Every month, 12 per cent of your basic pay is deducted from your pay cheque and parked with the Employees’ Provident Fund Organisation with purpose of  building your retirement kitty. We follow the interest rate announced by EPFO. But how does EPFO generates that return?  In 2015-16, EPFO invested 5% of its incremental corpus, or a little more than Rs.6,000 crore, in stocks. Labour ministry officials estimate that in 2016-17, the amount would rise to as much as Rs.10,000 crore. This article talks about how EPFO manages money , EPFO investment in Stock market.

How EPFO Manages Money

How are EPFO returns earned? 

The EPFO ‘declares’ the annual interest paid out to subscribers each year. In the last four years, the returns have been around 8.75 per cent a year. This interest is decided based on the surplus of its income over expenses. The fund earns income from the interest on government deposits, gilts, corporate bonds and the other securities it holds in its portfolio. It incurs costs on subscriber payouts and expenses.

While EPF returns depend on the fund’s annual income, the Employees Pension Scheme has been running a deficit for several years. According to a recent valuation report, by end of 2013-14, the pension scheme faced a deficit of ₹7,800 crore.

How does EPFO invest money?

Every month, 12 per cent of your basic pay is deducted from your pay cheque and parked with the Employees’ Provident Fund Organisation which is tasked with building your retirement kitty.Well, India’s largest retirement fund manager doesn’t disclose its portfolio or investment strategies regularly.  In the April 2015 the government has released the notification for investment pattern for EPFO money.

• 45-50%- Government securities
• 35-45% Debt securities and term deposits of banks
• 5-15% equity market.
• Up to 5% Money market
• Up to 5% Asset backed securities

Hindu Newspaper sifted through EPFO archives and responses to Parliament questions to answer these FAQs.

• The money contributed by active EPFO subscribers goes into a common pool and is invested based on guidelines formulated by the Central Government. The Central Board of Trustees of the EPFO selects the fund managers and monitors their adherence to these rules.
• According to the recent disclosure to Parliament, the EPF’s ₹3.6 lakh crore corpus (the provident fund alone and does not include the pension fund) was invested to the extent of ₹1.74 lakh crore in Central and State Government securities and Government-guaranteed securities; ₹52,845 crore in the special deposit scheme of the government; and ₹1,31,691 crore in corporate bonds (both public sector and private sector) as on December 31 2014.
• The government’s approved investment pattern for the EPFO requires that up to 55 per cent of the corpus be parked in government securities or State/Central Government-guaranteed bonds. 5% within this limit may be invested in gilt mutual funds.
• Another 40 per cent of its corpus is to be earmarked for term deposits in banks or corporate bonds, of which 75 per cent has to be rated investment grade. The remaining 5 per cent of the corpus may be parked in money market mutual funds.
• A recent amendment requires the EPFO to park a minimum of 5 per cent and a maximum of 15 per cent in stocks or equity-linked mutual funds. All these investments are managed on a buy and hold basis, without any active trading on market movements.

Who manages EPFO debt investments?

The EPFO’s debt investments are managed by SBI and four other private sector fund managers. The trustees allocate the EPF kitty between these fund managers and monitor that the money is managed according to the investment pattern.

While SBI has been a portfolio manager for the EPFO from 1995, the four other private sector fund managers were inducted in 2007 to improve fund management. At present, ICICI Securities Primary Dealership, Reliance AMC, HSBC AMC and UTI AMC are the private sector managers.

How are the fund managers selected by EPFO?

They are selected through a bidding process, once every three years. The current managers have just been appointed for the period from 2015 to 2018. The EPFO selects the managers based on their ability to bid the lowest fee for managing the EPF kitty entrusted to them.

EPFO Investment in Stock Market

How much does EPFO invest in stock market?

In FY 2015-16, the finance ministry asked the EPFO to invest between 5% and 15% of its incremental corpus in equities, but the EPFO decided to invest only 5% of it. EPFO had 8.5 lakh crore in its kitty. The EPFO investment in the stock market is only from the incremental corpus. It means the money accumulated in the current financial year would be considered for stock investment. In a financial year, EPFO gets about 1-1.2 lakh crore. The 5% of this amount would be about 5000-6000 crore. Only this amount would be invested in the share market. The existing 8.5 lakh crore will remain in debt securities.

Why does EPFO want to invest in Stock Market?

So that EPFO can give better rate on EPF. If EPFO gives 8.75% and it invests 5% investment in stock market and earns return of 15% one may get a return of 9.06% instead of 8.75%. However, in the short term, it all depends upon market movement.

Do you  face higher risk to your EPF money, now that EPFO has begun to invest in equities?

No. The EPFO is taking real baby steps with its stock market investments. The equity ceiling of 15 per cent exists only in theory. For the financial year 2015-16, the sum invested in equities was  capped at Rs 5,000 crore. This is 5 per cent of the incremental inflows of ₹1 lakh crore that the EPFO expects to receive from subscribers this year. At last count, the EPFO managed a total portfolio of ₹6.5 lakh crore (under the PF and pension schemes). The equity investments, even if they hit the limit of ₹5,000 crore, will amount to just 0.7 per cent of this portfolio.

So, for every ₹100 of subscriber money that is already in the EPF, only 70 paise is being deployed in equities. Even if this becomes zero (which is highly unlikely) ₹99.3 of every ₹100 you invested will still remain safe in gilt and bond investments. But on the flip side, if the money doubles, don’t expect it to generate a big kicker to your returns this year. As explained earlier return of 15% would add around .25%.

How did labour unions react to investment of EPFO in stock market?

The labour unions and labour ministry were reluctant for equity investment. But finance ministry was insisting.

How does EPFO invest in Stock market?

In August 2015, the retirement fund manager entered the equities market for the first time, through two exchange-traded funds (ETF).  An ETF comprises of stocks that reflect the composition of an index, such as the Nifty or Sensex, and are traded on stock exchanges like company stocks. The two ETFs chosen by the EPFO and investment in the two ETFs are as following

• SBI-ETF Nifty  : 75%
• SBI Sensex ETF :25%

The EPFO chose SBI to manage its corpus because SBI is charging 5 paise for investment of Rs 100. It means EPFO is spending Rs 2.5 Crore as the charges of fund management.

How has been EPFO investment in Stock Market?

The EPFO incurred a loss of around Rs.300 crore on its investment in stocks in the year ended 31 March 2016. Between 1 April 2015 and 31 March 2016, the Nifty index of the National Stock Exchange lost 9.87% and the BSE’s Sensex dropped 10.3%. Labour unions have been less than happy with the EPFO’s move to invest a part of its incremental corpus in stocks. “When you are earning negative return, then you need to be cautious. We have not yet understood why it supports more money going to stock market“. But EPFO feels “One-year return is not an indicator of equity returns. It will give us a better rate over a long period of time. We are convinced about the long-term benefit”

What are advantages of EPFO investing in Stock Market for the stock market

The investment of EPFO in the stock market helps the equity market. It gives

• greater stability to the share market.
• liquidity to the share market.
• It also reduces dependency on FIIs. The FIIs act according to the global markets. If FIIs are selling and EPFO (along with LIC) invests in stock market, it would help to stabilise the share market.

Considering the size of EPFO corpus the investment in share market is minuscule. The 5000 crore of EPFO would be far less than 60000-7000 crore of LIC. LIC, also the government entity invests a considerable amount in the stock market. It is a major shareholder of many blue-chip companies. In FY 13-14, LIC invested Rs 2.25 lakh crore, of which 15 per cent was in the equity segment. This was increased to about Rs 3 lakh crore in FY14-15. The company has been a long-term investor in the stock market, investing for at least eight years. LIC plans to raise its total corpus of investments, both equity and debt, to Rs 32 lakh crore by 2020.

Do other countries social security schemes invest in Stock Market?

Yes and No. Other countries pension funds invest in a wide range of investments, from equities, commodities and foreign bonds, even purchasing entire companies.

• The United States Social Security Trust only purchases special issue* (1) bonds, and only from the United States Department of the Treasury .
• The Canada Pension Plan had the following investment mix and CPP returned 16.4% in fiscal year 2014 and 9.9% in 2013: Real assets 17.7%: Equities 48.7%: Fixed income 33.6%
• China’s pension funds, which account for 90% of the country’s social security funds, were only allowed to invest in safer assets like bank deposits and treasuries. The new regulations brought in FY 2015-16 allowed early $100 billion of China’s state pension funds, about a third of the total available for investment, into the country’s volatile stock markets. they can also invest in bonds, asset-backed securities, index futures, bond futures, and the country’s major infrastructure projects.

The major pension funds of countries world are shown in image below , from Wikipedia Pension fund

Pension funds of world USA China France

Who invests in Stock Market: FIIs, Domestic Mutual Funds etc.

What is ownership pattern in stock market or who invests how much in Stock market?

As of March 31, 2015, the combined market value of the stakeholders (also called market capitalisation) of all the listed companies on the BSE crossed R100 trillion. From Value Research Major Shareholders of Indian Stock Market  are

• The biggest chunk of the value is still held by the promoter group, which is 51% of the total market value.
• This means that only 49 per cent of the equity is marketable and it amounts to Rs 49 trillion. If we look at the marketable portion of the equity, which is also known as free float,
  • then the biggest holders are the foreign institutional investors (FIIs). FIIs dominate the market by holding 40 per cent of the free float, thus impacting the market movement with their flows of funds.
  • Retail investors own one-third of the free float, which is far less than retail holding in developed economies and many developing economies as well.
  • Domestic institutional investors (DIIs), which mainly comprise insurance companies, banks and mutual funds, own about 20 per cent of the free float. The category labelled as ‘Others’ includes depositories receipts like ADRs and GDRs, and shares held by custodians.

How much do FIIs,Domestic MFs invest in Indian Stock Market

Following are the major shareholders of the Indian stock market. Among the top ten public shareholders, six are FIIs. LIC of India accounts for almost 4 per cent of the total market value of the listed equity. The president of India represents the Government of India holdings in public-sector companies. The following table is an indicative list and actual figures may differ due to indirect equity positions.

Stock Market Top 10 Contributors

Related Articles

• Articles for Learning Investing , Basics,Investing in PPF,Stocks,Mutual Funds,Post Office,FD
• Articles for an Employee:Earning,EPF, UAN,Study…
• Stock Market Index: The Basics
• UAN HelpDesk: UAN Problems, Password,Mobile Number,Incorrect Details and Help Desk

Hope this helped you in understanding how your EPF money is invested. Do you think EPFO should invest in stock market? Please vote for your result in poll or leave comment. Are you worried about how EPFO invests? If you want such type of articles please leave comment.

Subscribe

The post How EPFO Manages Money, EPFO investment in Stock Market appeared first on Be Money Aware Blog.

Every employee needs to submit a declaration,Form 11, when he takes up new employment in an organisation which is registered under the EPF Scheme of 1952. This form, EPF Form 11, contains basic information regarding the employee and it is mandatory for an employee to fill it upon joining an organisation . EPF Form 11 is a self declaration by new joinee about his status whether he is a member or non member of EPF / EPS in earlier employments and opt out of EPF. This article explains what is EPF Form 11, goes through contents of EPF Form 11 and instructions on how to fill it.

EPF Form 11

What is EPF Form 11?

Form 11 is a self declaration by new joinee about his status whether he is a member or non member of EPF / EPS in earlier employments. This form is to be filled in by every employee at the time of joining the PF covered establishment. From this form the establishment and the authority ascertain the eligibility criteria of the employee as member of EPF / EPS. The purpose of form 11 is to make sure either of two things,

• (1) if the new employee was earlier a member of PF then he should be member of EPF.
• (2) if the new employee was not a member of PF in the past, or he was not in employment earlier and his salary is more than Rs 150,000 p.m. in the new employment, he can opt NOT  to contribute for EPF / EPS. Such an employee  is called as an excluded employee.  A person receiving PF pension or persons who have withdrawn the PF are also excluded employees.

Form 11 is an important declaration form which enables the provident fund department to maintain records of employees, helping them during inspections and cross checking of facts. It also provides invaluable information about an employee to an employer.

Is Joining EPS compulsory? Can one just join EPF?

The members who join the EPF after 1971 have to became a member of EPS when they join EPF. The Family Pension Scheme came in to force in 1971, at that time option was given to then existing members whether to go for this new scheme or not. Many then members opted not to go for it. The Family Pension Scheme was converted to EPS in 1995

Can one opt out of EPF?

Once a person is enrolled under PF Scheme, irrespective of his salary increments in consecutive jobs, he does not have an option of exemption from the scheme, unless the company is not registered under the EPF act.Such companies are usually startup or company which has less than 20 employees

But if a fresher joins his first organization with Basic + DA above Rs. 15,000, he  can opt out of the PF scheme. However, he has an option to join the PF Scheme in his future organisations.

Revised EPF Form 11

In Jan 2015, New Form 11  was issued by EPFO to replace existing Form 11 . The Declaration Form,Form No. 11(New), also replaces Form 13 for existing member of the Provident Fund for transfer of his fund if he has UAN. The members who have been allotted UAN and where KYC details have been digitally verified by the previous employer, are not required to fill separate Form No.-13. Rest of the employees will continue to fill Form-13 along with Form No.11 (New) or transfer their EPF online.

Contents of Form 11

The revised structure of EPF Form 11 requires employees to fill in the following information which includes Personal Information, Details of Previous Employment, Details of International Employee,

Personal Information in EPF Form 11

Personal Information as shown in image below , click on image to enlarge.

• Name of employee
• Date of Birth of employee
• Father’s/Husband’s name
• Gender
• Mobile number
• Email ID
• Educational credentials
• Marital status

EPFO New revised form 11 personal-details

Instructions for filling the information is

1. Please tick the Title (Mr/Ms/Mrs) and write full name in the form in Item No 1. It is reiterated that each box should contain only one character leaving a blank box after each word. It may please be noted that the Title (Mr/Ms/Mrs) should not be entered again in the boxes provided to write full name.
2. Please provide Date of Birth in the form (DD/MM/YYYY) in Item No 2.
3. Please provide Father’s / Husband’s Name in full in the form in Item No 3. It may please be noted that the Title (Mr/Sh.) should not be entered again in the boxes provided to write full name.
4. Please tick the relevant box in item no 4 based on Item no 3. Tell the relationship i.e. Father or Husband.
5. Please Tick the relevant Box in Item No 5.
6. Please provide your mobile number on which formal communication can be established and necessary information can be provided through S.M.S to the member in Item No 6.
7. Please provide e-mail id on which formal communication can be established and necessary information can be provided through e-mails to the member in Item No 7.

Previous Employee Details in EPF Form 11

If you have contributed to EPF before then you need to give details of your EPF account as shown in image below. This is very important and should be entered with utmost care as a number of services including tagging of various member IDs with UAN and its portability are dependent on these details.

EPFO Form 11 give previous employment details

• 8. Please tick ‘YES’ if you have previous membership of the Employees’ Provident Fund Scheme, 1952 otherwise ‘NO’ in Item No 8, which is a mandatory field.
• 9. Please tick ‘YES’ if you have previous membership of the Employees’ Pension Scheme, 1995 otherwise ‘NO’ in Item No 9, which is a mandatory field.
• If you have ticked ‘YES’ in any or both of (8) & (9) above, please follow points 10, 11, & 12 to fill up the previous employment details at Item Numbers 10,11 &12, otherwise follow 13 onwards
• 10. Please fill Universal Account Number (UAN) Or Previous employment P.F. member ID in Item No (10). • UAN is 12 digit number which has been allotted by EPFO and provided to the EPF member through employer. To check whether you have been allotted UAN against  your PF member ID, please go to the UAN Member e-sewa on EPFO website www.epfindia.gov.in and click on Know your UAN status. •
  11. Please fill Date of Exit (i.e. Date on which member has ceased to work in the previous establishment) for the previous employment in Item No. 11.
• 12. Please provide the details of Scheme Certificate in Item No. 12 (A) and Pension Payment Order in Item No. 12 (B), if the same have been issued to the member for the previous membership.

Difference between PF number and UAN

PF number or Member Id or Member Identification Numbers is the number given by EPFO to allow the employer to submit EPF money of employee. It’s like Employer opens an EPF account for its employee and contributes to that account every month. Member ID is the account number of employee in the EPFO. When the employee changes the job then the new employer will open a new account number for it’s employee in EPFO. So a new Member ID will be allotted to employee. Member ID is same as PF number earlier. So you would have as many Member ID’s as the number of employers contributing on your behalf to EPFO. An employee will have one UAN or Universal Account number, which as the name implies will remain the same. It will maintain all your Member Ids. Its like you can have multiple Saving Bank account but all these are tied to your one Permanent Account Number or PAN. So when you change your job and the new employer, if contributing to EPF, gives you a new Member ID. This new Member ID has to be linked to your UAN number. Our article  FAQ on UAN number and Change of Job discusses it in detail.

International workers information in EPF Form 11

Foreign nationals coming to take employment in India were earlier excluded from the provisions of the EPF Act. The rule, however,  was changed in 2008. Now, a qualified international worker has to contribute to the Indian social security. An international worker is a person who can work in an Indian company, where Employee Provident Fund rules apply. Every International Worker, other than an ‘excluded employee’ should become members of the EPF Fund. There is no minimum period of stay in India for activation of Provident Fund compliance. Every eligible international worker has to be registered from the first date of his employment in India.

Social Security Agreement (SSA) is a mutual agreement between two countries to protect the social security interests of an employee in a country from the other country. India has signed this agreement with many countries such as Switzerland, Germany, France, Belgium and Luxembourg to ensure that Indian workers are treated equally in that country and vice versa. For more details read about International Worker at EPFO website.

An expatriate, working in India, can withdraw his or her provident fund under the following conditions:

• If the international worker is covered under an SSA, the worker can withdraw the provident fund according to the regulations of that particular SSA.
• If the worker is not covered under an SSA, he or she can withdraw the provident fund at the age of 58, which is the age of retirement. However, exceptions are made if he or she has retired because of any incapability to work or is suffering from leprosy, cancer and tuberculosis.
• An international worker under an SSA can have the provident fund credited to his or her bank account outside India. However, if he or she is not covered under an SSA, the PF would be credited to his bank account in India.

PF for International Workers to be calculated

• on total wages instead of Basic and DA. Total wages means whatever the wages/salary receiving inIndia(includes Basic and all other allowances (HRA, Conveyance, Project Allowance) and the salary/wages receiving in his/her home country. Adding of these amounts PF to be calculated on 12% as employee contribution. The employee should disclose his home town income to the Indian company for PF calculations
• (b) W.e.f 11-Sep-2010, Pension Fund (8.33%) to be calculated on the Total wages, whereas prior to the amendment it was calculated on Restricted Wages (Rs 6500/)
• The contribution shall be calculated on the basis of monthly pay actually drawn during the whole month whether paid on daily, weekly, fortnightly or monthly basis:
• There is no cap on the salary on which contributions are payable by the employer as well as employee. There is no cap on the salary up to which the employer’s share of contribution has to be diverted to EPS, 1995 and the same is payable on total salary of the employee.

If you are international worker then

• please provide country of origin in 13(A),
• Passport Number in 13(B) and
• validity period of Passport in 13(C).

EPFO Form 11 give previous employment details

Other details in EPF Form 11

• 14. Please tick the relevant Box for educational qualification in Item No. 14.
• 15. Please provide marital Status by ticking the relevant Box in Item No. 15.
• 16. Please tick the relevant box for handicap status in Item No. 16. If response to this item is YES, please tick the relevant category in the adjacent box.

EPFO Form 11 Other details

KYC Details in EPF Form 11

Please provide details of all the available documents mentioned in this column as far as possible. It is very important to note that KYC details are required to provide better services to the members and hence details of maximum number of documents should be provided in the Item No. 17. Fill the name as on KYC with KYC Number and also the remarks column. Remarks column is to fill up the relevant details i.e. I.F.S.C. code in case of Bank account Number, Valid up to date in case of Passport, date of expiry in case of driving license. Filling Bank account Number with I.F.S.C. code is mandatory.

EPFO Form 11 KYC Details

Declaration in EPF Form 11

EPF Form 11 Undertaking by employee

Please put your signature in the space provided with date and place. Please submit the filled up form to the present employer.

New Present Employer Section in EPF Form 11

The present employer i.e the new organization that you have joined is required to take necessary actions as explained in detail on EPFO website under UAN services and fill up the necessary details with signatureand seal in the space provided. It also has to provide a declaration stating facts regarding the information provided by an employee. This declaration contains the following details.

• Date of employee joining work
• PF ID number/Member ID assigned to employee
• UAN number of employee
• Verification of KYC credentials.

EPF Form 11 Declaration

Hope this helped in understanding EPFO Form 11. If you are starting in a new company you can opt out of EPF if your Basic + DA is more than 15,000. Else When you join a new organisation, it allows you to submit information about previous employer to new employer. New Form also starts the EPF transfer.

Related Articles:

List of articles for an Employee:Earning,EPF, UAN,Study

• Withdrawal or Transfer of Employee Provident Fund
• EPF Private Trust, the Exempted EPF Fund
• How much EPS Pension will you get with EPS Pension Calculator
• How EPFO Manages Money, EPFO invesment in Stock Market
• Changing Jobs:Take Care Of Bank Account,Tax Liability
• Changing Jobs and Tax, Form 12B

Subscribe

The post EPF Form 11 on Joining a New Job appeared first on Be Money Aware Blog.

If your HRA has not been accounted in Form 16, you can still claim it by using the calculation of HRA shown earlier. As the HRA was not claimed, taxable income would be more hence employer would have deducted tax on it. Now when you claim it in ITR you tax liability would get reduced (and in cases where you have paid more tax than due you might get refund also) . This article explains How to show HRA not accounted by the employer in ITR1 and Schedule S of other ITS. along with HRA calculator

Overview of HRA Allowance

Employees generally receive a house rent allowance (HRA) from their employers. An employee can claim exemption on his HRA under the Income Tax Act if he stays in a rented house and is in receipt of HRA from his employer. House Rent Allowance so paid by the employer to his employee is taxable under head Income from Salaries , but it can help you save taxes under  Section 10(13A) of the Income Tax Act.

• You must be an employee. Self-employed professionals cannot be considered for HRA exemption under this act, as they do not earn a salary. However, they can claim benefits on the house rent expenses incurred under section 80GG, which resembles section to 10 (13A) but is subject to certain conditions.
• You must live in a rented residential accommodation, and pay rent for the same.  If you stay in your own house, or in a house where you don’t pay rent, you cannot claim the exemption.
• If you pay house rent to your spouse, this does not qualify for exemption. But you can claim exemption on rent paid to others including parents, brother, sister in-laws etc. Our article Claim HRA while living with parents talks about it in detail.
• If you rent the house for only part of the year, the HRA exemption is allowed only for that period. HRA is available only for the period during which the rented house is occupied by the employee. So if you stayed in the house for 5 months and then moved to your own house, you can claim HRA only for the 5 months.
• You must actually pay the rent to claim the exemption. If rent is due but unpaid, the benefit of tax exemption on HRA is not available.

• If both husband /wife are working and living in same house on rent both can claim HRA subject to rent is shared/paid by both and individually,both can claim exemption up to share of rent paid actually paid by you.
• From fiscal year 2011-12 You need to give PAN details of landlord if rent exceeds Rs. 1.0 lakh year or  Rs. Rs 8,333 per month. According to the CBDT circular, if your landlord does not have a PAN, he is required to write a declaration signed by him with his complete name and address. The landlord needs to identify himself by attaching valid identification proofs. In the declaration, the landlord has to specify that he does not hold a PAN card.
• Tax benefits for home loans and HRA are two separate aspects and have no direct bearing on each other. If  your own home is rented out or you work from another city etc then As long as you are paying rent for an accommodation, you can claim tax benefits on the HRA component of your salary, while also availing tax benefits on your home loan. Please account for any rental income you receive from the property you own under income from House Property.
• You need to submit Proof of Payment or Rent Receipts to Employers. To allow you exemption on HRA, it is mandatory for the employer to collect proof of rent payment ie rent receipt. The employer will give you exemption on HRA based on these rent receipts. TDS will be adjusted so you don’t have to pay tax on HRA. Your  tax liability will be calculated accordingly.
• Employer issues Form 16 to his employees for each of the financial year (April to March of next year). Form 16 provides details of the salary income of the employee along with the Tax deducted at Source (TDS). This has details of HRA deducted as shown in image below.

• HRA in Part B of Form 16

When does employer gives HRA and other exemptions

The income tax act puts the responsibility on the employer to deduct tax at the time of payment of salary to the employees every month. The employer has to deposit the tax with the government before the seventh day of the following month. The TDS rules are very strict and the employer faces stringent penal provisions for non-deduction or non-deposition of tax.  Employers also have to file the TDS returns at the end of every quarter of a financial year.

So the employers asks employees for declaration of the their proposed investments for tax exemptions/deductions from employees in the beginning of the financial (April itself) . This helps them to calculate the taxable income according to the investments proposed and deduct the tax accordingly.

In month of Jan/Feb you need to submit Proof of Payment or Rent Receipts to Employers. To allow you exemption on HRA, it is mandatory for the employer to collect proof of rent payment ie rent receipt. The employer will give you exemption on HRA based on these rent receipts. TDS will be adjusted so you don’t have to pay tax on HRA. Your  tax liability will be calculated accordingly. The HRA allowance is shown in Form 16 as shown in image above.

If you miss submitting proofs to employer While filing ITR you can fill following unclaimed exemptions

• House Rent Allowance exemption
• Claim deductions under section 80C: If you made deposits to PPF or purchased NSC certificates, or made payments for any deductions covered under section 80C, you can claim all of these at the time of return filing. Our article How to Claim Deductions Not Accounted by the Employer explains it in detail.
• Bills for preventive health check-ups:If you have not yet exhausted your deduction limit under section 80D and you have a bill for a preventive health check-up, you can claim this bill and get a maximum of Rs 5,000 as a deduction

Do note that you don’t have to submit any deduction or investment proofs to the Income Tax Department whiling filing ITR. Returns are submitted without attaching any files or physical documents. But you must keep them safely these proofs with you for 6 years, lest you receive an Income Tax Notice and the Assessing Officer calls for them.

You CANNOT claim LTA and Medical reimbursement if you haven’t submitted proof to your employer.

How to show HRA not accounted by the employer in ITR

But if for some reason you could not submit Rent Receipts or employer did not consider it , you can claim it while filing ITR.  When HRA is not accounted by employer, more TDS is deducted from salary. It may happen that may be eligible for refund if net tax paid is more due from you. So claiming HRA not given by employer in ITR involves changing following steps:

• Calculation of HRA
• Filling the Salary Details in ITR with modifications for HRA
• Checking if Refund is due or not.

Note there is no change in Filling in the TDS details as per Form 16 and verified in Form 26AS or other schedules.

Calculation of HRA

As per income Tax act, for calculation House rent allowance least of the following is available as deduction.

• Actual HRA received
• 50% / 40%(metro / non-metro) of basic salary. Basic Salary for the purpose of HRA Calculation is Basic pay + Dearness Allowance  + Commission based on fixed percentage on turnover and excludes all other allowances and perquisites.
• Rent paid minus 10% of basic salary.
• Number of months one has paid rent for.

Basic Salary and HRA received one can get from Salary Slip ,an example of which is shown in image below.

Salary Slip with HRA and Basic Salary

HRA Exemption Calculator

Please enter the details for calculating HRA. You can enter annual or monthly values of inputs such as Rent, HRA from Payslip.

HRA Exemption :

Claim HRA not accounted by the employer in ITR 1

ITR1 has only one field for filling Income From Salary. So for  field Income chargeable under the Head Salary/Pension , on your Form 16, you need to fill in Gross Salary which takes care of all deductions,allowances etc . Fill information in point 6, as shown in image below. Our article Fill Excel ITR1 Form : Income, TDS, Advance Tax explains it in detail.

To claim the HRA not accounted by the employer you can deduct the amount of HRA exemption calculated from the Gross Salary and enter it as Income from Salary. So for Example your Gross Salary from Form 16 is 5,30,000 and you have HRA exemption. So instead of shoing 5,30,000 in ITR1 fill in 4,90,000.

Filling Income in ITR1 from Form 16

How to fill Salary Details with HRA in Form 16 in ITR2A, ITR2, ITR3, ITR4S, ITR4

In ITRs other than ITR1 more infomation has to be filled in wrt to salary. Infact ITR2 has separate schedule S which has various fields. Overview of various sections under Schedule S is as follows. If some Allowance etc is not in the Form 16 means you have to take value 0.

• Non-monetary payments which are car facility, chauffeur salary paid directly,housing, rent-free accommodation,hotel bills, free supply of gas, electricity and water, benefit on account of interest-free loans, furniture provided to employees, soft furnishings and so on.
• Monetary payment perquisite means where the employee initially incurs the expense and the same is later reimbursed by the employer to him.
• LTA exemption comes under Section 10(5) of the Income Tax Act.
• Profit in lieu of Salary 17(3) includes
  • Any compensation due or received by an employee in connection with the termination of the employment/ modification of the terms and conditions of his employment
  • Payment from employer or former employer from provident fund or such other funds, excluding the amount exempted form tax under section 10
  • Any sum received under Keyman Insurance policy including the sum allocated by way of bonus on such policy
  • Amount due to or received, whether in lumpsome or otherwise by any assessee from any person  before his joining any employment  or after cessation of his employment

If Form 16 considers HRA then salary details to be filled in ITR2 are as follows. Click on image to enlarge.

Salary Details from Form 16 having HRA,LTC filled in ITR2

How to fill Salary Details without HRA in Form 16 in ITR2A, ITR2, ITR3, ITR4S, ITR4

In the same example if HRA, of Rs 127877, would not have been claimed then once you calculate the HRA exemption subtract that from 1(a) ie Salary as per provision contained in sec 17(1) and fill the details. You need to subtract it from Gross Salary of 15,24,056.

• So you would show your Gross Salary in Schedule S for 1 as  1396179 (15,24,056 – 127877)
• Fill in remaining details from Form 16 as earlier
• Note now your total salary has become 15,05,379 instead of Rs 16,33,256.

How to show HRA not accounted by employer in ITR2 Schedule S.Clicl on image to enlarge

Refund if one does show HRA not accounted by the employer in ITR

As we saw in the example above, by claiming HRA not accounted by employer while filing ITR, your Income from salary reduces by HRA amount. So your taxable income from salary become 15,05,379 instead of Rs 16,33,256. So if your employer has paid taxes based on 16,33,256 , more tax may have been paid on your behalf. You can then claim a refund of excess tax deducted by your employer in your Income Tax Return.

Related Articles:

• How to Claim Deductions Not Accounted by the Employer
• If you don’t file the Income Tax Return on time
• Understanding Form 16 – Part 3
• E-verification of Income Tax Returns and Generating EVC through Aadhaar, Net Banking
• Articles to Understand Income Tax, How to Fill ITR,Income Tax Notice…

Note:The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.

The post How to show HRA not accounted by the employer in ITR appeared first on Be Money Aware Blog.

This article explains how to fill ITR1 in detail with images. It explains who can fill ITR1, Process of Filling ITR, explains Excel Utility of ITR, How to Fill Salary Details in ITR1, How to fill Income from House property in ITR1 when you have 1 house which is occupied or rented and may have home loan interest. How to show income from saving bank account, FD, claim deductions under 80C , 80TTA, fill TDS details, Bank details, Self Assessment Taxes.

Who can fill ITR1?

The ITR-1 Form,  is the Income Tax Return Form for salaried individuals i.e.those who have income from salary/pension. also called Sahaj ,easy in Hindi,

• Income from Salary/ Pension
• Income from One House Property (excluding cases where loss is brought forward from  previous years) i.e owns 1 house only. You might be living in it or would have given it for rental.  You might be paying home loan for it.
• Income from Other Sources (excluding  Winning from Lottery and Income from Race Horses). This includes income like Interest on saving bank account, Interest on Fixed Deposit (FD) , Interest on RD, loans or company deposits, Family pension (received by legal heirs of an employee),Dividend etc.

NOTE :Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

Who cannot fill ITR1?

•  Income from more than one house property: means you have more than 1 house
• Income from Winnings from lottery or income from Race horses;
• Income under the head “Capital Gain e.g., short-term capital gains or long-term  capital gains from sale of house, plot, shares  etc: Means you have sold property,house,shares,equity mutual funds, debt mutual funds
• Agricultural income in excess of 5,000;
• Income from Business or Profession; or
• Loss under the head ‘Income from other  sources’
• Person claiming relief Under section 90 and/or 91
• Any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India  or
• Any resident having income from any source outside India

Process of Filling ITR1

Which software to use for ITR1?

You can download and use the following software from Income Tax Website depending on your comfort level with software.

• Excel Utility
• Java Utility
• Online at income tax website the prefilled option

Process to efile your ITR using Excel given below.

Our article E-Filing of Income Tax Return explains e-filing of Income Tax Return in detail.

To e-file your returns you may download Excel based utility from the official E-Filing website,incometaxefiling.gov.in and start the E-Filing process.

1. Download the applicable ITR form which is zip file which has Microsoft excel file also called as Return Preparation Software
2. Fill it offline
3. Generate a XML file and save it to your computer.
4. Logon to incometaxindiaefiling.gov.in (If you don’t have the Login you need to register. Our article Registering on Income Tax efiling Website explains it )
5. Go to e-File->Income Tax Return and Upload your XML file (saved in step 3)
6. Choose whether you want to use Digital Signature or not
7. On successful upload acknowledgement details would be displayed.
8. You need to E-verify .If you did not use digital signature the Income Tax receipt, ITR-V, needs to be printed out and sent to Central Processing Unit (CPC) Banaglore within 120 days of filing return.

How to Fill ITR1 Excel Utility

ITR1 has  Our article E-filing : Excel File of Income Tax Return explains the excel file used for income tax return, answering questions like why excel, what are macros, how excel file for Income tax return form is , how to fill the data, validate it and Generate XML file.

• You may be asked to Enable Macros as shown in picture below,depending on your security settings (and Excel Version)
• WorkSheets on the bottom as tabs such as  Income Details, TDS, Taxes paid and Verification, Instructions, 80G. You can navigate to any of the tabs by clicking on the tab using mouse, or pressing Ctrl PgUp or Ctrl PgDn keys to navigate to the desired tabs. Clicking the Next/Previous button on the sheet
• DO NOT Copy and paste any of the information from anywhere. It may mess up the sheet.
• Green cells indicate data entry fields where one can enter information ex: First Name, PAN etc
• Label of cells which is in red colour indicates mandatory fields for example : Last Name,PAN, Date of Birth
• Label  of cell which is in black colour   indicate optional fields for example : First Name, Road,Phone
• Down arrow in cells can be used to select from a list of options for that field  For example Whether you have Aadhaar number?
• Red mark on the upper right hand corner of a cell provides help or more information about what needs to be filled in as shown in image below. Click on the arrow to get information about the cell.
• White cells with blue labels indicate auto calculating fields which should not be filled. These are calculated automatically based on information entered in other cells.

Color codes in Excel uitlity of ITR

• Filling ITR 1-Form
• Filling Individual ITR Form: Fields A1 to A22

How to Fill ITR1 Income Details

Please check the Assessment Year and the ITR Form. For income earned from 1-Apr 2015 to 31-Mar-2016, called as Financial Year 2015-16, Assessment Year should be 2016-17. Lets see how to fill Income details in ITR1

Fill ITR1 Income from Salary using Form 16

ITR1 has only one field for filling Income From Salary.

• If HRA claimed then Fill information in point 6, Income chargeable under the head Salaries, as shown in image below.
• If HRA not claimed : Calculate the HRA using formula and then subtract it from Income chargeable under the head Salaries and then enter that as income from Salary. You can read our article How to show HRA not accounted by the employer in ITR for more details.

Filling income from Form 16 in ITR1

Fill ITR1 Income from House Property

Basics of Income form House Property in ITR1

If you own a home, an office, a shop, a building or some land attached to the building say a parking lot then you have Income from House property. The Income Tax Act does not differentiate between a commercial and a residential property. All types of properties are taxed under the head  income from house property in the income tax return.

When a property is used for the purpose of business or profession or for carrying out freelancing work then it comes under the income from business and profession . Expenses on its repair and maintenance are allowed as business expenditure.

A self-occupied house property is used for one’s own residential purposes. This may be occupied by the you or your family, parents and/or spouse and children. A vacant house property is considered as self occupied for the purpose of Income Tax.  There is no income from your house property. The gross annual value of this property is zero.

A let out house property is one which is rented for the whole or a part of the year. When a property is let out, its gross annual value is the rental value of the property. The rental value must be higher than or equal to the reasonable rent of the property determined by the municipality.

If you own more than one house property, the I-T Department only counts one property as a self-occupied house. It treats all other houses as rented properties even if they are not rented at all. Rental income calculation is based on what rent a similar property in the area would earn.

If a A house has been self-occupied for few months and rented out for few months then  Calculate the gross annual value of the property by finding out its reasonable rent and actual rent collected. If Actual Rent is lower than Reasonable Rent, only because the house was vacant and not for any other reason, take actual rent collected as Gross Annual Value.If Actual Rent is lower than Reasonable Rent because of other factors, then take reasonable rent as GAV.

You can claim both HRA and deduction on home loan if you live in another city due to job,or in the same city for job or personal purposes ,ex house is small, near to children’s school.

Home loan Interest in Income from House Property

To claim Home Loan Interest , The home loan must also be in your name. A co-borrower can claim these deductions too.

Deduction on home loan interest cannot be claimed when the house is under construction. It can be claimed only after the construction is finished. The period from borrowing money until construction of the house is completed is called pre-construction period. Interest paid during this time can be claimed as tax deduction in 5 equal installments starting from the year in which the construction of the property is completed.

The home loan deduction can only be claimed from the financial year in which the construction is completed.

The amount of deduction you can claim depends on the ownership share you have on the property .

An individual can claim deduction of up to Rs.2 lakhs (Rs. 1,50,000 till  AY 2014-15) on his  home loan interest if the owner or his family reside in the house property or the house is vacant. . If you have rented out the property, the entire interest on the home loan is allowed as a deduction.

Deduction on home loan interest is limited to Rs.30,000 if you fail to meet any of the conditions given below for the Rs.2 lakh rebate. If you have taken loan  for reconstruction, repairs or renewal, only Rs.30,000 shall be allowed as deduction.

• The home loan must be for purchase and construction of a new property.
• The loan must be taken on or after 1 April, 1999.
• The purchase or construction must be completed within 3 years from the end of the financial year in which the loan was taken.

Fill ITR1 House Property from Form 16

If you have submitted the details such home loan interest and rent value to your employer then your Form 16 will have those details. You can enter it in ITR1 as shown in image below.

Fill ITR1 House Property for Self Occupied House with Home Loan

To calculate Income from House Property for 1 Self Occupied House with Home Loan Interest find the home loan interest that you have paid and want to claim. If you had home loan during construction stage, called pre-construction period. Interest paid during this time can be claimed as tax deduction in 5 equal installments starting from the year in which the construction of the property is completed. So you can claim 1/5 of it in next 5 years. Note Maximum home loan interest you can claim for self occupied property is 2,00,000. Our article Tax and Income From One Self Occupied property explains various cases with examples of computation of income from House property like House constructed before 1-Apr-1999, when house is co-owned and both husband and wife are paying EMI,when house is co-owned but husband is paying EMI.

Income form House property for 1 Self Occupied House = 0 (Gross value of the house) – Payment of Home loan Interest) – 1/5 of preconstruction loan

Maximum Income form House property for 1 Self Occupied House that you claim is = Maximum of(2,00,000 and  Income form House property for 1 Self Occupied House calculated above)

For example Mukund have taken home loan of Rs 40,00,000 (40 lakh) for 20 years @10.5% then  his loan EMI is Rs 39,935 For the financial year 2015-16, he paid 4,79,222  which includes a payment of Rs. 65,493  towards principal and Rs 4,13,730 towards interest.

So Total income form House property is= 0 (Gross value of the house) -4,13,730 (Payment of Home loan Interest)=–4,13,730(please note the negative or minus sign)

When you enter this amount in ITR1 as income from house property you will get the error,Loss cannot exceed 2,00,0000 for income from House property, as shown in image below

Fill House Property in ITR1 more than 2 lakh

You have to fill in maximum of 2,00,000 irrespective of how much your home loan interest is if its self occupied.

Fill Home loan interest in ITR1 with – (minus) sign

If Total Income from House property for 1 Self Occupied House is less than 2,00,000 then you enter that amount as Income from House Property as shown in image below

Fill Home loan interest income for Self occupied House in ITR1

Fill ITR1 House Property for 1 Let Out House with Home Loan Interest

Income chargeable to tax under the head “Income from house property” in the case of a let-out property is computed in the following manner. Our article Tax and Income from Let out House Property discusses various cases like House property which is let out and was vacant during the whole or part of the previous year etc.

Computation of Income from Let our property

Ravi owns a house which is let out for a rent of Rs 11,000 per month. The municipal value of this house is Rs 1,30,000 p.a, fair rental value is Rs 1,10,000 p.a, standard rent is Rs 1,20,000 p.a . If municipal taxes are 10% of municipal evaluation. Interest on borrowed capital was Rs 40,000 for the year.

Fill Income from Let Out house property in ITR1

Fill ITR1 Income from Other sources

Most of us would have interest on saving bank account, fixed deposits, recurring deposits ,company deposits which we need to add together and fill in Income from Other sources. The incomes, which are neither covered under the heads of salary, house property, business income, or capital gain, are covered in the head of income from other sources.

Examples of Income from Other Sources

• Dividend received from any entity other than domestic company such as cooperative bank or dividend received from a foreign company
• Any pension received by the legal heirs of an employee.
• Interest on securities if not chargeable under the head business or profession.
• Wining from lotteries, crossword puzzles, races including horse races,card games and any other sort of games or gambling or betting of any form. (Not in ITR1)
• Interest on bank deposits, loans or company deposits,
• Income from machine, plant or furniture let on hire.

Saving Bank interest

• Saving Bank interest , however small the amount , is your income.
• No tax is deducted(TDS) on Interest of Saving Bank account.
• From FY 2012-13 (AY 2013-14) year section 80TTA  has been introduced for which deduction up to an extent of Rs 10,00 in interest from all the bank accounts is allowed to an individual or Hindu undivided family, Interest over Rs 10,000 will be taxed at marginal tax rate of an individual. Section 80TTA is shown in Deductions under Chapter VI-A along with 80C, 80D
• You need to add interest from saving account to  Income from other sources and then claim deduction under section 80TTA.

Interest on FD, RD, Post office schemes,Senior Citizen Scheme

Interest on Fixed Deposit is taxable as Income from other sources  on entire amount whether TDS is deducted or not. When TDS is deducted you will be issued Form 16A to show the total interest and TDS. It would also be reflected in Form 26AS. Our article Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund explains it in detail.

• Interest income < Rs 10,000  : No TDS would be deducted
• Form 15G or Form 15H submitted : No TDS would be deducted
• Interest income > Rs 10,000 and PAN submitted: If you have submitted PAN details, any interest beyond Rs 10,000 interest income, the TDS would be deducted @ 10% p.a. For example if interest is 20,000 , TDS deducted will be Rs 2,000(10% of 20,000)
• Interest income > Rs 10,000 and PAN not submitted : If you have not submitted PAN details, any interest beyond the limit, the TDS would be deducted @ 20% p.a.

Income from Infrastructure Bonds

In the FY 2010-11, FY 2011-12  additional income tax benefit of 20,000 was made available under section 80CCF of the Income Tax Act, 1961 for investments made in long-term infrastructure bonds (as notified by the Central Government). The interest received on these bonds shall be treated as income from any other source and shall form part of the total income of the assessee in that financial year in which they are received. If you had invested in infrastructure bonds then you can check whether interest was paid to you by checking Onemint  Interest Payment Dates of Infrastructure Bonds Issued in 2011-12

Fill ITR1 Deductions under Chapter VI

You can save tax by investing for long term as in EPF,PPF or buying Life insurance or Health Insurance polices. These tax saving options are categorized under different sections, which if you inform to your employer are available in your Form 16. Just enter the same information in the corresponding cells. You may need to consolidate contributions under particular sections such as 80C which has a limit of 1.5 lakh, as shown below.If you did not declare your tax saving options, or did not submit proof within due time(usually by mid Feb) and still made some tax saving investments then you can still claim it while filing returns. Our article How to Claim Deductions Not Accounted by the Employer discusses it in detail.

Fill in ITR1 Deductions under Chapter VIA from Form 16

You need to add interest from saving account to  Income from other sources and then claim deduction under section 80TTA. If your total interest income from ALL your saving bank accounts

• is less than  or equal to Rs 10,000  For example if your interest from ALL saving bank accounts is Rs 7,000 you need to show 7000 in income from other sources and then show Rs 7000 for section 80TTA
• is more than Rs 10,000 say 12,000  then add 12,000 to Income from other sources and then show Rs 12,000 in Section 80TTA. Automatically only 10000 will be tax exempt.

How to show Saving Banks Interest in ITR1 under section 80TTA

Fill ITR1 TDS details

Click on the TDS Tab by clicking on bottom of excel ITR or Clicking Next on Income Details Tab. All the tax deductions at source made in the current financial year should be reported in the TDS tab. Details of each TDS certificate are to be filled separately in the rows.

• You need to fill in information about TDS (Tax Deducted at Source) from Salary as per Form 16given by the employer, and/or on
• Income from Other sources on Form16A issued by the deductor such as bank if bank has TDS details on interest in Fixed Deposit.

Note: Please enter the details of TDS at appropriate row. TDS on Salary should go to row 4  in ITR1, while TDS on Income from other sources should start Row 14 in ITR1. In other ITRs also PLEASE keep them separate.

Please verify that TDS you are reporting from Form 16 and Form 16A matches with the TDS in Form 26AS. Income Tax Department facilitates a PAN holder to view his Tax Credit Statement , called as Form 26AS, online. Our article Viewing Form 26AS on TRACES shows how to view Form 26AS.

Fill in ITR1 TDS as reported in Form 16 for Salary

Fill in TDS details by Employer from Form 16 in ITR1

Fill ITR, TDS as reported by deductor in Form 16A

• Unique TDS Certificate Number : This is a six digit number which appears on the right hand top corner of those TDS certificates which have been generated by the deductor through the Tax Information Network (TIN) Central System.
• Deducted Year -mention the financial year in this column.
• Total Tax deducted Enter details from Form 16A. Round off to nearest Rupee.
• Amount out of (6) claimed for this year.  Usually this will be the same as tax deducted. This value cannot exceed tax deducted. Round off to nearest Rupee.

Fill TDS on Income from Other Sources from Form 16A in ITR1

Fill ITR1 :Details of Advance Tax and Self Assessment Tax

Advance Tax: For salaried persons tax deduction at source (TDS), takes care of the tax payments for salary. But there can be other kind of income like interest on saving bank account, fixed deposits deposits, bonds, rental income or capital gains. If tax on income is more than 10,000 Rs in a financial year, Income Tax Department expects you to estimate your income and pay Advance Tax. Advance tax has to be paid in instalments in September, December and March. If If advance tax is due to you and you don’t pay then You need to pay interest(under section 234A, 234B, 234C) while filing returns. Details of Advance Tax are covered in our article  Advance Tax:Details-What, How, Why

Self Assessment Tax: While filing income tax returns, an assessee does a computation of income and taxes to be filed in the returns. At times,due to incorrect calculation or laziness or ignorance, the tax paid either as Advance tax or in TDS is less than actual tax payable. The difference between tax payable and tax paid is called the Self assessment tax. This needs to be paid before Income Tax Returns are filed.

Our article Paying Income Tax : Challan 280 explains how to pay Advance Tax, Self Assessment tax in detail.

Note: When you fill in the form for the first Time, you will not know if Self Assessment Tax has to be paid or not. So fill in the Advance Tax details,if paid. Compute the income as explained later in the article. If after computation you find that tax is payable, this would be Self Assessment Tax. Pay it and then enter the details about it in this section.

Fill Self Assessment Tax from Challan 280 in ITR1

Fill ITR1 : Schedule TCS

Similar to tax deduction at source (TDS) on certain incomes you receive, such as salaries, interest income above a certain threshold from fixed deposits, recurring deposits, etc, there are certain high value transactions that require tax collection at source at the time of payment from your hands. Earlier, there was no provision in the return form to claim credit for such tax collected at source.

For example, 1 per cent of the sale consideration is collected as tax from you by the seller if you buy jewellery exceeding ₹5 lakh in cash.

Budget 2016 also announced a 1 per cent tax on purchase of luxury cars over ₹10 lakh.

These are now required to be disclosed in the ITR forms. Just like Form 16 or Form 16 A issued by the deductor for TDS, the collector in this case will issue a Form 27D.

Using this, you can fill in the details asked for in Schedule TCS, such as name of the collector, tax collection account number and amount collected. You also can claim credit for this payment along with other advance tax, TDS and self-assessment tax payments in the return form.

Fill Exempt Income in ITR1

The word exempt means free from an obligation from doing something. In the case of income tax, Exempt income refers to income which though is earned and received during the financial year is not taxable. Certain type income can be exempted from tax provided certain conditions are met which are defined in Income Tax Act. Exempt income includes tax-free sources of income, such as the interest on PPF, tax-free bonds and dividends . The long-term capital gains from stocks and equity funds, the agricultural income and gifts from specified relatives. This also has to be reported. Calculation of exemption income  is as follows. It is to be filled in Sheet Taxes Paid and Verification Row 27. Our article Exempt Income and Income Tax Return discusses it in detail

Show exempt Income in ITR1

Fill Bank Details in ITR

Tax-payer needs to provide the Bank details irrespective of  refund due or not. Bank details are: Account Number, Kind of account(Current/Saving),  IFSC Code. You can get these details from your cheque leaf. Image below shows filling of Bank Details in ITR1.

Fill Bank Details in ITR1

Fill ITR1 Computing taxes, Generate XML, Upload XML

• Fill in the mandatory fields in the sheet and Validate each sheet, fix errors reported, before moving the next sheet
• Select the Income Details sheet(at the bottom of file) and click on Calculate Tax option.
• Check Tax paid & Verification sheet , Tax Payable (row 17), if it contains non zero value that means individual needs to pay that much tax to Income Tax Department. After paying this amount, mention details of tax payment information in TDS sheet under Advance Tax & Self Assessment Tax Payments section.
• If Tax Payable (row 17) in Tax paid & Verification sheet is zero then click on Generate XML. option in Income Details sheet.
• Clicking on Generate XML, will recheck all sheets to ensure that no sheet is invalid, and thereafter, will show a Pre XML sheet to reconfirm the count of the rows being generated in the various schedules as shown in image below. This count should be carefully crosschecked to see that the number of rows that are to be generated, are matching the filled in rows in each sheet.

Fill ITR1 compute tax generate XML

• Save XML button can be clicked to create the XML which needs to be uploaded to the incometaxindiaefiling website to complete the final phase of efiling the returns. When you click on this button, the utility will prompt with a message indicating the exact location and filename of the generated XML file. Go to this folder, and locate the file specified as per the message, and upload this file to the efiling website of Department of IncomeTax, India

Send ITR-V or Everify

To complete the e-filing process, taxpayers can send  the 1-page verification document  ITR-V to the Income Tax Department in Bangalore . Or they verify their return online after e-filing using an electronic verification code or EVC. Our article E-verification of Income Tax Returns and Generating EVC through Aadhaar, Net Banking explains it in detail.

On successful upload you will be asked to download a ZIP file containing Form ITR-V. You will also receive this file in your e-mail inbox.Extract this PDF file and open it using the password, which is your PAN number followed by your date of birth, all in lowercase and with no spaces or special characters. As an example, assume that your PAN is AGHWR5148J and your birth date is 29-Jul-1979. In that case, the password will be: afhwr5148j29071979. Take a printout of this file, sign it, and mail it to the following address:

Income Tax Department – CPC, Post Bag #1, Electronic City Post Office, Bangalore – 560 100

Related Articles:

• All our Articles to Understand Income Tax, How to Fill ITR,Income Tax Notice…
• Mistakes while Filing ITR and CheckList before submitting ITR
• Comparison of Income Tax Filing Websites:IncomeTaxEfiling,ClearTax,etc
• How to show Long Term Capital Gains on sale of House in ITR

Disclaimer:The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.

Hope this provides you all details of filling ITR1 in one place. If you have find something missing please do let us know.

The post How to fill ITR1 for Income from Salary,House Property,TDS appeared first on Be Money Aware Blog.

We want best for our children. As a parent, How do we instil the importance of struggle and hard work to our children? Owner of Hare Krishna Diamond Exports, Savji Dholakia, sent his 21-year-old son, Dravya, to Kochi with only Rs. 7,000 to fend for himself and work odd jobs to know the importance of struggle.

Learn Importance of Struggle : Savji Dholakia to his son Dravya

Dravya Dholakia (21), son of Savji Dholakia, proprietor of Hare Krishna Diamond exports, the Surat-based Rs 6,000 crore company with presence in 71 countries learnt the importance of struggle in Kochi for a month from June 21.  Dravya is pursuing his MBA in the United States and is on holiday in India. His father asked him to try this challenge for a month, and Dravya readily accepted.

There were to be three conditions:

1. Dravya was not supposed to use his father’s name or influence to get things done.
2. He wouldn’t work at a place for more than a week.
3. He would only have Rs. 7,000 for emergency purposes, which he shouldn’t use for his daily expenses.

Dravya chose Kochi because he didn’t know to speak Malayalam, and Hindi isn’t commonly spoken there. It was difficult for him, but he came through. FOR FIVE DAYS I HAD NO JOB OR PROPER PLACE TO STAY. I WAS FRUSTRATED AS I WAS REJECTED AT 60 PLACES, AS NO ONE KNEW ME HERE. I UNDERSTOOD WHAT IS REJECTION AND THE VALUE OF A JOB IN THESE FEW DAYS.”

Dravya first worked at a bakery in Cheranelloor. Following that, he worked at a call centre, a shoe shop, and also at a McDonald’s outlet. He said he earned Rs. 4,000 in the month, but it was difficult to even make ends meet, because he couldn’t even score a Rs. 40 meal in a day, and he needed Rs. 250 extra for his lodging.

As quoted on TOI, Savji Dholakia, the father said “ I wanted him to understand life and how the poor struggle to get a job and money. No university can teach you these life skills except experience,”

Dravya Dhokalia as son of billionaire and in bakery

The tradition  of learning value of money

Dravya Dholakia (21), son of Savji Dholakia, undertook the exercise due to a ‘family traditon’ that began 12 years ago.  “Our family had a traditional Gujarati dinner at a London hotel. The bill came to 100 pounds per person. The hoteliers said it was because we placed the order without looking at the price listed in the menu. It was an eye-opener. Hence, it was decided that every male member should undertake one month of hard life to learn the value of money,” Dravya Dholakia told Indian Express. Three of his cousins from the joint family of 30 did their ‘internship training’ in Pune, Baroda and Jaipur. Now they are heading companies with 1,500 to 2,000 employees,” he said.

Sajiv Dholakia A generous employer

Savji Dhanji Dholakia, born 12 April 1962, is the founder and chairman of Hari Krishna Exports Pvt. Ltd., a Diamond manufacturing and exporting company with manufacturing units at Surat in Gujarat, India and its marketing and sales office in Mumbai, India.  His company currently exports finished diamonds to more than 50 countries directly from Mumbai. The company also has affiliates in the US, Belgium, UAE, Hong Kong and China.

Hailing from a small village, Dudhala in Amreli district, Dholakia a Class IV dropout migrated to Surat,where eight out of ten of the world’s diamonds are cut and polished, in 1978 in search of a steady job in the diamond cutting and polishing industry. The son of a farmer, he got a job in a local firm at a monthly salary of Rs 169. Gradually he grasped tricks of the trade and also started working in a diamond brokerage firm apart from doing his primary job of diamond cutting and polishing.

However, the enterprising Dholakia always wanted to start his own business rather than work for others. During those days, he didn’t have adequate money to start a venture. Hence, he went to his uncle and took a small loan from him to start a small diamond cutting and polishing unit. The rest, as they say, is history. From there, the hardworking Dholakia never looked back. He finally established Hari Krishna Exports Pvt Ltd in the year 1991. His exports were then worth Rs 1 crore.

The company has achieved many prestigious awards over the years for their outstanding performance. For instance Hari Krishna Exports Pvt. Ltd. has been recipient of the Gem & Jewellery Export Promotion Council awards for the past 12 consecutive years from 2003–2014.

Savji Dholakia getting GJEPC’s Annual Export Award for 2010-11 from PM Narendra Modi

Sajiv Dholakia is best known for giving his employees cars, jewellery and homes worth Rs 50 crore  as a reward for meeting targets.  He has been rewarding employees of his firm with diamond jewellery, new cars and flats for meeting their annual targets.

• He gifted Maruti cars to three employees 18 years ago who later became our partners in the business,
• In 2013 the 6,500 employee-strong company had gifted cars to 72 such employees.
• In October 2014, he presented valuable gifts to selected 1,268 employees. The idea was to “extend gratitude” to employees who had helped the company grow. So, 491 employees received cars((Fiat Punto), 207 got funds for buying residential flats and another 570 were gifted jewellery. Each of them received ‘gifts’ worth Rs 4 lakh. Call it philanthropy or manpower-management, but for Dholakia this gesture was an outcome of “the most valuable lesson learnt – the art of humanity”.  Dholakia’s motto is: “I will not have less if I give. It is the law of nature. When I sow one seed, I’ll have a hundred seeds in my kitty later.” Ref:Pioneer

Savji Dholakia Gifts of cars,flats to his employees

Post giving gift Every day, 35-40 resumes were landing at his desk from people eager to work for him. Overnight, Dholakia became a highly sought-after employer.  But identifying ‘high performing’ employees is also a task in itself. Dholakia keeps track of his staff’s performance through an in-house software which the company has been using for the last five years.

In an interview to a news channel, he said: “My son has done an MBA from New York and has been working with me for six years. We have our own method of choosing people. Everyone got together and analyzed who the people responsible for our growth were. We know who has added what value to the company. What we have given them is nothing compared to the efforts put in by these people.”

Savji Dholakia Speech

You can checkout Savji’s facebook page . Listen to the man himself. Savji Dhokalia speech on Vibrant Gujrat in 2015, around 8 mins. Its in Gujarati. The transcription is given below

Friends I have been invited to the Vibrant Gujarat 2015 owing to my success story. My time allotment is 7 minutes & I shall not exceed to the 8th minute
Vibrant Gujarat is a medium through which the government provides essential support to entrepreneurs
Illiteracy is the primary reason for my success as it pushes me to learn every day. My team and I have grabbed every opportunity to learn. We apply all that we learn from events, programs and daily life.
At Hari Krishna Exports Pvt Ltd we motivate employees to become good human beings and that results in good work as a byproduct.At our factory we build confidence amongst employees & reinstall the attitude of “nothing is impossible, I can do it”.
Many foreign delegates are in India at this summit because human resources are relatively cheaper but at our factory we pay employees higher salaries and get higher returns as a byproduct.We are the highest TDS and TAX payers.
At HK we love our employees and teach them the art of living. We give them values and respect. Although our skilled Labour maybe illiterate but we have bestowed them with degree equivalent respect of diamond artists and diamond engineers.
Our family business is managed by a team of four brothers, three partners and eight kids. We live up to our commitments and fulfill them unwaveringly.
We had by mistake committed to planting 10 lakh trees. However I am proud to announce that in 2015 we successfully completed planting 11 lakh saplings.
A good citizens and responsible employers we take care of employees’ mediclaim, health insurance, life insurance and children’s education.
My parents wanted three things of me; to be a big man, be a good man and a rich man. However it’s not as important to be big as it is to be good.
I am proud of “made in India” movement. At our company we have 9000 employees of which 2200 employees at my office site earn an average salary of 1 lakh a month. Our employees are our real assets and they give back returns; it’s the law of nature.
At our company we also employ people with disabilities and it’s my goal to train 100 people with disabilities and employ them just as I already employ deaf & dumb and physically challenged people.
Today I have fulfilled my dream and that of my grandmothers by addressing an audience of over one lakh.
I hope to take my company to even greater heights in the next ten years and make it one of the top Indian companies.
Last but not least I am grateful to Narendrabhai Modi and Anandiben for inviting me to this summit. I hope Narendrabhai Modi will invite me again the day he conducts The Vibrant Delhi Summit.
May the Lord fulfill everyone’s aspirations. Thank you all!

Bemoneyaware on Teaching Kids about Value of Money

This is a story my mother told me years ago and I have written it in our book Lets Learn about money available on Kindle in Chapter Earning. You can order hard copy of book, worth Rs 150 by dropping an email to bemoneyaware@gmail.com.

What is the value of money? The best person to answer the question is the person who has earned it.  Often, we hear parents complaining that today’s children do not know the value of money.  It is so easy to spend the money but so difficult to earn it. There once lived a merchant, who had a handsome but lazy son Shyam. Shyam used to spend his father’s hard earned money without thinking. To make him realize the value of money, his father asked him to earn Rs 5 and bring it to him. This is the story of how Shyam learnt the value of hard earned money.

The boy said “Cool dad. How much do you want?” Get one coin, said the father. The boy had no plans of working. He went to his mother. His mother was giving instructions to the maid regarding food. He asked his mother for a Rs 5 coin. His mother gave it to him happily. He took that coin to his father and said “Papa, I have got this coin”. Father took the coin and threw it in the well and he asked him to get another coin the next day.
This process is repeated as he asked his grandmother, sister, brother. Every day his father used to take the coin and throw it in the well. After realizing that Shyam is getting coins from his family members, his father forbade the family members to give any coin to Shyam.

When no one gave coin to Shyam, he did not know what to do. So, he went to the railway station and started picking up the luggage. It was difficult, but he wanted to go to his father with the coin.

At the end of day, he took his coin to his father. When his father was about to throw the coin in the well, he got angry, “Papa, I have struggled all day, worked so hard to get this coin and you want to throw it in the well. I shall not allow it.” Then his father smiled and said, “Now, you realize the value of hard earned money. So many days I threw the coin but you didn’t say a word. Today you are cribbing because you had earned it. I also have to work hard every day to earn for you and the family. Just imagine, what I feel when you spend my hard earned money without thinking.” That day the child realised his mistake.

Related Articles:

• Starting a Family : What Financial Steps to take
• Money and your Child – ING ZING Survey
• Bemoneyaware’s Ebook on Amazon Kindle Lets Learn about money
• What are you teaching your kids about money?
• Books on Money for Children

Many of us can take this is a media gimmick but, we feel thus is great way to teach kids, how not to be comforted with privileges and rather take life lessons first hand. What lesson would you like your child to learn? How are you teaching your child importance of struggle, Value of money?

The post Learn Importance of Struggle: Gujarati billionaire Savji Dholakia to his son appeared first on Be Money Aware Blog.

The Finance Ministry has notified the salary hike based on Seventh Pay Commission recommendations.  The notification is dated July 25, 2016.  About 1 crore employees and pensioners will benefit from the pay hike from Aug 2016, effective from January 1, 2016. The government has decided to pay them seven months’ arrears at one go with their August salary. The arrears are on account of the government deciding to implement the 7th Pay Commission’s recommendations with effect from January 2016.  What is the  7th Pay Commission? What are the features of 7th Pay Commission? About 7th Pay Commission allowances, HRA what are recommendations? Financial Impact of 7th Pay Commission.

Overview of 7th Pay Commission

• According to the pay new structure, the existing basic pay as on December 31, 2015, shall be multiplied by a factor of 2.57.
• The new pay  is effective from 1 Jan 2016.
• The 7 month arrears shall be paid in one go with August salary.
• After taking into account the DA at prevailing rate (125 percent of basic pay), the salary/pension of all government employees/pensioners will be raised by at least 14.29  percent as on 01.01.2016
• The additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs. 1,02,100 crore. There will be an additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16. Out of the total financial impact of Rs 1,02,100 crore, Rs 73,650 crore will be borne by the General Budget and Rs 28,450 crore by the Railway Budget.
• The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix. Separate Pay Matrices have been drawn up for Civilians, Defence Personnel and for Military Nursing Service. The principle and rationale behind these matrices are the same.

• Entry-level pay will be raised to Rs 18,000 a month from the current Rs 7,000. The maximum pay has been fixed at Rs 2.5 lakh.
• Starting salary of a freshly recruited Class I officer will be Rs 56,100 per month. Chiefs of regulatory bodies including SEBI and TRAI will now get a consolidated pay package of Rs 4.5 lakh per month, while their full-time members will get Rs 4 lakh each.
• Maximum Pay: Rs 2,25,000 per month for Apex Scale and Rs 2,50,000 per month for Cabinet Secretary and others presently at the same pay level.
• The Seventh Pay Commission’s recommendations  on  allowances  (except  dearness  allowance) has been referred  to  a committee, which will submit  its  report  within  four  months. All allowances will continue to be paid at existing rates in existing pay structure. The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months.
• Gratuity: Enhancement in the ceiling of gratuity from the existing Rs 10 lakh to Rs 20 lakh. The ceiling on gratuity may be raised by 25 percent whenever DA rises by 50 percent.
• There shall be two dates for grant of increment January 1 and July 1 of every year, instead of existing date of July 1.
• The  recommendations  of  the  Commission  for  increase  in  rates  of  monthly  contribution towards Central Government Employees Group Insurance Scheme (CGEGIS) for various categories of employees  has  not  been  accepted.  The existing rates of monthly contribution shall continue.
• The Cabinet also approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs 7.50 lakh to Rs 25 lakh. In order to ensure that no hardship is caused to employees, four interest free advances namely Advances for Medical Treatment, TA on tour/transfer, TA for family of deceased employees and LTC have been retained. All other interest free advances have been abolished.
•  The Finance Ministry will work out a customised group insurance scheme for central government employees.
• The  recommendations  of  the  seventh pay commission  relating  to  interest  bearing  advances  as  well  as interest free advances have been accepted with some exceptions.
• Committees  will  be  set  up  by  Department  of  Personnel   to  examine individual,   post-specific and cadre-specific anomalies  arising   out   of   implementation   of   the recommendations of the Commission.
• Non-performing central government employees will not get annual increment if their performance is not up to the mark.The benchmark for performance appraisal for promotion and financial upgradation has been enhanced to “very good” from “good” under the Modified Assured Career Progression Scheme (MACPS), and if an employee fails to meet the benchmark of either MACPS or a regular promotion within the first 20 years of their service, his/her annual increments will be withheld.
• The seventh CPC has mandated that there will be an assured increment of 3% in the monthly salary even in case there is no promotion. For example, if an employee joins the the lowest possible level with entry pay of Rs 18,000 and serves for 40 years, he will be earning Rs 56,900 at the time of  retirement. But remember by then there will have been four more pay commissions.
• Two separate Committees (i) to suggest measures for streamlining the implementation of National Pension System (NPS) and (ii) to look into anomalies likely to arise out of implementation of the Commission’s Report

7th Pay Commission Decision For Defence Personnel & Combined Armed Police Forces Personnel

Decisions impacting the employees including Defence & Combined Armed Police Forces (CAPF) personnel include :

• The Cabinet approved further improvements in the Defence Pay Matrix by enhancing Index of Rationalisation for Level 13A (Brigadier) and providing for additional stages in Level 12A (Lieutenant Colonel), 13 (Colonel) and 13A (Brigadier) in order to bring parity with Combined Armed Police Forces (CAPF) counterparts at the maximum of the respective Levels.
• Gratuity ceiling enhanced from Rs 10 to 20 lakh. The ceiling on gratuity will increase by 25 percent whenever DA rises by 50 percent.
• A common regime for payment of Ex-gratia lump sum compensation for civil and defence forces personnel payable to Next of Kin with the existing rates enhanced from Rs 10-20 lakh to 25-45 lakh for different categories.
• Rates of Military Service Pay revised from Rs 1000, 2000, 4200 & 6000 to 3600, 5200, 10800 & 15500 respectively for various categories of Defence Forces personnel.
• Terminal gratuity equivalent of 10.5 months of reckonable emoluments for Short Service Commissioned Officers who will be allowed to exit Armed Forces any time between 7 and 10 years of service.
• Hospital Leave, Special Disability Leave and Sick Leave subsumed into a composite new Leave named ‘Work Related Illness and Injury Leave’ (WRIIL). Full pay and allowances will be granted to all employees during the entire period of hospitalization on account of WRIIL.

What is 7th Pay Commission?

The Seventh Pay Commission was set up by the government to revise remuneration of about 48 lakh central government employees and 55 lakh pensioners.  It’s mandate is to recommend pay, allowances and the like for Central government employees for a decade beginning January 2016,keeping in view the nation’s economic conditions and the need for fiscal prudence . Employees in union territories, regulatory bodies (except the RBI), Supreme Court and pensioners to be covered. It was constituted in February 2014. Expected to submit its recommendations by Dec 2015. Revised pay to be effective from January 1, 2016. Meena Agarwal is the secretary of the Commission. Other members are Vivek Rae, a retired IAS officer of 1978 batch and Rathin Roy, an economist. Our article Salary,Allowances,Dearness Allowance,Government Salary, Pay Commission explains What is the salary of a Government employee, what is 7th pay commission?

Pay Matrix of 7th Pay Commission

In the recommended pay matrix, the top three rows give the pay scale as per the sixth pay commission

• The first row gives the payband, which represents the range of salary that a person receives in that particular pay band.
• Basic pay varies in the range of the payband, which is Rs 5,400-20,200 per month for a grade 1 employee.
• Within these paybands are grade pays, which vary according to the position of an employee in the hierarchy of an organisation.

From 7th Pay Commission pay bands and grade pay are abolished.

• In their place there are 18 levels of promotions that an entry-level employee can go through.(Horizontal row)
• Within these levels there is an index for the amount of years one has served in the government.(Vertical Row)
• These indexes decrease as one moves up the hierarchy. A cabinet secretary is at level 18 — the highest possible — with a salary of Rs 2,50,000 a month. They will not get the 3% annual increment
• This pay band ensures that there no disproportionate jumps in salaries when one gets promoted, as was the case with the six CPC pay scales. For instace, if you are a level 10 employee at index 13 earning Rs 80,000 per month, upon being promoted to level 11 you will earn Rs 96,600 and not the entry pay of level 11.

Following image shows the Pay matrix as per 7th CPC 

7th Pay Commission Pay Matrix

7th Pay Commission allowances, HRA

The Union Cabinet on June 29 2016 cleared the recommendations of the 7th Pay Commission headed by AK Mathur in respect of the hike in basic pay and pension. The 7th Pay Commission examined a total of 196 existing allowances and, by way of rationalization, recommended abolition of 51 allowances and subsuming of 37 allowances. So, the decision on 7th Pay Commission suggestions relating to allowances has been referred to a Committee headed by the Finance Secretary.

The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing allowances will continue to be paid at the existing rates. So the HRA and TA will be paid to the central government employees at Sixth CPC rates in pre revised scale till the Committee decides on allowances.

As far as Transport Allowance (TA) is concerned, Pay Commission had proposed no increase.

The existing rates of HRA for Class X, Y and Z cities and towns are 30 percent, 20 percent and 10 percent of Basic pay (pay in the pay band plus grade pay) as shown in table below.

The 7th Pay Commission had earlier proposed the

• Rate of House Rent Allowance (HRA) at 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.
• the rate of HRA will be revised to 27 percent, 18 percent and 9 percent when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.

If the Committee accepts the bare recommendations of A K Mathur-led 7th Pay Commission then the HRA component of central government employees will increase ranging between 106 percent and 122 percent.

For example, a central government employee at the very bottom of the pay scale, where the basic pay (pay of pay band + grade pay) is now Rs 7,000, would currently be entitled to an HRA of Rs 2,100 in a Class X city. As per 7th Pay Commission, the new entry level pay at this level is Rs 18,000 per month against which the new HRA for a Class X city would be Rs 4,320 per month, that is 106 percent more than the existing level.

Similarly, at the highest level of the pay scale, the Cabinet Secretary and officers of the same rank have a basic pay of Rs 90,000, which means they are entitled to current HRA of Rs 27,000 in Class X towns. After the revised pay scale, the new basic pay is Rs 2.5 lakh, for which the HRA would be Rs 60,000, meaning a hike of 122 percent.

Financial Impact of 7th Pay commission

The financial impact of accepting Seventh Pay commission’s recommendations in 2016-17 will amount to Rs.1.02 trillion. There will be an additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16. Out of the total financial impact of Rs 1,02,100 crore, Rs 73,650 crore will be borne by the General Budget and Rs 28,450 crore by the Railway Budget. Of this, the

• increase in pay would account for Rs.39,100 crore,
• increase in allowances for Rs.29,300 crore and
• increase in pensions for Rs.33,700 crore.

Related Articles:

• Salary,Allowances,Dearness Allowance,Government Salary, Pay Commission
• Pay and perks of Indian MP, MLA and Prime Minister
• What is Leave Travel Allowance or LTA
• Understanding Variable Pay
• Understanding Form 16: Part I
• How To Fill Salary Details in ITR2, ITR1

The post 7th Pay Commission : Understanding Seventh Pay Commission appeared first on Be Money Aware Blog.

On 25 Jul 2016, Finance Ministry notified the salary hike based on Seventh Pay Commission recommendations.  About 1 crore employees and pensioners will benefit from the pay hike from Aug 2016, effective from January 1, 2016. The government has decided to pay them seven months’ arrears at one go with their August salary. This article explains with example how to calculate pay and Arrears as per 7th Pay Commission. It also provides 7th Pay Commission Calculator for Pay and Arrears.

Overview of 7th Pay Commission

• According to the pay new structure, the existing basic pay as on December 31, 2015, shall be multiplied by a factor of 2.57.
• The new pay  is effective from 1 Jan 2016.
• The 7 month arrears shall be paid in one go with August salary. In the past, the employees had to wait for 19 months for the implementation of the Commission’s recommendations at the time of 5th CPC, and for 32 months at the time of implementation of 6th CPC. However, this time, 7th CPC recommendations are being implemented within 6 months from the due date.
• After taking into account the DA at prevailing rate (125 percent of basic pay), the salary/pension of all government employees/pensioners will be raised by at least 14.29  percent as on 01.01.2016
• The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix. Separate Pay Matrices have been drawn up for Civilians, Defence Personnel and for Military Nursing Service. The principle and rationale behind these matrices are the same.
• The financial impact of accepting Seventh Pay commission’s recommendations in 2016-17 will amount to Rs.1.02 trillion. There will be an additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for 2015-16. Out of the total financial impact of Rs 1,02,100 crore, Rs 73,650 crore will be borne by the General Budget and Rs 28,450 crore by the Railway Budget

How to Calculate Pay under 7th CPC Commission

As Per 7th CPC :Your Pay Matrix Level and Pay Matrix Index
7th CPC Arrears upto June 2016
Your Total Arrears for 6 Months	Exclude HRA

Compare 6th and 7th CPC Pay Details
6th CPC Basic Pay	Initial Basic	Revised Basic Pay	7th Basic Pay
House Rent Allowance	House Rent Allowance	7th CPC House Rent Allowance	7th CPC House Rent Allowance
6th CPC Transport Allowance	6th CPC Transport Allowance	7th CPC Transport Allowance	7th CPC Transport Allowance
Dearness Allowance	Dearness Allowance	Dearness Allowance	0
Non Practicing Allowance	NPA	Your 7th CPC NPA	NPA
Your 6th CPC Total Pay	Total Pay	Your 7th CPC Total Pay	Total Pay

Pay Matrix of 7th Pay Commission for Civilians

The six pay commission introduced the concept of pay grades and did away with the concept of a pay scale. The seventh pay commission got rid of the pay grade and use a simply pay matrix to fix pay. “Pay Matrix” means Matrix with Levels of pay arranged in vertical cells as assigned to corresponding existing Pay Band and Grade Pay or scale. This pay band ensures that there no disproportionate jumps in salaries when one gets promoted, as was the case with the six CPC pay scales. For instance, if you are a level 10 employee at index 13 earning Rs 80,000 per month, upon being promoted to level 11 you will earn Rs 96,600 and not the entry pay of level 11.

• There are 18 levels of promotions that an entry-level employee can go through.(Horizontal row)
• “Level” in the Pay Matrix means the Level corresponding to the existing Pay Band and Grade Pay
• Within these levels there is an index for the amount of years one has served in the government.(Vertical Row)
• These indexes decrease as one moves up the hierarchy. A cabinet secretary is at level 18, the highest possible,with a salary of Rs 2,50,000 a month. They will not get the 3% annual increment

7th Pay Commission Pay Matrix

HRA and 7th Pay Commission

As per 6th CPC the percentages on HRA were prescribed on basic pay according to the cities in India. The cities are classified as X, Y and Z and the rates of percentage respect of the cities are 30%, 20% and 10% on basic pay (Grade pay including). The 7th Central Pay Commission has recommended

• to reduce the percentage of House Rent Allowance for all categories of Central Government employees rationalized to 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.
• rate of HRA will be revised to 27 percent, 18 percent and 9 percent when DA crosses 50 percent, 
• and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.
• For Classification of cities as X,Y and Z please check our article 7th Pay Commission : Understanding Seventh Pay Commission or the image Classification of cities as X,Y and Z

Population of City			DA above
	Present	7th Pay	50%	100%
Above 50 lakh (Class X)	30%	24%	27%	30%
5 lakh to 50 lakh (Class Y)	20%	16%	18%	20%
Below 5 lakh (Class Z)	10%	8%	9%	10%

Transport Allowance and 7th Pay Commission

7th CPC Transport Allowance for three Category of Employees for Two Types of Places

If you are living in A1 and A classified cities (See the List of 19 cities classified as A1 and A cities) you will be entitled to get higher TPTA rates

	A1+A Cities	For Other Cities
Grade Pay 1800 to 1900	Rs 1350+DA	Rs 900+DA
Grade Pay 2000 to 4800	Rs 3600+DA	Rs 1800+DA
Grade Pay 5400 and above	Rs 7200+DA	Rs 3600+DA

Classification of A1/A has been abolished for other purposes (like HRA, CCA) but retained for Transport Allowance. There are total 19 cities classified as A1/A

• 6 in A1, which are Hyderabad, Delhi, Bengaluru, Greater Mumbai, Chennai, Kolkata and
• 7 in A, which are, Ahmedabad, Surat, Nagpur, Pune, Jaipur, Lucknow and Kanpur.
• Recently, 6 more cities, viz., Patna, Kochi, Kozhikode, Indore, Coimbatore and Ghaziabad have been added to A1/A categories, making it nineteen in all.

Nonpracticing Allowance (NPA) and 7th Pay Commission

In the case of medical officers in respect of whom Non Practicing Allowance (NPA) is admissible, the pay in the revised pay structure shall be fixed in the following manner : (i) the existing basic pay shall be multiplied by a factor of 2.57 and the figure so arrived at shall be added to by an amount equivalent to Dearness Allowance on the pre-revised Non-Practicing Allowance admissible as on 1st day of January, 2006.

The figure so arrived at will be located in that Level in the Pay Matrix and if such an identical figure corresponds to any Cell in the applicable Level of the Pay Matrix, the same shall be the pay, and if no such Cell is available in the applicable Level, the pay shall be fixed at the immediate next higher Cell in that applicable Level of the Pay Matrix. (ii) The pay so fixed under sub-clause (i) shall be added by the pre-revised Non Practicing Allowance admissible on the existing basic pay until further decision on the revised rates of Non Practicing Allowance

 Are Government Employees Happy with 7th Pay Commission

There has been a spate of commentaries about how beneficial the 7th Pay Commission mandated pay hikes, and now approved by the Union Government with retrospective effect will benefit the economy. Others have cheered this with comments like “you pay peanuts you get monkeys!” But No government employee is really celebrating the 7th pay commission hike. There were threats of going on strike in Jul but that never materialised. Finance Minister Arun Jaitley claimed that the recent implementation on 7th CPC made by the government will match the salaries of government employees that to the private sector. Quoting from an IIM-Ahmedabad study he said it “found that pay in the government sector is distinctly greater than that in the private sector so there can’t be protests from employees.” He was basically comparing the salaries of class IV and III employees in government and private sector.

• Unlike the private sector, where the compensation is revised annually depending on the performance and skills, government employees have to typically wait for a decade for any substantial revision in their wages, if one sets aside the 3 percent routine annual pay increase.
• The cost of living and prices of food items have gone up so much since the sixth pay commission.
• Often, even the well performing bureaucrats feel that there is no value for their work, beyond the element of mental satisfaction, since the reward is same for the performers, laggards, sleepy heads and those who take a detour during their morning walks to office only to punch in their attendance and later return post lunch.
• Central and state government employees are the ones who get pension and each time pay of serving employees is hiked, a pensioner’s pension is also hiked. They also have other post-retirement facilities like health care. The number of pensioners (53 lakh) is higher than number of serving employees (47 lakh). A middle ranking government employee on his retirement said, “Sarkari naukar jinda toh lakh ka mara to sava lakh ka”(A retired man worth more than a serving one).”

The Government knew that after a pay and pension hike would be announced, unionists will cry hoarse of injustice committed on them, some others would want anomalies to be rectified and parity be restored. To remedy that, the Union Cabinet has set up four committees:

• first to look into the implementation issues anticipated;
• second will go into the likely anomalies;
• third committee to examine the recommendations on allowances, which have largely been kept on hold and
• fourth to suggest measures for streamlining the National Pension System.

IIM-Ahmedabad study on Salary Comparison

Commissioned by the Seventh Pay Commission, IIM-Ahmedabad conducted the ‘Salary Comparison Study’ in October 2015 examinining 40 professions, including nurses, teachers, scientists, electricians, drivers and clerks. It found the salaries of gardeners, clerks, receptionists and drivers lower in the private sector.  Experts are broadly in agreement with the findings of the IIM-Ahmedabad study. But it’s not all black and white.

For example, a driver in the private sector typically earns around Rs. 12,000 a month, while an entry-level driver in government service earns around Rs. 25,000, including additional benefits and allowances. Even qualified professionals working with the government at the entry level are paid more.Government doctors with an MBBS degree get Rs. 80,500 a month while their counterparts in the private sector are paid only Rs. 50,000.

The study also found wide variations in salaries within the private sector, primarily because of the size of organisations, location, and profitability status. For example, in private schools where the recommendations of the Sixth Central Pay Commission are followed, the salaries are comparable to government sector, but in other schools the payments are lower.

	Central Government	Private Sector	SEBI Listed
C- Grade employee	Rs 18,000	Rs 20,000-25,000	Rs 30,000-35,000
B- Grade employee	Rs 25,000	Rs 50,000-65,000	Rs 75,000-1.25 lakh
A- Grade employee	Rs 40,000 to Rs 45,000	Rs 1.5 lakh-2.54 lakh	Rs 3.5 lakh-5 lakh
Class 1 employee	Rs 56,100	Rs 3 lakh-5 lakh	Rs 8 lakh-10 lakh
Cabinet Secretary or CEO	Rs 2.5 lakh	Rs 15 lakh-25 lakh	Rs 1 crore to Rs 3 crore
MBBS Doctor(entry level)	80,500	50,000
MBBS Doctor(15 years)	1,30,000	1,05,000
MD Doctor (Entry Level)	95,000	1,05,000
MD Doctor(15 years)	1,60,000	3,70,000

Yes, if compared with a private sector CEO’s salary which ranges between Rs 12.5 lakh and Rs 2.5 crore per month — according to data available with HR consulting firm Omam Consultants — the salary of the cabinet secretary seems paltry; the topmost bureaucrat in the country takes home Rs 2.5 lakh per month. But then, you can’t ignore the embellishments — the tangible and non-tangible perks doled out to a government officer.

For example A Central government officer gets accommodation in Lutyens’ Delhi — the market value of the rent of the cabinet secretary’s bungalow on 32 Prithviraj Road, for example, is several times more than his salary.  An officer also gets a car, a driver, phone bill reimbursements, unlimited medical benefits for self and dependents, pension and a whole range of allowances, including one-time book allowance for Indian Foreign Service officers, and then a secret allowance -an undisclosed amount paid to officers working in the cabinet secretariat for dealing with top secret papers and performing sensitive duties.

In fact, many of the 196 allowances that exist in the government were not known publicly till Justice (retired) AK Mathur-headed pay panel placed each one of those in public domain and recommended the abolition of 52 such allowances,

Demand for Govt. jobs?

The Uttar Pradesh government secretariat recently received applications from postgraduates and Ph.D holders in response to a notification of vacancies of peon. Many people choose Government Job due to factors such as job security, work-life balance, a five-day week, post-retirement benefits. In government jobs, the ratio of the top pay to the lowest pay must be within a certain band (12-13:1). No such consideration applies in the private sector. But government jobs are not easy to come by and reservations for SC, ST and OBCs make it seem like a prize that is kept out of the reach of people from general categories.

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Related Articles

• Salary,Allowances,Dearness Allowance,Government Salary, Pay Commission
• 7th Pay Commission : Understanding Seventh Pay Commission
• Pay and perks of Indian MP, MLA and Prime Minister
• What is Leave Travel Allowance or LTA
• Understanding Variable Pay
• Understanding Form 16: Part I
• How To Fill Salary Details in ITR2, ITR1

The post 7th Pay Commission Calculator for Pay and Arrears appeared first on Be Money Aware Blog.

Several small businesses require financing to get started. Some of the commonly used sources for raising this money include savings, borrowing from friends and relatives, angel investors and institutional loans. A large percentage of small ventures do not survive the first year. In this situation, promoters would not want to be in a position where they have huge outstanding loans with no business. This article talks about How a Business Loan Can Help You Scale up Your Venture.

Here are five ways in which an SME (small and medium-sized enterprises) loan may be beneficial in scaling the business:

1. Effective Marketing

Without a structured marketing effort, bringing in customers will be difficult. Although free sources like social media may be beneficial, the best method to acquire loyal customers is through professional advertising sources. When the loan is used prudently towards advertising and marketing, companies would be able to increase the customer base, thereby earning higher revenue and profits.

2. Hire Skilled Professionals

Hiring skilled and experienced professionals means paying higher salaries and perks. In addition, taking the business to the next level requires talented personnel who have the expertise in managing different aspects of running a company. Some promoters may opt to invest money in talent with the objective of keeping their business competitive and innovative. Seeking business finance to hire experienced personnel is beneficial in scaling up the venture.

3. Invest in Better Equipment

An institutional loan allows business owners to be able to afford good quality and modern equipment. Without the money, promoters may have to use old and outdated machinery, which limits their operational capabilities and efficiency. With modern equipment, these shortcomings are easily overcome and the business grows.

4. Acquire More Inventory

Inventory is a huge expense for most businesses. Having the capability to constantly replenish inventory to meet demand is crucial for the growth of a business. Purchasing a large amount of inventory may be tough due to lack of funds. This limits the growth and using a loan to acquire inventory is beneficial in taking the business to the next level.

5. Expand to a Bigger Facility

Many entrepreneurs start their ventures from homes or garages. Using a loan facility allows them to think bigger and move to a better facility. This provides them the capabilities to service higher demand, which, in turn, translates to more revenue and greater profits.

Although a business loan has several benefits for the growth of the company, promoters need to think before making the commitment. The revenue potential by infusing these funds into the business must be evaluated. Using a forecast to determine the future revenue and profitability prior to availing the loan is imperative to prevent financial difficulties while servicing the funding.

The post How a Business Loan Can Help You Scale up Your Venture appeared first on Be Money Aware Blog.

Reason of rejection of EPF Withdrawal :  FATHER”S NAME OF MEMBER DIFFERS WITH CLAIM FORM. We assume that once we have provided the correct data, things would be fine and we don’t bother to check the details. For example our employer deducts the Provident Fund money and we check the payslip or UAN passbook. But in many cases when we try to transfer the EPF account or withdraw from the EPF account we come to know that either name is not correct, father name is not correct or missing or date of joining is not correct.  The process to correct EPF details are to submit the application through your employer. This article explains how you can rectify the EPF details , like how to Change or Correct EPF Details like Name,Father Name,Date of Birth,Date of Joining.

EPF Details

When we join an organisation which offers EPF we have to fill Form 11. Form 11 is an important declaration form which enables the provident fund department to maintain records of employees,  helping them during inspections and cross checking of facts. It also provides invaluable information about an employee to an employer. Our article EPF Form 11 on Joining a New Job explains it in detail.  Personal Information that one enters in Form 11, is as follows

• Date of Birth of employee
• Father’s/Husband’s name
• Gender
• Mobile number
• Email ID
• Educational credentials
• Marital status
• Date of joining

The details that you enter, can be verified in your UAN passbook as shown in the image below or EPF passbook from the online portal of EPF services using your document number. This will help you to get over all details such as Date of Birth, Date of Joining and Name of employee name and EPFO office(SRO stands for Sub regional office) . This basic information will help you to check your account details.You can check your name, your Father/Husband Name, Date of Birth, Date of Joining.

Verify EPF Details in UAN passbook

What problems can arise with in-Correct EPF details?

When I was filling my withdrawal form. The HR manager told me that there are some errors in my account. He cautioned me that if I don’t correct the name and date of birth error, the withdrawal may stuck. It was really very frustrating. Because of someone else fault I was feeling helpless.

You should not relax after you submit the required documents to your employer for EPF registration. It is important to check the status of submitted document and you should know whether the details are properly recorded or not. The probable reasons for rejection of an online claim form by the employer  is that member details do not match with establishment records.

• Any wrong entry of  data or misspelled details in record during enrolment will cause rejection.
• Date of joining is important to calculate number of years contributed to EPF, as we know that withdrawal in EPF after 5 years is tax free. It is also necessary for calculation of EPS pension.
• If your nominee detail is not properly recorded or updated then it may give trouble during claim process. The nomination also should be updated when the member got married.

It is very important to have proper account details. It is better you check while you are working in organisation than when you leave the organisation.

EPFO office, EPFO Sub office and Regional PF Commissioner

Administratively, the EPFO organisation is divided into zones which are headed by an Additional Central Provident Fund Commissioner. At present, there are 10 Zones across the country,given below.  EPFO is creating 21 zones in place of the existing 10 zones.  You can get information about EPFO Zonal office at EPFO website 

• Delhi & Uttarakhand
• Haryana & Rajasthan
• Punjab & Himachal Pradesh
• Bihar & Uttar Pradesh
• Andhra Pradesh & Odisha
• Karnataka & Goa
• Tamil Nadu & Kerala
• West Bengal & North- East Region
• Maharashtra & Chhattisgarh
• Gujarat & Madhya Pradesh

The states have either one or more than one Regional Offices headed by Regional Provident Fund Commissioners (RPFC) (Grade I) which are again sub- divided into Sub-Regions headed by Regional Provident Fund Commissioners (Grade II). To assist them are Assistant Provident Fund Commissioners looking after the enforcement of the Act and Schemes. Many districts in the country have smaller district offices where an Enforcement Officer is stationed to inspect the local establishments and attend to grievances. You can get link to regional PF sites at EPFO website . The following image shows the excerpt from Bangalore regional site from www.epfbng.kar.nic.in/contactus.html

EPF Regional PF Commissioner

The total manpower of the EPFO is at present more than 20000 including all levels. The Commissioner cadre numbering 815 are recruited directly, competitively, through the Union Public Service Commission of India as well as through promotion from lower ranks. Subordinate Officers (Enforcement Officers/Accounts Officers) are also recruited directly in addition to promotion from the staff cadre of social security assistants.

How to correct EPF details like Name,Father Name,Dates etc

Now You can transfer your  EPF account online. You can check your EPF balance online. You can even change mobile and email address online. But You cannot edit your  details i.e. father’s name, relationship, date of birth, date of joining, date of exit as available in the EPFO database online. Changing the personal details in the EPF account should be done jointly by you and your employer. There is a prescribed format for this application. The sample form of the correction in EPF details is shown in image below. It is more of a letter than a document. Reference: EPF Circular on Correction of Name

EPF Change details form

In this form, you need to fill the address of the regional Pf commissioner, your name and company name. You have to also fill the correct particulars in the given column. Fill only those columns which need to be corrected. Leave all other column blank. Also, You need to submit document as  proof which has a correct name.The data that can be corrected are:

• Name
• Name of the father or the husband
• PF or EPS account numbers
• Date of birth
• Date of joining organisation
• Date of leaving organisation

Steps to Correct EPF Details

Step 1:  Employee prepares joint request letter or fills the form. Regional PF Commissioner to be filled by your employer. You can download the form for correction of EPF details  from here.

• Fill only the information which has to be corrected.
• Once the form is filled, you can mention the documents that you are going to provide as proof of the changes you are requesting for.
• Sign the form

Step 2: Submit the letter/form to your employer along with any of the following supporting documents.  The supporting document can be any of the following:

1. PAN Card
2. Voters Identity Card
3. Passport
4. Driving License
5. ESIC Identity card
6. Aadhaar Card
7. Bank Passbook copy/ Post office Passbook
8. Ration Card
9. Any School/ education related certificate
10. Certificate issued by Registrar of Birth & Death
11. Certificate based on the service records of the Central/ State Government Organisation
12. Copy of Electricity/ Water/ telephone bill in the name of claimant
13. Letter from a recognised public authority or public servant verifying the identity and residence of the members to the satisfaction of the competent authority.

If you have changed your name due to some reasons, for example many woman change their names after marriage. Then one can submit as proof copy of gazette page copy in which your name change is printed.

Step 3: Employer fills the name of the authorised signatory on behalf of the company.  The authorised signatory will also have to sign the application form and affix the company seal on the form.

Step 4:Employer will submit the correct details to concerned Field office for changing it. After receiving completed information from your employer, the changes will take to update within 1 month(hopefully). Many a times you need to resubmit application.

Related Articles:

• Articles for an Employee:Earning,EPF, UAN,Study…
• Basics of Employee Provident Fund: EPF, EPS, EDLIS
• Understanding Employee Pension Scheme or EPS
• Stock Market Index: The Basics
• EPF Private Trust, the Exempted EPF Fund
• Tax on EPF withdrawal
• UAN HelpDesk: UAN Problems, Password,Mobile Number,Incorrect Details and Help Desk

Please do check your EPF details. If they are not correct please get them corrected. Have you got EPF details corrected? How was the process? How long did it take?

The post How to Correct EPF Details like Name,Father Name,Date of Joining appeared first on Be Money Aware Blog.

If a employee contributing to NPS changes his job, what will happen to his NPS account? This article explains how to transfer NPS when one shifts office. It explains various sectors of NPS,Nodal Office, Shift from EPF to NPS, Shifting NPS using Form ISS.

NPS account is portable

NPS is a pension system which offers financial security after retirement to a person. During the service life of an employee, only one NPS account is maintained irrespective of change of employer. You can shift from one sector to another,from one State Government service to another State Government service, from Central Government to Corporate and vice-versa etc.  So, if you opened account as Central Government Employee and quit your Government Job, you can still continue under All Citizens model by making contribution of Rs 1,000 to keep your NPS account active. You do not have to quit NPS when you quit your job or shift to an employer which does not offer NPS.

Permanent retirement account number (PRAN) is a unique number allotted to a National Pension System (NPS) subscriber. PRAN or the account is portable and can be moved even if a government servant moves to the private sector.  You can have just 1 PRAN just like you can have only one Permanent Account Number(PAN). So You can use the same PRAN across different Government departments, state governments, employers or even after changings job. 

Various sectors or Models of NPS

Let’s go over the sectors or the models of National Pension Scheme. Currently, NPS and APY together have more than One Crore subscribers with total Asset Under Management (AUM) of more than Rs.1 lakh crore.

• Government Sector:
  • Central Government : From 1 Jan 2004  Government made it  mandatory for new  government employees (except armed forces) to contribute to National Pension Scheme with matching contribution by government
  • State Government: NPS is applicable to all the employees of State Governments, State Autonomous Bodies joining services after the date of notification by the respective State Governments.  All state governments gradually adopted the NPS.  Tamil Nadu had signed to shift their employees to the NPS in April 2003, Maharashtra signed up in November 2005,Kerala finally agreed to join the NPS from 2013-14.
• Corporate Sector: Corporate National Pension Scheme (NPS) was launched in December 2011 by PFRDA (Pension Fund Regulatory Authority). Just like a Provident Fund, NPS is a contribution scheme through which both the employer as well as the employee can build the employees’ pension wealth.   The biggest advantage is the tax benefit up to 10% deduction on the Basic Pay+DA of the employer’s contribution on behalf of the employees. This is over and above Rs 1,50,000 benefit under Section 80 C, which is applicable to the employee’s contribution to the NPS kitty. Even the employer can claim tax benefit for its contribution by showing it as business expense in the profit and loss account.
• All Citizens Sector: NPS has been made available to every Indian Citizen from 1st May 2009 on a voluntary basis. All citizens of India between the age of 18 and 60 years as on the date of submission of his application to Point of Presence (POP) / Point of Presence-Service Provider (POP-SP) can join NPS.
• NPS Lite or APY or UOS( Unorganized sector)
  • NPS Lite or The Swavalamban Scheme is to provide the retirement benefit  for unorganized sector. Under this scheme, the Govt. of India will contribute Rs.1000 per year,for 5 years, to every NPS-Swavalamban account provided the contribution is between Rs.1000 to Rs.12000 per year.  The people forming part of this low income groups will be represented through their organisations known as Aggregators who would facilitate in subscriber registration, transfer of pension contributions and subscriber maintenance functions. Subscribers in the age group of 18 to 60 can join NPS – Lite through the aggregator and contribute till the age of 60.
  • From Jun 1 2015 Atal Pension Yojana (APY), replaced Swavalamban Yojana NPS Lite. The existing subscribers of Swavalamban Scheme were automatically migrated to APY, unless they opt out. We have covered the scheme in detail in our article Atal Pension Yojna

What is Nodal office of NPS?

PFRDA has appointed National Securities Depository Limited (NSDL) as the Central Record Keeping Agency (CRA) to maintain the records of contribution and its deployment in various pension fund schemes for the employees.  The records of the contribution of each employee will be kept in an account known as the Permanent Retirement Account which will be identified by a Permanent Retirement Account Number (PRAN).

Government offices like DTO and DDO or offices equivalent thereof which will interact with CRA on behalf of the Subscriber are collectively referred as Nodal Office. CRA-FC is Facilitation Centre appointed by CRA to facilitate Nodal Offices to submit applications for allotment of PRAN and application for change in signature and photograph of the subscriber

• Nodal offices  under Central Government include the Principal Accounts Office (PrAO), Pay and Accounts Office (PAO) and Drawing & Disbursing Office (DDO) under the Central Government or analogous offices .
• Nodal offices under the State Government include the Directorate of Treasuries and Accounts (DTA), District Treasury Offices (DTO) and Drawing & Disbursing Office (DDO)  .

Nodal Offices are identified by a unique number, i.e., Pr.AO /PAO/ DDO registration number that is allotted to them by the CRA on successful registration.

Can I shift my NPS account to eNPS?

Unfortunately, you cannot port your NPS account to eNPS i.e. eNPS cannot be your target PoP when you are shifting. You must open account using eNPS portal for it to be your PoP. But you can contribute using eNPS.

On Shifting Jobs

Our parents(mostly fathers) worked in the same or at most two jobs in one career, they retired on their provident funds. But now people hop from one job to the other looking for better and lucrative job opportunities. But to ensure a smooth financial transition one needs to take care of our salary bank account, Tax computation, Employee Provident Fund(EPF), Health insurance etc. Our articles Changing Jobs:Take Care Of Bank Account,Tax Liability focuses on exploring what to do with Salary Bank Account, Tax liability when ones switch jobs.

Changing jobs often leads to a situation where an individual gets tax exemptions twice from his earlier employer as well as from his new employer. Exemptions and Tax Liability form an important consideration while switching jobs. Making a job switch in the middle of the year involves making sure that the deductions and exemptions regarding tax liability are made only once. Our article Changing Jobs and Tax, Form 12B explains it in detail.

Shifting from EPF to NPS

The proposal to switch from EPF to NPS was announced in 2015 budget.  A legislation to amend the Employees’ Provident Fund & Miscellaneous Provisions Act has already been framed and is lying with the Law Ministry. Till the move becomes reality one would either have to withdraw money from EPF or let EPF account continue without any contribution and let EPF will earn interest.

The amendments allows EPF subscribers to make a one-time switch to the NPS. Within 30 days of applying, the entire balance in his EPF account will be transferred to the NPS. Opting for the NPS would also mean the individual exits from Employees Deposit Linked Insurance as well as the Employees’ Pension Scheme (EPS). The Bill is silent on what this means for the amount mandatorily deducted from the employer’s contribution and put into the EPS.
But the best part about the proposal is  , the employee will have a one-time chance to return to the EPF fold. However, on rejoining the EPF, the subscriber will be treated as a new entrant and will not be eligible for benefits he might have accumulated in his previous tenure in the EPF. Also, after this ghar wapsi, the subscriber will not have the option to go back to the NPS.

Shifting NPS within the Central Government/ a State Government

In case a subscriber shifts within the Central Government or a State Government then there is just change of Nodal office i.e. from one PrAO/DTA/PAO/DTO/DDO or to another PrAO/DTA/PAO/DTO/DDO then the subscriber need not submit any separate request. For shifting of NPS within Government sector, the Subscriber is required to intimate his PRAN to the target (new) office with whom he/she will be associated after shifting. The new office will facilitate shifting in the CRA system by uploading the NPS contribution. PRAN will get associated to new office in the CRA system on successful credit of the monthly NPS contribution. Subsequently, the new office is required to update Subscriber’s employment details in the CRA system.

Shifting NPS using Form ISS

A subscriber can shift from one sector to another sector or from one office to another office with the same PRAN e.g. from Central Government (CG) to State Government (SG) or from one department to another, etc. For most of the cases when one needs to Shift NPS one needs to submit  Inter Sector Shift (ISS) Form . It can be downloaded from npscra.nsdl.co.in or Click Here or you can get it from an existing point of presence of the service provider (POP-SP).

• Fill in complete details of the shift you are making ex: from State Govt to State Govt or from Govt to Corporate etc, discussed in detail later.
• Attached appropriate documents
• Form with supporting documents has to be submitted to target POP -SP.
• A stamped acknowledgement is given.
• Once details are verified, the change is communicated to the subscriber.

Before shifting Please note

• PRAN should be active.
• Details such as PRAN number, employer information and salary information must be filled correctly as these are recorded in the NPS system.

Shifting NPS Form ISS (Inter Sector Shift)

One must submit Form ISS-I. It can be downloaded from npscra.nsdl.co.in or Click Here   or you can get it from an existing point of presence of the service provider (POP-SP).

• Name and address, PRAN details, details of the existing and new POPSP need to be provided in the form.
• Please quote the correct PRAN and attach a copy of the PRAN Card
• Please provide Details of the DDO / POP-SP with which the PRAN is currently associated.
• Please provide Details of the DDO / POP-SP with which the PRAN will be associated.
• Sector for ‘Existing PRAN association’ and ‘Target PRAN association’ can be the same only if a subscriber is shifting from one State Government to another State Government

Shifting NPS Subscriber Form

Declaration to be filled by subscribers across all sectors.  On successful verification of the change request form, POP-SP shall accept the same and shall issue a 17 digit Receipt Number  as an acknowledgement to the subscriber. The nomenclature of the receipt

• First 2 digits (from left) – Type of request (19 for Subscriber shifting)
• Next 7 digits – Registration Number of POP-SP e.g., 6000002
• Next 8 digits – Running sequence number eg.00000001
• For Example: 17 digit receipt number will be “19600000200000001”

POP-SP shall handover the acknowledgement to the subscriber as receipt of the acceptance of the request. The POP-SP shall affix the seal as well as the user shall sign the acknowledgement before providing the same to the subscriber.

Shifting NPS declaration

Instructions and Documents that one needs to provide are shown in image below:

Shifting NPS Instructions and Documents

Shifting NPS Between State Government and Central Government

For shifting PRAN from one sector to another or from one State Government to another State Government, the subscriber is required to submit Form ISS-1 to the target Nodal Office i.e. to the Nodal Office with whom he/she will be associated after shifting. The target Nodal Office initiates the shifting of PRAN along with accumulated NPS contributions under the PRAN in the CRA system.

• Download Form ISS-1(Inter Sector Shifting form). To Download Click Here  
• Fill in complete details and attach documents
• Submit the form to your Target Nodal Office (i.e. Pay & Accounts Officer/ Drawing & Disbursing Officer)

Shifting NPS to Central Government or State Govt

Subscribers shifting to central /state government need to furnish employment details including salary and department involved. The information needs to be attested by employer. Bank details have to be provided with cancelled cheque.

The Government of India or a Government of States in India classifies public employees into Group A (Gazetted/Executive), B (Gazetted), B (Non-Gazetted), C and D. This classification is based on the recommendations of 6th CPC.

Shifting NPS to Central Govt or State Govt.

Shifting NPS to UOS or Citizen Sector

In case, the subscriber is shifting from UOS to Central or State government, the process remains the same as in Shifting NPS Between State Government and Central Government. Internally The Swavalamban Flag (even if already activated) will not be applicable in Government Sector. Image below shows additional information required when one needs to Shift NPS to Citizen or Unorganised Sector.

Shifting NPS to all Citizens or UOS sector

Shifting NPS to Corporate Sector

The subscriber will submit the duly filled form for shifting along with a copy of the PRAN card to the target POP/POP-SP. Image below shows additional information required when one needs to Shift NPS Corporate Sector.

• Subscribers have to provide employment, bank and PAN details.
• They also have to choose PFM and investment option.

Shifting NPS to Corporate Sector

Related Articles:

• Understanding National Pension Scheme – NPS
• eNPS : Open NPS account online, contribute to NPS online
• Should you Invest in NPS the National Pension Scheme for additional 50,000 and save tax
• Saving For Retirement : Pension Plans,NPS,EPF,PPF
• Tax saving options : 80C,80CCC,80CCD,80D,80U,80E,24
• Tax Planning Traps To Avoid
• Returns of NPS

The post Shifting NPS account: Sectors in NPS, Form ISS appeared first on Be Money Aware Blog.

An employee can start receiving the pension under EPS only after rendering a minimum service of 10 years and attaining the age of 58 or 50 years.  In case of death / disablement, the above restrictions doesn’t apply. One has to submit Form 10D through last employer to claim Pension.  This article gives overview of EPS Contribution,Pension from EPS, how much EPS pension would one get,explains how to fill EPS Pension Form 10D to Claim your Pension from EPS.

Overview of Pension from EPS

Employees’ Pension Scheme (EPS) offers pension on disablement, widow pension, and pension for nominees. In 1995 EPS replaced the Family Pension Scheme (FPS) of 1971. When an employee joins an establishment covered under the Employees Provident Funds & Miscellaneous Provision Act, 1952 (s)he becomes a member of Employees Provident Fund Scheme (EPF) and  Employees’ Pension Scheme (EPS) . Our article Basics of Employee Provident Fund: EPF, EPS, EDLIS explains EPS,EPS in detail.

EPS Contribution, Transfer of EPF and Withdrawal from EPF/EPS

EPS Contribution

• EPS is applicable to all members who joined EPF after 15.11.1995
• 8.33% of employer’s monthly contribution from the EPF goes to EPS.
• Monthly contribution to EPS is restricted to 8.33% of Rs. 15000 or Rs 1250 p.m.
• Unlike the EPF contribution, EPS part does NOT get any interest.
• On attaining 58 Years of age, a EPF member ceases to be a member of EPS automatically.
• From 25 Apr 2016 one can defer pension upto 60 years with/without contribution

• If you resign before completing 9 years and 6 months of service, you get the withdrawal benefit which depends on your monthly salary and the number of years of service. EPS always rounds up the number of years. So, if you worked for 4 years and 7 months, it will be considered as 5 years.
• A member who has completed 58 years of / claimant on behalf of a deceased member who died after the age of 58 years without completing the eligible service of 10 years should apply for Withdrawal Benefit through Form 10C.

What happens to pension when you transfer a  job?

Technically, EPS and EPF are not linked . You can withdraw the EPF once you leave the organization after filling Form 19. But when you transfer the EPF using EPF Form 13, then EPS is also transferred. It’s amount is not reflected in the passbook. But period of transfer is recorded.

Pension from EPS

 Applying For EPS pension

How to apply for the EPS pension?

Filling EPS Pension Form 10D to Claim Pension

1 By whom is pension claimed?

• MEMBER : one who has been contributing to EPF and EPS.
• WIDOW/WIDOWER : wife/husband of someone who was contributing to EPF and EPS.
• MAJOR : Child above 18 years of  one who has been contributing to EPF and EPS.
• ORPHAN :
• GUARDIAN :  if child of one who has been contributing to EPF and EPS is less than 18 then the Guardian.
• NOMINEE : Nominee mentioned by member in EPF Nomination Form
• DEPENDENT PARENT : Father/mother. If member has not nominated and has dependent parent, pension is payable first to Father and then on father’s death to Mother.

2 Type of Pension Claimed

• SUPERANNUATION PENSION :By member on attaining 58 years age, whether in service or not
• REDUCED PENSION: By member after the age of 50 years but below 58 years and having left service
• DISABLEMENT PENSION: By member on leaving service on account of total and permanent disablement.
• WIDOW & CHILDREN PENSION: By family (spouse and children) on death of the Member.
• ORPHAN PENSION: By surviving son/daughter (of age up to 25 years as on date of death of member/spouse whichever is later) on the death or remarriage of the deceased member.
• NOMINEE PENSION: By nominee declared by the Member through his/her Form 2(R) in case the member had no family (Spouse and children).
• DEPENDENT PARENT: By the dependent father and mother of the deceased member who died without a family (spouse and children) and failed to nominate a person for pension.

3 Details

• The name must be mentioned in BLOCK LETTERS.
• Marital Status: Whether married/unmarried/widow/widower/Divorcee.
• Date of Birth: In dd/mm/yyyy format.
• Father’s Name and in case of a married female member, Husband’s name in BLOCK LETTERS.

EPS Pension Form 10D Job Details

4. EPF Account Number: The account number should have the Region Code (two alphabets), Office Code (three alphabets) code number (maximum 7 digits), extension (sub code, if any, maximum three characters) and account number (maximum 7 digits). The region codes have changed after creation of the multiple regions in some states, namely Maharashtra, Tamil Nadu, Karnataka, West Bengal, Punjab, Gujarat, Andhra Pradesh, Uttar Pradesh, Haryana and Delhi. For getting the correct Region and Office Codes, please visit Establishment Search facility provided under link for Employees through the  website epfindia.gov.in

5. Name and Address of the Establishment where the member was last employed.

6. Date of Leaving service Indicate the actual date of leaving service in date/month/year form. If one has attained 58 years and continues to be in service. In such case indicate,” still in service”.

7. Reason of Leaving Service: If the reason for leaving service was on account of total and permanent disablement, as indicated by the establishment to the P.F. Office through Form 10/Form 5 (PS)/ECR (Electronic Challan cum Return) then only the member is entitled for Disablement Pension. In all other cases the actual reason for leaving service may be given.

8. Address for communication :Your address for communication

8A  In case of reduced pension (opted date for commencement of pension.)  If the member has left service before 58 years of age, has not completed 58 years age as on date of application and is ready for drawing reduced pension, he/she should mention the date from which /she wishes to get pension. The opted date cannot be prior to date of attaining 50 years age and date of leaving service.

Commutation and Return of Capital in EPS Pension Form 10D

Commutation and Return of Capital on superannuation was discontinued from 26-Sep-2008, (Notification Number GSR 688 (E) dated 26- 09-2008) in an attempt to curb the EPS deficit. So fill Sl. No.9, 10 and 11 of the form only if the date of start of member pension is before 26/09/2008 (cases where the application is being filed belatedly but the member is due for pension from such date)

Under the commutation of pension scheme, a retiring employee had an option to receive nearly 30% of his pension corpus in one go and draw monthly pension from his remaining corpus. Commutation is the option to receive a capital sum today instead of receiving a monthly pension for rest of your life. Rate of commutation  is upto 1/3rd of the Original Pension.  Suppose the original pension is Rs.600, the commutation value is Rs.20,000.  On commutation, the pension payable will be Rs. 400,

Return of capital on superannuation was the option to cash out the entire pension corpus i.e , employees had the option to get one-time cash by foregoing their monthly pension.

EPS Pension Form 10D Commutation and Return of Capital

Family Details in EPS Pension Form 10D

As mentioned earlier Lifelong pension is available to the member. Upon his death, members of the family are entitled for the pension. This section is about details of the family. While the member pension is approved, the pension amount payable to the family (spouse/children) are also decided and in case of the death of the member as pensioner, the spouse/children/orphan will start getting the pension on submission of the death certificate and there will not be any requirement of processing of the widow/children/orphan pension again. In case of a deceased member, it has to be filled by the spouse/children.

The list of surviving family members of the Member, covering his spouse, all children should be furnished. The particulars of Guardian should be given in respect of each minor child, as of the date of application. In support of the age of children, age proof certificate obtained from the school or Registrar of Birth-death or E.S.I. Record, or Municipal authorities should be enclosed. In the case of Guardian other than natural guardian, a Guardianship Certificate should be enclosed.

13 Date of Death of member(if applicable). Applicable only in case the member is not alive. In support of the date of death, death Certificate should be enclosed.

Family details in EPS Pension Form 10D

Bank Details for EPS Pension in EPS Pension Form 10D

Pension is payable through any branch of certain Banks depending on place where the pensioner wants to receive pension. Hence Saving Bank Accounts should be opened only in the said Bank(s). The member, the spouse and children (minor or major) should also open S.B. A/cs in the same branch of the Bank. In case the claim is preferred by spouse, he/ she should give his/her S.B.A/c No. and also separate S.B.A/c No.s in respect of each child. S.B. A/c No.s of children who are below the age of 25 years (as on date of death of the member) should be given. On behalf of minor child, S.B. A/c opened in the name of minor and operated by the guardian of the minor and A/c No. should be given.

Whenever pension is opted from a place beyond the jurisdiction of the region in which the member was last employed, he should ascertain the name of the designated bank applicable in that Region and open a S.B. A/C therein. On sanction of Pension, intimation will be sent to the pensioner to contact the bank. The list of  Banks in which provision has been made for the retired employees drawing pension under Employees’ Provident Fund Organisation (EPFO) as per Press Information Bureau Aug 2015 is given below

EPS Pension Form 10D Bank Details

Nomination Details and Scheme Certificates in EPS Pension Form 10D

In case of death of the member before attaining 58 years without leaving any eligible family members to receive the pension, the nominee as appointed by the member through the From 2 (Revised) already sent to the P.F. Office may apply, giving his particulars against this column. In case the member had no family and had died before appoint a nominee for pension, his/her dependent parent (father & mother) may apply for pension, pension will be paid to father and on his death to mother

As mentioned earlier For EPS, if the service period is less than 10 years, you’ve option to either withdraw your corpus or get it transferred by obtaining a ‘Scheme Certificate’. if you have obtained Scheme Certificate then you have to enter the details in this section.

EPS Pension Form 10D Nomination and Scheme Certificate Details

16. If pension is being drawn under E.P.S, 1995  If the applicant is already receiving pension under Employees’ Pension Scheme, 1995 claim pension, the details should be furnished against this column.

List of documents to be submitted with EPS Pension Form 10D

17. List of documents to be enclosed along with EPS Pension Form 10D

• Descriptive role of pensioner and his/her specimen signature/Thumb impression (in duplicate); (Form is enclosed with the Claim Form)
• Photographs: The photographs should be attested by the employer or his authorized official, indicating the person, whom the photograph relates to and also the P.F. Account No. of the member, written on the verse and placed in a separate envelope.
  •  3 pass-port size photographs If claimed by the member Joint photo with spouse, there is no need to send photograph of the children.
  • If claimed by widow/widower the photograph should be sent for widow/widower and his/her two children (below 25 years) separately.
• In the case of a member, who is permanently and totally disabled during the employment, he/she should undergo a Medical Examination before the Medical Board advised by the E.P.F. Office. However, the disablement should occur while in employment.
• Cancelled cheque of the Bank where one wants to get Pension.

Employer Approval in EPS Pension Form 10D

The application should be forwarded through the establishment in which the member last served/died. The establishment should furnish the certificate and wage particulars duly attested by the authorized officer.

EPS Pension Form 10D Employer Autorization

List of Banks where one can get EPS Pension

The list of  Banks in which provision has been made for the retired employees drawing pension under Employees’ Provident Fund Organisation (EPFO) as per Press Information Bureau Aug 2015 is given below

Download Form 10D 

Related Articles

• Basics of Employee Provident Fund: EPF, EPS, EDLIS
• How much EPS Pension will you get with EPS Pension Calculator 
• What are EPF,Pension and Insurance Changes from 1 Sep 2014
• UAN or Universal Account Number and Registration of UAN
• EPF SMS What is EE, ER? How much on Withdrawal from EPF?

The post How to Fill EPS Pension Form 10D to claim EPS Pension appeared first on Be Money Aware Blog.

The Employees’ Provident Fund Organisation (EPFO) has decided to deactivate all Universal Account Numbers (UANs) from which provident fund transfer has been effected to another PF account having different UAN. The earlier UAN would be simultaneously blocked for further use as per information on 21 Sep 2016. This article gives overview of UAN,Member Id, What to do when one has 2 UAN Numbers, How EPFO will handle duplicate UANs.

UAN, Member ID or EPF Number

What is UAN Number, Member ID and PF Number

UAN is Universal Account Number. The UAN is a 12-digit  number allotted to employee who is contributing to EPF.  It is expected that The universal account number remains same through the lifetime of an employee. It does not change with the change in jobs.   Universal number is a big step towards shifting the EPF services to online platform and making it more user-friendly.  Our article FAQ on UAN number and Change of Job discusses common questions on UAN number.

Member Id or Member Identification Numbers is the number given by EPFO to allow the employer to submit EPF money of employee. It’s like Employer opens an EPF account for its employee and contributes to that account every month. Member ID is the account number of employee in the EPFO. When the employee changes the job then the new employer will open a new account number for it’s employee in EPFO. So a new Member ID will be allotted to employee. Member ID is same as PF number earlier. So you would have as many Member ID’s as the number of employers contributing on your behalf to EPFO. 

Member ID or PF Account Number is in the format given below. PF Account Number may not have Extension code.

EPFO Office Code/Establishment Code(Max. 7 Digits)/Extension(Max. 3 digits)/Account Number (Max 7 digit)

Ex: For someone who works in Bangalore the code can be BG/BNG/012345//789

An employee will have one UAN or Universal Account number, which as the name implies will remain the same. It will maintain all your Member Ids.  Its like you can have multiple Saving Bank account but all these are tied to your one Permanent Account Number or PAN. So when you change your job and the new employer, if contributing to EPF, gives you a new Member ID.

How is UAN number allotted?

• The EPFO will allot employers the universal numbers of all employees for which employer makes EPF contribution.
  • If the employee does not have a UAN number, probably because it’s his first job or he was working before Jan 2014 before  UAN number process started. Then employer will request the EPFO to generate the UAN number for its employee along with Member ID.
  • For an employee who already has a UAN number the employer will submit the request to EPFO to generate new Member ID for the employee and link it to the UAN number of the employee by submitting Form 11 filled by new employee.
• The employer would then give the number to its employees, who need to provide their KYC (know-your-customer) details to the employer.
• The KYC details of employees would then be updated online on the EPFO website by the employer.
• An employee can also upload the scanned copy of the KYC document through the EPFO website once you are done with the UAN-based registration. However, your employer has to digitally verify your KYC details.

Every UAN will be linked to one or more Member Ids upto maximum of 10. It would help to track the EPF contribution throughout the entire career.

Change of Job and UAN number

What to do when one changes job. If  Universal Account Number (UAN)  s  already allotted then one is required to provide the same on joining new establishment to enable the employer to in-turn mark the new allotted Member Identification Number (Member Id) to the already allotted Universal Identification Number (UAN). This is done by Filling the  epf-NewForm-11-with-instructions(epf)  which replaces the old Form 11 and Form 13.  Part of Form which refer to Previous Employment details and Declaration by previous employer are given below. Our article EPF Form 11 on Joining a New Job discusses the Form 11 in details.

EPFO New Form 11 previous employer details

2 UAN alloted

When do you end up having 2 UAN?

There have been cases where duplicate UANs have been issued.

• At the time of initial allotment, the employer has not furnished the date of exit in the ECR (electronic challan cum return) even if the member has left the employment and joined some other establishment. Thus, two UANs have resulted to such members for both the employments.
• Secondly, at the time of joining the present employment, a new UAN has been allotted to the member due to wrong declaration by member/employer under the UAN programme.

How was the problem of 2 UAN alloted to same member was solved earlier?

In such a case, you are suggested to immediately report the matter either to your employer or through email to uanepf@epfindia.gov.in by mentioning your current and previous UANs. After due verification the previous UAN allotted to you will be blocked and Current UAN will be active. Later you will be required to submit your Claim to get transfer of service and fund to new UAN. Our article UAN Problems, Password,Mobile Number,Incorrect Details and Help Desk discusses common problems associated with UAN numbers.

Many cases filing grievances have helped.

How would the problem of duplicate UAN be solved after Sep 2016?

The Employees’ Provident Fund Organisation (EPFO) has decided to deactivate all Universal Account Numbers  (UANs) from which provident fund transfer has been effected to another PF account having different UAN. The earlier UAN would be simultaneously blocked for further use. The move will eliminate the problem of duplicate UAN. Our article UAN or Universal Account Number and Registration of UAN discusses how to register UAN.

EPFO has asked it offices to identify such cases on periodic basis where the PF transfer has been effected from one EPF account to another, both having different UANs attached to these EPF accounts. The process would be implemented in respect of all identified UANs even when no request has been received from the member.

The member would be informed of the deactivated status of his previous UAN by SMS to the registered mobile number. The member would be requested to activate the new UAN to get the updated status of his EPF account.

However, it has said that there is a possibility of arrear payment by the previous employer for the member. In such cases, since the system knows the new UAN against deactivated UAN, the system would automatically populate the new UAN in the ECR (on punching of previous UAN or member ID by the employer) and the statutory contribution by the employer against the arrears can be remitted against new UAN only.

So if you have 2 UANs then?

You have a new UAN in addition to old UAN. UAN is registered with a mobile number, Don’t use the mobile number associated with old UAN to activate new UAN. You would not be allowed to do so. If you are activating the new UAN, use a different mobile number. Try to keep the old number till transfer of EPF & UAN happens as you would get information about old UAN to the mobile number.

If you have withdrawn your EPF and EPS then no need to do anything. Your first UAN is of no use. So you can just send mail to uanepf@epfindia.gov.in to block your old UAN and keep a copy of mail, just in case.

If you have to transfer your old EPF account then Transfer the old EPF account associated with old UAN to new UAN.  Then during the periodic check, your old UAN number will be .Old UAN would be deactivated. The member would be informed of the deactivated status of his previous UAN by SMS to the registered mobile number. Our article Transfer EPF account online : OTCP  discusses transfer of EPF account in detail.

List of articles for an Employee:Earning,EPF, UAN,Study

• Withdrawal or Transfer of Employee Provident Fund
• EPF Private Trust, the Exempted EPF Fund
• How much EPS Pension will you get with EPS Pension Calculator
• How EPFO Manages Money, EPFO invesment in Stock Market
• Changing Jobs:Take Care Of Bank Account,Tax Liability
• Changing Jobs and Tax, Form 12B
• FAQ on UAN number and Change of Job

Do you have you 2 UAN numbers? What did you try to rectify ? What do you think of this move of EPF on process of duplication of UAN?

The post When you have 2 UAN Numbers What to do? appeared first on Be Money Aware Blog.

“Beta what do you want to become when you grow up?”, asked an Aunt to a 7 year old. Pat came the reply “Dhoni”. Father beamed, “He loves cricket, Did you check my Facebook page I upload his scores in matches, photos” Fast forward few years, child is turning 12-13, child still wants to play cricket but his father or mother says”I have put him in the coaching camp. Its a good hobby. But Everybody can’t become Dhoni! It is few more years then he has to focus on his 10th and become an engineer.  This article talks about the early years of a child in India, The middle year of child of getting interested in Sports, Money spent on playing sports like Swimming,cricket,badminton. Alternate career options in Sports, Journey of PV Sindhu.

Early Years of Child: Exposure to activites

No child is born gripping a cricket bat , a chess pawn, a stethoscope, computer. Parents expose their children to all kinds of things at a young age whether is it athletics,art, musical instrument or a sport(at times overloading them). It is a foundation stone of good parenting(not the overloading part), to ensure a wholesome development as well as a memorable childhood. The key to a healthy development lies in identifying your child’s interests and ensuring a parent does not force him or her into anything which they do not like. Most children grow up playing cricket, football, basketball and badminton. Few play hockey, volleyball and tennis. Not only is playing sports is brilliant form of physical exercise, sports teach kids teamwork, dedication, and diligence. They build confidence and character and also teach them how to overcome obstacle. A child should play a number of sports initially and then narrow down on one. Shikhar Dhawan started playing tennis and food ball and he was good at all of them.Learning period in sports extends from age of 5 to 18 years. At the age of nine you can play live sports and focus on one by the time you are 14.

Middle years of Child: Interest in Sports

Should you, or should you not? This is a question that most parents face when it comes to dealing with their children— whether the kids are asking for permission to go on a sleepover at a friend’s place, asking for money to buy something, or—yes—even asking whether they can get into a sports academy. Parents are the first talent spotters a child encounters and as such their role is very important. Once a child starts taking active interest in a sport, question that a parent faces is whether to admit child to a reputed coaching academy where he can play the same regularly hone his skills and find out how he fares in relation to others. Many children who show interest begin with a small cricket club near his house. As he started doing well, his coach  says “Yeh lambi race ka ghoad hai ” (He is cut out for the big league). Admitting a child in a sports academy is no guarantee for a career in sports. 

Coach: A coach is crucial, depending on the sport, he can soon spot exceptional talent. We all know the contribution of coach Pullela Gopichand to career of Saina Nehwal and P V Sindhu. But it  is important for the kid to play and enjoy the game for the first couple of years without getting exposed to tough competition. Finding a coach,however, doesn’t mean the parents can take their eyes off the ball. Since the child is focusing on a sport,it is incumbent on them to ensure that he maintains a balance with other aspects of his life.

Diet:All sports are physically demanding, even chess. A health diet, drawn up possibly in consultation with the coach is imperative for growing bodies.

Medical Advice: When the idea of a career is taking root, it makes sense to seek medical advice. A thorough medical checkup is needed to see whether a child is fit for competitive sport. Something like a cadilogical condition or a thalesmic trait may not affect him in a normal life but may  hinder a sporting career. If you are investing time and money in a sports career you need to know.

Exercise This is important even in the case of sports that require physical exercise because injuries can end a promising career.

Growth line: Time is everything in sports career. Once the child starts winning in house events or contributing significantly to them, he should movie into the city tournament and then to zonal , state , national and international level. If he doesn’t make the cut at the right age, it may be prudent to reconsider sports as a career.

Overall well being : A child deeply involved in sports exert himself far more than his peers ad a little indulgence doesn’t hurt. But crucial is balancing academics with sports and question of finances.

Support System in Sports

Remember that during this time chasing school project deadlines, finishing homework and keeping up with studies are the most strenuous forms of exercises that many students engage in while passionately honing their sports skills. A player needs a big support system. Poor performance and injury can break the morale of a child. Parents need too have the sportsman spirit as well and should teach the child to be gracious in defeat. From Rahul Dravid speech at MAK Pataudi Memorial Lecture 2015-16

Sachin had a great support system. His family were supportive and caring, his elder brother was always there to guide him, his coach Ramakant Achrekar was more than a coach, a mentor – in life and on the pitch, teaching him how to hold the bat, driving him to games. Sachin was lucky that he had this vast umbrella of support and I dare say and he would agree, he wouldn’t have survived and prospered if not for it. Not every young talent is lucky enough to have that kind of support. The history of Indian cricket is littered with stories of young exciting talent falling by the way side due to a lack of support and guidance.

School vs Sports

Most parents can live with their child missing a few days of primary school. But when faced with the board exams, a crucial juncture at their playing careers as well, most parents opt for the safer option: studies. Many kids who excel in both sport and academics but that means opening books after the day’s play.

Yes attitudes are changing. Many Parents move to a less demanding school. But One needs to be cautious when it comes to question of deciding between sports and school. Since so few make into sports it seems sensible to keep other career options open and much of that still depends on academics. Open school plans in the pre board stage and correspondence courses for graduation don’t require regular attendance and are often the favoured choices. This decision is in infact indicative of the seriousness with which parents pursue a child’s sporting dreams.

Since sports as a career is still on the growth curve, few parents put academics completely on the back burner. Shah Rukh Khan has said that “Indian parents don’t see sports as profession.”  This is primarily due to the notion that all students must pursue a professional degree and then move onto finding a job in the “usual” fields of engineering, medicine, software etc. The tightrope can be tough but not impossible.Parents feel sports cannot pay them handsomely in life the way a regular job can. The job security that a regular job has to offer cannot be there in a sports career. What also worries them is the short span of a sports career. As parents they want their children to have a safe and secure future and perhaps that is the main reason why they put their foot down when it comes to a career in sports. But the truth is that job insecurity is there everywhere even in bank jobs or IT.

Shikhar Dhawan says he had his father’s business to fall back on. I wish I hadn’t taken studies so lighly , infact I’ll advise all aspiring cricketers especially those who don’t have business to fall back on to focus on their studies. A good academic career always helps. From Rahul Dravid speech at MAK Pataudi Memorial Lecture 2015-16

15-year-old, reasonably good but now studying in Std 10. Alarm bells ringing in the heads of Indian parents everywhere. At an age when the only decision that boys should stress about is whether to start shaving or not, we expect them to decide what they want to do with their lives. What usually happens in such a scenario is that one set of players – those who haven’t made the U-16 state team – decide that cricket is not for them. Then others decide to give up on studies altogether because they are dead sure they can make it in cricket.

It is important for our young cricketers to continue with their education – even if all the time away from schools makes it hard for them to finish their graduation. It will be something they can go back to in case the cricket dream doesn’t come true for some reason. But aside from all that, it is important to stay connected to school and college because it will mean they have friends outside cricket, conversations outside cricket and life experiences that are not connected to cricket. It will give them the perspective needed to become well-rounded adults.

Money spent on playing sports

Capital is necessary for coaching,gear,nutrition and travel at the very least. Parents should have a corpus to support their children for a defined time period. One may need to create a training budget should be created for the child to allow him access to all the facilities and training required for his sport.  Costs vary widely from sport to sport. Cricket is generally regarded as a financially easier option as once a boy starts playing at the state of club level, all his expenses are borne by BCCI. You end up spending Rs 2000- 5000 on his cricket every month. Bat costs vary from 1000 to 10,000 Rs. The image below,from Business Today, shows cost, training life cycle, primary financial support during training and Employment opportunities.

Cost of sports in India

For tennis and chess costs escalate as a child progresses up a ladder. expenses multiply when one begins playing outside his city, since he has to be accompanied by at-least one parent. The image below shows the Break down of costs of playing badminton

Sponsorship: It is extremely hard, though not impossible to come come by for the individual games like tennis and chess. At all but highest levels, sponsorhsip depends more on individual networking skills that actual recognition of merit. At high levels sponsorship might be available but at lower levels you have to go to sponsors they don’t come to you.

Medical insurance, a policy covering sports injured should be examined. A contingency reserve should be created to supplement income in case of accident/injury. Scholarships/sponsorship/endorsement options can be explored. The image below shows the Break down of costs of playing various sports badminton

Break down of costs of playing sports

Indians does not have sporting mindset

In India education and work have been the recommended ways to make money and live somewhat happily ever after. Indians crave security. Our success as an academically-oriented people proves that we are excellent at pursuing something that pays well or, at least, regularly; to a lesser extent.  For many hardship and poverty makes them desperate to escape it by seeking, more than anything else, a source of income for life. Sport has never been the horse an average Indian would want to bet his money on. Only the very poor or the very well off in India feel motivated enough (for entirely different reasons) to focus on competitive sports apart from cricket and studies If you look at the Olympic medal winners

• Leander Paes hails from a prosperous family.Abhinav Bindra, too, belongs to an affluent Sikh family.
• But Sushil Kumar Tehlan’s and Vijender Singh’s fathers were both bus drivers. Karnam Malleswari, however, took to the hard grind of weightlifting as a means to give herself and her kin a better life.
• Colonel Rajyavardhan Singh Rathore was an Army man with access to world class training and nurturing from an early age.

None of these medal winners are part of the ‘Great Indian middle class.’ . This is the prime reason India does not win very many medals at the Olympics, and other world level competitions. No more than a very small percentage of the population is willing to devote its life to athletics, shooting, judo, table tennis, gymnastics, fencing and the like. That is why a country with so many people has so little to show by way of Olympic medals. Since 2005, Lakshmi Mittal has been funding the $10 million Mittal Champions Trust to support 10 Indian athletes with “world beating potential”.  However, it’s a risky investment in an historically feeble enterprise. For India, despite its billion plus population and genetic diversity, has had an astonishingly unimpressive record in international athletic achievement.

If India has to become a sports heavyweight, sport must become a middle class pursuit. Right now, only cricket, acquiring a university degree and work indisputably are. It’s only when these activities become as or even somewhat as rewarding as cricket, school, and the ubiquitous ‘import-export’ will a majority of the billion Indians take it up. Until then, it’s idiotic to carp about the fact that

Alternate career options in Sports

You need spectacular talent and luck to make it in sports in India although there are allied professions that not so successful could consider.  Even when you’re looking at a serious playing career, it pays to be aware of the alternatives. good sports performance at the state and national level opens many doors. For more than a toe hold in these opportunities though a fair academy record is necessary.

• Sports quota admission: State run colleges have performance based admission quotas for state/national level sports people. Many US varsities too are generous with sports scholarships.
• Sports quota employment : National and state level players can take advantage of support quotas in government departments like railways amd excise or in public sector companies.
• Coaching, physiotherapy , nutition , commentry and allied services.

Journey of P V Sindhu

Sindhu has been playing the sport professionally since she was just eight years old, which means she has a 13-year long history in the sport already at the age of just 21. It follows, then, that there are several moments which have helped shape her journey so far. We look at the key moments in her career that have made her who she is today: From PV Sindhu’s career timeline

• 2003:Born in a family of Volleyball players, Sindhu says she got inspiration from her coach Pullela Gopichand’s win in 2001 All England Badminton Championship and chose Badminton over Volleyball at an early age of eight in 2003
• 2004: The young girl started her first training in the sport with Mehboob Ali at the badminton courts of Indian Railway Institute of Signal Engineering and Telecommunications in Secunderabad.
• 2005: The shuttler won her first major tournament in the form of the 5th Servo All India ranking championship in the under-10 category. Sindhu also won the singles title at the Ambuja Cement All India ranking at that young age of 10.
• 2007: A 13-year-old Sindhu went on to win doubles titles in the Under-13 category at four major tournaments, as she won at the IOC All India Ranking, Krishna Khaitan All India Tournament, the Sub-Junior Nationals and the All India Ranking in Pune. This brought the shuttler widespread recognition on the domestic circuit.
• 2008: Sindhu joined the Gopichand Academy in Hyderabad, which started a new journey for the shuttler.  Sindhu used to travel more than 50 kilometres everyday to get to her training centre in Hyderabad.
• Hard working, tireless and never one to miss training, Sindhu had set aside all distractions before the Games, including her mobile phone. She has been off Twitter since the start of the Olympics, father Ramana said.
• Sindhu’s parents told the media after the victory that, from the time she was young, she would cry if she missed practice even for a day. “She has been training from when she was 10 years old. The last twelve years or so have not been easy for us. The first few years, we used to come to the academy everyday from Secunderabad. She would cry if I could not bring her even for a day. But we are glad that we did all that and followed the rigour. I cannot think Gopi enough,” Ramana said
• 2009: Sindhu saw herself develop into a force to be reckoned with as she won the gold medal in the Under-14 category at the 51st National School Games in India. In the same year, Sindhu won a bronze medal at the 2009 Sub-Junior Asian Badminton Championships held in Colombo, which was her first ever international tournament. This indicated that the shuttler was ready to compete globally at such a young age, and she was already said to be ahead of her fellow competitors at that point.
• 2010: The 15-year-old had become a sensation in the sport of badminton and she bagged her first ever senior medal when she won the silver in the women’s singles at the Iran Fajr International Badminton Challenge. This achievement also led to the shuttler finding a place in the national team of India at the 2010 Uber Cup.
• 2012: Sindhu stepped up her pursuit of becoming the best, a goal which had been instilled in her by her coach Gopichand. The 17-year-old saw herself win the gold medal at the Asia Youth Under-19 Championships that year. The icing on the cake came when the youngster defeated Li Xuerui of China, who had just won the gold medal at the London Olympics. This helped her in progressing to the semi-finals of the Li Ning China Masters Superseries tournament. Her good run of form resulted in the Indian finishing the year at the 15th spot in the world rankings.
• 2013: Sindhu did not take her foot off the pedal, and she became the champion of the Malaysian Open 2013 – this was her maiden Grand Prix Gold title. But what made the year truly special for Sindhu was that she became India’s first medalist in women’s singles at the Badminton World Championships.The shuttler ended the year on a high by also winning the Macau Open Grand Prix Gold title.
• 2016; Winner of olympic Silver Medal at Rio Olympics.

Related articles:

• Sports person income and endorsments : Virat Kohli, Maria Sharapova
• Cricketer and Money
• Sports person income and endorsments : Virat Kohli, Maria Sharapova
• Is IPL the Indian Premier League the Indian Paisa League?
• What does Bharat Ratna winner get?

Sports is a sunrise industry in India today. It demands talent, dedication,consistency, sacrifice and a lot of hard work from the sportsperson himself and above all from his parents. So are you planning to encourage your child to explore sports as career? Have you explored the option of your child taking sports as a career, how much have you spent on his sports activity.

The post Sports as career:So your child wants to be cricketer,badminton player appeared first on Be Money Aware Blog.

After leaving your old job after 2 months you can withdraw EPF  by submitting Form 19 to your old employer or EPFO. You can withdraw From EPS(even for scheme certificate) by submitting form 10C. This articleIt talks about EPF Withdrawal, how to withdraw from EPF and EPS  in detail, Forms to be filled, check claim status, SMS, Tax on epf withdrawal

Overview of Withdrawing from EPF and EPS

• If withdrawing through previous employer.
  • Download and take print outs of form 10C and Form 19. Please mention your mobile number on the top of the Form-19 and 10c.
  • Fill in Form 19 and Form 10C
  • Submit to previous employer
• Approaching EPFO directly only for un exempted organisations ie you are not contributing to EPF Private Trust.
  • If details such as Aadhaar and bank account number are linked to your Universal Account Number (UAN) and know-your-customer (KYC) verification is done by the employer, then an employee can directly approach EPFO for withdrawal using UAN based Forms.
  • If no UAN then you can still submit Form 19/10C to EPFO attested by Manager of a bank/Any gazetted officer/Member of the Central Board of Trustees./ committee/ Regional Committee (Employees’ Provident Fund Organization)/Magistrate/ Post/ Sub Post Master/ President of Village Panchayat/ Notary Public. Note EPFO looks at such applications in detail, to prevent PF fraud and rate is rejection is higher. 
  • Going forward Aadhar based EPF Withdrawal
• Fill Form 15G  to avoid TDS deduction.
• Attach a cancelled cheque leaf of the account mentioned in the Forms.
• Revenue Stamps Re. 1 each are required to be affixed on the forms and duly signed. (Not available in Karnataka so just sign in the location where it has been requested for revenue stamp)
• EPFO normally takes around 15-60 days to process your claim.
• Track EPF Withdrawal
• You will get SMS updates
• You’ll receive two different amounts in your account. One is for your EPF withdrawal and one is for Pension contribution.
• Check out your tax liability.

When can one withdraw from EPF?

It is important to note that withdrawal of the EPF account by a salaried employee is illegal. Many employees withdraw their EPF account at the time of leaving the organisation. Legally Right thing it to transfer the EPF account from old employer to new employer . Financially EPF is saving for retirement, you lose out on compounding and disruptions will affect the final returns. Transferring EPF account is easier now. Give your UAN to the new employer, using EPF Form 11/13, . As per PF withdrawal rules, a person who has EPF account  can withdraw from provident fund account

• if he or she has no job
• if two months have elapsed since his or her last employment (unemployed for 2 months).

Exceptions.

• A woman who quit their job for getting married, pregnancy or childbirth will not have to wait for two months to withdraw. They can do so immediately.
• if you are quitting due to health reasons.

Note: You can withdraw PF amount even after absconding as EPF money is your money. The employer cannot withhold it. You would have to approach EPF office directly.

• If you are taking break for higher studies and plan to join job after the studies, you can choose NOT to withdraw from EPF. When you join the new organisation you can transfer the PF account. With UAN it has become easier. Now EPF accounts don’t become dormant and continue to earn interest.

Filling EPF Withdrawal Forms without UAN

Download EPF related Forms from EPFO website at Which Claim Form to Submit or from our website

Write your Mobile Number on top of form to get SMS alerts

• Final Settlement from EPF :Form19 (pdf)   To see the filled sample form Sample Filled Form19_English
• Withdrawal Benefit/ Scheme Certificate from Pension Fund through Form-EPS-10C  Instructions on how to Fill Form-EPS-10C-Instructions-Eng
• Apply for Pension Form Form-EPS-Pension-10D. Instructions on how to fill Form-EPF-10D-Instructions-Eng

Filling EPF Withdrawal Forms with UAN

New EPF UAN based forms. If details such as Aadhaar and bank account number are linked to Universal Account Number (UAN) and know-your-customer (KYC) verification is done by the employer, then an employee can directly approach EPFO for withdrawal using UAN based Forms.  Please in such cases payment is in the bank account mentioned in the UAN portal. A cancelled cheque (containing member’s name, bank account number and IFS Code) is still required . Ref: EPF Circular

1. EPF withdrawals : UAN-Based_Form 19 . Please do submit Form 15G to avoid TDS deduction if your service is less than 5 years.
2. EPS withdrawals :UAN-Based_Form 10C(note that EPS withdrawal is only allowed if you have not completed 10 years of service. Else you get Scheme Certificate)

TDS on EPF Withdrawal, Filling Form 15G/15H for EPF withdrawal.

The EPFO can deduct tax on source (TDS) in conditions given below.One can submit form 15G during EPF Withdrawal If one wants to avoid TDS. Many employers are asking for Form 15G to be submitted to be on safe side. Note no TDS doesn’t mean that you don’t have any tax liability. EPF deducts TDS

1. One has not completed total 5 years of contribution to EPF. If EPF withdrawal is made before the completion of five years of continuous service, the amount withdrawn will be taxable
2. The EPF withdrawal amount is more than 50,000. Earlier this limit was Rs 30,000.

Following image shows the Form 15G for EPF Withdrawal made during FY 2016-17(AY 2017-18) from our article How to Fill Form 15G? How to Fill Form 15H? Sample filled form for Aarti Shukla, who is withdrawing on 30 Aug 2016 ,her EPF of Rs 1,30,00 and has 10,000 other income is given below. Please click on image to enlarge. If you withdraw between 1 Apr 2016 to 31 Mar 2017 then details of PY and AY can be used as filled in the form.

Tracking EPF Withdrawal

Know your EPF Claim Status facility is meant for EPF Members/subscribers/pensioners who have submitted a claim in any of the EPFO offices across India. Using this facility one can track the  status of a claim so submitted. The only pre‐ requisite is you must know your PF Account Number. You can go and check your EPF Claim Status by going to EPF Webpage for EPF Claim Status

1. If you know the EPF Office from where your claim has to be settled, select the same from the office drop down list.
2. On selection of office, the mandatory Region Code and Office Code will get populated automatically in the respective boxes.
3. Enter the Establishment Code in the third box – which can be of maximum 7 digits.
4. In case the Establishment Code has an extension / sub‐code, enter the same here. It can be a digit or letter as the case may be and can be of maximum 3 characters in size. Leave this field blank, if there is no extension /sub‐code to the Establishment Code.
5. Enter your account number which can be of maximum 7 digits.
6. Click on submit to get the status.
7. Details would be similar to shown in image below.

SMS while EPF Withdrawals

While submitting your claims, write your mobile number on the top of the application forms. You will get SMS on your mobile number and/or an email, about the status of your claim. In claim settlement requests, usually one gets two SMSs.

1. a) First SMS – would be for intimating that the EPFO has received their application.
2. b) Second SMS – when the claim is settled, applicant would get another message stating the amount is credited in the specified bank account.

Verify the amounts of EPF Withdrawal in bank account

You’ll receive two different amounts in your account. One is for your EPF withdrawal and one is for Pension contribution.

You can compare the received amounts with the contribution made by you to your EPF with previous employer. Check with UAN Passbook or Ask for Form 3-A from your previous employer. It should have all the information about the contribution made towards the EPF.

You will get Form 23 (Annual PF Statement) by post from the Regional Provident Fund Office, by which you can verify the claim credited in your account. You would receive this at your address, which you’ve mentioned in your withdrawal form.

EPFO’s Grievance

What to do if I won’t get the claim within 60 days?

If you won’t find status of your EPF claim then submit your grievance at the EPF website. The EPFO’s Grievance Redressal Website is epfigms.gov.in

• Click on the “Register Grievance” link.
• Fill up your EPF Account related details in the first section titled “Enter EPF Details”
• Then fill up your personal details in the second section titled “Enter Personal Details”
• Once done, scroll down to the third section on the page which is titled “Enter Grievance Details”
• Select your Grievance Category correctly and clearly explain your Grievance and submit your request.
• Once your request is submitted, the EPF Organizations Grievance Redressal Team will look into your request and will respond to you within 30 days.

Reasons for Rejection of EPF Claim

Many times EPF Claim is rejected. When checked on EPF website the status message is shown in image below.

• Provide all the information which matches your previous employer records such as Father’s name, Date of Birth.
• Mention your mobile number and email id clearly with out any overwrite.
• Mention  your bank account details

Tax on EPF Withdrawal

No tax is levied if you withdraw after completion of 5 years of your service. In calculating the 5 year term, the period of previous employment is included if the EPF balance from the previous employer is transferred to the current employer. If PF withdrawal is after 5 years then it is exempt from tax. You can still show it Income Tax Form under exempt income section like we show PPF Interest (as shown in our article Filling ITR-1 : Bank Details, Exempt Income, TDS Details)

If you withdraw your EPF amount before 5 years of service, it is taxable though you can claim relief under section 89.

• The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
• The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
• The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.

If TDS is deducted for EPF Withdrawal then you can claim for refund on TDS of EPF withdrawal  for the year in which EPF is withdrawn. This is helpful if you withdraw in the year when your income is less than taxable limit for example you are studying or not working.

Rebate under section 89

The rebate under section 89 is basically to even out the tax liability across the years by allocating the arrears received now to the years they pertain to.For example, if EPF is received for the financial years 2010-11 to 2014-15. Then the tax liability for each year will be calculated by adding this income to the returned / assessed income for these years. The difference between the tax liability for the assessment year 2015-16 by including arrears and the tax liability for the assessment years 2011-12 to 2015-16 by spreading out the arrears will be allowed as rebate under section 89. The effect of this rebate is to even out any difference in tax liability due to changes in income slabs. The workings for the rebate u/s 89 are complicated. I suggest that you should do it with the help of a CA to avoid errors.

EPF Image references

Related Articles:

• Basics of Employee Provident Fund: EPF, EPS, EDLIS
• Withdrawal or Transfer of Employee Provident Fund
• EPF Private Trust, the Exempted EPF Fund
• Tax on EPF withdrawal
• Transfer EPF account online : OTCP 
• How much EPS Pension will you get with EPS Pension Calculator
• How EPFO Manages Money, EPFO invesment in Stock Market

The post EPF Withdrawal:How to withdraw from EPF and EPS appeared first on Be Money Aware Blog.

Have you forgotten your UAN Password and want to recover or reset it? This article talks about how to reset and change UAN password when you have your mobile number with UAN registered with you but you have forgotten your UAN password.

Steps to Recover and Reset UAN password

Steps to recover and Reset UAN password, when you have the mobile number with UAN registered with you but you have forgotten your UAN password.

• Go to UAN Member e-SEWA Portal by clicking here
• Click on Forgot Login?
• Fill the details (your UAN and Registered Mobile Number)
• Click on Submit button.
• Screen shows the message Your UAN Password is reset now and it is sent to you through SMS.
• You will get a SMS on your mobile as shown below
  You have successfully reset your password on <date> for UAN <UAN No.>. Your username:<UAN No.> and new password is iqxbhkjui3498.
• Login to UAN Portal and change your Password through PROFILE

Details on how to Reset and Change UAN password

The UAN is a 12-digit number allotted to each Employee Provident Fund(EPF) member  by the Employee Provident Fund  Organization(EPFO) which gives him control of his EPF account and minimises the role of employer. Once member has activated his UAN based registration, he can any time login to the portal by using his username and password created. UAN

• Download Passbook/UAN Card,
• List Previous Member ID/View Linking Status,
• File Transfer Claim/View Transfer Claim Status/System Generated Transfer Claim Status,
• Edit Mobile Number/Edit Email ID/Update KYC Information/Change Password/Edit Personal Details,

When does one set up UAN password?

You set up UAN password when you register your UAN and activate it. As explained in the article UAN or Universal Account Number and Registration of UAN, Once you receive the Universal account number or UAN from your employer, you have to log on to the official website http://uanmembers.epfoservices.in. When you Click on Activate UAN Based Registration you have enter your UAN, mobile number and member ID. You will receive an authorisation PIN on your mobile,as shown in image below.

Steps to Change UAN password

• Go to UAN Member e-SEWA Portal by clicking here. 
• Login to UAN Portal using your UAN number and new password sent.
• Click on  PROFILE->CHANGE PASSWORD

UAN Change password

• Enter the old password and new password (one sent through SMS) twice. Remember The password for UAN should be alphanumeric, have minimum 1 special character and 8-25 character long. Special characters are one of  ! @ # $ % ^ & * ). Click on Change Password.
• You will see the message You have successfully change your password, as shown in image below.
• You would also get a SMS on your registered mobile ,You have successfully change your password against UAN <UAN number> on UAN Member portal.

UAN password change

Related Articles:

• UAN or Universal Account Number and Registration of UAN
• FAQ on UAN number and Change of Job
• UAN Problems, Password,Mobile Number,Incorrect Details and Help Desk
• EPF Form 11 on Joining a New Job

The post Forgot UAN Password: How to reset and change UAN password appeared first on Be Money Aware Blog.

Paytm claims to have over 150 million users, making it the biggest online payments platform in the country. On Nov 15 , 2016 Paytm said on Tuesday that its mobile interface will be available in 10 Indian languages, besides English, to boost adoption across the country. This article talks about what is Paytm, how Paytm

The post Paytm: How to Use Paytm,Open Paytm account,Pay using Paytm appeared first on Be Money Aware Blog.

The National Pension System (NPS) is a defined contribution retirement plan. At the age of 60 years, the subscribers may exit the NPS by withdrawing 60% as a lump sum and converting 40% to an annuity plan. The NPS is an Exempt-Exempt-Taxable plan. The maturity proceeds are taxable, which makes it less attractive when compared

The post Is NPS considered to be a Tax-Free Bond? appeared first on Be Money Aware Blog.

The National Pension System (NPS) is is gaining popularity because of Tax benefits. It is also one of the most feasible and cheapest products in the market.  This article talks about the features of NPS, changes in NPS in 2016 to make NPS attractive like more equity exposure ,about Bajpai committee which recommended the changes,

The post Changes in NPS: Will it make NPS attractive? appeared first on Be Money Aware Blog.

Those who have contributed to Employee Provident Fund also contribute to Employee Pension Scheme or EPS. If you have worked in an organization for more than 10 years and you want to withdraw from EPS you will not get your money but would get an EPS Scheme certificate, which you can use at age of

The post What is EPS Scheme Certificate? appeared first on Be Money Aware Blog.

EPFO has come up with a new unified UAN portal for Employees and EPF Employers and Establishments in Dec 2016. This article talks about the new UAN Unified Portal for Employees in detail.  After it was launched on 28 Dec 2016, it was not working properly. After 1-2 weeks of down time, this new portal

The post New UAN Unified Portal for Employees appeared first on Be Money Aware Blog.