Saturday, February 20, 2010


Health care insurance cover is a must in today's society. When we were young civil Hospitals were taking care whenever common people were falling ill.The hospitalisation were in- expensive. I still remember the birth of my only son in 1967 at panbazar civil Hospital then turned Medical College. The total delivery charge in a paying cabin by legendary Doctor Rajkumar Das was Rs 165/- only. Today child delivery cost goes up to thousands.Sometime the cost nears onelakh rupees.The Health care cost has become prohibitive. A minor surgery now a days has become unaffordable. To protect the family and to keep tension away all persons ,who can afford ,should take health cover.It is not only essential,it is a must for self employed persons and their family members, beside retired persons.

Fortunately all the employees and their families are mostly covered by their employers.But many companies and government do not cover old parents of their employees. The medical expenses are gen rally higher during old age and as such special care should be taken by the children for their parents. unless insurance cover is taken by late fifties, very often insurance companies hesitate to issue cover to older persons who have crossed sixty years of age. But recently the central government have issued directives to insurance companies to issue the policy to senior citizens after due health check up.

HEALTH INSURANCE IS OBTAINABLE BOTH BY INDIVIDUAL POLICY OR BY GROUP POLICY. GEN RALLY GROUP POLICY IS ISSUED TO CORPORATE, SOCIETY AND ESTABLISHMENT. Generally individual policy is costlier and group policy is cheaper. In India both public sector insurance companies and private sector insurance companies issue health care policy. The premium of nationalised insurance companies are little less than private sector companies. Premium paid by people get income tax deduction up to Rs 15,000/- and additional amount of tax rebate is available for the policy of their parents. In lieu of the premium the insurance coma pies covers the insured in case of critical sickness and accident.

Beside group and individual insurance cover Special Plans are also available for elderly persons, veterans of armed forces etc. Medical insurance covers expenses of the hospitalisation, doctors fees and medicine etc only on hospitalisation of patient.No medical expenses are paid for treatment at home.But the expenses of domiciliary treatment are also available under certain condition. The cost of treatment are generally reimbursed and under certain condition cashless options can be also availed. This policy is popularly known as "Mediclaim Policy". In addition to general health care policy another policy known as "Critical illness cover" are also available under separate or as additional cover on payment of additional premium. whenever any claim is preferred under the critical illness cover a lump sum amount of insured amount is paid beside usual medical reimbursement to take care of prolonged medical requirements etc. The policy stands terminated after such payment is released. the critical illness cover is available for Heart illness, kidney treatment, cancer etc.

The health care policy is beneficial to member of the insured in many ways. According to a specialist of insurance the benefit under health cover are manifold.

"Benefit however depends on the policy you choose and the coverage it provides. Here is a list of basic coverage provided by most of the health policies.
It helps securing a better future by paying a fraction as an expenditure today called the premium.
It reduces saving huge amount of financial losses, risk of financial breakdown in case of expensive medical and post-illness care.
It certainly induces a sense of security to the insured.
It provides financial security to the family members.
It covers your hospitalisation and medical bills.
It also covers disability and custodial bills.
You can avail tax benefits on the premium paid under section 80D of the Income Tax Act.
The best factor, you can also opt for medical policy even after the age of 60, now a days."

Before taking a health care mediclaim cover it would be better to study the cost of premium of various companies. Every insurance company charges different premium. The nationalised companies charge similar premium but their service vary area wise. Before taking policy try to find out which company provide better service. All the insurance company now a days settle claim through a settlement agency known as TPA.(Third party Administrator). The settlement of claim is always problematic. You need to take help of your agent while filling up the claim forms. So while taking insurance cover it would be wise to buy through a well known and efficient insurance agent or adviser who would help his clients in actual time of need, when claim is preferred.

Fortunately most employers take care of their employees.But self employed persons like consultant , Doctors, Actors, lawyers, singers artist must take medical cover. The most self employed people remain busy and so forget to take care of their own health. Unfortunately not so many people get health care facilities after retirement. They need to
take Mediclaim policy when they are on the verge of retirement at 58 years. Health covers are not luxury.It is a necessity of life. Let us all be prepared for the health care for health is the actual wealth.





The importance of PAN Card was never realised properly by common people ,till recently. Suddenly to the horror of income earners it was found that unless PAN CARD IS PROCURED IMMEDIATELY THEY WOULD BE SUSTAINING GREAT LOSS OF MONEY, if they have Fixed Deposit in Bank. This is because by a recent notification by the Central Board of Direct Taxes have announced that the the new rule would take effect of First April 2010. What is the new rule? "Pan must be quoted in all transaction between two entities that involve a tax deduction at source, failing which the tax deducting entity will impose a 20 percent levy". The most non tax payers in Assam donot have PAN Number,even if they have kept money in bank FD. This is the time they apply for PAN Card immediately to avoid penalty.

During the Third week of January,2010 when almost all the National news papers announced the imposition of the new rule people at first panicked and shouted for help. What is the solution, many of the wage earners asked. Fortunately, we in this column forewarned our readers about possibilities of such a steps by Government of India as back as in August 2009. Some of our readers took quick decision to organise the pan card for their safety. According to us it is even now not too late to organise the Pan Card. Every major cities of India have centres managed by UTI who,on application, issue pan card. . In case there is no UTI centre people should visit nearest income tax office and ask for the details of the centre in their own town and area. Income tax department would remain ready to extend helping hand.

In this new provision, mostly widow women, single women, single mother and senior citizens , who do not have organised support system, may suffer if pan details cannot be obtained immediately.It would be prudent for them to seek help of their Friends ,kith and kin and of well wishers. In case pan cannot be quoted while depositing fixed deposit amount and 15 H is not submitted tax will be charged at 20% rate as against 10%. It is needless to mention that PAN (permanent account number) is an identifrication number issue to all entities with taxable income. But many people never applied for PAN for they thought that their income was beyond taxable limit hence PAN Card is not necessary. Now even if some persons remain beyound taxable limit yet have bank fixed deposit they would need Pan card . In case they canot submit the pan number then tax amount would be deoubled,unless they submit their PAN number to the bank concerned from First April 2010.

Beside bank transaction of FD any other transaction which is a legal document betwen two parties such as rent deed or a gift deed, transaction is not salary, in most cases the 20 percent levy was higher than the existing TDS(tax deducted at source) rate. Entities could be individuals as well as firms. Though the rule has been notified now, but in the last budget itself it was explained about such imposition as follows: " The deductees (person from whom income tax is deducted) shall madatorily funish his PAN to the deductor, failing which the deductor shall deduct tax at source at higher rates".

This rule , we understand now, would be applicable to NRI's also,So those persons whose relatives are NRI and have FD or any other transaction in India should forwarn them so that they have their PAN card made soon. This action is imperative. And should be considered seriously. Many of the children of retired persons send remittances to their old
parents.they need to check up if such remittances are subject to TDS. Why such steps have been taken by the central government?

According to informed source as the government is facing huge budget deficit it is trying to pull out all the stops to increase revenue collection fast. For any finacial transaction involving TDS it would be the responsibilites of Deductees to keep deductor apprised of their pan details. Deductors may or may not ask for it from their clients.According to the new provisions , a certificate for deductions at lower rate or no deduction shall not be given by the assessing officer, if there is no PAN.Besides, declaraation by deducteee for non deduction of TDS on payment shall not be valid.

We would however like to advice senior citizens not to worry too much.There is enough time. You need to visit UTI office / Income tax office to organise PAN card ,if it is not taken already.Income earner need to get the PAN card and should intiimate their banksers before 31st March 2010.Perhaps every citizens by now know that in the recent budget a provision has been incorporated that any persons having invested money in fixed deposit would require to quote the pan number. This provision will be applicable to all persons irrespective of the fact that he or she is not even income tax payers. The banks ar being advised to deduct money if no pan numbers are quoted even by non income tax payers from April next. In case wrong mentionning of Pan card number also by depositors there would be 20% deduction of tax, as a penalty.

Till recently Pan card was a necessity for the income tax payers who submit income tax returns annually. now a days pan card is necessary for buying a car, or owning a cell phone number. Now pan card would be necssary for Fix Deposit in Bank even if he not a tax payer.

. Now Pan card is required for any kind of financial transaction.. I would there fore like to recommend all persons having fixed deposit in bank or in Government or non Government organisation to apply for PAN number for his own benefit. What is a PAN CARD ?
I will try to answer like a lay man. The PAN is the abbreviation of Permanent Account Number . Actually this is a unique number allotted to individual or a corporate entity by department of income tax, Government of India. It is more an identification number . The PAN card is a plastic coated/laminated card containing an alphanumeric number, mentioning name, father's name, date of birth, the signature, person's photo and, of course, the PAN number and logo of government. of India and dept. of IT. By default , a PAN number has five letters first, then four digits and then one letter again. The uses of Pan card was for mainly following reasons.:

1 Till now, it was mandatory to have a pan card for every Indian who's income exceeds tax free limit. ( this provision is being changed from next April)
2. It serves as an photo-identity card as an Indian citizen .

With the new change in law Pan number become necessary for everyone who has FD account in Bank including a widow who may earn an income of below Rs one lakh ninety thousand.. The threshold limit for payment of income tax for all categories of persons have recently been upwardly revised and most of the retired senior citizen and some of the ladies have become out of income tax net. From next April a widow earning below the threshold limit ,even if she has submitted the form 15 , income tax would be deducted by bank for her fixed saving in bank, in case Pan number is not submitted. In certain case if pan numbers are wrongly quoted, may be due to inadvertence, for them also tax will be deducted at the double the rate. This is where shoe would pinch for a widow or a lone lady or for a senior citizen. The persons having bank FD etc must be very vigilant if they want to avoid unnecessary deduction of tax and penalty from now onward.

This provision would be applicable to ordinary common salary earners also unless he submits pan card number. Many senior citizen never was to apply for pan card thinking that they were beyond the ambit of income tax hence no pan card was required. This was a valid argument till now. But from next April onward if pan card number is not submitted to the Bank or any other other authorities income tax would be deducted on payment of interest amount.

My humble suggestion is not to panic . There are ample time to apply for a pan card. In any case the provision would be applicable from next April only. We have some time to get organised for a pan number. Having a pan card is very useful and easy. It can be used as a photo identity card also beside using for all financial transaction. This number is actually isued by income tax department to track any financial transaction and also to ensure non evasion of tax by eligible citizen. The pan card is very useful for all the citizens, for our country donot have a Social security number like develop countries of the world.. The importance of PAN card would continue till unique Identification number is issued by the central Government to each citizen. The project has already been taken up recently. A few persons recently wrote to me asking as to how and where PAN card could be applied?

The Income tax Department has authorised UTI investors services Limited to manage and issue pan card for smooth issuance of the card.. It can be applied on line also through internet fascility for the application form. There is a specific application form and that should be filled up to enable UTI Invetors Services Limted to issue PAN number with photogtraph. A small fee is also charged for the fascility. The pan card can be issued to NRI also. Now all senior citizens,single women and children having FD at bank or in companies should rush to UTI Investors Centre and get the pan card if not recei ved already to avoid higher incidence of tax.

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"Can I gift my House to my daughter" , asked one of the worried father. He learnt that the Gift tax rules have been changed and now Government intend to charge high tax on the the hand of the recipient of the gift."My daughter is not earning as much. where from would she pay tax on an immovable property" ? The latest gift tax amendment has crated tension in the mind of lot of senior citizens. I would like to assure that gift from blood relations are exempt from the tax even now .The Government of India amended the Gift tax only because the provision was misused by unscrupulous persons.

High Value Gifts were a safe haven to show one’s love to others financially. Now the tax man has tightened (putting it mildly) the strings attached to gifts. In fact the rule has become so tight that it may be the end for all high value gifts in India.

Since 1998, there is no Gift Tax per say in India. The gift is now added to the income of the receiver and is taxed accordingly. Earlier (prior to October 1st 2009), gifts in kind (a car or a house) were not considered at the cash value. Many rich and powerful people used to request ,some of their friends and associates, to give expensive gift during their daughter's marriage in lieu of high favours.At that time all gifts received at the time of marriage were exempt from tax. The gifts could have been from anyone and of any type. This made very high value gifts the norm at the marriages of very powerful and rich people. The taxman was hoodwinked by making marriages occasions for large scale conversion of illegal money (black money) into legal gifts. This system was going on in rampant ways.The government knew it but had no courage to stop it. ultimately ManMohanSingh Government mustered enough courage and made provision to stop it, with a new rule.

What is the new rule of the day? The change in the rule related to gifts now says that the receiver has to pay tax for receiving any gift valued at Rs.50,000 and more. The 'any gift' clause means that not only cash but all gifts of any value. So if someone receives a gift of a house worth Rs.30 lakhs, then he/she is automatically in the highest income bracket and has to pay 30% + surcharge on value of the house as tax (close to Rs.10 lakhs in this case). It ihas become vry diffcult for a young girls with limited mens to pay so high income tyax if she is not very rich officially.
The rule thus effectively prevents money laundering in the guise of high value gifts.

The question now comes whether gift given by relatives during marriages would also attract so much taxes? the genuine people donot have to worry at all.There is exemption for gifts received from certain people. The gifts that one receives from relatives on the occasion of marriage, the gifts receives from parents and grand parents, the gift received by a daughter-in-law from her parents-in-law, and gifts received by way of a will and inheritance are exempt.
But here is a catch. To stop the evil practice of dowary demand The gifts received by a son-in-law from his parent-in-law will be taxed. would it bring done dowry demand. Very unlikely, sid a social scientist.According to him the demand would stay not in white but in coloured. The father inlaws would remain as vulnerable as they were before. A good provision has been made. Children living abroad can freely send money to their old parents with out attracting any gift tax in the hands of their parents. Due to existance of this provision an NRI can gift to his/her parents in India from their NRE account without their parents suffering any tax.

An excellent provision have been made so that none can circumvent the rules. The gifts received in the names of one's minor children will be clubbed with the parents' income for taxation purpose. Also the taxman is very alert in saying that, in case of both parents having income, clubbing will be done with that parent who is earning more. So one cannot hide under the cover of their minor child(ren) receiving the gifts. For a long time non relatives were sending gift in the name of the minor children and most of the time it was clubbed with the income of mother so that minimal tax is paid.With the incorporation of the new provision the loophole have been plugged.

Not only gifts, but any real estate deal done for values lower than the state governments fixed rates, will also be taxed. Here the tax will be charged on the difference between the state government’s rate and purchase price. The tax needs to be paid by the buyer of the property.

According to a taxation expert the tightening of the rules related to gift tax will curb money laundering to a great extent. However it does protect genuine gifts from relatives and loved ones. Several guises used earlier to cover up transactions as gifts are now taxable.


Gautam Prasad Baroowah
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Sunday, February 7, 2010


We welcomed, a month ago, the New Year with great enthusiasm. Let us hope the New Year would usher in, for all of us, peace, prosperity and happiness. We all have desires and goals to achieve in life. We need to earn for our decent livelihood. We also need to save for our children's education & marriage and need finance for building a dream home, to buy a car and plan for retirement. These are attainable goals, if planned from the beginning of career. However, at the mid-age years we may sometime wonder where has all our money vanished? Whether would it be at all possible for us to reach our goals in life? Regardless of our stage in life, income, or wealth, a personal financial plan helps, clarify and prioritize our goals and set objectives for reaching our targets. Actually for a secured, satisfied and purposeful life the meticulous financial planning is a must.
In Indian culture four tenants have been specified for a successful life on the earth for human being... Those are Dhrama, Artha, Kama and ultimately Muksho. For a peaceful and successfully life on earth these four things are most required. Very interestingly among all the important virtues "Artha" has been given an important place. Its place is just after the concept of "Dharma". Now what is "Dharma"? The Dharma is the expression of divinity in the human body and soul. The "Artha" is one of the basic requirements on earth to keep body and the soul together. Yet least importance is given to Artha or "money management” by most people of Northeast India. For a long time the importance of money was never used to be discussed in the family get together, as it was considered indecent to discuss money matters in front of the children by parents. This culture has changed of late and people have become conscious of importance money. Yet full power of money has not been realised as yet.

In fact, money does not have any strong intrinsic value of its own. It acquires value as it is handled by people. If coins are kept stored in a pitcher or in a box or in a locker for a few years it looses value. Once upon a time, during Sixties, people of Assam used to buy ten eggs for a rupee. With the same amount of money today even one egg is not available. If a person saved that one rupee in his box, today it would have become almost valueless. But if he would have saved that one rupee in a bank (earning ten percent interest) the value of that Re One would have become Rs128/- .With that money even in today's market he would been able to buy three dozens of eggs. So it is the human being who would have to be responsible to increase the value of money if he needs to survive even in today's market condition. How the value of money was increased in the instant case? It is the habit of saving and investment that generated the value of money. So in today's life whatever we earn should not be consumed during the month itself. A portion of earned income must be saved. Why? Because people can earn money only for thirty five to forty five years but they may survive up to eighty years of age. To keep their body and soul together they need to save and invest money. In to day’s situation earning money is not easy. But saving and investing money is still more difficult. So we need to make special efforts to save money and train our children to realise the importance of money as soon as they are ten years old.
What is Financial Planning?
Financial Planning is a process that
• Reviews our current financial position
• Sets goals for the future and
• Creates a plan to achieve those goals
To start the financial planning first steps need to be started as soon as career begins. Yet it is never too late to initiate financial planning later.

Let us Review our Finances
o We should begin with a review of our current financial position. Start with a top down approach .we need to find out what are assets and liabilities by adhering to following simple formula:
1. Total assets + Total savings – Total debt = our position
2. Monthly income – Monthly expenses = our cash flow

3. What is our expenditure?
 Where are we spending money?
 Food, fees, gas & electricity, Clothing, entertainment, eating out and travel etc

4. Identify opportunities to save money
 Eating out lesser could save you Rs 1000 per month. Avoiding smoking could save substantial sum. Planning travel expenses can save some money.

Let us set our Goals:
A. Identify our goals
 Buying a new car, buying a house, taking a vacation, educating your children etc after meeting our monthly domestic expenses.
B. Set clear targets and time frames to achieve our goals

 Saving Rs 2000 per month will help educate your children
 Saving Rs 1000 per month will help fund your vacation
We do not have to save and invest in a hurry. Slow and steady wins the race. Let us first draw up a plan as to how to go about.

Now, Draw A Financial Plan:
• Include a mix of short and long term goals
• Convert our goals into rupee amount and set a deadline to achieve them

Diversify our investments according to our risk profile
Look for ways to minimize tax
Don’t forget insurance
Start retirement planning
Get professional advice if required
Since we have drawn up a financial plan after lot of studies let us implement our plan today. Delay in implementation will deny the success.
Sometime let us review our plan:
Life is always changing, so it is important to review our plan if any of the following events occur:
• our circumstances change
 Through marriage, new dependants etc
• our rules change
 Through taxation etc
Investment climate changes
 Through market boom and busts

Tips To Stay On Track
• Stay focused on your lifestyle goals
• Don’t be distracted by fear or greed
• Diversify your investments according to your risk profile
• Keep a long term view
• Review your plan regularly
• Get advise from a professional

We should always try to invest for long term to reap higher benefit. We need not put all the eggs in the same basket. Investment in bank, ppf, debt fund and equity and mutual fund should be taken as per the individual risk profile.

The most investors are planning now as to how to go about investing in the New Year. A few of our readers conveyed us that the year 2009 brought luck to them. They invested wisely when market was down and could gain almost 28 % returns within a period of eleven months. Naturally they were happy and expressed their satisfaction. Actually they gained only for their own boldness and judicious decision making capacity. It was nice to hear that some of our readers could get satisfying returns during the last year. But it must be kept in mind that in short term generally equity market does not provide excellent returns. Perhaps an element of luck also helped our investors, beside their own strength. The 2009 was an unusually good year.( The investment of Rs. one lakh on First January gave a return of Rs 1,78,597 on BSE sensex, Rs. 1,29,953 on Gold, Rs 160,991 on silver, Rs 1,08,243 on Bank fixed deposit, Rs 1,22,027 in Debt oriented hybrid fund and Rs. 1,86,090 on equity Mutual fund, as on 28TH December 2009.) The highest return came from equity, followed by silver and Gold and the lowest was bank fixed deposit.

Everyone expect that in 2010 also such good returns would be available. According to our calculations year to year returns during the New Year may not be as alluring as it was during 2009. The inflation is getting higher every day. Though America and Europe is out of severe recession actually unemployment figures have not gone down. The banks are not giving enough loans as before. Under the circumstance market is expected to remain volatile. Unless FII invest in Indian share market stocks do not move steadily upward. Indian investors remain shy till market makes bold upward movements. There is a strong possibilities that Indian share market may move upward during first few months of the first quarter but as the year marches ahead THE CORRECTION MAY SET IN AND MARKET MAY GO DOWN AT-LEAST BY 20% PERCENT. Mark Faber predicts 30% correction from present high of 17,800 sensex. Everyone is asking now the following question:

What’s in store for us in 2010? The answer is: The recessions stemming from financial crises tend to be severe and are usually followed by relatively anemic economic recoveries. This time will be no exception, with one of the feeblest recoveries -- maybe 6% to 7% growth in GDP in 2010 – there could be a steep decline of market after a few months. But investors should not worry. In last ten years (from year 2000 to First January, 2010) the best return came from equity, (despite big crash of 2008) followed by gold, silver, real estate, debt oriented balance fund and lastly Bank Fixed Deposit. The equity is the king ion the long run .So younger investors should concentrate on equity, Mid aged investors on Balance fund and old investors on SCSS , PPF and bank.

The stock-market rally of 2009 had an artificial feel. It owed more to a sea of liquidity than to an improvement in the nation’s basic economic condition. Shadow of such depressing situation market may behave erratically. What should be done under such circumstances?

Our recommendation would be to stick to old faithful stocks so far as shares market is concerned. If you have to buy stock buy only promising shares of the emerging categories like communication, IT etc and shares of good old industrial products like steel, oils & chemical, banking and medicine. Investor could also rely more on ULIP and diversified Mutual Fund. During the year thematic funds should be avoided. It is a fact that all the investment should not be kept in single basket of equity only. For creation of wealth different asset class should be subscribed. What is the other asset class that could be relied upon? During past ten years only one asset class had surpassed the equity market- I.e. “ART “segment. But to buy art work investor must be knowledgeable. Art of Hussein or Ganesh Pain and Bikash Bhattachajee are real asset but those are very costly for common investors. The art work of new artists is available at reasonable cost. The silver, Gold and land are other two asset Classes that could be relied upon provided it can be kept protected. Gold ETF are easy to handle but realty sector have not inspired confidence. So the best bet for 2010 would be the Diversified equity and PPF for young investor and for senior citizen it could be balanced funds and SCSS. During the year of 2010 the market is sure to correct. That would be time to enter the market who can organize lump sum amount. My recommendation would be to take the route of SIP or STP from now onward for a period of two years. .If money could be kept invested atleast for four years from now there is a strong possibility of a high return by 2012. Making money is not easy. Many people broke down when their hard earned money, invested for children, became half almost, in 2008, but those persons reaped greatest benefit who kept the money invested throughout 2008 and 2009 and did not redeem despite great psychological pressure from family and friends.

The greatest virtue for the investors of 2010 would be Caution, Patience and Boldness. None need to invest who are weak heart. The year of 2010 would be going to be a landmark year for it would provide the base for a successful earning in 2012-2015. Investor should fix their vision judiciously, keeping in their earning capacity in mind, and wait for the opportunity to invest when opportunity knocks at the market door in 2010.
The investment and saving is not the only thing people need to take care. From time to time they need to take care of the security of their family through insurance. Take care of their old parents; protect their assets built up with their hard earned money .Ensure health care facility for self and for old parent. Every stages of life have specific responsibilities to be carried out. There are five stages of life for human being. Single, Married, Married with children, pre retirement and post retirement. Investment should be done in first three stages. During the fourth stage consolidation of assets should be done and in the fifth stage they need to relax, devote time in intellectual pursuit, and take care of health through walking, exercise, travel and social service for enjoyment of life. As a thumb rule investment should be done in the formula of “100 -Age = equity”, balance amount in Debt. After reaching Seventy five years no more investment should be done in equity. At that time we need to draw up our will and keep all the money in Bank. Always married couple should have bank account in both the persons name as a measure of security. We would be always happy, satisfied and secure sooner we make our financial plan in life.