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Sanjeev

Sanjeev Govila  | Answer  |Ask -

Financial Planner - Answered on Sep 20, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
shrinivas Question by shrinivas on Aug 10, 2023Hindi
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what is 139 (9) income tax notice

Ans: Section 139(9) of the Income Tax Act, 1961, states that when a return is found defective, the Income Tax Department will send a defective notice via email on the registered email id.

A defective return under Section 139(9) of the Income Tax Act, 1961 occurs when crucial information is either omitted or inaccurately entered in an income tax return. This triggers the issuance of a defective return notice by the IT Department, aimed at rectifying the inaccuracies.

Reasons and Situations Leading to Defective Return Notices:

1) Incomplete ITR
2) Missing Tax Information
3)TDS claimed without corresponding income
4)Discrepancy in Gross Receipts
5)Nil Income but tax liabity
6)Incomplete business and profession details
7)Tax payment Discrepancies
8)Mismatch in the name

Receiving and Responding to Defective Return Notices
Responding within a 15-day timeframe is crucial. Taxpayers must rectify the defects identified by the Income Tax Department by revising their return within this period. In case the revision cannot be completed within 15 days, an extension can be requested from the local Assessing Officer.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Moneywize

Moneywize   |174 Answers  |Ask -

Financial Planner - Answered on Feb 05, 2024

Asked by Anonymous - Feb 04, 2024Hindi
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Is there an option to claim any deduction under Section 89? How can I go about claiming it, or, will I get it only via refund?
Ans: Yes, there is an option to claim a deduction under Section 89 of the Income Tax Act, 1961, in specific situations. It applies when you receive income in the current year that was earned in a previous year. This often comes up with:

• Salary arrears: If you receive past due salary in the current year.
• Family pension arrears: If you receive past due family pension in the current year.
• Gratuity: Depending on the duration of your service, you may be able to claim relief under Section 89.
• Other income: There are other types of income covered by Section 89, like premature withdrawal from your PF account, commutation of pension, and compensation on termination of employment.

Here's how you can claim the deduction:

1. Eligibility: Ensure you meet the eligibility criteria for claiming relief under Section 89. You can find details on the Income Tax Department website or consult a tax advisor.
2. Form 10E: File Form 10E electronically at the e-filing portal of the Income Tax Department before filing your Income Tax Return.
3. Calculation: The relief amount is calculated by comparing the tax you would have paid in the year the income was earned with the tax you pay in the year you receive it. The difference becomes the relief amount.
4. Tax reduction: The relief amount reduces your taxable income in the current year, ultimately lowering your tax liability.

Refund vs. Reduced Tax Liability:

Whether you receive the benefit as a refund or a reduced tax liability depends on your specific situation. If you already paid taxes on the received income, filing Form 10E will trigger a refund for the relief amount. However, if you haven't paid taxes yet, the relief will directly reduce your tax liability for the current year.

Important notes:

• It's crucial to file Form 10E before filing your Income Tax Return to claim the deduction.
• The process can be complex, so consider consulting a tax advisor for personalised guidance, especially if your situation involves multiple income sources or intricate calculations.

I hope this clarifies the deduction process under Section 89. Remember, this is just general information; consulting a tax advisor is always recommended for accurate and personalised advice based on your specific circumstances.

..Read more

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Ramalingam

Ramalingam Kalirajan  |6965 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 05, 2024

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Sir, i am working as lecturer having 25000/- salary, due to family circumstances i have 30lk credit. All jewell loans, i could not able to handle. Even i sale my jewellery, i will be having 5 to 6 lk only. Any suggestion to reduce my credits.
Ans: It takes courage to address such situations, and it’s great that you’re taking proactive steps to improve your finances. Here’s a 360-degree approach to help you effectively reduce your debts while managing your monthly income of Rs 25,000.

 

Assessing Your Debt Situation
Current Debt Amount: You have Rs 30 lakhs in debt primarily due to loans taken against jewelry. If selling your jewelry will provide only Rs 5-6 lakhs, then other measures are necessary to bridge the remaining gap.

Debt Sources and Interest Rates: Understanding the interest rates on each loan will help prioritize payments. Jewelry loans often carry lower interest than unsecured loans or credit card debt. However, their high value makes them significant.

 

Setting Financial Priorities
Essential Expenses: Calculate your essential monthly expenses (household, transport, utilities). This will clarify how much is left for debt repayment each month.

Debt Repayment Priority: Prioritize high-interest debts first. Any loan with a high interest rate should be addressed as soon as possible to reduce interest accumulation.

 

Exploring Repayment Options
Partial Repayment by Selling Jewelry: Selling your jewelry may not clear all debt but will help reduce a portion. Use the Rs 5-6 lakhs strategically by paying off high-interest loans first.

Consider Loan Consolidation: If possible, consolidate your loans into one with a lower interest rate. For instance, banks or cooperative societies sometimes offer personal loans at a lower rate, which can help ease monthly payments.

Restructuring Existing Loans: Contact your lenders to discuss loan restructuring options. Many banks provide relief by extending loan tenures or reducing EMI amounts for individuals in genuine financial distress.

 

Managing Monthly Cash Flow
Setting a Strict Budget: Allocate a strict budget for necessities. Consider frugal practices to reduce monthly costs temporarily, which can free up additional funds for debt payments.

Allocating a Debt Repayment Fund: Set aside a specific portion of your income every month, no matter how small, strictly for debt repayment. This will build consistency in reducing your debt.

Avoiding New Debts: Avoid taking additional loans or using credit until your current debt is more manageable.

 

Additional Income Opportunities
Tutoring or Freelance Work: As a lecturer, you could consider online tutoring or offering coaching for students after hours. Even Rs 5,000-10,000 in additional income monthly can significantly help.

Skill-Based Part-Time Work: If time permits, you could explore other opportunities aligned with your teaching expertise, such as writing educational content, creating online courses, or conducting paid webinars.

 

Support Systems and Resources
Family Support: Since family circumstances have impacted your debt, consider discussing any temporary financial support options with family members to ease immediate pressure.

Seeking Financial Counseling: Consider consulting with a Certified Financial Planner (CFP) who can give detailed advice tailored to your unique situation, including restructuring or debt management plans. A CFP will provide a professional outlook on maximizing your income and managing debt within a structured plan.

 

Reducing Emotional and Financial Stress
Avoid Impulse Financial Decisions: It’s easy to make financial decisions under stress that may lead to more debt. Focus on following a structured plan.

Self-Care: Financial challenges can be overwhelming, affecting mental and physical health. Maintain a balanced routine, and stay positive.

 

Final Insights
Addressing debt takes time and disciplined planning. By following these steps, you can gradually reduce your financial burden. The approach of combining structured repayments with minimal expenses and possible additional income can put you back on a more stable financial footing.

 
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |6965 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 05, 2024

Asked by Anonymous - Nov 04, 2024Hindi
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Sir, I purchased a residential plot in 2018. Paying 6 monthly installment.Total amount paid with interest was 43,00000/- forty three lack. I have no residential house at present. Now the present price of that is 95,00000/- . Now I want to sell that and investing Rs 40,00000/- for residential house and balance in commercial land. please advise me.
Ans: You’ve achieved excellent appreciation on your plot investment, which is highly commendable. You now aim to sell this property and use part of the funds for a residential house while considering the rest for commercial land. Let’s analyse this plan from a Certified Financial Planner’s perspective. Here’s a 360-degree assessment to help you make a well-informed decision.

Capital Gains and Tax Implications
Long-Term Capital Gains (LTCG): As you bought the plot in 2018 and are selling it now, the capital gains qualify as long-term. Given the increased value, you may incur LTCG tax on the profit.

Exemptions: When reinvesting in a residential property, you can potentially claim exemption under Section 54F of the Income Tax Act. This exemption applies if the capital gain amount is reinvested in a residential house within a specified timeframe. Consulting with a tax advisor could optimize your tax efficiency here.

Analyzing Residential House Purchase
Primary Residence Investment: Using Rs 40 lakh for a residential house is a wise move, as it gives you a self-owned home, fulfilling a fundamental need. Without a current home, owning a residence enhances your long-term security and reduces rent expenses.

Long-Term Value: Owning a home can offer lifestyle stability, tax benefits, and asset value over time. However, as residential properties are typically less liquid and may have lower returns than other assets, it’s best to consider it a personal asset rather than an investment.

Considerations for Commercial Land Investment
Investing in commercial land may seem attractive due to potentially higher rental yields and appreciation rates. However, let’s evaluate it against alternative investment avenues.

Risk and Return: Commercial properties generally offer higher returns than residential properties but come with higher risks. Rental income from commercial spaces can be inconsistent based on economic conditions and tenant demand. It’s essential to assess if you’re comfortable with this risk.

Liquidity Concerns: Real estate, especially commercial property, is less liquid. Selling a commercial property may take time, and in down markets, you may not realize your expected price.

Maintenance and Management: Commercial properties often require more active management, legal clearances, and compliance checks. Unless you’re prepared for these responsibilities, this investment could become complex.

Exploring Alternative Investments for Growth
To maximize growth, diversifying your remaining funds into financial instruments can be beneficial. Here are a few alternatives:

1. Mutual Funds
Actively Managed Funds: Actively managed mutual funds, overseen by professional fund managers, have the potential for higher returns than index funds. Unlike passive index funds, active funds aim to outperform benchmarks, making them appealing for growth-focused investors.

Regular vs. Direct Funds: Regular funds come with guidance from a Mutual Fund Distributor (MFD) and a Certified Financial Planner, who can provide personalized advice. The convenience of a CFP-guided approach often outweighs the slightly higher fees compared to direct funds. Direct funds, while fee-saving, lack advisory benefits and can lead to suboptimal choices if not expertly managed.

2. Fixed Income Instruments
Corporate Bonds or Government Securities: These can provide steady income and safety for conservative investors. Interest rates vary based on the issuer and tenure, and they offer fixed returns over time.

Fixed Deposits (FDs): Bank FDs or other fixed-income options offer stability and liquidity. Though the return rates are modest, they add a stable component to your portfolio.

Debt Mutual Funds: For a moderate-risk approach, debt funds are ideal. Debt mutual funds invest in bonds and government securities, offering stability and potentially higher returns than FDs. Remember, debt funds are taxed as per your income slab.

3. Gold as a Hedge
Sovereign Gold Bonds (SGBs): Investing a small portion in SGBs diversifies your portfolio, providing a hedge against inflation. SGBs offer interest income and avoid the hassle of physical storage, making them an efficient gold investment.

Gold Mutual Funds and ETFs: Alternatively, gold mutual funds or ETFs provide liquidity and flexibility, though they may have slightly lower returns than physical gold or SGBs.

Evaluating Your Financial Goals and Needs
Based on your current objective, here’s a tailored roadmap to help meet your requirements:

Primary Residence Ownership: Prioritise the Rs 40 lakh towards a residential home purchase, fulfilling your immediate housing needs.

Enhanced Diversification: For the remaining funds, diversify between mutual funds, fixed-income products, and gold. This combination offers growth, stability, and inflation protection.

Balanced Liquidity and Growth: Consider liquid investments like mutual funds and FDs for accessible funds. These can support liquidity while generating returns.

Key Takeaways for a Secure Future
Avoid Concentration in Real Estate: Since you already hold residential and commercial property, too much allocation to real estate could limit liquidity and growth opportunities. Financial assets offer more flexibility.

Tax Optimization: By consulting a tax advisor, you can strategically reinvest and claim exemptions, optimizing your tax outgo while achieving your financial goals.

Active Monitoring and Review: Regularly review your portfolio, especially in mutual funds, with the assistance of a Certified Financial Planner. This ensures alignment with your goals and adapts to market changes.

Final Insights
Selling your plot offers a unique opportunity to balance asset allocation between real estate and financial assets. By investing in a residential property for personal use and diversifying into financial assets, you achieve both stability and growth potential.

Your disciplined approach to financial planning is commendable. With a balanced strategy, you can maximise both security and growth for a prosperous future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |6965 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 05, 2024

Asked by Anonymous - Nov 05, 2024Hindi
Money
Dear Mr. Ramalingam Kalirajan, I am 51 years old, single with no dependent. currently I own a portfolio of INR 1.3 Cr in which 40 L is in MF and 10L in Bond and 10L in Gold. 50L in direct Shares and another 20L in Insurance (Ulip). apart from this I have a Flat which is worth of 60L. my Monthly expenses is around 40K, currently I am planning to retire, kindly let me know whether with this investment can I retire keeping life expectancy of 70-80 years. kindly advice.
Ans: It’s commendable that you’ve accumulated a substantial portfolio and are considering retirement thoughtfully. Let's evaluate each asset class within your portfolio to assess your retirement readiness.

Monthly Income Needs and Existing Assets

You mentioned monthly expenses of Rs 40,000.
Over a 20-30 year retirement period, inflation may gradually increase this amount. A sustainable withdrawal strategy will help address this.
Given a life expectancy of 70-80 years, a monthly income from investments is essential to meet your needs without depleting your corpus.
Mutual Funds

Your mutual fund corpus of Rs 40 lakh could play a key role in providing regular income.

Actively managed funds, unlike index funds, allow expert fund managers to navigate market conditions. They aim for growth even in uncertain markets.
These funds can also be diversified across equity and debt categories to maintain balance. Equity funds can support growth, while debt funds can offer stability and liquidity.
Suggested Action

Retain and build your mutual fund corpus. Regular funds through a Certified Financial Planner (CFP) and Mutual Fund Distributor (MFD) offer guidance, minimizing risk while aiming for returns.
Setting up a Systematic Withdrawal Plan (SWP) can provide monthly income in a tax-efficient manner. SWP helps maintain principal while generating steady cash flow.
Direct Share Investments

With Rs 50 lakh in direct shares, your exposure to the equity market is significant.

Direct shares can be volatile and may not always align with the cash flow needs of retirement.
However, with proper management, shares may serve as a growth engine in your portfolio.
Suggested Action

Gradually shift part of your direct shares to diversified equity mutual funds. They provide professional management, spreading risk across sectors and companies.
Review the remaining stocks for potential dividends. Dividend-yielding stocks can complement your monthly cash flow needs.
Bond Investments

Your Rs 10 lakh in bonds offers stability but limited growth. Bonds are more effective as a balance to higher-growth assets like equities.

Bonds have fixed interest, but they may not keep up with inflation. Over time, they could lose purchasing power.
Suggested Action

Retain some bonds for safety but consider partially reallocating to debt mutual funds. Debt funds offer liquidity and potentially better post-tax returns than traditional bonds.
Maintain a mix of short and medium-term debt funds. These provide safety while possibly enhancing returns over traditional fixed-income instruments.
Gold Holdings

Gold can serve as a hedge in times of market volatility, and your Rs 10 lakh in gold contributes to a diversified portfolio.

However, gold alone may not generate regular income. It is more useful for capital preservation.
Suggested Action

Keep your gold as a long-term hedge but avoid expanding your holdings in gold.
For income generation, focus on growth-oriented assets like equity or hybrid funds, which combine equity and debt in a balanced manner.
Insurance (ULIP)

Your Rs 20 lakh in a Unit Linked Insurance Plan (ULIP) provides both insurance and investment. However, ULIPs can come with high charges and may not yield optimal returns.

Suggested Action

It is advisable to consider surrendering or partially exiting the ULIP.
Reinvest the proceeds into mutual funds, which offer greater flexibility, transparency, and cost-efficiency. A term insurance policy can cover any remaining insurance needs.
Real Estate

You own a flat valued at Rs 60 lakh, which can provide security or rental income if required. However, real estate as an asset is typically illiquid, and immediate access to funds can be challenging.

Suggested Action

If rental income isn’t feasible, consider whether this asset aligns with your retirement goals. Selling the property can free up funds for more liquid investments.
Alternatively, keep it as a fallback option but prioritize liquid and income-generating investments for cash flow needs.
Creating a Sustainable Income Stream

To cover Rs 40,000 monthly expenses, an ideal approach is to create a mix of income sources from your portfolio:

A Systematic Withdrawal Plan (SWP) from equity and hybrid mutual funds could provide monthly income while maintaining the principal.
Dividends from shares, if selected well, can further support your cash flow.
For liquidity, a portion in debt mutual funds or bonds can cover emergencies.
Optimizing Tax Efficiency

Long-term capital gains (LTCG) on equity mutual funds above Rs 1.25 lakh are taxed at 12.5%, and short-term gains at 20%.
Debt funds, on the other hand, are taxed per your income tax slab.
Setting up withdrawals strategically can help minimize tax impact and extend the life of your corpus.
Maintaining Emergency Funds

Since you are planning for a lengthy retirement, set aside a portion of liquid assets as an emergency reserve. This could be a mix of cash, liquid mutual funds, and short-term debt funds.

A sufficient emergency fund provides a buffer without disrupting your main investment portfolio.
It ensures that you won’t need to liquidate assets in unfavorable market conditions.
Healthcare Planning

Without dependents, healthcare planning is crucial to address any unforeseen medical expenses. Consider a robust health insurance policy to minimize out-of-pocket costs.

If you already have health insurance, evaluate the coverage for adequacy.
Top-up plans can provide extra protection without a large increase in premiums.
Finally

Your retirement plan appears well-structured with diversified investments, yet a few refinements could ensure financial security. By consolidating your portfolio for income generation and stability, you can enjoy a comfortable and financially independent retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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