new or small business owners to get loans without great financial backing. One of the major things which a new business owner face is confusion while navigating through the loan process. Lenders who provide personal loans get you the loan on mostly your terms. They also guide you well with their expertise. With Piramal Finance’s Personal Loans, you get a team of expert advisors. They guide you through the application process ensuring no hiccups in your journey. 2. Lower credit requirement Traditional finance institutions like banks etc do not provide loans to people or businesses with a lower credit score. If you have a lower credit score, then it is almost sure that your loan for a new business will be declined. As opposed to this, you can get a personal loan even with a lower credit score. Personal loan lenders do not fuss about a higher score. They also work with people with lower credit scores. You can also negotiate the terms and conditions of the loans even with a low credit score. 3. Easier qualification process The approval process for most personal loans is comparatively easier than traditional financing methods. All your lender needs to know is your credit score and income. There are likely fewer questions about the prospects and finance of your business. You don’t need to come up with an extensive plan of business or documentation to present to the lender. 4. Fast approvals There are numerous steps and documentation required to get a traditional loan. If you want to get faster approval for your business, then a personal loan is the best choice you can make. It does not take a long time to get a personal loan approved. It also gives easy access to the amount in lesser time. Personal loans could be disbursed within days. So if you need finance quickly, then personal loans are the way to go. 5. No collateral is required Personal loans do not require you to provide any collateral as a security. This also makes it desirable. If you are choosing a personal loan for a new business, you have to know about all the risks along with the advantages to make an informed choice. Disadvantages of using a personal loan for new business 1. Risking personal credit Taking out a personal loan for a new business could also put your credit score on the line. In the worst-case scenario, if the business fails or you fail to repay the loan, your credit score could decline beyond repair. It also increases the chances of rejection while getting finance in other forms in future. Also, personal loans increase the ratio of your debt-to-income ratio. This makes it difficult to qualify for getting loans for assets, mortgages or credit cards. 2. Limited borrowing in personal loans The maximum amount of personal loans depends entirely on the lenders. It depends on various factors on the lender’s and your part. Also, according to rules and regulations by Government, the maximum amount limited by most banks and NBFCs is Rs 25 lakh. You might have to search for a lender willing to lend you the amount you need for starting your new business. 3. Risking personal assets Not all personal loan lenders demand a guarantee of personal assets. However, to get a secured personal loan, you might have to give some type of collateral for giving a personal loan for a new business. It poses the risk of your collateral being seized in case of your inability to repay the loan according to the terms. 4. Possible higher interest rates Everything about personal loans depends on the lenders. So you might have to pay a higher interest rate. Your credit score changes how high your interest rate will be. And most personal lenders decide to lend to those with higher scores. If you have a lower credit score, you might have to pay higher interest rates against the loan. So, the question arises whether you should get a personal loan for a new business. A personal loan is a sure way to get the finance you need with less formality. It takes less time to get a personal loan and the paperwork is fairly easy. Nevertheless, it does not come risk-free. There are risks embedded in availing of a personal loan. Thus, it is important to ensure that you find a lender that offers you the best terms and conditions. It ensures that you pay reasonable interest and there are no hidden risks. [B-02] For this, you can get a hassle-free and quick personal loan for your new business with Piramal Finance personal loans. Piramal personal loans offer zero pre-payment and foreclosure charges. With Piramal Finance’s personal loans you can start your business in no time and without the stressful paperwork. Along with this, you get a dedicated team of experts dealing with your issues and guiding you through the process of availing of the loan.
08-11-2023
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Tax Savings

List down the Tax Benefits on NPS Investments

The NPS was established to ensure federal and state government retirees continued to receive a steady stream of funds after they ceased working. Currently, anyone, not just paid company employees, can join the NPS. Let’s learn more about the tax benefits on NPS. [B-01] Taxes and Benefits of the NPS’s Tier I Account Since a tier-I account in the new pension system is not designed to be accessed before retirement and is used to provide benefits to the investor afterward, the investor is entitled to some tax benefits on NPS. However, Tier-II accounts do not permit withdrawals and do not provide tax advantages; the NPS calculator may be used to get a rough approximation of your program balance. Who is Eligible for the NPS and How to Join The NPS is unique among retirement plans in that it is open to citizens of India and those legally considered to be NRIs. However, the applicant must be between 18 and 60 years old. Subscribers must also complete the “Know Your Customer” paperwork with the standard registration papers (CS-S1 and CS-S2). What is Article 80 of the CCD at first glance? Under Section 80CCE of the Income Tax Act, contributors to a Tier 1 NPS account may deduct contributions of up to Rs. 1.5 lakh from their taxable income. Because the “All Citizens” model of NPS relies only on voluntary contributions from its members, contributors are not restricted in their ability to put in as much as the Rs. 1.5 million annual caps set under Section 80C. However, the benefits of self-investment in NPS are limited in the corporate model and the government NPS in the following ways. To everybody who has subscribed to the corporate NPS model: Under Section 80 CCE of the Income Tax Act, 1961, an individual may get a tax deduction of up to 10% of salary (Basic + Dearness Allowance), up to a maximum of Rs. 1.5 lakh. Subscribers in the public sector NPS: Government workers who contribute to an NPS Tier 1 account get a tax break. Starting on April 1, 2019, the maximum amount of tax benefits on NPS available to state government workers is 10% of salary (basic + Dearness Allowance), while the maximum amount available to central government employees is 14% of pay (basic + Dearness Allowance). For this tax deduction, which is provided under Section 80 CCD of the Income Tax Act, the annual Rs. 1.5 lakh ceiling established by the Act is in effect (2). What is Section 80 CCD (1B)? For NPS Tier 1 account contributions made by retail subscribers, Section 80C of the Income Tax Act of 1961 allows for an NPS deduction of up to Rs. 50,000 every financial year. That’s on top of the Rs. 1.5 million ceilings imposed under Section 80 C. These two subsections make up the well-known Section 80C of the Income Tax Act, and together they provide for a total of Rs. 2 lakh in tax benefits on NPS within a fiscal year. Investing in a Tier 2 NPS Account Has Tax Advantages Payments to Tier 1 of the NPS are tax-deductible for all members, but Tier 2 contributions are deductible exclusively for members of the Central Government NPS. This NPS tax advantage is now available to central government workers under Section 80C of the Income Tax Act of 1961. Within Section 80C, the maximum allowable annual tax savings in this situation is Rs. 1.5 lakh. These investments are subject to a three-year lock-in term under current law. The Tax Benefits of the NPS for Employer Contributions Employer contributions to NPS accounts are advantageous only for those who enrol under the corporate model or the government NPS. Under both of these programs, the tax benefits on NPS are limited to contributions made by an employer in tier 1 accounts. Tax relief for employer contributions is available over and above the Rs. 1.5 lakh limit for individual contributions under Section 80C. Following is a list of the maximum tax breaks for employer contributions to an NPS: Corporate NPS models provide tax advantages for employer contributions. Under the corporate NPS model, an extra tax deduction of up to 10% of the employee’s salary (Basic + Dearness Allowance) is available for employer contributions to the NPS Tier 1 account. The Rs. 1.5 lakh cap on Section 80 CCE deductions is exceeded by this amount (2). Government National Pension System Employer Contributions Are Tax Deductible Employer donations to the Government NPS for state and federal workers may qualify for NPS TAX exemptions. Under current NPS legislation, employers of state government workers are permitted to contribute up to 10% of their employee’s wages (Basic + Dearness Allowance) as shown on their pay stubs. NPS Annuity Purchases and Withdrawals May Qualify for Tax Breaks The tax advantages of the current NPS go beyond donations. Numerous large tax incentives exist for withdrawing any amount or purchasing an annuity from the NPS. Here are some other details provided by the National Pension System: Partial withdrawals from an NPS provide tax benefits. There are limitations and restrictions on how often and how much money may be withdrawn from your NPS Tier 1 account; however, you can take out a portion of your money three times during the investment’s lifetime. According to Section 10(12B) of the Income Tax Act, subscribers may withdraw up to 25% of their self-contribution from their NPS without paying taxes. Annuity buyers might get a tax break in retirement. At least 40% of the NPS Tier 1 account balance must be used for annuity purchases under current legislation. Under Section 80 CCD (5) of the Income Tax Act, annuities purchased in retirement via NPS are not subject to taxation. However, the money received from an annuity is subject to taxation at the individual’s or couple’s standard income tax rate. [B-02] Conclusion: The NPS was set up to provide federal and state pensioners with a steady stream of payments even after they had stopped working. Previously restricted to full-time salaried staff, NPS is now open to all members of the public; both employees and freelancers fall under this category. For more information about NPS, visit Piramal Housing Finance.
08-11-2023
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Personal Loan

Paying Off Personal Loan instant- All You Need to Know About

Do you ever consider how to close a personal loan instant? Does it always make sense to pay off a personal loan instantly? Not necessarily—there are other aspects to consider before making a decision. If you owe money on a personal loan and can pay it off instantly, it could lower your interest costs and improve your credit score. To avoid prepayment penalties, be sure your lender does not impose only pay off a loan instantly if you can do so within your budget. [B-01] This is the place to be if you’re considering how to close a personal loan instant. This article explains all the procedures needed for personal loan documents list pdf! Is closing a personal loan instantly possible? How to close personal loans instant personal loans can be repaid instantly, but you may not want to. Making extra payments or placing a cash windfall toward your loans could shorten your repayment duration. Few lenders may levy a prepayment charge. The prepayment charges may be a percentage of your loan total or how much interest the lender would lose if you repay instantly. Prepayment penalties are mentioned in your loan agreement and vary by lender. Can you close a personal loan instant? Yes, borrowers can often repay personal loans instantly. Instant repayment fees vary by lender. It’s charged up to 2% of the loan’s total if repaid within the first year. In succeeding years, the charges decrease. When should I close a personal loan? Prepaying for a loan requires extra savings. It’s best to invest additional cash. Instead of paying a long-term financial commitment in one go, the sum can grow over time, especially if there’s a prepayment charge. Calculating Personal Loan instant Repayment How to close personal loans instant repayment affects financial commitments. Knowing how much you’ll have to spend to repay it instantly is crucial. The best way to complete a personal loan now by calculating personal loan repayment is with an IIFL calculator. ● Use the loan calculator to enter the loan amount, term, interest rate, and prepayment amount. ● After entering these facts, you’ll see your new financial obligations and prepayment charges. How does instant loan repayment affect credit score? When you pay down your credit card balance, you lower your debt-to-credit-limit ratio. This reduces your utilisation rate, which accounts for 30 per cent of your credit score, boosting it. So why not with a personal loan? Personal loans are instalment debt; therefore, Experian says they’re different. Credit card debt is revolving, so there’s no defined repayment period, and you can borrow more as you pay. Instalment debt involves repayment in equal monthly instalments over a particular term. After refund, the account is closed. Personal loans contribute to your credit report’s open accounts. The loan can boost your credit mix by 10% of your FICO score. When you pay off an instalment loan, it’s considered a closed account. Once you pay off your loan, you’ll have fewer open accounts on your credit record, improving your FICO score. Your credit report will show a shorter account lifespan if you instantly pay off the personal loan. Your average account age determines 15% of your FICO score. A more extended credit history equals a better credit score. Paying off a personal loan instantly will reduce your credit history and score. Your credit profile will determine how much your score changes. Low credit can make it hard to secure an apartment, financial goods, or a job. Sound financial practices, such as on-time payments and avoiding too many new lines of credit, can increase your score. Personal loan documents list pdf ● ID Required: Passport, Driver’s License, State Issued Photo ID, or Permanent Account Number (PAN) Card (any one) ● Evidence of Residency: Any of the following Passport; Current Utility Bill; or Leave and License Agreement (not older than three months) (anyone). ● Bank Statements from the Past Three Months (showing where pay and other income have been deposited). ● The past three months’ worth of pay stubs. ● Two pictures, passport size each. Pros of closing personal loan instant Reducing debt and keeping it reasonable are keys to good credit and financial health. Instant loan repayment provides all that and more. 1. Interest savings. Interest costs less the faster you pay off a loan. Because that reduces your total borrowing cost, you could save a lot. 2. Your monthly budget will increase. Without that monthly payment, you’ll have more budget space. You can use that money for day-to-day costs or save for emergencies, retirement, or investments. 3. You’ll reduce debt-to-income. Lenders evaluate your debt-to-income ratio to make lending decisions. By lowering your debt-to-income ratio, you may improve your credit score and qualify for better loan terms. 4. Peace of mind Paying off a loan faster reduces monthly financial stress. Before deciding, check that you can pay your monthly bills and have emergency savings. Don’t tap your savings or retirement accounts, as they could save you more. Cons of closing personal loan instant It can save interest, put money in your pocket, and reduce debt, but there are disadvantages. Consider these three impacts. 1. Prepayment charges. Some lenders include a prepayment charges clause in loan contracts to recuperate lost interest. This is a proportion of the unpaid loan principal at payback. Before deciding, check loan documentation and perform the maths. Prepayment charges could diminish or cancel your interest savings, especially if your loan has a low, fixed-rate or short duration. 2. You may lose credit. Your credit mix and history change as you repay a personal loan, which may affect your credit goals. A personal loan is reported as an instalment account, including the loan amount and payback schedule. Since payment history is the main component in determining your credit score, on-time monthly payments benefit your finances long-term. You could lose months (or years) of a positive payment history if you pay off your loans instantly. Age of accounts and a well-managed mix of credit (credit cards, school loans, auto loans) also affect your score. Paying off a personal loan instantly may temporarily lower your credit score. 3. You may have better money options. If your loan interest rate is lower than other debts, you may be better off elsewhere. Instead of paying off your loan instantly, focus on paying off higher-interest debt, such as a credit card amount. Consider increasing your work retirement plan contribution to qualify for an employer match or opening a high-yield savings account. Before changing your monthly payments or paying off a personal loan instantly, check your bank accounts to be sure you can afford monthly costs and emergencies. Future planning can reduce stress. [B-02] Conclusion This article’s goal is to thoroughly analyse crucial considerations of how to close personal loans instantly. Personal loans are a quick and reasonable solution to pay a significant bill and enhance your credit. As with any financial tool, you should carefully assess if a personal loan is right for you. Paying off the loan instantly can result in prepayment charges, negating interest savings and hurting your credit. If you wish to pay off the loan instantly, apply to a lender who won’t charge a prepayment charge. Before signing up for a new financial instrument, check the personal loan documents list pdf etc. do your research correctly. Investment Reliable does not offer financial advice, but we provide unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their research. Also, visit Piramal Finance has more in-depth educational articles.
08-11-2023
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Tax

Learn About Taxation on Mutual Fund

If you now invest in or are considering investing in the taxation of mutual funds, you should be aware of the laws dictating how your returns will be taxed. Gains and income from mutual funds are taxable, just like those from other asset types. Since taxes cannot be avoided, it’s important to learn how they are applied to mutual funds before putting money into them. [B-01] The main factors influencing the taxation of mutual funds in India are: The taxation of mutual funds is a complicated topic, but examining it in parts may make it more manageable. Therefore, let’s start with the three variables influencing how taxes are applied to mutual funds. Finance Options: For monetary purposes, a mutual fund can be categorised as either an equity or debt taxation of the mutual fund. Gain classification: A capital gain occurs when an investor sells an asset for more than they paid for it, while a dividend is a portion of earnings delivered to investors by the mutual fund firm without the investor having to sell the asset. Following this part, we will go through what they are and how they are taxed. Involuntary self-detention: How long you keep an investment is a key factor in calculating your capital gains tax. Holding onto your investments for longer can help you pay less in taxes. According to the country’s income tax code, investing with a longer time horizon results in a lesser tax liability. How do mutual funds make money? Taxation of mutual funds offers the potential for profit through both capital appreciation and dividends. Let’s break down the distinctions and clarify what each term means. Earning more than what an asset was originally purchased for is considered a capital gain. If you own units in a mutual fund scheme and pay a NAV of 140 per unit, you will earn a capital gain if and when you sell them for more than 140. Please remember that mutual fund units only generate capital gains upon redemption. Therefore, investors only have to pay capital gains tax on mutual funds when cashing out their holdings. Therefore, the taxation of mutual funds redemption must be included in the income tax returns for the subsequent fiscal year. Taxes on dividends The Dividend Distribution Tax was repealed by the Finance Act of 2020. Investors only had to report dividend income from mutual funds after March 31, 2020. Before sending dividends to the taxation of mutual fund shareholders, fund houses deducted the Dividend Distribution Tax (DDT). The investor must now report all dividend income as “income from other sources” and pay taxes on the full amount according to their tax rate. Tax on Capital Gains The type of taxation of the mutual funds scheme you have invested in and the time you have held its units will affect the taxation of capital gains from those schemes. Keeping that in mind, let’s examine these two parts more closely. The terms “long-term capital gains” (LTCG) and “short-term capital gains” (STCG) need to be defined before proceeding (STCG). The difference between short-term capital gain (STCG) and long-term capital gain (LTCG) is the amount of time an asset is kept by the investor (i.e., a long holding period). The scheme’s orientation The capital gains tax you pay will depend on the type of mutual fund in which you invest once you have determined your holding period. Generally, mutual funds may be sorted into two broad categories: debt and equity. However, the tax treatment of hybrid funds requires further explanation. In this article, we will discuss the tax implications of mutual funds for various demographics in further depth. The Concept of Equity in Accounting Taxation of mutual funds schemes that invest at least 65% of their assets in Indian stocks or equity-related derivatives is considered equity-oriented for tax reasons. For tax on mutual funds redemption purposes, all other financing sources are classified as debt-oriented initiatives. Mutual Fund Equity Schemes with Long-Term Capital Gains Gains from the sale of stocks or equity mutual funds were not subject to long-term capital gains taxation of mutual funds until the beginning of 2018. (38). According to Section 112A of the Income Tax Act of 1961, long-term capital gains (LTCG) on equity-oriented plans such as mutual funds are now taxed at a rate of 10% on amounts above Rs 1 lakh. If you earned $120,000 in LTCG through an equity-oriented scheme in a fiscal year, your tax on mutual funds would be computed on $20,000 at 10%, independent of your tax rate. (with the appropriate fee and cess applied). Investing in Stocks: Units of equity-focused mutual fund schemes are subject to a 15% STCG tax upon sale per Section 111A of the Income Tax Act of 1961. By way of illustration, if you received $1,300,000 in STCG from an equity-based compensation plan during a fiscal year, you would be subject to a 15% tax on that amount (plus any applicable cess and surcharge). This is because the STCG tax does not benefit from the Rs. 1,000,000 exemption available for LTCGs. Individual Retirement Account: At least 80% of the total value of ELSS mutual fund taxation of mutual funds programmes is put into stocks and shares. If you want to reduce your taxable exposure when investing in mutual funds, this is the option for you. Under Section 80C of the Income Tax Act of 1961, ELSS investments are eligible for a tax deduction of up to Rs. 1.5 million. It’s important to keep in mind that there’s a Rs. 1.5 million cap on deductions under Section 80C. You would have less of a deduction for your ELSS payments if you already take deductions for other things under Section 80C, such as LIC premiums. [B-02] Conclusion: In terms of taxes, equity and debt plans are treated differently in the long and short term. In the case of mutual funds, a 12-month holding period is required for equity-oriented schemes, and a 36-month holding period is required for debt-oriented schemes to qualify as long-term capital gains. We’ve compiled a table with the relevant information to help determine whether your capital gains are long-term or short-term. Know more about it at Piramal Housing Finance.
08-11-2023
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Personal Loan

Most important qualities to have while applying for a personal loan?

A personal loan is excellent when you need money to pay sudden costs. These may include your children’s education, renovating homes, expensive medical care, etc. Personal loans are popular because they have precise repayment terms. Plus, they do not demand any security. Despite this, your eligibility for a personal loan depends on different parameters. [B-01] Since personal loan requirements vary, you should familiarize yourself with the bank’s conditions before you apply for a personal loan. You need to make sure to meet all the documentation needs from the banks. Suppose you know this before meeting the bank official. In that case, your application process can be simplified, improving your chances of getting that loan. Requirements for a Personal Loan in India Generally, banks ask for the following requirements when you apply for a personal loan: 1. Applicant’s Credit Score and History This is by far the most vital eligibility factor when you apply for a personal loan. Credit scores are based on one’s payment history, any outstanding debt, and the total duration of credit history. A good credit score ranges between 300 and 850, so a borrower’s credit score should range between 670 and 720. However, some lenders give out loans without checking out the credit histories. 2. Regular Monthly Income You must show your income statement to your banker if you have a steady income. This will give you a better chance of getting the loan as the banker will believe you can repay the monthly instalment. Other important documents might include rent tax receipts, bank statements, and pay slips. You could provide tax returns or your fixed deposits if you are self-employed. 3. Security Do you have any valuables you can pledge to the bank instead of a personal loan? What you promise to the bank is security or collateral, which you offer the bank in exchange for a loan. Perhaps, you have investments, coins, collectables, precious metals, or real estate. Offer this to the bank in exchange for your loan. After you pay up the entire amount, the bank official will return your security. However, this is considered risky because, if you do not pay on time or in full, the lender may repossess the security in exchange for the money owed to the bank. 4. Debt-To-Income Ratio Debt-to-income ratio (DTI) is that part of an applicant’s gross monthly income that will go towards paying his monthly instalment. This figure indicates a borrower’s debt repayment ability. Bankers find that a DTI below 36% works best, though others may seek a DTI of about 50%. You can also ask your banker for the eligibility requirements before meeting him. Once you know this, you can be better prepared for your meeting. 5. Origination Fee This isn’t mandatory, though some bankers ask you to pay this fee. It pays for processing your application, carrying out credit checks, etc. Generally, this fee ranges between one per cent and eight per cent of the total loan amount. It depends on several factors, such as: The applicant’s credit score The loan amount Personal Loan Documents Required for the Application Process Fulfilling the eligibility criteria for a loan means submitting certain documents. These prove your identity, your address, and your place of work. Here are the documents you will be required to submit for your loan to be processed: For Salaried Individuals Proof of Identity: Voter ID card/Aadhar Card/Driver’s License / Employer’s Card Proof of Residence: Ration Card/Telephone Bill /Electricity Bill /Voter ID card Income Proof: Latest Bank Statement/Passbook to show salary credited for the past six months, latest six months’ salary slip with all deductions Form 16 of the past two years Copies of property documents For Self-Employed Individuals Proof of Identity: Voter ID card/Aadhar Card/Driver’s License/Employer’s Card Proof of Residence: Ration Card/Telephone Bill/Electricity Bill/Voter ID card Income Proof: Certified Financial Statement for the last two years, latest bank statement/Passbook in which your salary is credited for the past six months Copies of all Property Documents Documents Required for a Personal Loan Along with your loan application, be sure to add the following documents as well: Proof of Identity: Passport copy/Voter ID card/Driver’s License/Aadhar card Proof of Residence: Passport copy/Voter ID card/Driver’s License/Aadhar card Bank statement of the previous three months or passbook of the last six months How to Qualify for a Personal Loan Knowing a few things about the application process is good before you fill out the form. They include: Checking your credit score Improving your score by paying off any debt Think of a realistic figure that you would like to borrow Shop around for the best rates using lender prequalification Ensure you submit only a formal loan application Once you complete applying for a personal loan online, you will need to wait for a few hours until the banker decides. Usually, you will know the outcome that very day. [B-02] Conclusion Now that you know what to do to qualify while applying for a personal loan, you can prepare for it so that your application is accepted. One way of doing this is to access the Piramal Finance website and read all the articles on personal loans and other related topics. This company is one of India’s leading financial services companies. So, go ahead and explore its products and services.
08-11-2023
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Home Loan

Home Loan vs Mortgage Loan – What is the Difference?

Are you confused between a home loan and a mortgage loan? Want to know about home loans and mortgage loans? Want to see the difference between home loans and mortgage loans? So now, in this article, you will get to know everything about home loans and mortgage loans, and how they differ from each other. After reading the whole article, you can easily differentiate between a home loan and a mortgage loan, and understand which loan is suitable for you. [B-01] What Is a Home Loan? A home loan is a type of secured loan used to finance real estate acquisition by using the property’s value as collateral. Finances of substantial worth can be obtained through home loans, including low-interest rates and extended repayment terms. Payments are made through monthly EMI instalments. The borrower regains full ownership of the property once all payments are made. If the borrower cannot repay the loan, the lender has the right to foreclose and sell the collateral to recoup the debt. Types of Home Loans Financing obtained to buy a home Loan secured against a property to make necessary repairs or alterations. Construction financing, which is a loan explicitly used to construct a dwelling Money borrowed to acquire land on which a dwelling is to be built Financing for constructing an addition to a house, such as a bedroom, bathroom, kitchen, garage, etc. A “joint home” refers to a loan taken out by two or more people, typically a married couple. A top-up home loan is a loan taken out in addition to the original home loan and can be used for anything. Changing home providers and transferring the remaining loan balance enables borrowers to take advantage of competitive interest rates and more favourable repayment arrangements. What Is a Mortgage Loan? A mortgage loan is a type of secured loan in which the borrower pledges an immovable asset, such as a home or commercial property, to the lender as security for the loan. The lender holds the collateral until the loan is repaid. This type of financing is expected since it enables you to borrow a sizable sum of money at an affordable mortgage loan interest rate and spread out your payments over a long time. Types of Mortgage Loans There are three main categories of mortgage loans to choose from. Home mortgages Finance for business properties Security-based loans Home Loan Vs Mortgage Loan – 7 Ways in Which They Are Different 1. Quantum of Loan The purchase of a home is often the most significant single financial commitment somebody makes. The purpose-built nature of a house loan means that you can borrow more money against the same amount of equity as you could with a mortgage loan. 2. Interest Rate Mortgage loan rates are higher than home equity loan rates. The Government of India has reduced the margin criteria for home loans to make homeownership more accessible to its citizens. 3. Loan Tenure Mortgage loans and home loans both feature lengthy repayment periods. Home loans have terms that might extend up to 30 years. Mortgage loan terms usually are 15 years, though some lenders extend them to 20 years. To better suit your budget, you can make prepayments on these loans in whole or part to shorten the term or the EMI. 4. Top-up Loans You can take out a second mortgage loan on top of the first. Depending on your credit history, you may be approved for a considerably larger loan than you initially selected. If you are qualified for a loan of up to 70% of the property’s market value but have already taken out a loan for 50% of the deal, you can take out a top-up loan for the remaining amount. Top-up options are uncommon with home loans, but certain creditors may be willing to provide one depending on their evaluation of your financial situation and ability to make payments. 5. Tax Exemption If you’re paying down your mortgage principal, you may be eligible for a tax break of up to Rs. 1.5 lakh under Section 80C. Also, the interest you pay on your mortgage is exempt from taxation under Section 24. General-purpose mortgage loans do not qualify for any tax benefits. 6. Prepayment Charges No lender, regardless of the sort of loan you’ve taken, can charge you a prepayment penalty because of a variable interest rate. There may be a prepayment penalty if a fixed interest rate is used. This is unique and varies significantly among financial institutions. 7. Use A mortgage loan can be used for many other purposes, like paying for college, a wedding, or unexpected medical bills, but a home loan can only be used to finance the purchase or building of a property. Documents Required for Home Loans and Mortgage Loans Latest salary slips/ proof of income Bank account statements for the last 3 to 6 months PAN card Aadhar card Proof of address Documents about the property being purchased IT returns In the case of home loans, you will also need to have complete paperwork of the property that is being pledged [B-02] Summing Up Our goal is to provide you with tips you should keep in mind while taking home or mortgage loans, which you can prefer. Which one is suitable for you? If you need money to buy or build a house, you should look into getting a home loan. Simply put, a mortgage loan can’t be utilised for anything else. Therefore, a home loan is viable if you need money for any other purpose. Investment Reliable does not offer financial advice, but we provide unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their research. Also, visit Piramal Finance has more in-depth, educational-related articles.
08-11-2023
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Tax

What is property/house tax – NDMC, EDMC, BBMP

Property tax is the amount paid to a local governing body for a property. This amount is paid annually. Landowners pay property tax for the property they own. They pay the tax to a municipal corporation. Local governing bodies also collect taxes. This type of tax is usually considered to be regressive. Regressive taxes impact individuals who belong to low-income households as opposed to the wealthy. [B-01] What is property/house tax: Property or house tax is paid on real estate assets such as a house, properties rented to others, residential spaces, and office buildings. The municipal corporation collects these taxes in India. This is done once or twice a year. The municipal corporation assesses all the properties and looks at the size, area covered, construction, etc. After this, it collects a certain amount of tax. Property taxes are the main sources of income for any local government. The money needed for the city’s upkeep is paid through this tax. Staff payments, and office charges, are also covered by these taxes. Land or property owners must pay the property taxes on time. Not paying taxes on time can lead to fines. The NDMC, EDMC, and BBMP receive tax payments from the residents in their regions. These taxes are then divided between the region’s colonies and wards. Individuals need to find out which zone they live in. They should pay the correct amount of taxes to their local governing body. Property taxes include water, lighting, and drainage tax. The taxes are calculated under two diverse categories. These are self-occupied properties and let-out properties. Self-Occupied Property If the property is used only for residential reasons, the value will be 0 per year. If the property has not been let out or occupied, the annual value shall be put forth as 0. Let-out Property The annual value of the property can be determined if it has been let out for even a few months by the owner. It is determined by considering one or more of the following traits: A municipal appraisal Fair rent calculated by an information technology department The rent the owner has collected. Different Types of Property exempted under Property/House Tax Any property owned by the central government. Buildings that are not allowed in the municipal register. They are also unlisted. Specific properties that are vacant. These include plots of land or buildings. Schools, graveyards/cremation grounds, and recreational buildings. Charitable institutions, religious places of worship, and trade union offices. Deductions allowed while calculating property/house tax A deduction of up to 30% in the property tax is allowed. This deduction happens for the maintenance and repair of the property. The interest amount on a loan can be reduced for purchasing, repairing, or constructing a property. The maximum payable interest amount is around Rs 1,50,000, but only if the loan was given before April 1, 1999. If the loan was borrowed after April 1, 1999, the amount to be paid is Rs 30,000. NDMC Property Tax The New Delhi Municipal Council is responsible for collecting taxes in the region. The Department of Property tax collects the tax. It also collects a service charge. It is collected from private properties and government-owned properties as well. The Supreme Court directed this. Any properties completed after January 26, 1950, must pay these taxes. All buildings and land in New Delhi are subject to property taxes. These taxes are mandatory. The NDMC decides the rate of taxes every year. EDMC Property Tax The East Delhi Municipal Corporation charges tax on people buying properties in this region. Falling real estate prices motivated people to buy property in this area. East Delhi has many advantages in terms of development. This has caused growth in the real estate sector in that region. The official EDMC website can help you know more about the rules and regulations to be followed before and after buying a property in that region. You can pay the EDMC property taxes online or travel to an ITZ centre to pay the tax. BBMP Property Tax The Bruhat Bengaluru Mahanagara Palike is the third level of government in Bengaluru. The BBMP is run by representatives known as corporators. They are elected in each region. They are from each of the wards located in the city. Each municipal corporation calculates taxes in different ways. The BBMP follows the UAV or the Unit Area Value System. The tax in the UAV System is determined by: The location of the property. The purpose for which it is being used The returns that are filed by the individual. The formula is as follows: Property tax (K)= (G-I)*20% + Applicable cess (property’s 24%). You can calculate the property taxes on your own with this formula. Always verify taxes with a professional in the real estate industry to avoid fines. The last date to pay the property tax at the BBMP is March 31, 2021. [B-02] Conclusion It is important to stay up to date with all the taxation laws if you own a property. This can help you avoid any fines or imprisonment. It is important to keep yourself informed. Visit Piramal Finance to learn more about property taxes and stay on top of all the latest developments.
08-11-2023
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