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Anil Rego  |377 Answers  |Ask -

Financial Planner - Answered on Aug 25, 2021

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
Mahesh Question by Mahesh on Aug 25, 2021Hindi
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I was working abroad since June 2009 and returned back to India permanently on October 28, 2020.

I changed my NRE bank account status to that of resident saving account in November 2020. Also, the FDs in the NRE account status were changed to resident saving account FDs.

The interest accrued on these FDs on December 31, 2020, on quarterly basis and the bank cut TDS on the same. Also, TDS deducted in the March 2021 quarter on FD interest/ matured FDs in this quarter.

My questions are:

1. While filing tax for the financial year April 2020 to March 2021, will the interest income on the savings account and the FDs be considered from the date of account status changed from NRE to resident saving account? Or will the interest income be considered from Mar 2020 (ie, for whole year)?

Ans: As per the RBI's master directions, upon returning to India permanently, the existing NRE FD account of the NRI account holder is required to be converted to a resident account, without any changes in the promised rate of interest.

The interest earned from the NRE FD is not taxable. However, after it is converted to a resident FD, the interest earned is taxed as per your income tax slab. TDS will be deducted if applicable.

2. If the answer of the first question is from the date of account status change, then the total income for the year will be less than exempted income. In this case, can I get tax return on deducted TDS on FDs after filing ITR?

Anil Rego Yes. Once you file ITR, you can claim a refund for any extra tax paid.

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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Asked by Anonymous - Nov 27, 2024Hindi
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Hi, sir I am a an 30 year old (single) engineer working with a MNC in Chennai, unfortunately till this day i haven't had any savings at all for my future (retirement, other short term or long term goals). Currently my take home salary after EPF and parental insurance is 53k ( EPF is about 4900/month - employee+employer) i haven't opted for Corporate NPS but is provided by the company without any additional contribution from company. I have company health insurance policy and have planned to take my own health insurance and term insurance plan. Adding to above I have zero emergency fund with me. How should I proceed with my investments?
Ans: You have taken the first step by recognising the need to plan. It’s essential to appreciate your intention to secure your financial future. Let’s look at how you can proceed to achieve your short-term and long-term goals.

Your current take-home salary is Rs 53,000, and your EPF contribution is Rs 4,900. However, you lack savings, investments, and an emergency fund. Here's a step-by-step strategy:

Build an Emergency Fund
Set aside funds to cover at least six months' expenses.

Start by saving 10-15% of your salary monthly into a high-interest savings account.

Use Recurring Deposits or Liquid Mutual Funds to maintain this fund for emergencies.

Secure Yourself with Insurance
Health insurance: Maintain your company health policy but add a personal health policy. Choose a policy offering a sum insured of Rs 10-15 lakh.

Term insurance: Buy a term plan covering 10-15 times your annual income. Keep the policy simple and avoid investment-linked insurance.

Budget Your Income
Allocate your income carefully for expenses, savings, and investments.

Use the 50-30-20 rule: 50% for needs, 30% for wants, and 20% for savings and investments.

Avoid unnecessary expenses to increase your saving capacity.

Start Investing Gradually
Short-term goals (1-5 years): Invest in debt funds or recurring deposits. Debt mutual funds are good for stable returns.

Long-term goals (5+ years): Invest in equity mutual funds for higher returns. Choose actively managed funds with consistent performance.

Avoid index funds. Actively managed funds have a better potential for higher returns through professional fund management.

Retirement Planning
Utilise the EPF for retirement. Your current contribution will grow over time with compounding.

Consider investing in diversified equity mutual funds for additional retirement savings.

Corporate NPS: You can explore NPS for its tax-saving benefits. However, don’t rely solely on it for retirement.

Tax-Saving Investments
Use Section 80C to save taxes up to Rs 1.5 lakh.

EPF, PPF, ELSS mutual funds, and life insurance premiums can qualify under this section.

Opt for ELSS funds for tax saving and wealth creation.

Review Existing Expenses
Evaluate and minimise unnecessary expenditures.

Avoid loans for discretionary spending like vacations or gadgets.

Advantages of Using a Certified Financial Planner
A CFP can help you plan holistically and ensure you stick to your goals.

They provide tailored strategies, ensuring proper fund allocation and monitoring.

Invest through a Mutual Fund Distributor with CFP credentials to access professional advice.

Key Steps for Discipline
Automate investments through SIPs in mutual funds.

Track your monthly budget and investment progress regularly.

Avoid direct funds. Regular funds offer professional guidance and fund distributor support.

Tax Implications
For equity mutual funds, LTCG above Rs 1.25 lakh attracts 12.5% tax.

STCG on equity funds is taxed at 20%.

Debt fund gains are taxed as per your income slab. Consider these while investing.

Final Insights
You are in the right direction by seeking advice now. Build a solid foundation with savings, insurance, and investments. Take small steps toward financial independence.

Remain consistent with your investments, and review your financial plan annually.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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Hello, i really have a serious issue regarding my studies as i am 24 yrs now and gave NEET 4times and i am still preparing for nxt year 2025 but at the back of my mind i am really tensed what if the same thing repeats in the neet 2025 also like paper leak and all, So now i am confused that should i take a full drop or partial drop. The mental pressure is really hitting hard and also its almost been 4years that i am still 12th pass only and my classmates have already completed their college and some are flight attendant and earning well, So this all things just hits so hard and also the hope in parents eyes as my father is already proud that i studied science so i would definitely become doctor. I wasted a lot of money in pg and coaching (fastrack) and this all things are hitting so hard that i really feel sad and have no ways to go.
Ans: Hi Bhima
I must say you have got perseverance & I appreciate your parent's trust in you. You have already appeared multiple times and you are going to appear again in 2025. By the time you will be 25 years old. They say there is no age to learn. But after getting admission you need another 10 years to practice as a qualified specialist. Make sure you take admission in the next session.

If higher cutoff & high fees of private colleges are an issue for you, then try exploring the MBBS abroad option, I can help with that too. Since NEXT is compulsory for Indian & Foreign graduates too it won't make a difference if you study in India or Abroad.

For time forget all the societal pressure and give your 100% and make your parents proud.

...Read more

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