Here are 5 rules you need to know about PPF withdrawal

PPF or Public Provident Fund is one of the most popular tax saving investments in the country. Investments made in PPF are deductible under Section 80C of the Income Tax Act. The interest earned on PPF account is exempt from tax. The minimum contribution under this is Rs. 1,000 whereas the maximum is Rs. 1,50,000.

Investments made in PPF have a lock in period of 15 years. After the end of 15 years, it can be extended in blocks of 5 years at a time. The amount lying in the balance of the PPF account can be withdrawn at the end of the first lock in period of 15 years. It is also possible to withdraw prematurely from the PPF account, subject to certain rules.

Here are 5 rules you need to know about PPF withdrawals:

1. Maximum withdrawal permitted:
The maximum withdrawal permitted from PPF is 50% of the lower of:

• Accumulated balance at the end of fourth year immediately preceeding the year of withdrawal
• Accumulated balance at the end of the year immediately preceeding the year of withdrawal

50% of the lower of these two figures is allowed to be withdrawn from the PPF account. To make this withdrawal the PPF account holder needs to fill Form-C and submit it to the bank in which the PPF account is held.

2. Year of withdrawal:
A PPF account holder is allowed to make withdrawals starting from the 7th year from the year of account opening. For example, if the account was opened in 2009-2010, then the account holder can make his first withdrawal in the year 2017.

3. Number of withdrawals:
The withdrawal from PPF is capped at one withdrawal per year. This withdrawal is tax free, i.e it is not charged to tax.

4. Withdrawal after account extension:
Once the PPF account has matured, it can be extended in blocks of 5 years at a time. If the account is extended without any contributions, the amount standing to the credit of the account when it matured can be withdrawn. However, this withdrawal can be done only once in a financial year.

If the account is extended and further contributions are made, the account holder can withdraw up to 60% of the balance standing to the credit of the account when it matured. This withdrawal is also capped at once every financial year.

5. Withdrawal after maturity:
When the PPF account matures after 15 years, the entire amount standing to the credit of the account can be withdrawn. This entire amount is tax free.

Here are 5 reasons to shift to UPI

UPI is a payment system developed by the National Payments Corporation of India and is one of the most popular modes of fund transfer in India today. But what is it?

UPI or Unified Payment Interface is a means to transfer funds from one party to another. However, unlike the typical fund transfer system, where the bank details of the recipient are used, UPI uses a UPI ID. Payments can be made and received on the UPI ID. Using UPI is extremely simple.

If you’ve not transitioned to making payments via this method, then here are 5 reasons to shift to UPI.
1. UPI is simple to setup and use:

The Unified Payment Interface system is very easy to set up. You need to download any UPI app i.e the official BHIM UPI app by NPCI or any UPI app issued by any bank. It is possible to use UPI through wallets such as Google Pay (Tez), PayTM, PhonePe etc.

To set up UPI payment, you need to create a unique ID. This ID will be linked to your bank account number. You also need to create a PIN for yourself. Before a transaction is authorized, the UPI system requires you to input your PIN. Once the PIN is input, the amount gets debited from the payer’s bank account is paid to the recipient.

It is not necessary to link a particular bank’s account details to use the UPI app, i.e it is possible to use HDFC Bank’s UPI app but put in details to any bank account you want to receive payments to. It is possible to set up a different bank account to make payments and a different bank account to receive payments.

2. Sensitive bank details protected:
One of the best advantages of UPI is that it adds another layer of security to regular fund transfers. There is no need to share your bank account details with a third party to receive funds. The funds can be received through the UPI ID.

3. Low cost:
UPI transfers are free of cost at the moment. Using the UPI apps is free of charge and making fund transfers is also free of charge. However, in the future, banks may introduce a charge on these transfers.

4. 24x7 transfers:
The UPI payment system operates on the IMPS system. This means any fund transfers to be done with UPI can happen 24x7. They are not restricted to banking hours only. This makes it dependable for instant fund transfers.

5. Instant payments:
Fund transfers under UPI are immediate. The money is immediately debited from the bank account and is immediately credited to the payee’s bank account. This is why it is important to double check the recipient’s details and UPI ID before making the payment.

Gold Loan: Benefits and Features

A gold loan is a type of loan in which gold is hypothecated or mortgaged with a lender till the time the loan is repaid. It is one of the most popular types of loans especially in villages and smaller towns. A gold loan is an excellent option to raise funds especially in case of emergencies.

Features of a gold loan:

1. A gold loan is a secured loan, which means the gold has to be kept with the lender till the time the loan is repaid. Once the loan is repaid, the customer can collect the gold that has been kept with the lender.
2. The lender may accept gold of a certain purity, for example 18 karat, 22 karat, 24 karat. The lender will specify this on their website or in the branches clearly.
3. The lenders usually accept all types of physical gold such as jewellery and biscuits or coins.
4. Gold loans are short term loans with tenures ranging from a few months to 12 or 24 months. The loan tenures will differ from lender to lender.
5. The repayment structure for loans may differ from lender to lender as well. Some lenders will require a monthly installment based system whereas others will take repayment at the end of the loan tenure with only interest payments in between.
6. This loan generally does not require much documentation except for standard KYC documents.
7. The lender generally independently verifies the purity of the gold and the weight.
8. The loan amount is generally 60% to 70% of the market value of the gold.
9. Lenders keep the gold under lock and key till the time the loan is completely repaid.

Benefits of gold loan:
1. A loan against gold has very low or no loan processing fees.
2. Lenders process these loans very quickly. Funds can be disbursed the same day as well.
3. This type of loan can be used to raise funds quickly in case of emergency. It can also be quickly repaid. There are no prepayment or foreclosure charges on such type of loan.
4. Since this is a secured loan, the gold loan interest rate is lower than that for other loans like personal loans.
5. Most lenders transparently display their fees and interest costs up front. There is no need to be scared about hidden costs and fees in loan against gold.
6. No income proofs are required for a loan against gold.

A gold loan is one of the best options to raise quick funds from lenders. A host of banks and non-banking financial companies offer gold loans in the market which make it easy to opt for such a loan.

Features and benefits of IMPS

IMPS is one of the most convenient forms of fund transfers today. IMPS stands for Immediate Payment Service. Under IMPS, payment is made immediately from the payer to the recipient. IMPS transfers money outside of the banking system which means payments from IMPS get done at any time of the day even outside banking hours. The IMPS transfer is immediate.

Features of IMPS:

1. IMPS transfer is available 24x7 for 365 days in a year. Since it operates out of the banking channel, it can be used at any point of time.
2. IMPS is completely operated on the customer’s mobile phone.
3. IMPS transfer is immediate. The sum is immediately debited from the sender’s account and it gets credited to the recipent’s account.
4. There are three types of IMPS:
a. Person to person IMPS transfer using mobile number of the recipient and the mobile money identifier (MMID)
b. Person to person using bank account number of the recipient and the bank IFSC code
c. IMPS merchant payment
5. To get started with IMPS, the person has to register himself for the service with his respective bank. Once registered, he needs to set up a MMID which is a 7 digit code that his bank issues to him for this service.
6. To use IMPS, both the sender and recipient of funds need to have MMID from their respective bank.
7. IMPS can be accessed from the mobile banking application of the respective bank.
8. IMPS is a homegrown payment channel started by the National Payments Corporation of India (NCPI)
9. IMPS charges differ from bank to bank. Most banks price their services between Rs. 5 and Rs. 15 depending upon the amount of transfer. GST is charged on the IMPS charges.
10. It is possible to add a beneficiary under IMPS using mobile banking or internet banking.

Benefits of IMPS:
1. IMPS transfer is immediate. The amount gets credited to the recipient’s account immediately.
2. IMPS can be used on the mobile phone which provides a lot of convenience to the person making the payment.
3. IMPS makes the person completely mobile since there is no need to be in front of a desktop or a PC to make a payment.
4. IMPS transactions are secure since each transfer is authenticated with the MMID.
5. These transactions can even be done on holidays.
6. In case the customer does not receive the funds for whatever reason, the funds will get credited to the sender’s account.

Different modes of interest calculation in a fixed deposit

Fixed Deposits are one of the most popular investments for people to make. Now with the digital revolution, booking a fixed deposit online is very convenient and can be done even with your mobile phone.

While booking a fixed deposit, one of the things that needs to be considered is the type of interest calculation on the principal amount. Depending on the type of interest calculation, the final outstanding amount will change.

One way to find out the total interest on your fixed deposit and the interest under different alternatives is to use an FD interest calculator. A fixed deposit calculator will calculate the total interest earned for a given set of conditions of a fixed deposit. You need to input the principal amount, the period of the fixed deposit and the type of interest and the FD calculator will show the rate of interest and the total interest payable. This can help you plan and make decisions about the FD tenure and the amount to be invested.

Different modes of interest calculation:

1. Cumulative:
This is the most common type of interest calculation on a fixed deposit. In this type, the interest is calculated quarterly and added to the principal amount. For the following quarter, interest is compounded i.e it is calculated on the principal outstanding and the interest credited for the earlier quarter. The interest earned is highest under this option.

2. Quarterly payout:
Under this type, interest is calculated at the end of every quarter and paid out to the savings account linked with the fixed deposit. This is one way to ensure some income from the fixed deposit.

3. Monthly payout:
Under this type, interest is calculated at the end of every quarter and paid into the savings account linked with the FD on a fixed day every month. This option is generally preferred by senior citizens who need regular and consistent income.

4. Simple interest for Short term FDs:
For fixed deposits of a very short duration, banks generally calculate interest on a simple interest basis. Even for fixed deposits longer than a quarter but less than 6 months, interest is calculated for the entire tenure of the deposit on a simple interest basis.

Using a fixed deposit calculator is both simple and free. With it, you can plan your investments so that you get the maximum income from your investments.

Debit card: features and benefits

A debit card is a type of card that is connected to the holder’s bank account. This means whatever transaction is done with the debit card, the amount directly and instantly gets debited from the bank account. A debit card also functions as an ATM card. It can be used to withdraw funds from an ATM. A debit card is a very useful card to have since it is an instant way to pay for your purchases. However, since the amount directly gets debited from the bank account, it is risky in case it is stolen.

Features of a Debit card:

1. Debit cards allows you access to your savings account. You have no limit on the amount you spend. However, it is restricted to the balance in your savings account.
2. An international debit card can be used on international websites to purchase different items. For example, if you want to buy any subscriptions or purchase software, you can safely use your international debit card.
3. A debit card also functions as an ATM card and can be used to withdraw funds from an ATM. You can withdraw funds from both your bank and an ATM of a different bank.
4. You can use your online debit card for purchases online and avail cashback offers. Cashback offers accumulate on your card and are credited to your savings bank account.
5. Debit cards come with chip encryption and PIN based authorization.
6. Banks allow you to set your own daily shopping limits on the debit card.


Benefits of a Debit card:

1. A debit card can only be used till the time there is balance in the savings account. This can effectively be used to control and check spending.
2. Debit cards are secure since they have PIN based authorization for transactions.
3. International debit cards can be used on all types of websites, making it a boon to have.
4. Debit card is a replacement for cash. There is no need to carry cash on hand since the debit card can be used to swipe at POS terminals and can also be used to withdraw funds.
5. Many banks offer free accident insurance and travel insurance coverage for debit cards. Once you get your debit card, ensure you check with your bank about the insurance coverage, the inclusions and exclusions.
6. Some special debit cards give offers on online shopping up to a particular limit while some cards help you accumulate airline miles.

Car Insurance: 5 things you must know

We take life insurance to protect our family financially. We take health insurance to protect ourselves from the rising medical costs. We even take travel insurance to cover the risks of travel. But what about insurance to protect things we own, such as our car? Our vehicles face a lot of risk of loss or damage in the form of accidents, thefts, break ins or other damages. To protect against these risks, car owners are generally advised to take car insurance.

Car insurance is a type of insurance that covers a motor vehicle against different losses. Getting vehicle insurance is mandatory and the car owner can be fined for not getting car insurance.

Here are 5 things you need to know about car insurance:

1. Yearly renewal:
Vehicle insurance is a type of general insurance. This means the policy duration is one year from the date of purchase. It needs to be renewed every year. It also means that the car owner can change the insurer from one year to the other. However, insurance companies give benefits to car owners who have been their customers in the form of no claim bonus.

2. Value of insurance policy:
The value of the insurance policy depends on the declared value of the car. This is taken as the ex showroom price. However, the insured value does not remain the same every year. Since the value of the car reduces year to year because of depreciation, the car insurance policy reflects the reduced value of the car every time it is renewed. The value of the car also includes the value of different accessories.

3. Coverage:
Vehicle insurance typically covers different losses and damages such as:

• Loss or damage due to natural calamities such as earthquake, floods, lightning, hurricane, cyclone, heavy rains etc.
• Loss or damage due to man made disasters such as theft, burglary, damage to parts of the car, riots, strikes, terror attacks
• Personal accident coverage which covers any damage to the driver of the vehicle
• Third party liability which covers any claims that a third party may make against the driver of the vehicle for any damage caused to the third party. These covers are usually more expensive and separate from regular car insurance.
• Towing fee waiver in case of accidents when the car needs to be towed

4. Exclusions:
Even though car insurance covers a wide range of losses, there are some exclusions to this policy

• Any loss or damage caused when the driver is driving under the influence of alcohol or any drugs
• Any loss or damage caused to the vehicle when it is driven by someone who is not insured i.e if any third party drives the car and causes damage, it is not covered under vehicle insurance
• Deliberate and purposeful damage to the car
• Any loss caused as a consequence of war
• Any breakdowns or mechanical faults are not covered under car insurance
• Wear and tear of the vehicle associated with the passage of time

5. Availability:
Car insurance can be purchased offline through agents or it can be purchased online. It is very convenient to buy car insurance online through the insurance company’s website or through different insurance aggregators.