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Points to remember before E filing your Tax Return

Many a times it has been noticed that the e filing of tax returns are rejected by the Income Tax department for not following the guidelines. Here is a brief checklist before you file your returns online:

1.. Though you need no documents to be attached while filing an e return, you need to keep all the records form 16 and bank account statements, in case the Income Tax Department asks for it at a later stage.

2.. Make sure you declare the correct and full breakup of tax saving investments and other deductions u/s VIA.

3.. The circles under Sahaj and Sugam Forms must be shaded and not ticked.

4.. One must print the form ITR V properly, in Black ink, and avoid using dot matrix printer.

5.. While mailing the document to the Central Processing Center at Bengaluru, make sure your signatures are legible and signed in Blue ink and avoid using photocopies as these are generally rejected by the Income Tax Department.

6.. Your ITR V must reach the Central Processing Center at Bengaluru within 120 days of e filing or else you will have to start the process of e filing all over again.

7.. Central Processing Center at Bengaluru acknowledges the receipt of ITR V generally within 3 days of receiving it. If you do not receive such acknowledgement in a reasonable time, check with them on or contact them on their toll free no. 18004252229. Better still send the ITR V once again to them.


TCS limit raised for cash purchase of Jewelery

The Government has raised the threshold limit for Tax collection at source (TCS) on cash purchases of jewelry from Rs. 200,000 that was proposed in budget 2012 to Rs. 500,000 now. In order to curb the black money from the Gold and jewelry market, the Finance Minister had earlier proposed TCS by the seller at the rate of 1% of the sale amount of all the cash transactions exceeding Rs. 2,00,000 from the buyer .

However, the threshold limit for cash purchase on Bullion shall be Rs. 2,00,000. Bullion for this purpose will not include any coin or any other article weighing 10 gm or less.

The Government has also decided to roll back the earlier proposed 1% excise duty on unbranded jewelery and 1% that is already imposed on branded jewelry with effect from March 17, 2012, the day the proposal was made in the Indian Budget.

The Government has also left unchanged a proposal to double the import tax on gold from 2% to 4%.


The Online submission of ITR-1 (SAHAJ) and ITR-4S (SUGAM) for AY 2012 -2013 has been enabled

The Online submission of Tax Return, ITR-1 (SAHAJ) and ITR-4S (SUGAM), for Assessment Year 2012 -2013 has been enabled. One can log in at for the same.

You can also view your Tax credit statement (Form 26AS) in the my account section before filing your e-return.

Download the excel format of ITR-1 (SAHAJ) and ITR-4S (SUGAM) here :


Interest rates on small saving schemes wef 1st April 2012

The Government of India has revised the interest rates on small savings schemes on the recommendations of the Shyamala Gopinath Committee which had suggested linking of interest rates on small savings with that of the market, and an annual revision of such schemes.

The new rates will be effective from April 1, 2012 and will remain valid during 2012-13.

Interest rate on PPF has been increased by 0.2 % to 8.8 %. EPF rates stands at 8.25 %.

NSC (National Savings Certificates) with maturity of 5 and 10 yrs, up by 0.2 % each, will give 8.6 % and 8.9 % respectively.

The rate for SCSS (Senior Citizens Savings Scheme) has been hiked to 9.3 % from 9 % at present.

Interest rate for 3 year time deposits has been increased from 8 % to 8.4 %. Similarly, interest rate on 5 year time deposit has been raised from 8.3 % to 8.5 %.

The 5 year recurring deposits will get you an interest of 8.4 % as against 8 % at present.

There has been no change in the savings deposit rate which has been retained at minimum of 4 %.

Quick Reckoner:

w.e.f. 1.4.2012
Savings Deposit
1 year Time Deposit
2 year Time Deposit
3 year Time Deposit
5 year Time Deposit
5 year Recurring Deposit


5 year SCSS
5 year MIS


5 year NSC

10 year NISC




DTC rates proposed to be introduced for personal income tax.

Income Tax Exemption limit for the general category of individual taxpayers proposed to be enhanced from Rs. 1,80,000 to Rs. 2,00,000 giving tax relief of Rs. 2,000.

Upper limit of 20 per cent tax slab proposed to be raised from Rs. 8 lakh to Rs. 10 lakh.

New Income Tax Limits

Upto Rs. 2,00,000 for General category (Both men and Women) – Nil

(This limit is Rs. 2,50,000 for senior citizens)

Rs. 2,00,000 to Rs. 5,00,000 – 10%

Rs. 5,00,000 to Rs. 10,00,000 – 20%

Rs. 10,00,000 onwards – 30%

Proposal to allow individual tax payers, a deduction of upto Rs. 10,000 for interest from savings bank accounts. Other bank deposits like FD will not attract this clause.

Proposal to allow deduction of upto Rs. 5,000 for preventive health check up. This is within the overall limits of Rs. 15,000 u/s 80 D.

Tax saving u/s 80CCF for investment in Infrastructure bonds abolished for FY 2012-13.

Life Insurance deduction available only if premiums are below 10% of Sum Assured. Tax exemption u/s 80C shall apply only to the Insurance policies where the premium or other payment made on an insurance policy, other than a contract for a deferred annuity, does not exceed 10% of the actual capital sum assured.

Senior citizens not having income from business proposed to be exempted from payment of advance tax.

Securities Transaction Tax (STT) reduced from 0.125% to 0.1%

As per the new sub-section (5D) to Section 80 G any payment exceeding a sum of Rs. 10,000 shall only be allowed as a deduction if such sum is paid by any mode other than cash.

TDS @1% at the time of real estate sale above 50 lac. If you sell your any kind of property / real estate, and if the selling price is more than Rs. 50 lacs, you will have to compulsorily pay TDS @1% , even though after indexation and your decision to use the funds in next house purchase, your overall tax out of the transaction might be Zero. In such cases where the tax is nil, you will have to claim that tax amount back by filing a return. Property registration at the registrar office will not be permitted without proof of deduction and payment of this TDS.

Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.

The amount of duty free goods you can bring from outside India increased to Rs. 35,000 from the earlier Rs. 25,000 for adults and children above age 10.

Tax filing compulsory for any resident who holds a property outside India even if the taxable income in India is below the limit.

Rajiv Gandhi Equity Saving Scheme to allow for income tax deduction of 50 % to new retail investors, who invest upto Rs. 50,000 directly in equities and whose annual income is below Rs. 10 lakh to be introduced. The scheme will have a lock-in period of 3 years.

Proposed to levy 1 % excise duty on non-branded gold jewellery besides doubling import duty on gold to 4 %.

Proposed that jeweller should collect 1 % tax from every buyer if sale consideration exceeds Rs. 2,00,000 in cash.

Branded silver jewellery has been fully exempted from excise duty.

Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from Rs. 60 lakhs to Rs. 1 crore.

Proposal to extend the levy of Alternate Minimum Tax to all persons, other than companies, claiming profit linked deductions.

Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST.


GDP is estimated to grow by 6.9 % in real terms in 2011-12, after having grown at 8.4 % in preceding two years. India however remains front runner in economic growth in any cross-country comparison.
India’s GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.

Fiscal deficit at 5.9 per cent of GDP in RE 2011-12.

Fiscal deficit at 5.1 per cent of GDP in BE 2012-13.


Interest rate on EPF savings for 2011-12 slashed down to 8.25%

The interest rate on Employees Provident Fund (EPF) savings for 2011-12 has been slashed down to 8.25% from earlier 9.50%, which will leave many salaried employees with lower returns on their retirement savings. The 1.25 per cent cut in the interest rate is the single largest rate cut in over a decade.

The Employees Provident Fund Organisation (EPFO) had provided a 9.5 per cent interest rate to its subscribers for 2010-11 after it found Rs 1,731 crore surplus in its books. But the reserves were not enough to support this rate hike of 1 %, forcing EPFO to dip into this year’s income to fulfil last year’s promise. A 5.7% error in its income estimates for 2010-11 led to a Rs 510-crore deficit that was funded from this year’s income.

The interest rate on PPF (Public Provident Fund) remains unchanged at 8.6 %. Risk-free bank fixed deposits are earning over 9.25% currently. However one cannot ignore the tax benefit on the interest income that EPF provides.


Should we invest in NHAI tax free bonds?

NHAI (The National Highways Authority of India) is offering 10 and 15 yr redeemable secured debentures carrying an tax free interest rate of 8.2% and 8.3% respectively. It is open to general public and institutions as well as non resident Indians. The interest payout will come to you every year on 1st Oct. The issue is open from December 28, 2011 to January 11 2012. Minimum investment is Rs. 50,000/- and then in multiples of Rs. 1,000/-. It carries a AAA/Stable rating by CRISIL.

These bonds will not get any benefit of tax deduction u/s 80C or 80 CCF. These can be traded in stock exchanges. Hence, if you choose to sell them in the market, you will incur capital gains tax similar to other listed debt securities.If sold within one year of purchase, it will attract short-term capital gains tax. And if sold after a year, it will attract long term gains @ 10% without indexing the cost. But if held till maturity, there will be no tax liability.

For individuals in the highest tax bracket of 30.9%, the 10-year 8.2% tax-free bond gives an effective return of about 11.87%, and the 15-year 8.3% bond 12.01%.

However if you compare investing in NHAI bonds with Fixed Deposits, we recommend you go for FDs because of following reasons…

1) Interests from NHAI bonds will come to you every year and will not be reinvested back in the bonds. That means unless you are looking for periodic payout or would be very disciplined in investing back the annual payout in some other instruments, you will be loosing out the opportunity of compounding effect and reinvestment of interest amount.

2) Assuming, you are able to reinvest the interest amount from NHAI bonds back into some other instrument, with 7%-8% coupon, every year for 10 years, the net yield will still be less than investing in FDs with 9.25% taxable interest for the same period. The only exception is if you fall in the 10% tax bracket, you might gain investing in NHAI bonds rather than FDs.

So in nutshell, invest wisely and invest in NHAI bonds only if you fall in the tax bracket of 10%, or less or if you are sure that you will reinvest your money back into some other instrument.



Banks in India to offer higher rates of interests on Fixed Deposits placed by NRIs

Banks in India are set to offer higher interest rates to the fixed deposits placed by NRIs (Non Resident Indians).   The Reserve Bank of India deregulated interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts recently. It will provide greater flexibility to banks to attract dollars.

Yes Bank has raised the rates to 9.6 % from 3.82 %. The new rate is being offered on term deposits of 15 months-15 days to 16 months. Not only that Yes bank has also increased the interest rate on saving bank account deposits to 6%.

INDUSIND Bank has also raised interest rates on its non-resident external accounts to 9.25 % for deposits of Rs. 10 million and above across tenors from an earlier 3.82 %. Interest rates on deposits of less than Rs. 10 million will earn 8.75 %.

HDFC Bank which commands second position in the private lending in India, has raised its interest rates for non-resident savings deposits to 9 % from 3.82 %.

Banks are likely to see a strong inflow of funds from NRIs in the coming days, especially since dollar has risen to the historical levels of Rs. 53/- against Indian Rupee and banks are offering better interest rates.


Mistakes we should not make with our money

There are some financial mistakes we should not make, especially during these uncertain times. Some of the mistakes can cost a lot of damage, immediately and over a period of time on your financial health.

Holding back your investment decisions
Dont wait till tomorrow to start investing. In fact this is perfect time to start investing gradually. With whatever money you have. Best is to start with a SIP (Systematic Investment Plan).
Stock markets have corrected nearly 20% from its peak. And bank fixed Deposit (FD) interest rates are on average 9.5% to 10%. So pick your stock, best mutual fund and other financial instruments as per your risk appetite, time frame and investment objective.
Start investing for future. If you do not do it now, the best times will run out soon.

Spending more than you earn
So you cant avoid the temptation of upto 50% off. It does make sense if you prepone your purchases and save some money during the festive discount period. But what if you buy stuff which you actually do not NEED, and empty your pocket.
Most of our financial problems start when you spend more than you earn. You become an impulsive buyer and start spending on just about everything by taking loans.

Have a budget for almost everything. And keep a track on what you spend, and what you earn, so that you get a fair understanding on what you have and where your money is going.
Do not avoid taking tough decisions. If you have to cut down on some expenses this month because you overshot your budget last month, Do So.

Defaulting on loans
Do not default on your loans. Defaulting on loans will impact your credit rating. And it will impact your future credit standing for taking loans.
And if you default on your credit cards, you will not only downgrade your credit rating, but you might also be charged upto 38% annually on your outstanding amounts on credit card. Some times it is not so easy to discuss discuss with your spouse on the necessity of cutting down on expenses. But you have to do it. For a better tomorrow for both of you.

Feeling Poor
Stop feeling poor or sorry about yourself. If you feel that the world is conspiring to make you poor, it is likely to come true. Start thinking good about your money, finances and future. The tomorrow will be much better than today.

And lastly do not forget to review your financial standing on a regular basis. If not more, than atleast once a year. You may find a shift in your risk profile, some avoidable expenses and better investment opportunities.


Infrastructure Bonds (u/s 80CCF) IFCI and L&T

There is an additional opportunity for you to save tax on Rs. 20,000/- of taxable income by investing in Infrastructure Bonds u/s 80CCF. This is over and above the limit of Rs. 1,00,000/- of investments that qualify for tax rebate u/s 80C. An investment of Rs. 20,000 would get you maximum tax exemption of Rs. 2,060/- (if your current tax rate is 10.3%), Rs. 4,120/- (if your current tax rate is 20.6%) and Rs. 6,180/- (if your current tax rate is 30.9%).

IFCI (Sr IV) and L&T (2011 B Series, Tranche-1) has come out with their public offering of Infrastructure bonds u/s 80CCF. L&T Infrastructure bonds have slightly better rating than IFCI.


The bonds have a face value of Rs. 5000. A minimum of one bond applications is to be made, and in multiples of one bond thereafter. The bonds have a maturity period of 10 years or 15 years (depending on the series) and an initial lock in period of 5 years.

There are 4 options of investment in these bonds.
Series 1: Offering 9.09% cumulative coupon with a maturity of 10 years and a buyback after 5 years.
Series 2: Offering 9.09% annual coupon with a maturity of 10 years and a buyback after 5 years.
Series 3: Offering 9.16% cumulative coupon with a maturity of 15 years and a buyback after 7 years.
Series 4: Offering 9.16% annual coupon with a maturity of 15 years and a buyback after 7 years.

The issue is currently open and closes on 16th January, 2012.


L&T offers two series. Series 1 has interest rate of 9% payable annually. Series 2, the interest rate is 9% but compounded annually payable at the end of maturity. The maturity is 10 years from the deemed date of allotment. At the end of 10 years, the maturity amount shall be Rs. 2367.36 for every Rs. 1000/- invested.

The bonds have lock in period of 5 years from the date of allotment. It has three exit options which includes buyback after 5 years, or 7 years, and 10 years (which is at the time of redemption). If you go for buyback option after 5 years, you will get Rs. 1,538/62, and after 7 years you will get Rs. 1,828/04, for every Rs. 10,000/- invested.

The issue is currently open and closes on 24th of December, 2011.

If you fall in the tax slab of 30.90%, the effective yield on the 10 yr L&T bonds shall be 13.02% ( taking into consideration the amount of tax you save), whereas for 10 yr IFCI bonds the effective yield shall be 13.26%.

Both the bond are proposed to be listed on the BSE. After the lock in period of 5 years, trading is permitted, but in dematerialized form only. HUF can also apply for these bonds under the name of Karta. Documents required are:
1) Self-attested copy of PAN card.
2) Self-attested copy of residence proof.
3) Canceled cheque of the bank account to which the amounts pertaining to payment of refunds, interest and redemption applicable is to be credited.

Kindly note that if you need funds in the interim period, you cannot pledge or hypothecate these bonds and and there is no exit before the lock in period.


Small Saving Schemes to earn higher returns

From 1st Dec 2011 you will be able to enjoy higher returns on your small saving schemes. The rate of interest paid under the Post Office Savings Account has been increased by 0.5% to 4%. MIS (Montly Income Scheme) will get you 8.2% and PPF will get you 8.6%, an increase of 0.6%.

Also, the annual ceiling on investment under the Public Provident Fund (PPF) has been increased from Rs. 70,000 to Rs. 100,000. NSC’s will be for 5 and 10 years now, and the interest will be 8.4% and 8.7% respectively. The Government has decided to discontinue Kisan Vikas Patra (KVP’s).

The Government borrows money from a pool of small savings to finance its deficit, but for the current fiscal year the finance ministry had to resort to higher than budgeted market borrowings by as much as Rs. 530 billion as there were insufficient funds in the National Small Savings Fund. Rising interest rates has led to more people parking money in bank deposits rather than small savings like the NSC or the PPF.

This move will make more cash available to Government who is running low on the funds this year.


What is FMP (Fixed Maturity Plan)

A FMP (Fixed Maturity Plan) is a close ended, fixed income fund that has a predefined maturity date. A FMP typically invests in Debt instruments like securities issued by the Government of India (GILTS), Debentures, Commercial Paper and Certificate of Deposits. FMPs typically have no equity component. As investments generally do not flow in or out during the tenure of the scheme, a FMP is able to give fair idea on the expected returns. One must keep in the mind that the returns in FMPs are not guaranteed.

One can invest in FMP at the time of its initial launch only and redeem them only on maturity at a pre-stated period. However post listing most of the FMPs are traded on the stock exchange and thus provide some liquidity to the investor.

FMPs are tax efficient, both in short term as well as long term. There is a long term capital gains tax at either a rate of 10% without indexation or 20% with indexation (whichever is lower). And one can enjoy the benefit of double indexation if investment is held over two financial years. FMPs used to be in the investment domain of only large companies and HNI’s, but have now moved into general public domain.

The difference between FMP and FD are many, including, Tax treatment, in which FMP score better that FD. But FD offers fixed rate of return while FMP offers only expected rate of return. FMPs are also marginally riskier than FDs.


KYC (Know Your Customer) Guidelines by Reserve Bank Of India

1. What is KYC?

KYC is an acronym for “Know your Customer”, a term used for customer identification process. It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently. The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering.

KYC has two components – Identity and Address. While identity remains the same, the address may change and hence the banks are required to periodically update their records.

2. Is there any legal backing for verifying identity of clients?

Yes. Reserve Bank of India has issued guidelines to banks under Section 35A of the Banking Regulation Act, 1949 and Rule 7 of Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005. Any contravention thereof or non-compliance shall attract penalties under Banking Regulation Act.

3. I want to keep a fixed deposit in a bank. Is KYC – applicable to me?

Yes. KYC is applicable to customers of the bank. For the purpose of KYC following are the ‘Customers of the bank.

  • a person or entity that maintains an account and/or has a business relationship with the bank;
  • one on whose behalf the account is maintained (i.e. the beneficial owner);
  • beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors etc. as permitted under the law, and
  • any person or entity connected with a financial transaction which can pose significant reputational or other risks to the bank, say, a wire transfer or issue of a high value demand draft as a single transaction.

4. Is there any procedure specified for Customer Identification?

Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. Banks have been advised to lay down Customer Identification Procedure to be carried out at different stages i.e. while establishing a banking relationship; carrying out a financial transaction or when the bank has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data.

5. Once KYC requirements are complied with while opening the account, whether the bank can again ask for KYC compliance from me?

Yes. To ensure that the latest details about the customer are available, banks have been advised to periodically update the customer identification data based upon the risk category of the customers.

Banks create a customer profile based on details about the customer like social/financial status, nature of business activity, information about his clients’ business and their location, the purpose and reason for opening the account, the expected origin of the funds to be used within the relationship and details of occupation/employment, sources of wealth or income, expected monthly remittance, expected monthly withdrawals etc. When the transactions in the account are observed not consistent with the profile, bank may ask for any additional details / documents as required. This is just to confirm that the account is not being used for any Money Laundering/Terrorist/Criminal activities.

6. I had submitted my driving licence as a proof of identity and address but still the bank asked for telephone / electricity bill.

There are two aspects of Customer Identification. One is establishing identity and the other is establishing present residential address.

For establishing identity, the bank requires any authentic document carrying photo of the customer such as driving licence/ passport/ pan card/ voters’ card etc. Though these documents carry the residential address of the customer, it may not be the present address. Therefore, in order to establish the present address of the customer, in addition to passport/ driving licence / voters’ card / pan card, the bank may ask for utility bills such as Telephone / Electricity bill etc.

The detailed list of the documents that the bank can ask is given below.



Accounts of Individuals

Legal name and any other names used

(i) Passport
(ii) PAN card
(iii) Voter’s Identity Card
(iv) Driving licence
(v) Identity card (subject to the bank’s satisfaction)
(vi) Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank

Correct permanent address

(i) Telephone bill
(ii) Bank account statement
(iii) Letter from any recognized public authority
(iv) Electricity bill
(v) Ration card
(vi) Letter from employer (subject to satisfaction of the bank)
(any one document which provides customer information to the satisfaction of the bank will suffice)

Accounts of Companies

Name of the company

(i) Certificate of incorporation and Memorandum & Articles of Association
(ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account
(iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf
(iv) Copy of PAN allotment letter
(v) Copy of the telephone bill

Principal place of business

Mailing address of the company

Telephone / Fax Number
Accounts of Partnership Firms

Legal name

(i) Registration certificate, if registered
(ii) Partnership deed
(iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf
(iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses
(v) Telephone bill in the name of firm / partners


Names of all partners and their addresses

Telephone numbers of the firm and partners
Accounts of Trusts & Foundations

Names of trustees, settlers, beneficiaries and signatories

(i) Certificate of registration, if registered
(ii) Power of Attorney granted to transact business on its behalf
(iii) Any officially valid document to identify the trustees, settlors, beneficiaries and those holding Power of Attorney, founders / managers / directors and their addresses
(iv) Resolution of the managing body of the foundation / association
(v) Telephone bill

Names and addresses of the
founder, the managers / directors and the beneficiaries

Telephone / fax numbers
Accounts of Proprietorship Concerns

Proof of the name, address and activity of the concern

*  Registration certificate (in the case of a registered concern)
*  Certificate / licence issued by the Municipal authorities under Shop & Establishment Act,
*  Sales and income tax returns
*  CST / VAT certificate
*  Certificate / registration document issued by Sales Tax / Service Tax / Professional Tax authorities
* Registration / licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority / Department.
* IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of bank account.
*  Licence issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, etc.
Any two of the above documents would suffice. These documents should be in the name of the proprietary concern.

7. Can my wife who is not having any address proof in her name, open an account with the bank?

Yes. In such cases where the utility bills required for address verification are not in the name of the person who wants to open an account ( close relatives, e.g. wife, son, daughter and daughter and parents etc. who live with their husband, father/mother and son, as the case may be) , an identity document and a utility bill of the relative with whom the prospective customer is living along with a declaration from the relative that the said person (prospective customer) wanting to open an account is a relative and is staying with him/her is acceptable. As supplementary evidence bank may ask for a letter received through post for further confirmation.

8. I am a daily wage earner without any document to satisfy the bank about identity and address. Can I open a bank account?

A customer belonging to low income group who is not able to produce  documents to satisfy the bank about his identity and address, can open bank account with an introduction from another account holder who has been subjected to full KYC procedure provided that the balance in all his accounts taken together is not expected to exceed Rupees Fifty Thousand (Rs. 50,000/-) and the total credit in all the accounts taken together is not expected to exceed Rupees One Lakh (Rs. 1,00,000/-) in a year. The introducer’s account with the bank should be at least six months old and should show satisfactory transactions. Photograph of the customer who proposes to open the account and also his address needs to be certified by the introducer,


any other evidence as to the identity and address of the customer to the satisfaction of the bank.

If at any point of time, the balance in all his/her accounts with the bank (taken together) exceeds Rupees Fifty Thousand (Rs. 50,000/-) or total credit in the account exceeds Rupees One Lakh (Rs. 1,00,000/-) in a year, no further transactions will be permitted until the full KYC procedure is completed.

In order not to inconvenience the customer, the bank will notify the customer when the balance reaches Rupees Forty Thousand (Rs. 40,000/-) or the total credit in a year reaches Rupees Eighty thousand (Rs. 80,000/-) that appropriate documents for conducting the KYC must be submitted otherwise operations in the account will be stopped.

9. Whether a certificate from my employer is sufficient as identity as well as address proof for opening an account?

Banks rely on such certification only from corporate and other entities of repute provided that they are aware of the competent authority designated by the concerned employer to issue such certificate. In addition, banks also require at least one of the valid documents indicated above viz. Passport, Driving Licence, PAN Card, Voter’s Identity Card etc. or utility bills for KYC purposes for opening bank account of salaried employees of corporate and other entities.

10. Whether the information given by me to the bank under KYC is treated as confidential?

Yes. The information collected from the customer for the purpose of opening of account is treated as confidential and details thereof are not divulged for cross selling or any other similar purposes.

11. Whether KYC is applicable for Credit Cards/Debit Cards/Smart Cards?

Yes. Application of full KYC procedure is necessary before issuing Credit Cards/Debit Cards/Smart Cards and also in respect of add-on/ supplementary cards.

12. If I refuse to give information on KYC asked for by the bank, what action the bank can take against me?

Where the bank is unable to apply appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, the bank can consider closing the account or terminating the banking/business relationship after issuing due notice to the customer explaining the reasons for taking such a decision.


Sale transaction carried by way of General Power of Attorney

A lot of properties are being sold on the basis of power of attorney and there are many properties with unclear or disputed titles. To put a stop on this, The Supreme Court of India, in a recent judgment , has ruled that “a transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred.”

That means any sale transaction carried by way of General Power of Attorney will have no legal sanctity. The apex court further said that “A high rate of stamp duty acts as a damper for execution of deeds of conveyance for full value, and encourages sale agreement/general power of attorney/Will (SA/GPA/Will) transfers? When high stamp duty is prevalent, there is a tendency to undervalue documents, even where sale deeds are executed.” It asked states to reduce the stamp duty in order to prevent the undervaluation of property.

Before you buy any property it is essential to know about the property you are going to buy. It is a kind of due diligence process that one must undertake before buying a property.


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