I-T Rules on Form 15G and 15H Are Harassing
This is with regard to the article “File Electronic 15G and 15H Forms” in Moneylife (issue dated 29 October 2015). Until now 15G/15H were valid for a year, if I continued to qualify. It was permitted to add/delete/renew deposits as long as the total income did not cross the taxable income threshold. The Form 15H, submitted at the beginning of financial year, continued to be valid.
The new I-T (income-tax) regulations stipulate that for each and every renewal, and for additional deposits, I have to submit a fresh Form 15H. I have several deposits in an NBFC (non-banking financial company) and banks, which mature on different dates. I have to submit Form 15H on multiple occasions during the financial year, even though my taxable income is below Rs3 lakh (the limit for senior citizens).
My happiness on reading the above-mentioned article was short-lived. I feel harassed by the new rules (which should affect thousands of other senior citizens in a similar way). I thought I should bring it to the notice of readers.
Padma Raghavan, by email
We sent Ms Raghavan’s views to Hashmukh Adhia, Union revenue secretary, who has publicly sought feedback from taxpayers on the issues that they face. The email elicited a prompt reply from Mr Adhia saying that the government will look into the matter. — Editor

Minimise Use of Currency Notes

This is with regard to “Fix the Informal Economy” by TV Gopalakrishnan in the Readers’ Responses pages of Moneylife (issue dated 26 November 2015). Sweden is going to be a totally cashless country by 2016, when currency notes will be rarely seen in that country. 
On the other hand, India is far, far behind with nearly 86% transactions being effected through cash, rather than banking. This is the main reason for the parallel black economy and corruption. Prime minister Narendra Modi’s desire for a cashless system in the country is welcome. With his ambitious Pradhan Mantri Jan Dhan Yojna (PMJDY) being successful and even crossing the fixed target, the need now is to make it compulsory for every person to have a bank account—these can be opened even with zero balance. It must be compulsory to make not only all government payments, but even salaries, etc, by private parties above, say, Rs5,000 through banktransfers only. We should also ban the system of payment through bearer-cheques. The system of electronic bank transfers should be encouraged and popularised, so that persons with small salaries do not have to wait for three days to get cash and avoid time spent on going to deposit salary cheques in their banks. Such a system will effectively check corrupt practices.
Notes of higher denominations, of Rs500 and Rs1,000, are often used as unaccounted money. India should also discontinue currency in denominations of Rs500 and Rs1,000. 
Since property deals have a larger component of unaccounted money than what is disclosed on documents, tax laws should be simplified by providing a permanent voluntary declaration scheme. The scheme should enable people to declare as much income as possible from ‘undisclosed sources’ on payment of maximum tax of 30%. This will catch those purchasing property with unaccounted cash. Tax officials will find ‘income from undisclosed sources’ in tax returns of those selling property. Circle rates should be somewhat higher than the prevailing market rates and should be reviewed and fixed after every three months. Stamp duty should be charged at just 2% of such fixed circle-rates, irrespective of the price disclosed on documents. Capital gains tax should be reduced to 10% instead of the present 20%. The idea should be to have such low rates of stamp duty and capital gains tax that people would volunteer for clean and fully accounted for property deals which, in turn, will yield much more revenue than at present.
Madhu Agrawal, by email

Is Gold Bond Scheme Worthwhile?

I found some instructive articles on financial management by Moneylife authors and, hence, I have started subscribing to Moneylife. Regarding Gold Bond Scheme, it will be good if Moneylife can give advice about investing in the scheme. It will be very useful for readers like me.
Gold Monetisation Scheme can be a very good investment for households which have bought gold biscuits in the past for conversion into gold ornaments at the time of the marriage of their daughters or when they convert old jewellery into new jewellery. Also, temples can invest in it as a safe and good investment, as they have large deposits of gold donated by devotees.
Yet, the Gold Bond Scheme, in my opinion, is a destroyer of wealth and is not a prudent investment on a long-term basis. The reasons are as follows: 
(a) What can be achieved by investment in Gold Bond Scheme is better achieved by an equity-based fund of a good mutual fund. These funds have been consistently giving an annual dividend in the region of 7%-9% of NAV (net asset value). If these investments are kept for 7-10 years, they are likely to have capital appreciation as well. The capital gains are also tax-free. Moreover, nobody knows what would be the price of gold at the time of redemption of the gold bonds. Gold, over a long period, has not given any worthwhile appreciation.
(b) If it is argued that investments in equity schemes of mutual funds are risky, one can buy 10-year government bonds. These will have good dividend yield of 7%+. This is much more than what gold bonds offer and it is also risk-free. Even fixed deposits with banks would offer better returns than gold bonds. 
(c) There is only one advantage of gold bonds. If one were to purchase the gold bonds in the name of one’s wife or daughter, it will give her emotional satisfaction. Gold bonds are good for the country, as these will help in controlling the fiscal deficit. 
P Sankaran, Chennai
We have already published an evaluation in the MSSN blog and also published other articles listed below:
—  Editor

Action is Not Authorised By I-T Act

This is with reference to the box item, “A New Source of Pain” by Dr Nita Mukherjee, in Cover Story (Moneylife, issue dated 26 November 2015). Interest paid on refund under the Income-Tax Act is considered as income from ‘interest other than interest on securities’. TDS (tax deducted at source) provision 193A is not applicable in respect of interest paid on tax refund as per S193A (3) (viii). When the Section specifically says that TDS provision is not applicable, the action by the department is illegal. This action is not authorised by the Income-Tax Act. The assessee can write to the CPC (central processing centre), Bengaluru to rectify the order giving the refund request for the full refund along with interest, without deduction of tax.
A Soorianarayanan, by email

Biggest Con Job?

This is with regard to “IRDAI Wants Life Insurance Proceeds To Be Tax-Free” by Raj Pradhan. The taxpayer will be hit. Investment insurance is the biggest con job in the world. Premiums paid on such policies should not be allowed as tax-breaks.
R Balakrishnan

Linux has Better Security

This is with regard to “Safe Online Shopping” by Yogesh Sapkale. This is a good list. One could also consider using Linux as it has far better security compared to Windows.
Anand Vaidya

Work Hard And SIP!

If you need fixed income post-retirement, work hard and SIP (systematic investment planning) in your working years. But don’t buy a house. From that corpus, buy a flat or flats and retire on their rent. Smile.
Pravesh Pandya

Really Helpful!

This is with regard to “6 Mediclaim Blunders To Avoid” by Raj Pradhan. The article is insightful. It is really helpful. Keep doing the great research work.
Vinay Maheshwari



Fixed-income Options
In 2015, the Reserve Bank of India (RBI) pared rates by 125bps (basis points) to 6.75%, bringing them to the lowest level since June 2011. When RBI reduces interest rates, it affects the rates of all other fixed-income products. Over the past year or so, bond yields have fallen considerably. However, yields fell much before RBI started cutting the repo rate. Banks have reduced interest rates on fixed deposits (FDs). From 8.50% a year ago, most banks are currently offering interest rates for one-year deposits of 7.75%. Will RBI cut rates further is the big question? With inflation inching up again in October 2015, RBI may go slow on further rate cuts. In such a scenario, which fixed-income option will work out best for savers? Will debt schemes of mutual funds continue to be a good bet? Our Cover Story analyses the factors that affect debt schemes and suggests the best fixed-income options available for investors.
Buying a home is one of the biggest financial decisions one takes. Unfortunately, most buyers are taken for a ride by builders. R Balakrishnan has a put together a few suggestions to make buying real estate trouble-free.
It’s been over a decade since many investors of the NSE and BSE, some of them marquee names, have been trapped without an exit route even as the two Exchanges, and the regulator, have found novel ways to postpone listing. These investors are now getting restless, pressurising the government to expedite the approval for listing, writes Sucheta, in Different Strokes. The listing, which now seems almost certain, will make the Exchanges accountable and more transparent. While identity theft may be a serious issue worldwide, in India, people in power are taking it ever so lightly. Sucheta, in Crosshairs, highlights the tolerance of powerful Indians for shady records, benami dealings and incorrect reporting to statutory databases. 
On 19th December, Moneylife Smart Savers will be conducting a seminar on “How To Start Investing in Shares” at a nominal fee of Rs500 per person where participants will learn about investing in shares from scratch. For details, check out http://goo.gl/fRQdjc


Sena demands Maharashtra advocate general's resignation
The Shiv Sena on Monday demanded the resignation of Maharashtra Advocate General Shrihari Aney for propounding the cause of a separate Vidarbha state, even as pro-Vidarbha groups rushed to his support.
Sena MP Sanjay Raut made the demand while reacting to Aney's statement seeking a referendum on the sensitive issue.
Aney stuck to his stand by saying he respected the Sena sentiments, but what he had stated was "historically correct".
He said legislators have a right to raise issues in the assembly and even (Shiv Sena) could raise it, though Chief Minister Devendra Fadnavis sought to downplay the matter.
On Sunday, speaking at a function to release his book, 'Vidarbha Gatha' (Vidarbha Saga), Aney asked for a referendum on the issue and said if 51 percent people vote in favour, the centre must carve out a separate Vidarbha from Maharashtra.
Aney -- grandson of former Congress MP and pro-Vidarbha campaigner -- expressed confidence that more than 80 percent of the people in the region would vote in favour (of Vidarbha) and that is why the centre was reluctant to take it up.
Endorsing Aney, senior Congress leader and moving spirit behind Vidarbha Rajya Andolan Samiti (VRAS) Vikram Bokey said that in a mini-referendum conducted last year in Akola, Amravati, Bhandara, Chandrapur, Nagpur and Yavatmal, 97 percent of the respondents voted in favour of separate state.
"The 2.50 crore people of Vidarbha strongly feel that the region has faced the brunt of stepmotherly treatment by non-Vidarbha leaders and parties. On behalf of our top activists Shriniwas Khandawale, Wamanrao Chatap, Ram Newale and others, we urged the Bharatiya Janata Party to implement its election promises and immediately carve out a separate Vidarbha," Bokey told IANS.
Criticising Aney's statement, Congress senior leader in Council Sanjay Dutt asked: "How can a Constitutional authority like the advocate-general representing the entire state, demanding its splitting and making a separate Vidarbha?"
Aney pointed out that several referendums by NGOs and other groups, have indicated the pro-Vidarbha sentiments clearly, local bar associations in all 11 districts there have passed unanimous resolutions favouring Vidarbha.
Bokey added that the nature and mindset of the people there is different and "they feel that their unique identity will be protected in a separate state".
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


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