Petrol Prices

Sometime back, had a necessity to find out a month before petrol price and got the below links from Indian Oil.

1. Historic prices of Indian Oil
2. Current petrol price

How is Gratuity of an employee calculated?

Is there a formula to calculate gratuity? 
Yes, there is one.
Indian laws suggest that an employee should be given gratuity for long term service. Gratuity is calculated by the formula,
G = (15/26)* N* (Monthly basic + Monthly DA)
where,
G - Gratuity
N - No of yrs of completed service (rounded)
DA - Dearness Allowance
15/26 - 26 stands here with the assumption there are 26 working days in a month while 15 stands for calculating 15 days of last drawn salary.

In a sense, one can assume the formula as Gratuity is 15 days of Basic + DA for every year of employment. Where, one day salary is calculated by dividing the monthly salary by 26days. If you find this statement confusing, stick to the above stated formula itself as they are all the same.

For an employee earning a basic + DA of Rs.20k per month and has worked more than 240 days for 7 continuous years,
Gratuity = (15/26)*7*20000

No. of years is calculated if an employee has completed more than 240 days in the respective years during service. If an employee has completed 7 years in a service but only in 6 years has attended more than 240 days then,
Gratuity = (15/26)*6*20000

N is the No. of years of service in which he/she has attended more than 240 days

Who is eligible for getting Gratuity paid?
The employee who have worked for at least a minimum of 5 years* in the organization is eligible for the gratuity when the term of employment ceases. Completion of continuous service of five years is not necessary where the termination of employment is due to death of disablement.

Maximum cap on Gratuity?
Yes, there is a limitation how much an employee can get gratuity. The maximum amount of Gratuity an employee can receive is Rs.3,50,000.

Employee gets different basic and DA during the term with an employer. Which amount gets counted for calculation purpose?
The last drawn 15 days salary. For example, you get your first year Basic and DA as Rs.8000/month and at the end of 7th year and during leaving the employment the Basic, DA combo is Rs.25000/month. Then Rs.25000 is the amount taken into consideration in the above formula.

Since the number of years is rounded, if an employee works with an organization for 4 years and 6 months does he/she become eligible for Gratuity?
NO.
After 5 years and up to 6 months should be counted as previous year and after 6 months to be counted as next year. Yes, rounding is allowed, but not for 4 years and 6 months. Rounding of months to years is allowed only after 5th year. However technically, if an employee has worked for minimum 4 years and 8 months with at least 240 days of no absence in the fifth year(the 8 months period) then the employee is eligible for gratuity.

Some examples below(years of service - no. of yrs for gratuity calculation):
5 years 2 months - 5 years
5 years 6 months - 6 years
4 years 7 months - Not Applicable
4 years 8 months** - 5 years
* Assumption that employee has worked at least for 240 days on all years of service.
** - Minimum period required for Gratuity applicability on satisfying the above assumption.

So effectively(with the assumption true), an employee who works for minimum 4 years and 8 months with an organization is eligible for gratuity as per Indian laws.

How to get Gratuity?
If gratuity is applicable, employee has to make an application in Form-I to his employer within 30 days from the date of gratuity becomes payable. Major organizations do get the required signature in this form on proper cease of employment with an employee.

Section 80CCF of Income Tax Act

Recently came across one Infrastructure Bond which claimed tax benefits from a new IT section 80CCF. This was the first time I heard this section and hence this post. 80CCF is a new IT section added in the financial year 2010-11 which allows deduction in respect of subscription to long-term infrastructure bonds.


Below is the information I got from Indian Income tax site. 

The following section 80CCF shall be inserted after section 80CCE by the Finance Act, 2010, w.e.f. 1-4-2011 :

Deduction in respect of subscription to long-term infrastructure bonds.

80CCF.  In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011, as subscription to long-term infrastructure bonds as may, for the purposes of this section, be notified by the Central Government.


The Central Government have specified bonds to be issued by:

1. Industrial Finance Corporation of India
2. Life Insurance Corporation of India
3. Infrastructure Development Finance Company Limited
4. a Non-Banking Finance Company classified as an infrastructure finance company by the Reserve Bank of India; as “Long-term Infrastructure Bond” for the purpose of section 80CCF of the Income Tax Act, 1961.

The good news is that, this deduction under 80CCF of IT Act is over and above the existing overall limit of tax deduction on savings of up to Rs.1 lakh under section 80C, 80CCC and 80CCD of the Act. This means we can save tax of amounts Rs. 2000(for those in 10% tax bracket), Rs.4000(for those in 20% tax bracket) and Rs.6000(for those in 30% tax bracket) above the already existing Section 80Cxxx limits. Though I am not an expert, I would still say this is a good move by Finance Ministry to encourage investors to participate in Infrastructure growth of our country.

Security against loss of credit cards and convenience of blocking them at once

Credit cards provide us a wide range of flexibility and options which have made these cards an integral part of middle class and upper middle class people in India. With the convenience, also comes the vulnerability of credit card misuse through frauds and theft. Most people who hold credit card in India hold more than one and when they lose it or misplace it they seldom realize often noticing they have lost their card only on seeing monthly statements.

Consider a situation where you are running for your flight and in the neck moment find that you have lost your wallet with few credit and debit cards. The options for you are to call all the credit card customer care lines and intimate them to block your card. But it is not as easy as you say. First you must remember your credit card number, your card end date, some banks even ask for last 2 transactions, the day which you lost the card and few more questions to verify your personal identity before blocking the card. Not to forget that you must also remember the customer care numbers of respective banks. All this process will surely make you sweat before you block all your cards and show a sigh of relief that it is not misused or will not be misused further. If there were any transactions made by misuse between the time one lost the card and blocked it the customer will have to bear the charges. Not to mention that you would have also lost your flight or may not be able to make the payment that you intended to while carrying the credit cards. The same process has to be followed for debit cards though the risk of misuse is little less as most of the debit cards ask for PIN verification. Thanks to RBI’s directive that from 1st August for all online transactions IPIN is mandatory so that way, misuse may not happen. But RBI has mandated only for Indian sites and misuse in International sites is always possible.


What if we have the convenience of just calling one number and blocking all the credit cards and if we get replacement cards just by making that one call. Sounds simple isn’t it?

Thanks to CPP which exactly does this.

What is CPP?
CPP Card Protection is India’s first 24-hour Card Protection service for use in the event of card loss, theft and related fraud. One free call to CPP ensures that all the registered cards are cancelled immediately; and not only those we also get emergency travel and hotel assistance. We can now protect all the credit, debit, ATM, membership or loyalty cards & also valuable documents including passport, driving license, insurance policies.
CPP Assistance Services, India is part of the CPP group, a pioneer and a world leader in the emerging assistance services market. CPP launched card protection in Asia as far back as 2004, starting with Hong Kong, followed by Singapore, Malaysia and now from early 2009 in India.

Buying a CPP Card Protection Membership

• Call 6000-4000 (prefix city code if calling from a mobile)
• Choose your preferred plan
• Make payment (through MasterCard or Visa)
• You will get welcome kit after a week
• Register cards for which you need membership
• You can send filled registration mail to CPP office in Delhi, or call 6000-4000 to register
  Membership valid for one year
  

Reporting a Loss and Making a Claim

• Call 6000-4000 as soon as you realize that you have lost a card and notify them
• To make a claim, ask for a claim form and submit it with all necessary bills in original. claims should be sent not later than 28 days from date of reporting card loss
• In case of further problems, call 6000-4000

Courtesy: money.outlookindia.com (Above 2 subtitles)

Is this service Free?
Of course, a big ‘NO’. No service comes free of cost especially which involves financial transactions and protection. Minimal charges are applicable for this service. This should be just treated like a Term Life Insurance. The chances of meeting with an accident in a short term are very less but yet we pay premium in a Term Life Insurance for the financial cover and security it provides. CPP should be taken the same way as in business no one gives a free meal. With a host of benefits available at less than Rs. 3 to 4 a day, a complete peace of mind is assured.

What are the plans available?
The best option is to call CPP and get the information. You could also visit CPP’s website www.cppindia.com and find even more details not just about the rate but also about the wide range of services CPP provides.

This is not a marketing effort for CPP and is just an effort to let you know the options and convenience of blocking all credit cards at once in case the need arises.

All about Tax Refund

What is Tax Refund?
Tax refund is the amount paid back by government to a tax payer who has paid excess amount of Income Tax.

Are all taxpayers eligible for IT refund?
No. As mentioned above, only tax payers who have paid excess tax can get IT refund.

How one pays excess tax?
For an individual earning salary from his employer, and when employer does a TDS and the TDS amount is greater than the actual tax to be paid by the individual.

Can I get back the excess tax paid?
Of course yes, As mentioned above, government pays back the excess tax.

How do I get a refund? / What makes me eligible for a refund?
The refund amount is calculated when an individual files his IT returns. Just tax filing will make the individual eligible for tax refund if he/she has paid excess tax.

Is it true that if tax returns are not filed within time, I will not get refund
No, this is not true. It is not mandatory to file returns on time to get a refund if eligible. But the later you file the later it is going to take to get refund.

How long will it take for tax refund?
In ideal cases the amount will be refunded within 12 months time. Though it is dependent upon lot of factors like refund amount, whether there is a change in jurisdiction, time of tax filing(the earlier you submit the earlier you receive refund for a particular FY)

Will IT department give me interest for the refund amount?
Yes and No.
Yes, if the tax refund amount is greater than 10% of the actual IT to be paid. No, the tax refund amount is less than 10% of actual IT to be paid.

How will I receive the refund amount?
In major towns and cities tax department credits the amount directly through ECS. So it is essential to maintain the same bacnk account if you are eligible for a refund. I nother locations tax department sends the refund order with your bank account mentioned in the back side of the refund order. Refund order is similar to a cheque sent by tax department. The refund order can be deposited to any of your bank account after signing on the backside of the refund order.

What if refund amount is not received?
If tax refund amount is not received within 12 months from the date of filing the tax return below are the options to do:

• Visit the tax return office and follow up.Write a letter to Income Tax officer along with the photocopies of acknowledgement of tax return.
• If not redressed, then write a letter to the jurisdictional Chief Commissioner of the Income Tax with a copy to the Grievance Cell and the concerned Income Tax Officer. Also enclose copies of previous written communication to IT department.
• If still not redressed file a RTI online at: http://www.rtiindia.org/forum/10393-income-tax-return-refund.html
• Alternatively you can consult a Auditor and ask him to follow up on your refund amount. The procedure is the same and yes of course you will have to pay his/her consultation charges.
  

Tax Exemption on Medical Expenses

Can tax benefits be availed for medical expenses incurred? What are the various sections of Income Tax act and how to avail the benefits.

Section 80D of Income Tax Act:
Medical Insurance premium for self, spouse, children and parents are eligible for exemption under section 80D up to a maximum of Rs.15000 for individuals and Rs.20000 for senior citizens.

Section 80 DD of Income Tax act:
Deduction under this section is available to an individual who:

• Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependant; or
• Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependant. An annuity or a lump sum amount is paid to the dependant or to a nominee for the benefit of the dependant in the event of the death of the individual depositing the money, from the said scheme,

A deduction of Rs 50,000 is available. Where the dependent is with a severe disability, a deduction of Rs 75,000 is allowed.

To claim the tax benefit under Section 80DD, the dependent person means a person having any disability of not less than 40%, as per section 2(i) of the Persons with Disability Act, 1995.
Section 80DD deduction is available only towards medical treatment of dependents with specified disabilities.

Section 80DDB of Income Tax act:

An individual, resident in India spending any amount for the medical treatment of specified diseases affecting him or his spouse, children, parents, brothers and sisters and who are dependant on him, will be eligible for a deduction of the amount actually spent or Rs 40,000, whichever is less.
For any amount spent on the treatment of a dependent senior citizen an individual is eligible for a deduction of the amount spent or Rs 60,000, whichever is less is available.

Section 80DDB allows deduction of expenses on medical treatment of specified ailments prescribed under Rule 11DD of the Income Tax Rules.
The list of diseases/ ailments falling under this section:

1. Neurological diseases where the disability level has been certified to be of 40% and above. These include: Dementia, Dystonia, Musculorum Deformans, Motor Neuron Disease, Ataxia, ChoreaHemiballismus, Aphasia Parkinson's Disease
2. Malignant cancer
3. Full blown Acquired Immuno Deficiency Syndrome, (AIDS)
4. Chronic renal failure
5. Hematological disorders. These include: Hemophilia and Thalassaemia

Is NRE remittance taxable?

Is it possible to avoid taxes by remitting to NRE account instead of salary account?
Remitting into any type of account makes no difference in tax exemption.
Is NRE remittance taxable?
Yes if you are resident and ordinarily resident in India. If you are a NRI then you claim tax exemptions.

So now one wonders who is a resident and who is an ordinary resident and who is a non-resident.

Under section 6 of the Income Tax Act, an individual is resident in India if he is in India for 182 days(182 days if he leaves India to takes up employment outside India if he is a citizen of India or being outside India comes to India on visit if he is a citizen of India or a person of Indian origin) or more in the previous year, or he is in India for 60 days or more in the previous year and for 365 days or more in the four years preceding the previous year. He/She is a resident but not ordinarily resident if he satisfies any of the following conditions: He is non-resident in nine out of the 10 years preceding the previous year; he is in India for 729 days or less in the seven years preceding the previous year; if an individual is resident but is not resident but not ordinarily resident then he/she would be resident and ordinarily resident.

For a resident and ordinarily resident in India (decided based upon the above) the income earned by way of salary outside India will also be taxable in India. If there is a Double Taxation Avoidance Agreement between India and a foreign country in which one earns salary, claim benefit can be claimed under the agreement. If there is no such agreement, benefit can be obtained by way of credit of the tax paid in the foreign country on such salary income in India. The credit will be the lower of the tax paid on such doubly taxed income in that other country or the tax payable on the same in India.

From the taxation point of view, it will not make any difference whether one remits his/her earnings into a NRE account or into a regular savings bank account.