Here’s why you should book your FD online

One of the safest and most popular avenues to park excess funds for a short period of time is a fixed deposit. For many senior citizens, keeping their money in a fixed deposit is an excellent way of ensuring a consistent monthly return on their funds. A fixed deposit offers a stable rate of return and regularity of interest payments.

With the digital revolution in banking and the spread of internet and mobile banking, it has become possible to book an FD online without visiting the bank branch. Booking the FD online has its own set of benefits, especially for techno savvy users.

Here are 5 reasons why you should book your fixed deposit online:

1. Convenience:
Booking your FD online is now possible in just a few clicks. Customers of a bank can book a fixed deposit either using internet banking or mobile banking. It is possible to choose the tenure and get the interest rate while booking as well. The amount is automatically debited from the account and a fixed deposit is created instantly.

2. Online FD certificate:
If you book a fixed deposit online, the receipt and FD certificate for the same is sent by the bank on your registered email address. This reduces the hassle involved in taking care of the certificates. It can easily be accessed online in case the need arises.

3. Fixed Deposit rates:
One advantage of opening a fixed deposit online is the transparency in FD interest rates. The FD booking system automatically shows the rate of interest based on the tenure. Most lenders have their fixed deposit rates displayed clearly on their websites which makes it possible for a customer to check which bank’s fixed deposit can yield a higher rate of interest.

4. Fixed deposit renewal:
In case of online fixed deposit, there is no need to renew the fixed deposit manually every time it matures. Most fixed deposits have an option to automatically renew the fixed deposit. The different options that the customer can choose are:

• Renew principal
• Renew principal and interest
• Do not renew

Depending on what the customer chooses, the fixed deposit is either renewed or liquidated on maturity. In case the do not renew option is chosen, the fixed deposit plus the interest amount is credited to the account. This option can also be changed anytime.

5. Easy liquidation:
There is no need to visit a branch to liquidate a fixed deposit booked online. In case of premature liquidation, the procedure is very convenient and happens in a matter of a few clicks. However, interest at a reduced rate is paid out in case of a premature withdrawal.

Here’s how you can get a tax benefit with your education loan

An education loan is one of the most important loans for students who are looking to fund their education. These loans are available for all levels of education, whether it is school or college education. These loans are also called student loans and are available for college education both in India and abroad. But, did you know you could get a tax benefit for opting for an educational loan?

Section 80E is an often forgotten section of the Income Tax Act. But this section can help you save tax if you have an educational loan.

Section 80E: Tax deduction for interest on educational loan:

This section provides a deduction on the interest paid for servicing an educational loan. No benefit is available for the principal component of the student loan.

This deduction is available for the entire amount of interest paid on education loan. There is no limit for the interest deduction. However, since this is a deduction, it is automatically restricted to the gross income of the taxpayer. For example, if the income of the taxpayer is Rs. 8,00,000 and the interest on education loan is Rs. 8,50,000, the total deduction will be restricted to Rs. 8,00,000 only.

This benefit under Section 80E can only be availed for loans taken for higher studies. This means loans taken for primary education are not allowed as a deduction. The section does not distinguish between the subject of study and the place of study i.e in India or abroad. However, it specifies that higher studies include undergraduate and graduate studies. The student will have to complete higher secondary exams to avail this benefit.

The student loan must also be taken from a financial institution or a charitable trust giving educational loans to students. If the loan is taken from parents, relatives or friends, then this interest does not matter.

This deduction under Section 80E is only available to an individual. The loan should be taken for higher studies for self, spouse, children or students for whom the taxpayer is a legal guardian. This means parents can avail tax deduction on interest for loans taken for their children.

A deduction under Section 80E of the Income Tax Act is available for 8 financial years starting from the time repayment of the loan begins. To get this deduction, the taxpayer will need to get a certificate from the bank that shows the total interest paid to the bank for the financial year. This breakup needs to be attached with the income tax return.

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.