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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 Taxes on dividends The Dividend Distribution Tax was repealed by the Finance Act of 2020.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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Tax Savings

Top Tax Saving Mutual Fund in India 2022

Tax Saving Mutual funds or ELSS offer higher returns compared to regular saving schemes. You get to save Income tax under section 80 C of the IT act by investing in ELSS. Get a maximum amount of 1.5 lakhs tax deduction by investing in an ELSS tax-saving mutual fund and avail of the benefits of the shortest lock-in period. Before you go ahead and invest your funds in ELSS tax-saving mutual funds, get familiarized with ELSS. ELSS investments are made in stock. They, therefore, carry higher risks. They don’t offer guaranteed returns like usual investment schemes. However, it’s no secret that stocks offer higher returns over a longer time. Hence, ELSS tax-saving instruments have the potential to earn better returns. Further, ELSS offer the shortest lock-in period of as low as 3 years. Investments covered under 80C have lock-in periods of 10-15 years. ELSS with a cap of 5-7 years offers beautiful returns. [B-01] Everyone should make use of the tax deduction scheme by investing in ELSS tax-saving mutual funds. The beautiful thing about today’s informative world is that you can benefit from people’s knowledge. You don’t need to be a pro-investor to pick safe rewarding investment tools. Choose and invest amongst these 7 best-performing tax-saving mutual funds and reap bounty benefits from them. Quant Tax Plan Quant Tax plan is an ELSS mutual fund scheme by Quant Mutual Funds. It has been successfully offering maximum returns ever since its launch in 2013. A major part of the fund is invested in energy, material sectors, consumer staples, financial segments and services. It tracks the NIFTY500 total return index and has doubled the invested money in it every 2 years. Quant tax direct plan has a fund size of 2127 Crores. Its top holdings include Ambuja Cements, State Bank of India, ITC Ltd, Adani Ports, Reliance Industries Ltd and others. Ever since its launch, the direct plan has offered 21.94% average annual returns. Mirae Asset Tax saver fund Mirae Tax Saver fund has been in the market for more than 6 years and has Rs 13546 crores of assets under management. It has stood true to investors’ expectations with its consistent returns. The central focus of investment is majorly in the healthcare, automobile and technology sectors. The major holdings of the fund lie in HDFC Bank Ltd, ICICI Bank Ltd, Reliance Industry, Axis Bank, Infosys Ltd and others. Mirae Asset Tax Saver fund offers 19.79% average annual returns ever since its launch. HDFC Tax Saver Fund HDFC Tax saver fund is a rewarding ELSS tax-saving mutual fund from HDFC Mutual Funds. It has a fund size of Rs. 10,066 Crore under Asset Management and its top holdings are Hindustan Aeronautics, Bharti Airtel Ltd, ICICI Bank Ltd, HDFC Bank Ltd and State Bank of India. The investments are major in the healthcare, energy, and automobile sectors along with the financial and technology sectors. HDFC Tax saver fund was launched in 2013 and offers 13.63% average annual returns consistently. IDFC Tax Advantage fund IDFC Tax Advantage direct-plan is in the market for more than 9 years. It is an ELSS Tax saving instrument part of IDFC Mutual fund plans. It has Rs 3986 crores of fund assets under management with its top holdings in Reliance Ltd, Infosys Ltd, State Bank of India, HDFC Bank and ICICI Bank. The materials, technology and healthcare sectors are prominent investment sectors by this tax saving fund and have a slight inclination towards automobile and financial sectors. IDFC Tax Advantage fund has offered 17.96% average annual returns since its launch time. Canara Robeco Equity Tax saver fund Canara Robeco Equity tax saver fund is as old as other ELSS tax saving tools. It was launched back in 2013 and ever since then, it has Rs 4407 Crore of Assets under management. The fund invests primarily in the automobile, capital goods, and healthcare sectors; however, the technology and financial sectors are less explored. The top holding of funds is in ICICI Bank Ltd, HDFC Bank Ltd, Axis Bank Ltd, Infosys Ltd and reliance Ltd. Canara Robeco tax saver fund offers 15.91% average annual returns and is above average at coping with losses in a falling market. Tata India Tax Saving Fund Tata India Tax Saving fund is an ELSS Tax Saving mutual fund scheme by TATA Mutual fund. It was launched in 2014 and since then it manages assets worth Rs 3191 crore under management. The ELSS fund holds major holdings in ICICI Bank, HDFC Bank, Infosys, State Bank of India and Reliance Ltd. The major investments of the fund are in Capital goods, energy and healthcare sectors. It can sail par in a falling market and is a good ELSS tax-saving mutual fund. The Tata India Tax Saving fund has consistently delivered 17.21% average annual returns. Axis Long-term Equity Fund Axis Long term equity fund is a part of Axis mutual funds ELSS Tax saving plan. It has Rs 31,624 crore of assets under management with its major investments in chemical, technology and healthcare sectors. The major holdings of the fund lie in Bajaj Finance, Avenue Supermarts, Kotak Mahindra, Tata Consultancy and Nestle India. Axis Long term Equity fund is comparatively less consistent when it comes to regular returns. It offers 17.58% average annual returns with a low coping mechanism in a falling market. [B-02] The following ELSS tax-saving mutual funds are selected based on 5 parameters. These parameters are consistency, downside risk, asset size, outperformance and mean rolling returns. These tax saving instruments offer generous returns compared to regular saving schemes like 5 years fixed deposits, PPF, NSC and others. Whether you are an avid investor or someone who wants to build safe saving instruments, ELSS tax saving tools should be on your investment list. Avail the advantage of tax deduction up to 1.5 lakhs today by investing in ELSS tax-saving mutual funds. Head to Piramal Finance and get quick financial reads to help you invest better. If you are looking to avail of personal loans, click here.
08-11-2023
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Personal Loan

What is the processing fee for a personal loan: All you need to know

A personal loan may be a valuable financial tool for meeting expenses, but it includes expenses other than interest. Lenders add several fees on top of the principal amount of personal loans, including a processing fee for a personal loan. It’s important to figure out whether you can afford a loan before applying for one. Therefore, consider all the costs involved with a loan before applying, whether online or via a personal loan app. Let’s look at a processing fee for a personal loan and why a personal loan app would charge it. [B-01] How much does it cost to process something? The processing fee for a personal loan is money paid up ahead by the borrower to the lender to cover the expenses of processing a loan. The price is spelled out in the loan document. Examples include administrative expenses, document processing charges, credit check fees, etc. Lenders incur costs for administrative fees associated with processing and approving loans. They also determine the amount of the loan that will go toward the borrower’s processing fees. Various factors, including loan type, borrower credit, and loan amount, may affect the processing fee. What is the maximum fee that a lender may pay for your loan? Lenders are free to charge whatever amount they see fit for processing costs. Nonetheless, the law requires that all expenses associated with a personal loan be disclosed and not discriminatory, even if there is no specific regulation to that effect. Depending on their circumstances, lenders may charge processing fees ranging from zero to several hundred dollars. Before applying for a personal loan, whether online or offline using an instant personal loan app, discuss the processing fees with the lender. It would help if you also were looking for hidden processing fees levied under other names. Lenders can split the processing cost into two equal parts: a one-time login fee and the balance required upon loan closing or distribution. What type of cost is typical for a personal loan’s processing? Personal loan charges are often low, ranging from 1-6% of the total loan amount. Generally, the fee ranges between 0.5%-2.5% of the total loan amount. For loans of lesser sums, banks sometimes charge a disproportionately high percentage of the processing cost. In addition, they often provide lower processing fees for greater loan amounts. However, internet lenders charge much smaller processing costs of about two percent to four percent of the loan amount, or five hundred dollars, whichever is greater. The question is whether or not the processing fees are covered. Once processed, fees are often non-refundable. Sometimes those who applied for loans had their requests turned down. Despite having their applications rejected, they were still required to pay a processing fee. Borrowers are sometimes expected to cover the costs lenders expend to check borrowers’ credit histories, assess their trustworthiness, and perform various other administrative duties. Options for paying Transaction Fees Lenders may levy processing fees in various forms. While some lenders deduct the processing charge from the loan amount before disbursement, others deduct it from the check you write to them the moment your loan is approved. The lender may require prepayment of or deduct the processing fees from the loan amount before making a distribution. Be wary if the lender attempts to upsell you on anything outside the loan, such as insurance or a credit fitness report. It’s great to compare the rates and fees offered by several lenders for the same loan amount. How much do processing fees and other requirements from banks and online lenders typically cost? The lender will charge you a processing fee when you apply for a loan. The application process and the associated fees might vary across financial institutions. Your bank may demand the processing fee upfront to approve your loan. You should now acquire a written confirmation from banks if they guarantee to repay your processing charges if your loan application is refused. Since the processing fee for a personal loan is often non-refundable, a statement from the bank will help you recoup the return if the personal loan is not made available to you. Online lending companies often deduct fees associated with processing the loan before making a distribution. This results in a decrease in the amount of money you requested. Knowing the processing fees before applying for a personal loan is preferable to finding out about them afterward. A processing fee for a personal loan is often associated with submitting a loan application and the necessary paperwork. In most cases, the processing charge will be a fixed amount or a percentage of the total loan amount. Banks collect a processing charge to cover the cost of processing loan applications, legal procedures, customer service, document verification, and other services. What does a Loan Processor Do? Someone who processes loans or mortgages is called a loan or mortgage processor. They check the loan application to make sure the borrower has included everything needed, validate the information, and then pass it on to the underwriter for final approval. When you’re ready to apply for a loan, a loan officer will guide you toward the best option. However, the loan processor is responsible for everything that happens after you apply for a loan. To get a loan, you will need to fill out several forms, and the loan processor verifies the accuracy of your application and supporting documents. She may also check with other places, including your employer or a credit bureau, to double-check. [B-02] Conclusion For more information regarding the processing fee for a personal loan, contact Piramal Finance today. They will clear your doubts and apprise you with the information you need.
08-11-2023
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Personal Loan

Pros and Cons of Personal Loan Prepayment in India

Personal loans are a widely known way to get money, whether for a wedding, a trip, a festival, or a new gadget. They are reliable, flexible, easy to get and don’t need any security. Even though getting the loan is simple, it is expensive. Due to the high EMIs and interest rates, many people with personal loans consider paying them off early or getting rid of them. You should conduct a cost-benefit analysis before personal loan prepayment to make sure you are picking the right choice. [B-01] This article discusses the pros and cons of loan prepayment. What is prepayment? When you make a loan prepayment, you repay all or part of your loan before its due date. According to the prepayment clause, the lender will charge a fee equal to a proportion of the total loan amount, or foreclosure fees on a personal loan, if you repay your loan before the set term. Personal loan prepayment fees vary from one lender to another. What are two types of prepayments? There are three types of prepayments. 1. Full prepayment Personal loans usually have a one-year lock-in period. After that, you can repay the entire balance and save on interest. Even if you pay early, you will still have to pay interest. The rates can vary from 3% to 5%. You might be surprised that some public and private lenders do not charge foreclosure fees on personal loans. If you need cash right away, you can get it without paying too much interest rates. 2. Partial prepayment You can make a partial prepayment if you have a large sum. A partial prepayment will make a dent in your loan payments. It can lower the principal amount you owe, lowering your monthly payments and interest. What are the pros of a personal loan prepayment? Paying off your debt before the tenure ends is a good way to ease financial stress. Let’s look at the pros and cons of prepayment. You save money on interest. When you repay a personal loan, you save capital income costs that you would’ve had to pay if you had kept the loan open for the whole tenure. Many people who take out a personal loan think the only way to save funds is to pay off the loan early. You can also save money by having to look for a personal loan with no prepayment fees. If you pay off your debts faster, you can save money on your EMI payments. You can use a loan prepayment calculator to determine how much interest you will save by paying off the loan early. You should, however, figure out prepayment fees and other extra costs (if any) when calculating how much you will save overall by choosing the prepayment option. It will make EMIs more affordable for you. Banks and NBFCs are more likely to give personal loans to people whose total EMIs, including those for existing and new loans, are less than 50% to 60% of their total income. So, if your EMI is more than 60% of your income, you have a lower chance of receiving a personal loan. You can improve your loan eligibility by paying off an existing personal loan and lowering your EMI/NMI ratio to between 50% and 60% of your monthly income. Some lenders also offer personal loans that can be paid off early without fees. It reduces the number of loans in the mix of credit. Since personal loans are unsecured, early payment will lower the percentage of unsecured debt in the credit mix. As a result, a greater proportion of secured loans may improve your credit scores, enhancing your chances of obtaining additional loans. To be on the safe side, you can take advantage of a personal loan with a no-fee prepayment option. What are the cons of loan prepayment? You have to pay penalty fees for prepayment. The RBI has told all lenders that they can’t charge fees for paying off personal loans with variable interest rates early. On the other hand, borrowers who get personal loans with a fixed interest rate need to pay prepayment charges. When you repay a personal loan, you may have to pay a prepayment penalty of up to 5% of the remaining principal amount. If you repay a personal loan with a fixed rate early, you might save less on interest. Many lenders will only let you make partial payments or prepayments on personal loans once you’ve made a few payments. It will affect your liquidity. For paying back the loan, you can use up all of the cash or investments you already have. But if you do that, you might not be able to manage a monetary emergency like a medical problem. In such a case, you may have to take out a loan with a higher interest rate if current investments are used beforehand. You must only choose the prepayment option if you have enough funds for an emergency. You should not use your existing investments to reach unavoidable financial goals. So, before you choose to foreclose or repay your loan early, you should think about these factors and carefully consider the prepayment penalties, extra interest, or whether or not it might help you. [B-02] Conclusion Personal loan prepayment is appealing to many because it will help them reduce their interest costs and total repayment load. But many lenders charge fees for repaying the loan early, which reduces your cash flow. It can be a drawback. On the other hand, you can easily repay your loans and save money on interest by refinancing them with a lender who has lesser interest rates. For more details, you can visit Piramal Finance and explore the personal loan options.
08-11-2023
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Tax

Tax on profit from commodity trading in India

Online commodity trading has become very popular lately. There are many reasons why. Commodities can help protect you from inflation. They also allow you to spread your investments in different ways. Investing in gold or silver is also a smart way to secure your financial future. However, knowing the tax on online commodity trading is essential. This helps to make educated investments and trades. This is because you have to pay taxes for most high-return investment products in India. In the following sections, you’ll learn all there is to know about the commodity transaction tax. You will also learn how it might affect your earnings in the commodities market. [B-01] Commodity Transaction Tax: A brief overview Earlier, the government didn’t levy any taxes on commodities trading. This was in contrast to the trading of stocks and mutual funds. In 2013-2014, Mr. P. Chidambaram was the Finance Minister. He suggested a tax on the trading of commodities. It is similar to the trading of securities. He named this new tax the Commodity Transaction Tax (CTT). He applied it to all non-agricultural commodity transactions. This tax is similar to the Securities Transaction Tax (STT). You must pay this on equity investments. The CTT was 0.01% of the daily trading volume and applied to stock futures. The buyer or seller of the commodity pays this tax. This depends on the type of transaction. There was a proposal to increase the tax in 2008-2009. But the government did not implement it. This was because the Prime Minister’s Economic Advisory Council rejected it. A tax on speculative and non-speculative trading in commodities income Major commodity exchanges in India include the Multi Commodity Exchange (MCX), the National Commodities and Derivatives Exchange (NCDEX), and others. You can also trade futures and options contracts in the commodity market. The trader selects the contract type which determines the applicable commodity trading tax. Commodity traders make two main types of trades: Speculative trading: It is the same as day trading in the stock market. In speculative trading, a trader buys a commodity in the morning. They sell it in the evening. They do this just before the market closes for the day. These transactions are considered speculative. They are cash-settled. They are not delivery-based.Non-Speculative Trading: Non-speculative commodity trading is like positional trading in stocks. It involves holding the position for at least one day. Non-speculative trade transfers ownership from one buyer to another. Points to remember: Trading profits are subject to taxation in India. It doesn’t matter if they are speculative or not. You have to pay the taxes at the same rate as other business income. The taxpayer’s income tax bracket determines the taxable rate. Trading commodities is not like trading stocks. This is because of the structure of tax laws. In certain cases, you may be liable to pay both short-term and long-term capital gains taxes on stock trades. If you sell shares within a year of buying them and make a profit out of it, you have to pay Short-Term Capital Gains Tax (STCG). Long-term capital gain is the sale of an investment held for more than a year. The standard short-term capital gains tax rate in India is 15%. The long-term capital gains tax rate is just 10%. The stock and commodity markets are vastly different. Because of this, it is easier to calculate and pay taxes on gains from commodities than stocks. When you have losses from a declining investment, it is difficult to calculate the taxes. It is important for traders to understand the type of trading they are doing to determine the tax implications. You can consult a tax expert or financial advisor. This will help you get a better understanding of the tax implications of commodity trading. The next section talks about this topic in depth. How to Deduct Trading Losses and Trading Gains When Paying Taxes on Commodities? Profits from online commodity trading are subject to income tax at your normal rate. There is no tax on the losses. When paying taxes on commodity investments, it’s important to know how to deduct your trading losses and gains. For this, you’ll need to calculate your net profit or loss for the year. You can do this by subtracting your total trading losses from your total trading gains. If your net result is a profit, you’ll need to pay taxes on it according to the applicable tax rate. On the other hand, if your net result is a loss, you can carry it forward to the following year and deduct it from any future gains. The Indian Income Tax code permits taxpayers to deduct business losses from their taxable income. But, the law handles losses from speculation differently from those arising out of other types of investments. You can carry forward the speculative trading losses for 4 years. This starts with the fiscal year when you first suffered a loss. But you can’t make up for speculation trading losses with a steady income. If you made INR 50,000 in non-speculative transactions and INR 50,000 in speculative trades, you cannot claim a net profit of zero. This is because you cannot balance the speculative loss with the non-speculative gain. In this case, you should carry forward the speculative loss. You can use it to offset future speculative profits. This will reduce the taxable amount of the latter. You can balance out speculative profits against losses from other areas of your portfolio. You can also deduct non-speculative losses against either speculative or non-speculative profits. You can do this for up to eight years. [B-02] Conclusion The exchange of commodities is subject to two different forms of taxation. The first is the Commodity Transaction Tax. The second is the income tax. To counteract this, however, you might claim under the appropriate conditions. You must also subtract your gains from your losses. You can only deduct commodity investment losses from futures and options profits. And you can deduct the other losses from both types of profits. Visit Piramal Finance now that you know everything there is to know about commodity investment taxes and the CTT. Click this link to know more about its offerings like personal loans and credit cards.
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Tax Savings

Income Tax Benefits that Senior Citizen can Continue Enjoying in 2022

Additional tax breaks, on top of those already provided by general legislation, are available to individuals who have reached the age of retirement. These eligible individuals may benefit from increased income tax exemptions, larger deductions, and simplified preparation of their tax returns when certain conditions are met. Let’s take a look at the various income tax benefits that are available to people who are in their golden age. [B-01] Increased threshold for basic exemption Tax rates are not adjusted for senior citizens; everyone pays the same amount. However, the standard income tax benefits that apply to people who are not seniors, seniors, and super-seniors are not the same. The maximum /income that can be exempted from taxation is Rs 3 lakh for seniors and Rs 5 lakh for super seniors. The cap is only Rs. 2.5 lakh for those individuals who do not qualify as seniors. Citizens below 60Citizens between 60 – 79Citizens above 60Tax ratesBelow Rs. 2.5 LakhBelow Rs. 3 LakhBelow Rs. 5 LakhNilRs. 2.5 Lakh to 5 LakhRs. 3 Lakh to 5 Lakh—-5%Rs. 5 Lakh to 10 LakhRs. 5 Lakh to 10 LakhRs. 5 Lakh to 10 Lakh20%Above Rs.10 LakhAbove Rs.10 LakhAbove Rs. 10 Lakh30% However, this will no longer be the case if they elect to switch to the new income tax benefits. Everyone, regardless of age, is subject to the same basic exemption level, Rs. 2.5 lakh. The tax brackets under the new system are as follows: Income slab for all individualsTax ratesBelow Rs. 2.5 lakhNilRs. 2.5 lakh to 5 lakh5%Rs. 5 lakh to 7.5 lakh10%Rs. 7.5 lakh to 10 lakh15%Rs. 10 lakh to 12.5 lakh20%Rs. 12.5 lakh to 15 lakh25%Above 15 lakh30% Disregarding one’s income tax returns Individuals 75 years old or older are excused from filling out an ITR. Those who get their interest and pension from the same financial institution qualify for income tax benefits. Those who receive their pension from a different institution are not eligible. It is required that the person in question have no other potential sources of financial assistance. However, before distributing the money, the bank must subtract the tax from the total amount. The senior citizen must provide the bank with a completed copy of Form No. 12BBA to receive the refund outlined in Section 87A of the Income Tax Act and the number of deductions outlined in Chapter VI A. No tax withholding is withheld on interest income Senior citizens may submit a statement to their tax withholding entities in Form No. 15H for tax withholding on income from post office deposits, public provident funds, provident fund withdrawals, LIC maturity profits, etc. For senior citizens who have paid all their taxes and have nothing left to claim, this eliminates the need to file a tax return or seek a refund. Seniors can make this declaration on Form No. 15H, even if their income exceeds the standard deduction amount. Moreover, for those aged 60 years and over, the maximum interest tax deduction on deposits is Rs 50,000 (Section 194A). For those who are not seniors, the limit is Rs 10,000. Up to Rs. 50,000 in interest may be written off Under Section 80TTB of the Income Tax Act, seniors may deduct interest earned on savings and fixed deposits up to Rs 50,000. If your annual income is more than Rs 50,000, you’ll be subject to the lower, senior citizen-friendly tax rates. Interest earned on term or fixed deposits is not eligible for deduction under Section 80TTA for those who are not seniors. Tax deduction under Section 80C According to this provision, elderly citizens and super seniors are eligible to deduct up to Rs 1.5 lakhs from their yearly gross income for allowable investments and expenses. Common assets that qualify for 80C deduction protection include: Financial commitments to create an equity-linked savings scheme (ELSS) over 5 years. You may put money away in various ways, such as the National Savings Certificates (NSC), the Public Provident Fund (PPF), and the Life Insurance Policy (LIP). Healthcare expenses and insurance premiums are tax deductible under Section 80D According to Section 80D of the Indian Income Tax Act, individuals under the age of 60 years are eligible to receive a tax deduction for up to Rs 25,000 of the cost of their medical insurance premiums. Nevertheless, the reduction of Rs 50,000 is a significant income tax benefit for senior citizens. Under section 80D, senior citizens are eligible for an additional deduction for medical expenses. Tax break increase for a certain illness Under Section 80DDB of the Internal Revenue Code, taxpayers are allowed to deduct the expense of treatment for certain diseases. This section discusses the medical treatment of serious diseases and ailments, such as cancer, neurological abnormalities, etc. Deductions for medical expenses are possible up to Rs 1,00,000. The money from a reverse mortgage doesn’t have to be paid in taxes By permanently mortgaging their houses, elders may receive monthly payments via a reverse mortgage arrangement. A senior citizen retains all rights of ownership and possession. When the borrower dies, the lender will sell the property and use the proceeds to pay off the debt plus any accrued interest. The proceeds from the sale are distributed to the rightful heirs. A senior citizen who receives a lump-sum payment now or in instalments throughout their lifetime from this plan will not be subject to federal income tax on that amount. Prepayment of taxes is not required An individual must make an advance tax payment if they anticipate having a tax liability for the subsequent fiscal year that is more than Rs 10,000. If senior citizens have no revenue from a company, they do not have to make an advance tax payment. They are accountable for deducting and paying taxes on their earnings. This is another one of the income tax benefits. [B-02] Summing up When paying taxes, seniors are considered to be 60 years or older but still younger than 80. Those who have reached the age of 80 and beyond are considered “super senior citizens”. These are some income tax benefits these seniors and super citizens may enjoy in their golden years. To learn more about their benefits, you may visit Piramal Finance, which will provide you with all the necessary information.
08-11-2023
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