Salary Trend in India, How much you can expect!

Indian IT professional’s salary increase one of the highest in world

According to recently released 2007 salary survey, typical Indian software professional got an average salary increase of 18.7% in 2007, an improvement over 18.3% increase recorded in the previous year.
This is revealed by a nation-wide survey carried out by IDC India for CyberMedia group’s flagship publication, covering 2,806 IT professionals. This number is one of the highest in the world. Compare this to roughly 2.7% to 3.3% average salary increase in US.

Employee Break-up by Salary and Experience

The average annual salary drops from Rs 5.7 lakh to Rs 5.4 lakh, despite the average hike touching 19.8%, with aggressive hiring of freshers at basic salary levels
(Dataquest survey)

Difference between Gross Salary and Net Salary

Gross Salary is inclusive of all the remuneration payable to an employee.
while Net salary is only the take-home salary. i.e, Gross salary earned minus the deductions towards ESI, EPF, PT, Insurance etc..

Cost To the Company (CTC): all the expenses to calculate the CTC of an employee i.e.

1. All the components of the salary.
2. All the perks that are being given for the candidate (i.e) - bonus, incentives, reimbursement of medical/telephone/petrol, benefits extended thro' various schemes like housing/vehicle/furniture/ A/C/ etc....
3. All the contributions that the company makes for the employees like PF,SUPER ANNUATION, GRATUITY,MEDICAL INSURANCE, ETC. should also be included in calculating the CTC of an employee.

Take Home Salary
Take a simple example of take-home salary calculation. For this, from the gross package one has to deduct professional tax, income tax, mediclaim premium, investment in tax saving instruments and provident fund contribution from the total salary
As you can see when Total salary increases Percantage of Actual or Take home salary goes down.

So take care when you discuss your CTC with HR.

Latest salary package for freshers in MNC...

Figure in Lacs/Annum

Caritor ---------------------------2
Computer Associates------------4.5
DE Shaw--------------------------6
Fiorano ---------------------------5
Flextronics (HSS) ---------------3
Google ---------------------------12
GE --------------------------------3
HCL ------------------------------2
Hexaware -----------------------2.1
IBM ------------------------------5
Impulsesoft ---------------------4.5
Interra Systems ----------------4.6
Induslogic -----------------------4.2
Infosys Systems ----------------1.8
Kanbay --------------------------3.25
Kritical ---------------------------5.6
MBT ------------------------------2.5
Microsoft ------------------------7.8
Mindtree ------------------------3
Motorola ------------------------3.6
Oracle ---------------------------4.2
Patni(PCS) ----------------------1.7
Perot ----------------------------2.5
Polaris ---------------------------2
SAP Labs ------------------------4
Samsung ------------------------4.6
Satyam --------------------------2.25
STM -----------------------------4.5
Sun Microsystems --------------5.0
Syntel ---------------------------2.05
Tata Elxsi -----------------------1.9
Tavant --------------------------3.6
TCS -----------------------------1.8
T-Mobile ------------------------8.0
Trilogy --------------------------7.5
Verizon -------------------------3
Virtusa --------------------------2.4
Wipro ---------------------------2.1

This is not a conclusive / affirmative data. This is just provided for reading purpose., no claims, guarantees on the accuracy of the above data is given.

Should I Buy Real Estate or wait?

"Is now a good time to buy real estate?"

The short answer is, "it depends." People are either optimistic or pessimistic about their personal financial life and they are the same way about more macro economic topics like housing and jobs. Each month, surveys are conducted to measure Consumer sentiments to try and get a reading on the likelihood people will purchase in the near future.The topic of real estate is a pretty split camp. There are rational and compelling reasons to be optimistic or pessimistic about housing and it doesn't really matter what part of the country you live in.

Reasons to be pessimistic about real estate

1. House prices are falling in parts of the country. Why buy in a declining market?
2. Cost of ownership on a monthly basis is higher than renting.
3. Taxes and home owners insurance are too high.
4. Prices of homes are too high.
5. Houses take time to sell. With less people being able to buy, it will take even longer.
6. When I will be back in India (Duration in USA)

Reasons to be optimistic about real estate

1. Real estate is a relatively safe investment over the long run.
2. Prices continue to appreciate in 2/3rds of major metro areas.
3. Interest rates are at near historic lows.
4. Buy now while mortgages are still relatively easy to get.
5. Everybody needs a place to live. Why not own it and get the tax break associated with ownership?

The one thing has changed about real estate over the past nine months is Nobody would recommend buying a home without financial reserves. In the recent past, house prices were shooting up so quickly, it was impossible to save enough money fast enough to even out. During this time, getting into a house at any cost was a smart move. Everybody don't believe that same philosophy still holds true.

Experts think 20% appreciation will continue to hold up. It is no longer smart to pay anything to get into a house and it is no longer smart to purchase homes with no financial reserves.If the "credit crunch" we're seeing now turns out to be more than a passing trend, it can have a major impact on the entire economy. It all goes back to whether you're an optimist or a pessimist. Expert believe this will be a lasting trend. Financial markets are resilient and innovative and predict the mortgage of choice for most Americans will soon be FHA. Yes, this subprime backlash will soon be remedied by the most classic of saves, the government bailout.

News said that Washington DC is being strongly lobbied to raise FHA loan limits to match conforming. This means that except in the highest priced States and neighborhoods, FHA loans will be just as competitive and available as any other option. With mortgage insurance and the backing of the US government, there won't be a bank that will be afraid to make this loan and there won't be an investor who won't buy it.

To answer the original question, "Should I buy real estate now?", so It depends on if you have reserves. If you're an optimist, You should have six months of reserves in cash, CDs or savings that will pay all your mortgage and other monthly obligations if you lose your job, or have to make a major repair to the home. Reserves also allow a seller to hold out a maximize their sales price in a less demanding market.

Economic pessimists shouldn't buy unless they have a year of reserves for the same reasons. For everyone else who would someday like to own a home, now is the time to start saving and reducing your debt. With home prices stabilizing, for now the best action you can take is to save money.

Basics of Mutual Fund

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal
A mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager, who is also known as the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income.
The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.

You could make money from a mutual fund in three ways:

1) Income is earned from dividends declared by mutual fund schemes from time to time.
2) If the fund sells securities that have increased in price, the fund has a capital gain. This is reflected in the price of each unit. When investors sell these units at prices higher than their purchase price, they stand to make a gain.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's unit price increases. You can then sell your mutual fund units for a profit. This is tantamount to a valuation gain.

What are the different types of Mutual Funds?

Mutual fund schemes may be classified on the basis of their structure and their investment objective

A. By Structure

1. Open-ended Funds
An Open-ended Fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices.

2. Close-ended Funds
A Close-ended Fund has a stipulated maturity period, which generally ranges from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the Stock Exchanges.

B. By Investment Objective

1. Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. Growth schemes are ideal for investors who have a long-term outlook and are seeking growth over a period of time.

2. Income Funds
The aim of Income Funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities.
Income Funds are ideal for capital stability and regular income. Capital appreciation in such funds may be limited, though risks are typically lower than that in a growth fund.

3. Balanced Funds
The aim of Balanced Funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents.
This proportion affects the risks and the returns associated with the balanced fund - in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of the equity market.
Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a combination of income and moderate growth.

4. Money Market Funds
The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market.
These are ideal for corporate and individual investors as a means to park their surplus funds for short periods.

C. Other Equity Related Schemes

1. Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws. (ELSS) and Pension Schemes

2. Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE S&P CNX 50.

3. Sectoral Schemes
Sectoral Funds are those which invest exclusively in specified sector(s) such as FMCG, Information Technology, Pharmaceuticals, etc. These schemes carry higher risk and restricted to specific sector.

What are the benefits of investing in a mutual fund?

The benefits of investing in mutual funds are as follows -

1. Access to professional money managers - Experienced fund managers using advanced quantitative and mathematical techniques manage your money.

2. Diversification - Mutual funds aim to reduce the volatility of returns through diversification by investing in a number of companies across a broad section of industries and sectors. It prevents an investor from putting "all eggs in one basket". This inherently minimizes risk

3. Liquidity - Open-ended mutual funds are priced daily and are always willing to buy back units from investors. This mean that investors can sell their holdings in mutual fund investments anytime without worrying about finding a buyer at the right price.

4. Tax Efficiency - Mutual fund offers a variety of tax benefits. Please visit the tax corner section or consult your tax advisor for details.

5. Low transaction costs - Since mutual funds are a pool of money of many investors, the amount of investment made in securities is large. This therefore results in paying lower brokerage due to economies of scale.

6. Transparency - Prices of open ended mutual funds are declared daily. Regular updates on the value of your investment are available. The portfolio is also disclosed regularly with the fund manager's investment strategy and outlook.

7. Well-regulated industry - All the mutual funds are registered with SEBI and they function under strict regulations designed to protect the interests of investors.

8. Convenience of small investments - A mutual fund on the other hand allows even individual investors to hold a diversified array of securities due to the fact that it invests in a portfolio of stocks. A mutual fund therefore permits risk diversification without an investor having to invest large amounts of money.

What are the different plans that mutual funds offer?

Mutual Funds offer various investment options. Some of the important investment options include:

1. Systematic Investment Plan (SIP)
The investor is given the option of preparing a pre-determined number of post-dated cheques in favor of the fund. The investor is allotted units on a predetermined date specified in the offer document at the applicable NAV.

2. Systematic Encashment Plan (SEP)
As opposed to the Systematic Investment Plan, the Systematic Encashment Plan allows the investor the facility to withdraw a pre-determined amount / units from his fund at a pre-determined interval. The investor's units will be redeemed at the applicable NAV as on that day.

3. Growth Option
Dividend is not paid-out under a Growth Option and the investor realizes only the capital appreciation on the investment (by an increase in NAV).

4. Dividend Payout Option
Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV of the mutual fund scheme falls to the extent of the dividend payout.

What are the types of risks?

For mutual fund investments, risks would include variability, or period-by-period fluctuations in total return. The value of the scheme's investments may be affected by factors affecting capital markets such as price and volume volatility in the stock markets, interest rates, currency exchange rates, foreign investment, changes in government policy, political, economic or other developments.

1. Market Risk: At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to "market risk".

2. Inflation Risk: Sometimes referred to as "loss of purchasing power." Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you'll actually be able to buy less, not more.

3. Credit Risk: In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures?

4. Interest Rate Risk: Changing interest rates affect both equities and bonds in many ways. Bond prices are influenced by movements in the interest rates in the financial system. Generally, when interest rates rise, prices of the securities fall and when interest rates drop, the prices increase

5. Investment Risks: In the sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities.

6. Liquidity Risk: Thinly traded securities carry the danger of not being easily saleable at or near their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the Indian fixed income market.

7. Changes in the Government Policy: Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.

ULIPS are a long term Investment

I have recently come across agents selling ULIP's as three year plans. You might hear them ask you to invest for just three years and then reap the benefits.
All this in my opinion is miselling. Investing in ULIP's work only if your investment horizon is more than 10 years.

Below is an illustration of returns from HDFC Unit Linked Endowment Plus based on term of the plan.
These illustrations are for a 34 year male. Assuming returns of 10% per annum the following is what the figures look like.

Term : 3 years
Premium : Rs.25,000 per annum
Sum assured : Rs.1,25,000
Total premium paid : Rs.75,000
Fund balance at the end of 3 years : Rs.68,976
Net return on investments : Loss of Rs.6,024 on principal

Term : 10 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 1,25,000
Total premium paid : Rs.2,50,000
Fund balance at the end of 10 years : Rs.3,17,657
Net return on investments : 7.17%

Term : 15 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 1,87,500
Total premium paid : Rs.3,75,000
Fund balance at the end of 15 years : Rs.7,37,790
Net return on investments : 8.07%

Term : 20 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 2,50,000
Total premium paid : Rs.5,00,000
Fund balance at the end of 20 years : Rs.13,01,447
Net return on investments : 8.43%

Term : 25 years
Premium : Rs.25,000 per annum
Sum assured : Rs. 3,12,500
Total premium paid : Rs.6,25,000
Fund balance at the end of 25 years : Rs.13,01,447
Net return on investments : 8.62%

Clearly, if you look at the net returns, investment in ULIPs only work if you plan to stay invested for long term. If someone is selling you a ULIP for a time frame of 3 to 5 years, it will not work. All he is doing is mis-selling

Investment returns for government issued bonds is also around 8%. After investing for 20-25 years we get around 8.5% interest rate.


  • Do not exit before the Ulip matures.
  • If you need to withdraw, do it partially, and only if there's an emergency.
  • Take 100 per cent equity exposure when the maturity is over five years away.
  • Review you life cover needs and increase the cover, if required.
  • Use top-up facility to deploy surplus funds.

What should you do in case of a road accident?

If there is an accident causing injury or damage to any person, animal, vehicle or property, the driver of that vehicle should render all possible help to the injured.

He should also report the matter to the nearest police station, within 24 hours of the occurrence of such accident. According to the provisions of Section 134 of the Motor Vehicles' Act, the driver/owner of the vehicle involved in an accident is responsible to convey the injured to the nearest hospital or clinic. The doctor so approached shall be duty bound to render necessary medical aid or treatment without waiting for any procedural formalities.

Here are some Do's and Don'ts, in the event of an accident


  • Keep calm
  • Switch off the car engine
  • Apply parking brakes
  • Switch on hazard warning lights
  • Cordon off the area of accident
  • Help the injured
  • Take down the names and addresses of the witnesses and registration numbers of the vehicles involved
  • Report the matter to the police and
  • Take down the name and the number of the policeman who arrives at the scene


  • Do not panic
  • Do not argue with any one and
  • Do not handle the injured unless it is necessary as a life saving measure

How to Avoid Insurance Claim Rejection of Your Car

These days denial of insurance claim on motor vehicles is getting increasingly common. They constitute to the majority of consumer cases in consumer forums and courts. Here we are covering the important points you should keep in mind while purchasing insurance for your vehicle and while you make a claim.

Provide authentic documents.
While purchasing insurance most of the customers negotiate for discounts which results in agent or executive suggesting unfair means to get the same. One such common method in vehicle insurance is a fake No Claim Bonus (NCB) certificate while purchasing a new insurance policy. The insurance agent believes it and gives you a 20% discount.
But if unfortunate events happen and you put a claim on your new insurer he does all the checks including your NCB claim on the previous policy. And this is where they would find a reason to reject. Remember, Insurance companies usually do not do these checks while selling you the insurance (which they should ideally do) and trust you for all that you say but they check every single document when it comes to passing a claim. Looking from economic perspective this makes sense too! So if we give wrong information or fake document to purchase a policy then we are actually buying a piece of paper of no value.

Do not lie to claim investigation officer.
This is most important; tell the exact incidence, even if you think that a slight modification would save you lots of questions or money. Remember claim officers inspect 10 – 15 cases a day and are well experienced to identify the truth. On finding things fishy they may submit a negative report.

Purchase commercial insurance
If your vehicle is used commercially. Its only slightly expensive (about 8 – 10%) but in the unfortunate condition will get you the claim. And people who use popularly commercial vehicles like Indica DLE, Tavera, Qualis, TATA Sumoetc. need to patient for getting claims as more than usual investigations are done for such vehicles under private motor vehicle insurance.

File your claim and keep communicating
File your claim and keep communicating with your insurer while they process it in order to assist them if something is missing or incomplete and henceforth avoiding any rejection. Also it is advisable to maintain a photocopy of all the documents or written communication that you do.

How to dispute an Incorrect Charge?

Online Shopping, Chargeback Rights & How to Dispute a charge?

What if goods or services I ordered are delivered defective, old or not delivered at all?

Well for those who do not know MasterCard and Visa have chargeback policies in place to prevent such frauds over internet which are applicable in India in similar fashion as they are applicable in developed nations.
If the merchant doesn’t provide you with the goods and services promised within specified time here is what you need to do.

1. Send e-mail or letter to merchant describing the order you placed and problems that you are facing with that and ask him to resolve it within specified time.
2. Keep a copy of the communication that you do.
3. If merchant does not resolve the problem and provide you with what was promised then ask him to refund your money.
4. If merchant refuses to return the money or does not respond to your communication at all. Contact your credit card company and tell them you would like to dispute a charge on your account.
5. Give your information to the credit card company over the phone. Some companies will send you a form to complete, sign and return. These forms often require an explanation of the situation, as well as copies of any receipts. Charge dispute forms are also available on websites of many companies. You can fill that form and send it to the address mentioned directly via registered post or courier. We have included dispute a charge form of ICICI Bank, HDFC Bank and HSBC Bank here.
6. Wait to hear the resolution. Your credit card company is obligated to respond to you within 30 days of receiving your completed form.

Chargeback is not limited to online shopping.
When you get your card statement you should examine it thoroughly to identify any incorrect charges. There could be multiple reasons of incorrect charges. Few are listed below.

1. Neither incurred nor authorised the above transactions
2. Charged twice or thrice for the same transaction
3. The transaction amount incurred different from amount charged.
4. Hotel reservation was cancelled on time but you have been billed a No-Show Charge.
5. Already paid the transaction amount by other means and the evidence is available.
6. ATM Transaction attempted did not dispense or partially dispensed cash (copy of ATM slip attached).
7. Never received the ordered merchandise.
8. Cancelled the transaction(s)/returned the goods, but did not receive credit/refund for the same.
9. Received defective merchandise/goods and had returned the goods to the merchant which he accepted.
10. Cancelled Membership/Subscription/Booking but still being charged.

In all the disputes cited above you would be required to provide supporting document.
It is advisable that you keep transaction related documents like charge slips credit notes, bill or e-bill etc till you are satisfied with the goods and see the correct charges appearing in the statement.
When you file a dispute the charge would be reversed by the bank immediately on receipt of the complaint. You typically get 60 days from statement to file such a complaint. The issuing bank then pursues the matter with the merchant and based on the final decision you get a complete waiver of the charges or are asked to pay the reversed amount in a specified time.
Do not give up if your dispute gets denied. Determine if there is additional information you can provide. Ask your credit card company about your options.

For More inofrmation on Credicard policy visit RBI

For filing complaint against credit card company, click on below link

"Every credit card (CC) holder should be aware of CHARGE BACK;
the only protection for customers.

What is 'charge back' and how does it work?
If a customer is unhappy with a purchase thru CC, s/he can demand for 'charge back' so that banks will reverse the amount billed on CC. That is, bank will cancel that purchase & will not pay the amount to merchant. Net result is customer need not pay for that faulty product or unsatisfactory purchase. The charge back can be claimed within 180 days of the purchase date."

Post Office Savings Schemes

This section of InvestInn offers information about various savings and investments plans available to residents of India via. Indian Post offices. These schemes are popular among each and every section of society as they offers higher returns without any risk loss. i.e. Guaranteed returns.

Current Small Savings Schemes With Main Features

  1. Post Office Time Deposits
  2. Post Office Recurring Deposits
  3. Post Office Monthly Income Scheme [Post Office MIS]
  4. National Savings Certificates [NSC]
  5. Kisan Vikas Patra - [KVP]
  6. Public Provident Funds [PPF]
  7. Deposit Scheme for Retiring Government Employees.
  8. Deposit Scheme for Retiring Employees of Public Sector Companies.
  9. Postal Life Insurance

1. Post Office Time Deposits

Post office Time deposit scheme is a type of fixed deposit account offered by Department of post, Government of India at all post office. This saving plan is best for those investors who want to deposit a lump sum for a fixed period. Investor gets a lump sum (principal + interest) at the maturity of the deposit, where rate of interest on investment depend on the term of deposit.

Who can open

  • A single adult or two adults jointly,
  • A pensioner to receive/credit his monthly pension,
  • Group Accounts by Provident Fund,
  • Superannuation Fund or Gratuity Fund, Authority controlling funds of the Sanchayika. Public Account by a local authority/body,
  • Institutional Accounts by the Treasurer of Charitable Endowments for India, Trust Regimental Fund & Welfare Fund,
  • A cooperative society / cooperative bank or scheduled bank on behalf of its members, clients or employees
  • Gazetted Officer in his official capacity.
    [ Non Resident Indian / HUF can not open the account. ]

Nomination facility
Nomination facility is available under Post office Time Deposit scheme.

Amount Required
Minimum amount required: Rs.200/-. Maximum Amount : No Limit

Time / term of investment
Time Deposits can be made for the periods of 1 year, 2 years, 3 years and 5 years.

Interest Rates

Period of deposit--- Rate of Interest per cent/ per annum
1 YEAR ----------------6.25
2 YEARS ---------------6.50
3 YEARS ---------------7.25
5 YEARS ---------------7.50

2. Post Office Recurring Deposit Accounts

Who can open :
  • A single adult or two adults jointly,
  • A guardian on behalf of a minor or a person of unsound mind; or
  • A minor who has attained the age of ten year, in his own name.

Where can be opened :
At any post office.

Period of maturity of an account is five years.

Sixty equal monthly deposits shall be made in an account in multiples of Rs. five subject to a minimum of ten rupees.

Defaults in deposits

  • Accounts with not more than four defaults in deposits can be regularized within a period of two months on payment of a default fee.
  • Account becomes discontinued after more than four defaults.
Interest & Repayment on maturity
  • On maturity of the accounts opened on or after 1st March, 2003, an amount (inclusive of interest) of Rs. 728.90 is payable to a subscriber of Rupees: Ten denomination account.
  • Amount repayable, inclusive of interest, on an account of any other denomination shall be proportionate to the amount specified above.
Pass Book
Depositor is provided with a pass book with entries of the deposited amount and other particulars duly stamped by the post Office.
Premature closure
Premature closure of accounts is permissible after expiry of three years provided that interest at the rate applicable to post office savings account shall be payable on such premature closure of account.

Continuation after maturity
Permissible for a maximum period of five years.

3. Monthly Income Scheme [Post Office MIS]

Who can open
A single adult or 2-3 adults jointly.
More than one account can be opened subject to maximum deposit limits.
Where can be opened
At any post office.

Period of maturity of an account is six years.

Only one deposit shall be made in an account.

Deposit limits
rupees one thousand.
Maximum: rupees three lakhs in case of single and rupees six lakhs in case of joint account. Deposits in all accounts taken together shall not exceed Rs. three lakhs in single account and Rs. six lakhs in joint account. The depositor’s shares in the balances of joint accounts shall be taken as one half or one third of such balance according as the account is held by 2 or 3 adults.


  • Interest @ 8 per cent/ per annum, payable monthly in respect of the accounts opened on or after the 1st March, 2003.
  • In addition, bonus equal to ten per cent of the deposited amount is payable at the time of repayment on maturity.
Pass Book
Depositor is provided with a pass book with entries of the deposited amount and other particulars duly stamped by the post Office.
Premature cloasure
Premature closure facility is available after one year subject to condition.

Closure of account
Account shall be closed after expiry of 6 years, bonus equal to ten per cent of deposits shall be paid alongwith principle amount.

Income Tax relief
Income tax relief is available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.

4. National Savings Certificates [NSC]

Who can purchase

  • An adult in his own name or on behalf of a minor,
  • A minor,
  • A trust,
  • Two adults jointly,
  • Hindu Undivided Family.
Where available
Available for purchase/issue at Post Offices.

Period of maturity of a certificate is six Years.
Nomination / Transferability
  • Nomination facility is available.
  • Certificates can be transferred from one post office to any other post office.
  • Transfer from one person to another person permissible in certain conditions.
Denomination / Deposit limits

  • Certificates are available in denominations (face value) of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 & Rs. 10,000.
  • There is no maximum limit for purchase of the certificates.
Interest/maturity value
  • With effect from 1st March, 2003, Maturity value a certificate of Rs. 100 denomination is Rs. 160.10.
  • Maturity value of a certificate of any other denomination shall be at proportionate rate.
  • Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested.

Premature encashment
Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.

Place of Encashment/discharge on maturity
Can be encashed/discharged at the post office where it is registered or any other post office.

Income Tax relief

  • Income Tax rebate is available on the amount invested and interest accruing every year under Section 88 of Income tax Act, as amended from time to time.
  • Income tax relief is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.
5. Kisan Vikas Patra [KVP]

Kisan Vikas Patras (KVPs) are available at all Head Post Offices and authorized post offices throughout India. The KVPs are measured as the most safe investment tool, as it has the backing of the Government of India. The principal is assured (guaranteed) and it is deemed to be a safe avenue for investing your money. KVP is suitable for an increase in investment as it accumulates money at a fixed rate, and money doubles at the end of the specified period. It is for those looking for guaranteed returns.

Who can purchase

  • An adult in his own name or on behalf of a minor,
  • A minor,
  • A Trust,
  • Two adults jointly.
Where available
Available for purchase/issue at Post Offices.
Maturity amount / period
With effect from 1st March, 2003, invested amount doubles on maturity after Eight Years and Seven months.
Nomination facility is available.

Denomination / Deposit limits

  • Certificates are available in denominations (face value) of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10,000 & Rs. 50,000.
  • There is no maximum limit for purchase of the certificates.
Tax Benefits
No income tax benefit is available under the scheme. However the deposits are exempt from Tax Deduction at Source (TDS) at the time of withdrawal.
Premature encashment
Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.

Place of Encashment/discharge on maturity
Can be encashed/discharged at the post office where it is registered or any other post office.

6. Public Provident Funds [PPF]

Who can open account under the scheme
An individual :

  • in his own name,
  • on behalf of a minor of whom he is a guardian,
  • a Hindu Undivided Family.

Where to open an account

  • at designated post offices throughout the country and
  • at designated branches of Public Sector Banks throughout the country.
Maturity period
  • The account matures for closure after 15 years.
  • Account can be continued with or without subscriptions after maturity for block periods of five years.
Nomination facility is available.

Deposit limits

  • Minimum deposit required is Rs. 500 in a financial year.
  • Maximum deposit limit is Rs. 70,000 in a financial year.
  • Maximum number of deposits is twelve in a financial year.
Loans from the amount at credit in PPF account can be taken after completion of one year from the end of the financial year of opening of the account and before completion of the 5th year. The amount of withdrawal cannot exceed 40% of the amount that stood to credit at the end of fourth year preceding the year of withdrawal or at the end of preceding year whichever is lower.
Premature withdrawal is permissible every year after completion of 5 years from the end of the year of opening the account.

  • Account can be transferred from one post office to another post office,
    from a bank to another bank; and
  • from a bank to post office and vice-versa.
Pass Book
Depositor is provided with a pass book with entries of the deposited amounts, interest credited every year and other particulars duly stamped by the post Office.

· Interest at the rate, notified by the Central Government from time to time, is calculated and credited to the accounts at the end of each financial year. · Present rate of interest is eight per cent / per year since: 1st March, 2003.

Income Tax relief

  • Income Tax rebate is available ‘on the deposits made’, under Section 88 of Income tax Act, as amended from time to time.
  • Interest credited every year is tax-free.

Komal Jeevan

'KOMAL JEEVAN' introduced w.e.f. 14th November, 2002. This is a money back plan with guaranteed addition and payment of premiums ceases on the policy anniversary immediately after the child attains 18 years of age.

The Komal Jeevan plan is specially made for the children between age of 0 to 10 years. This paln guarantees a return @ 7.5 % p.a on Sum Assured. Premium payments are limited upto the 18 years of the child. Special Benefits can be added to the policy to ensure FINANCIAL SECURITY of your child even in your absence

This policy is suitable for parents who wants to secure money for there children’s higher education. It can be availed by parents having children aged between 0 to 10 years.


  • Parents can propose the child's life.

  • Risk under this plan will commence either after 2 years from the date of commencement of the policy or from the policy anniversary immediately following the completion of 7 years of age by the child, whichever is later. No medical examination of the life to be assured would be required under this plan.

  • Premiums are payable upto a term equal to 18 minus the age of the child at entry.

  • In most cases, Father would be the proposer. But, if Mother has an income of her own, can also propose the policy. If both parents are not alive legal guardian can propose.

  • Policy can be gifted by grand parents, elder sisters or brothers and uncles both from paternal or maternal side, by taking a single premium policy for love and affection. In such cases also, the policies will be proposed by father, mother or legal guardian.


1. Installment Benefits:

The Sum assured under this plan will be paid installments at periodic intervals provided the policy is in force for full sum assured as under:

1. 20% on policy anniversary after completing age 18
2. 20% on policy anniversary after completing age 20
3. 30% on policy anniversary after completing age 22
4. 30% on policy anniversary after completing age 24

2. Guaranteed additions:

Payable along with sum assured either on death within the term or on policy anniversary after attaining age 26 years. The policy has to be kept in full force at Rs.75 per thousand for each policy year to receive this benefit.

3.Death Benefit:

1.In case of death of life assured before the commencement of risk, the policy is cancelled and premiums paid are refunded.
2.After the commencement of risk, if the life assured dies before policy matures, full sum assured plus guaranteed additions are payable without deduction of earlier installment benefits paid.

4.Loyalty Additions:

Special benefit on maturity - Loyalty Additions depending on policy duration and sum assured are paid on maturity.

5.Premium Waiver Benefit:

Premium Waiver Benefit available with some extra premium amount.

6.Term Rider Benefit:

Term Rider Benefit can be availed by the proposer to the extent of 20% of the basic sum assured under the policy not exceeding Rs.1,00,000/-. The benefit will be payable in case the proposer dies before the policy anniversary on which the child is 18 years last birthday.


1. Children (both boys and girls) from 0 to 10 years of age are eligible.
2. Minimum Age at Entry : 0 years
3. Maximum Age at Entry : 10 years
4. Maturity Age : 26 Years
5. Mode of Premium : Single Premium, Yearly, Half-Yearly, Quarterly, SSS.
6. Minimum Sum Assured Rs.1,00,000/-
7. Maximum Sum Assured Rs.25,00,000/- within the overall permissiable limit of Rs.50,00,000/-
8. Policy will be issued only in multiples of Rs.25,000/-
9. Loan against the Policy is not available.


Suicide: This policy shall be void if the Life Assured commits suicide at any time on or after the date on which the risk on the policy has commenced but before the expiry of one year from the date of the policy. In case of death due to suicide during this period, the Corporation will not entertain any claim by virtue of this policy except to the extend of a third party's bona fide beneficial interest acquired in the policy for valuable consideration of which notice has been given in writing to the office to which premiums under this policy were paid, at least one calendar month prior to death.

Jeevan Anand

Jeevan Anand is a With Profit assurance plan. The plan is a combination of the Whole Life Plan and the most popular Endowment Assurance Plan. It provides pre-decided Sum Assured and bonuses at the end of the stipulated premium paying term, but the risk cover on the life continues till death.

Special Features

  • Moderate Premiums
  • High bonus
  • High liquidity
  • Savings oriented.

Premiums are usually payable for the selected term of years or until death if it occurs during the term period. This policy not only makes provisions for the family of the life assured in the event of his early death but also assures a lump sum at a desired age. The lump sum can be reinvested to provide an annuity during the remainder of his life or in any other way considered suitable at that time.


Survival Benefits
Sum Assured along with all vested bonuses payable at the end of the premium paying term ( Endowment term).

1. Accident Benefit
The Double Accident benefit is available during the premium paying term and thereafter up to age 70. The premium for this has been built into the tabular premium rates. Maximum accident cover available under this plan will be Rs. 5 lakh ( this limit excludes accident benefit taken under other plans).

2. Premium Stoppage
If payment of premiums ceases after at least three years' premiums have been paid, a free paid-up policy for a reduced Sum Assured will be automatically secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs. 250/-. The reduced sum assured will become payable on the event as stipulated in the policy..

If it is a ‘with profits’ policy note that every year the LIC distributes its surplus among policyholders to ‘with profits’ polices in the form of bonuses. Substantial bonuses have been declared in the past after each valuation of policy liabilities.

Death Benefits
Sum Assured along with vested bonuses are payable on death during the premium paying term and when policy ceases. An amount equal to the Sum Assured is payable if death occurs after the premium paying term.
Simple Reversionary Bonus accrues during the premium paying term and is payable at the end of the premium paying term or on earlier death along with final additional bonus, if any. No Bonus is paid on death after the premium paying term.

Policy Parameters

Min Max Entry Age: 18-65
Sum Assured: 100000-No Limit
Term: 5-57

Mode of Payment: Monthly, Quarterly, Half Yearly, Yearly, Small Saving Scheme
Max Maturity Age: 75 Years
Policy loan available: Yes

Suitable For
Being an endowment assurance + whole life policy, this plan is apt for people of of all ages and social groups who wish to protect their families from a financial setback that may occur owing to their demise. The amount assured if not paid by reason of his death earlier will payable at the end of the endowment term where it can be invested in an annuity provision for the rest of the policyholder's life or in any other way he may think most suitable at that time.

Can NRIs take LIC Policy?

1. Can NRIs take Rupee - Currency Policy of LIC ?

2. Can NRIs take Foreign - Currency Policy of LIC ?
In India, LIC markets only Rupee - Currency Policy. If all premiums are paid in foreign curreny the proceeds will be paid in foreign currency otherwise the same will be paid proportionately.

3. What are the types of schemes offered by LIC to NRIs ?
All individual schemes marketed by LIC in India are available to the temporary NRIs holding Indian Passports. Foreign Nationals of Indian origin can take LIC policies during their stay in India. However, joint life plans having term insurance element and plans having health insurance are not allowed.

4. Does LIC offer Overseas Medical Insurance for people visiting abroad ?
No, LIC does not have any scheme of visitors Medical Insurance for people traveling abroad.

5. How can an NRI pay the premium under the policy ?
The manner of payment of premiums under the policy is as follows.

a) For Rupee Policies on NRIs

By direct remittance from abroad through Banking Channels in approved manner (preferably by Indian Rupee drafts drawn in favour of LIC of India) or by remittances through postal channels like Foreign Money Order.

By payment out of funds held in Non-Resident (External) Account or Foreign Currency (Non- Resident) Account with a Bank in India.

By cheques drawn by Non- resident policy holder on Bank Accounts held in India in his own name (either solely or jointly with another member of the family) whether or not the account has been designated as non-resident.
By cheque drawn on account maintained by resident parent or spouse of policy holder in their own name or joint names with other close relatives.

By the absolute Assignee in India wherever such policies have been absolutely assigned to a resident in India.

By the employers in respect of policies issued to their employees who have been deputed abroad by them.

Premiums can be paid in cash by a resident parent or spouse of the non-resident policyholder subject to his / her submitting a letter stating the relationship with the policyholder.

Premiums due on policies issued to Indian students who have gone abroad for higher studies may be collected in Rupees out of the Resident Bank Account in India or any of their representatives in India by cash or cheques.

Note:In respect of premiums collected in cash from sources mentioned in iii) to viii), it should be noted that the policy moneys cannot be paid abroad in foreign exchange but has to be paid in

India only.

b) For policies held on foreign register of LIC:
Premiums on foreign currency / Rupee policies issued by overseas of LIC and held on their foreign register should be collected only in foreign currency.


Welcome to, provides a variety of services to address the problems and questions you may face as an investor. Discussed countless strategies how to save money and increase cash flow, and how to skyrocket your success.

Here we tried to give you maximum information on Financial front. We expect that it will be helpful to you. We added number of categories for better browsing from insurance to Tax. we provide helpful investing information and resources to help you understand investing basics, and to help you to come with your own personal investing strategy.



Different types of Calculator to know the exact figures.

1. Take Home Salary 2. Income Tax (In Detail) 3. LIC Premium 4.Mutual Fund- NAVs 5. PPF 6. Human Life Value 7. Tax E-Filing: Online Tax file 8. Loan- EMI Basic

Everything you wanted to know about PPF

The Public Provident Fund (PPF) is one of the most popular investment options. Here are some frequently asked questions on this subject

What is the actual yield on the 11 per cent annually compounded return?
If you are in the 34.5% bracket, the tax equivalent yield amounts to 16.79 per cent. It amounts to 14.10 per cent and 12.22 per cent, if you are in the 22 per cent or 10 per cent tax brackets. This means that if you want a similar return, you will have to scout for an investment that offers you these returns putting the risk factor at the forefront.

What is the investment leeway offered?
You can invest anywhere from Rs 100 to Rs 60,000 in a year. This can be put in one lumpsum or a maximum of 12 monthly installments, but it should be in multiples of Rs 5. In fact, you can use the PPF account as a recurring deposit by making it a point to put aside a fixed amount from your income every month. Unlike a bank recurring deposit, you don't need to put the same amount every month.

Since the amount invested will vary month-to-month and year-to-year, how is it computed?
The rate of interest will be calculated on the lowest balance in the account between the close of the fifth day and the end of the month and will be credited to your account at the end of the year. So, to get the maximum out of your investment, deposit the amount in the first few days of the month.

What if I am desperately in need of funds?
Then you can opt either for a partial withdrawal (only one a year) or take a loan on your PPF account. A second loan can be taken only after the first is totally repaid.

Can I do both simultaneously?
No. You can take a loan only after two years from the end of year in which the initial subscription was made. A partial withdrawal is permissible only from the fifth year from the end of the year in which the initial subscription was made. For all practical purposes, it means from the seventh year onwards.

How expensive is the loan?
Very cheap. If you manage to repay the principal within 36 months, you are subject to just 1 per cent per annum as the rate of interest. In case you fail to repay it by then, it goes up to 6 per cent per annum. But this rate of interest is payable out of your non-taxable income.

Up to what limit is the loan sanctioned?
Up to 25 per cent of the balance to your credit at the end of the second year immediately preceding the year in which the loan is applied for.

Up to what limit is partial withdrawal permissible?
An amount not exceeding 50 per cent of the amount that stands to your credit at the end of the fourth year, immediately preceding the year of withdrawal, or at the end of the preceding year -- whichever is lower -- less the amount of loan, if any, which still has to be repaid.

For how long can I maintain my PPF account?
Though it says 15 years, it actually works out to be a 16-year period since an individual is allowed to make his last contribution in the 16th financial year. Even if the contribution is made on the last day, the tax rebate still holds though no interest on the amount will be earned.

What about continuing with my account after this period?
Sure, but at a block of five years. And, you can continue extending this in five-year blocks till it touches 30 years.

Do these extensions require me to continually invest?
No. If you merely retain your balance, it will earn the 11 per cent as interest until withdrawal.

What if I want a withdrawal during the extension period?
If you are just retaining the balance in your account, you can withdraw the entire sum in one or more installments at the commencement of each extended period. However, not more than once a year. If you have been continuing with fresh subscriptions, then you can withdraw up to 60 per cent of your balance at the commencement of each extended period in one or more installments, but not more than once a year.

Do I have to notify the bank about my PPF account being extended?
Yes. The Central Board of Direct taxes has stipulated that after 15 years, the tax benefits under Section 88 will not accrue unless the option for continuance is exercised.

Where can I open up my PPF account?
At head post offices, selection grade sub-post offices, State Bank of India and its subsidiary banks, and selected branches of nationalised banks.
or You can contact us at:

Salary Allowance: Save Income Tax

A HEFTY gross package that’s reduced to near peanuts at the net level due to taxes is of little utility. And there’s no use blaming the tax mandarins for this. There are ways and means to structure your salary package to ensure maximum tax-efficiency. The trick lies in using perks and allowances to your advantage.

It is prudent that Basic Pay and dearness allowance, which do not find any exemption, should be kept to a basic lower limit depending on the employee’s designation and salary.

What is Allowance:
It is the amount received by an individual paid by his/her employer in addition to salary. Under section 15 of the Income Tax Act, 1961 these allowance are taxable excluding few condition where they are entitled of deduction/ exemptions.

Under Income Tax Act following types of allowance are defined

Allowances ............

1.House Allowances
The exemption of House Rent Allowance (HRA) received is exempt to the least of the following:
HRA received the period during which the rental accommodation is occupied by the employee in the previous year.

  • Excess of rent paid over 10 percent of salary.
  • 50% of the salary, if the rented accommodation is situated at Mumbai, Calcutta, Delhi or Chennai and 40% of salary in other cities. The salary is taken for the period during which the rental accommodation is occupied by the employee in the previous year.

Includes basic salary and dearness allowance if terms of employment so provide but does not include any other allowance. However, any commission payable at a fixed percentage of turnover achieved by the employee is included.

2.Entertainment Allowances
Any amount received by the employee, as entertainment allowance is taxable as salary. However, deduction is available to the employee if he has been:

In continuous service with the present employer from a date before April 1, 1955, and Receiving Entertainment Allowance from his present employer continuously from a date before April 1, 1955 till the year for which the income is to be taxed.

The amount of deduction available is restricted to least of the following:

  • In case of government employees: Rs. 5,000; 20% of salary; or amount of entertainment allowance granted during the previous year.
  • In case of non-Government employees: Rs. 7,500; 20% of salary; amount of entertainment allowance granted during the previous year, or
  • Amount of entertainment allowance received during the financial year 1954-55. Salary means basic salary and excludes all allowances, benefits or perquisites.

3.Transport Allowances
Transport allowance provided to an employee for commuting between his residence and the place of his duty shall be exempt up to Rs. 800 per month. However, in case blind or orthopaedically handicapped employee's, a sum of Rs. 1,600 per month is exempt from tax.

4.Education Allowances
Education allowance of Rs. 50 per month per child for up to 2 children of the employee is exempted. In case the children are in hostel, the exemption available is Rs.150 per month per child for up to 2 children.

5.Special Allowances
The following allowances are exempt from tax:

  • Expenses incurred on conveyance in the performance of duties of office;
  • Cost of travel on tour or on transfer;
  • Daily ordinary charges incurred by the employee on account of absence from his normal place of duty during a tour;
  • Expenditure on a helper where such helper is engaged for the performance of the duties of office;
  • Allowances granted for encouraging the academic research and training pursuits in educational and research institutions; or
  • Expenditure incurred on the purchase or maintenance of uniform for wear during the performance of the duties of office.

6.Leave Travel Assistance
LTA is paid for meeting travelling expenses incurred by an individual as also family members (this includes only the spouse, two children and dependent parents, brothers and sisters) while on holiday in India. The amount of exemption depends upon the mode of journey. This exemption is available in respect of 2 journeys undertaken in a block of four calendar years.

7.Medical Allowances
This exemption is available in respect of :

  • Reimbursement upto Rs.15,000 for medical treatment of the employee and family members.
  • Reimbursement of expenditure incurred by an employee and family members in approved hospitals, dispensaries etc.
  • Group medical insurance for an employee and family members or reimbursement of premium paid by an employee for medical insurance.
  • For medical treatment abroad, the actual expenditure incurred, including on travel and stay abroad of the patient and one attendant (if permitted by the RBI). The ceiling for the gross total income excluding the amount to be reimbursed is Rs.2 lakhs.
  • Medical treatment of the employee whose family is outside India; Travel and stay abroad of the employee or his family including one attendant accompanying the patient for medical treatment.

8.Lunch and Refreshment
Refreshment at free or concessional rate is not taxable.
Exemptions of medical expenses incurred by or on behalf of the employee

  • The following medical facilities provided to an employee are exempt from income tax:
  • Treatment of an employee or his family in any hospital maintained by the employer;
  • Reimbursement of any medical expenditure actually incurred by the employee for himself or his family :
    In any hospital maintained or approved by the Government, any local authority; or For prescribed diseases or ailments in any hospital approved by the Chief Commissioner, or

9. Dearness Allowance
Dearness Allowance (DA) is paid to the employees to compensate them for the erosion in their wages due to increase in the price level. The system of payment of DA has its own diversity and disparity in the pattern of payment of remuneration to employees. It not only differs from industry to industry but also within the same industry.

A fairly large number of industrial establishments in the country pay a separate allowance known as the dearness allowance to supplement the wages of their employees. It includes any payment made to protect the employees against the inflation and rising prices, such as, dearness allowance (DA), variable dearness allowance (VDA), interim relief, dearness pay, etc. Since the payment of dearness allowance is not occupation specific, therefore, the information collected during the survey covered all the employees in the sample units.

10.Other Special Allowances

  • Children Education Allowance
  • Tribal Area Allowance
  • Hostel Expenditure Allowance
  • Remote Area Allowance
  • Compensatory Field Area Allowance
  • Counter Insurgency Allowance
  • Border Area Allowance
  • Hilly Area Allowance

Design a tax-smart "Salary Package" for maximum Take Home

How to design a tax-smart salary package?

There are plenty of opportunities for reducing the amount of income tax you pay.

move from Tax Payer To Tax Saver!!!

Corporate India is witnessing unprecedented growth. Consequently, the demand for savvy talent is also growing apace. In a bid to attract and retain the best people in their fold, companies are competing with one another in offering high salary with attractive perks.

Realising that the income tax takes away a good portion of the pay packet, and also that individual needs differ, companies often consult their employees in designing their own salary packages.

Here is a checklist to help you work out tax-smart salary and perk options:

Major Tax- be smart

1. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property, and without any limit on a rented out house.

2. The repayment of housing loan from specified sources is also deductible, irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh (Rs 100,000) under Section 80C, taken together with contributions to other avenues under its umbrella.

3. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental, or 20% of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone, the family benefits. Yes, the maximum benefit accrues when the rent is over 20% of the salary.

4. Chauffeur-driven motorcar provided by the employer has no perk value. True, the company would pay FBT (fringe benefit tax). It is @30% on 20% of the value, thereby bringing down the effective rate to 6%. Better still, if the employee owns the car and the employer pays the cost of petrol and maintenance.

5. Contributions up to Rs 1 lakh per annum to a Superannuation Fund (SAF) of the employee are not taxed, either as fringe benefit in the hands of the employer or as perk in the hands of the employee.

6. Contributions to certain specified schemes (Company PF, PPF, NSC, life insurance LIC , etc.) qualify for a deduction u/s 80C from gross total income with an overall ceiling of Rs 1 lakh. PPF has a ceiling of Rs 70,000 to contributions made to the accounts of self and minor children whereas the contributions to accounts of self, wife and children (major or minor) attract the deductions.

7. Employer's contribution to Company PF in excess of 12% of an employee's salary is taxable. Employee contributes an equal (or higher) amount to his PF account. Again, any excess over 27% of salary contributed by the employer to Company PF and SAF put together is to be treated as a taxable perk.

8. Any death-cum-retirement gratuity received up to Rs 3.5 lakh (Rs 350,000) -- subject to certain conditions -- is tax-exempt.

9. Leave Travel Allowance (LTA) given as reimbursement of expenses incurred by the employee and his family for travelling while on leave is exempt, once in two years.

10. Transport allowance for commuting between residence and place of duty is exempt up to Rs 800 per month.

11. Reimbursement, not exceeding Rs 15,000 in a year, for medical treatment from any doctor for himself and his family members is tax deductible.

12. Under Section 80D of the Income Tax Act, a deduction up to Rs 10,000 paid as medical insurance premiums on the health of an assessee, the assessee's spouse, dependent children or parents is allowed. Where an individual has insured a senior citizen (dependent parent), a higher ceiling of Rs 15,000 is available.

13. Professional tax paid by a salaried employee (around Rs 2,500 p.a.) is deductible under Section 16(iii).

14. As a tax-smart strategy, the salary (basic + DA) "should be low", the rest should come by way of such allowances on which the employer pays FBT; the employee, then, does not have to pay any tax thereon.

15. ESOP has been brought under the purview of FBT by Budget-07.

Other tax- be smart

In respect of HRA, the least of the following is exempt from tax under Section 10(13A):

(a). 40% of salary (50% for Mumbai, Kolkata, Delhi and Chennai).
(b). HRA for the period the house is occupied by the employee.
(c). The excess of rent paid over 10% of salary.

Please note that an employee who lives in his / her own house, or where s/he does not pay any rent, is not eligible for this exemption. If you are staying in a house belonging to your family members (preferably not your wife), start paying rent to the owner and ask for HRA from your employer.

1. A helper engaged at home for the performance of the duties of an office or employment of profit is not considered as a perk.

2. If the employer employs a gardener for the building premises belonging to the employer, it would not be treated as a perk. The possibility of it being extrapolated to other servants is logical.

3. Perk value of concessional loan to the employee for purchase of house or motor cars shall be the difference between the interest payable calculated at the rate of interest for similar loans charged by SBI, and the actual interest charged.

4. Loan for medical treatment specified in Rule-3A is exempt, provided it is not reimbursed under any medical insurance scheme. Where it is reimbursed, the perquisite value shall be charged from the date of reimbursement on the amount reimbursed but not repaid against the outstanding loan taken specifically for this purpose.

5. Small loans from the employer up to Rs 20,000 in the aggregate are exempt.

6. Expenses on meals provided to the employee during his hours of duty are not treated as perks.

7. Employer pays FBT on the value of any gifts to an employee. Gifts up to Rs 50,000 in a year received without consideration by an individual from any person are tax-free in the hands of the donee. However, there is a risk that the IT Department may claim that such gifts are in lieu of salary.

8. Employer pays FBT on the value of the facility of credit cards and expenses for the club.

9. Where an employer transfers a movable asset to an employee directly or indirectly, the perquisite value shall be the actual cost to the employer minus the cost of normal wear and tear @10% for each completed year during which such asset was put to use. In the case of motor cars, the normal wear and tear would be @20% whereas in the case of computers, data storage and handling devices, digital diaries, printers, etc. it would be @ 60%. These do not include household appliances (i.e., white goods) such as washing machines, microwave ovens, mixers, hot plates, ovens, etc.

10 .Uniform allowance to meet the expenditure incurred on the purchase or maintenance of uniform for wearing during the performance of the duties of an office or employment of profit is exempt from tax.

11. Expenses for soft furnishings (table linen, curtains, etc.), including their maintenance at the residence in the case of employees who entertain guests at home for official purpose are also exempt.

12. Goods at concessional rates, membership of professional associations, subscriptions for technical and business journals and newspapers are not considered as taxable perks.
Payment or reimbursement by the employer towards bills on telephones and cellular is not a perk.

Tail End

It is unlikely that good employers would add the FBT payable by them as a part and parcel of the pay package. For instance, take the case of chauffeur-driven car, which has a cost to the company of Rs 120,000. FBT has to be paid on 20% of this amount. The tax payable works out at Rs 7,416 (= 30.9% of 20% of Rs 120,000) only.

By A Shanbhag

United India Auto Insurance-

Motor Package and Liability only Policies

United India has been in the forefront of designing and implementing complex covers to large customersInrurance Cover. We are discussing Insurance package, Coverage & policies

These details you cant find anywhere.

What Insurance Cover

  • Motor vehicle which includes private cars, Motorised Two wheelers and Commercial vehicles excluding vehicles running on rails

Who can Insure ?

  • Owners of the vehicle, Financiers or Lessee, who have insurable interest in a motor vehicle.

Insured's Declared Value (IDV)

(a) In case of vehicle not exceeding 5 years of age, the IDV has to be arrived at by applying the percentage of depreciation specified in the tariff on the showroom price of the particular make and model of the vehicle.

(b) In case of vehicles exceeding 5 years of age and Obsolete models (manufacture of those vehicles which have been stopped by the manufacturers), they have to be insured for the prevailing market value of the same as agreed to between the insurer and the insured.

(a) Package Policy - Section I

Section I (Own Damage - OD) of Package Policy :

Section I of package policy covers loss or damage to the vehicle and / or accessories due to

  • Accidental external means
  • Fire, Self ignition, lightning
  • Burglary, house breaking or theft
  • Terrorist activity
  • Riot, Strike and Malicious Damage
  • Earthquake
  • Flood, cyclone and Inundation etc
  • While in transit by rail, road, air, elevator, lift or inland waterways
  • Landslide or workslide

None of the above perils can be excluded from the scope of a policy.

Loss or damage to accessories by burglary/house breaking/theft

  1. For private car it is covered
  2. In case of Motorised Two Wheelers this can be covered on payment of an additional premium at 3% of the IDV of such accessories
  3. Loss or damage to Lamp, Tyres, mudguard and / or bonner side parts, bumpers etc., can be covered on payment of additional premium. This is applicatble only to Commercial Vehicles.
    If the vehicle is disabled in an accident, cover is provided for the reasonable cost of the following :
  • Its removal to nearest reapirers
  • The cost of reasonalble repairs immediately necessary
    subject to the limit provided for.

    (a) Package Policy - Section II

Section II (Liability) of Package Policy :

  1. Liability to third parties bodily injury and or death and property damage
  2. Personal accident cover for the owner driver for a specified sum insured
    The following are payable under Section II of the Package Policy subject to the limit of liability laid down in the Motor Vehicles Act :

  • The insured's legal liability for death / disability of third party
  • Loss or damage to third party property
  • Claimant's cost as decided by the court
  • All costs and expenses incurred with company's written consent
  • In case of death of an Insured person, entitled to indemnity for a liability incurred under this policy, his legal representative will be indemnified in place of insured, if he observed all conditions as the insured himself.

What is not payable under the policy ?

  • Contractual liability.
  • War perils, nuclear perils and drunken driving
  • Consequentail loss, Depreciation, Wear and tear, mechanical or electrical break down
  • Damage suffered due to driving the vehicle under the influence of intoxicating liquor or drugs
  • Claims arising outside the geographical area specified in the policy
  • Claims arising whilst the vehicle is used in contravention of the limitations as to use
  • Claims arising when the vehicle is driven by a person without valid driving licence

    (b) Liability Only Policy

    As per Section II of the package policy


The following are the discounts available on the premium payable.

  • Vintage Cars - Cars manufactured prior to 31.12.40 and duly certified by the Vintage and Classic Cars Club of India :
    A discount of 25% on the OD rates is available. Policies issued covering these vehicles are Agreed Value Policies.
  • No Claim Bonus :
    Ranging from 20% to 50% depending on the number of claim free years.
  • Automobile Association Membership Discount :
    Discount of 5% on the Own Damage premium subject to a maximum of Rs. 200/- for private cars and Rs. 50/- for Motorised Two wheelers only.
  • Discount for Anti Theft Devices :
    A discount of 2.5% on the OD component of premium subject to a maximum of Rs. 200/-. Device approved by the ARAI, Pune - installation of the same in vehicle certified by the Automobile Association of India.
  • Concession for vehicles laid up for continuous periods exceeding 2 months
  • 50% discount on the OD premium on the vehicle specialy designed / modified for use of the blind, handicapped and mentally challenged persons
  • Use of vehicles withing Insured's premises/sites :
    A discount of 33 1/1 % on the tariff rates is permissible.

Extension of Cover on payment of additional premium

Additional premium is payable to extend the cover under the Package and Liability Only policies in case of the following :

  • The Geographical area may be extended to include
    a) Bangladesh b) Bhutan c) Nepal d) Pakistan e) Sri Lanka f) Maldives by charging additional premium of Rs. 500/- per vehicle in case of package policy and Rs.100/- per vehicle in case of Liability only Policy.
  • Personal Accident covers are available to names and unnamed persons travelling in the Motor Vehicles including employees.
  • In case of vehicles belonging to Embassies / Consulates etc., where the "import duty" element is not included in the IDV the premium for Own Damage shall be loaded by 30%.
    Electrical / Electronic Fittings :
    Electrical / Electronic Fittings which do not form part of the vehicle manufactured and imported have to be specifically covered separately by paying additional premium of 4% on the value of such fittings.
  • CNG / LPG-Bi-fuel Kits :
    Vehicles fitted with CNG/LPG Bi-fuel kits have to be separately declared and premium is chargeable at 4% on the value of such kit.
  • Fibre Glass Fuel Tanks :
    An additional premium of Rs.50/- for OD cover for all vehicles except Miscellaneous Type of Commercial Vehicles : for Miscellaneous Type of Commercial Vehicle it is Rs. 100/-.

Other Information

(I) Transfers :

In case of change of ownership, please ensure to effect the transfer of Insurance policy within 14 days from the date of transfers of ownership.

(II) Change of Vehicles :

A vehicle can be substituted by another vehicle for the same class, for the balance period of a policy subject to adjustment of premium, if any, on prorata basis from the date of substitution.


Particulars of cover, liability and exclusion given above are not complete or exhaustive.

Please contact us for our office for complete details