my daughter is in 7th standard, she is not putting enough effort in studies, but when we discuss she says she knows everything but in exams she scores around 80% only, before exams we assume that she may score good but after results get disappointment, one astrologer told us that she will be average only, please guide us how to improve?

Ans: Hello Jitendra
You can expect core branches like Civil, Chemical, or lower-demand streams in NIT Uttarakhand or GFTIs during CSAB rounds.

Good luck.
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Radheshyam

Ans: Hello dear.
Your son has chances of getting branches like Chemical, Civil, or Metallurgy in mid-tier NITs, and may upgrade from SVNIT Chemical to a better branch or NIT in CSAB rounds. Keep a close eye on the counseling process.

Good luck.
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Radheshyam

Ans: Hello Shantanu
You have a chance in lower-tier Maharashtra colleges via CAP rounds; after CAP, target private or autonomous colleges like MIT-WPU, DY Patil, or VIT through non-CAP/institutional rounds.

Good luck.
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Radheshyam

Ans: Hello dear
You can target lower NITs (Puducherry, Meghalaya) for core branches, newer IIITs and GFTIs for ECE/IT, under Gujarat home state quota in CSAB.

Good luck.
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Radheshyam

Ans: Hello dear
You can expect branches like CSE in lower NITs/IIITs, IT/ECE in mid-tier NITs, or core branches in good NITs during CSAB rounds.

Good luck.
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Radheshyam

Ans: Hello Jyoti
Preference order: (1) EEE @ Jalandhar (2) Electronics @ Calicut (3) VLSI @ Jalandhar. The final choice will be yours.

Good luck.
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Radheshyam

Ans: Understanding Taxation on Fixed Deposit Interest

– Interest on fixed deposits is taxable under “Income from Other Sources.”
– Tax is not based on when interest is received.
– It is based on when the interest accrues.
– This is true even if the FD pays only at maturity.

? When Does Interest Accrue?

– Interest accrues every financial year, not just on maturity.
– Banks calculate interest every quarter or half-year.
– Even for reinvestment FDs, interest is earned yearly.
– The entire interest is paid at maturity, but accrues yearly.

? Taxation is Based on Accrual Method

– As per Income Tax Act, interest must be declared yearly.
– This is known as “accrual basis of taxation.”
– Ignoring this may result in tax demand and penalty later.

? Common Misunderstanding About Tax on FDs

– Many believe tax is due only when FD matures.
– This is incorrect under the Income Tax rules.
– This assumption may cause large tax outflow in maturity year.
– Also, it may attract interest and penalty from IT department.

? Your Obligation Each Year

– Every year you must estimate interest accrued.
– Add it to your total income while filing ITR.
– Pay tax as per your income slab on that amount.
– This is applicable even if the interest is not paid out.

? Where to Find Yearly Accrued Interest

– Ask your bank for yearly interest accrual certificate.
– Usually available in April each year.
– This helps in proper tax reporting in your return.

? Tax Deduction at Source (TDS) on FDs

– Banks deduct TDS if interest exceeds Rs. 40,000 per year.
– For senior citizens, this limit is Rs. 50,000.
– TDS is 10%, provided PAN is updated.
– If PAN is missing, TDS can be at 20%.
– TDS is not the final tax liability.
– You still need to calculate your slab tax.
– If you fall in higher tax slab, pay balance tax.
– If your slab is lower, claim refund of excess TDS.

? If You Ignore Annual Reporting

– Tax department can track FD accrual via Form 26AS.
– Interest is also shown in AIS (Annual Information Statement).
– If you don’t report interest, it raises red flags.
– In future scrutiny, you may face tax demand and penalty.

? Tax Planning Suggestions

– Ask bank for Form 16A or interest certificate every year.
– Add accrued interest to your income in your return.
– Pay self-assessment tax if needed before 31st July.
– This avoids last-minute surprise tax burden at maturity.
– Also avoids interest under section 234B and 234C.

? Impact on Overall Financial Planning

– FDs give assured returns but interest is fully taxable.
– This makes post-tax return low for many investors.
– Consider this tax aspect while comparing with other investments.
– For high income earners, debt mutual funds may be better.
– They offer indexation benefit and lower tax impact over time.

? Should You Break FD to Avoid Annual Tax?

– No need to break FD.
– Just declare interest every year properly.
– Even if maturity is far, show yearly interest accrual.
– Maturity proceeds will be tax-free if already declared yearly.

? Tax Filing and Documentation Tips

– Maintain record of FD opening date, amount and maturity date.
– Keep bank’s yearly interest certificate safely.
– While filing ITR, enter interest under “Income from Other Sources.”
– Match with AIS data to avoid mismatch.
– If mismatch found, explain with proof during ITR processing.

? What Happens on Maturity Year?

– In maturity year, you receive full interest and principal.
– But only declare the last year’s interest in ITR.
– Don’t report entire 6 years’ interest again.
– That would mean double taxation.
– Maturity amount already includes taxed portion.

? If You Missed Reporting in Earlier Years

– You can revise past returns for last 2 assessment years.
– File revised returns and pay tax with interest.
– Better to rectify voluntarily than face penalty later.

? Key Tax Rule to Remember

– Interest earned is taxable on accrual basis.
– Even if payment is made on maturity only.
– Pay tax each year, not just in maturity year.

? Ideal Tracking Practice

– Maintain Excel sheet for FD investments.
– Note FD amount, start and end date, and yearly interest.
– Add this value every year while filing your ITR.

? Benefit of Declaring Yearly Interest

– You avoid tax shock in final year.
– You avoid penalty, interest, and notice from IT department.
– You show income transparently.
– This helps in home loan, visa, and other financial proofs.

? Role of a Certified Financial Planner

– A CFP can help optimise tax-efficiency of your investments.
– Can help plan maturity of FD with other cashflows.
– Can suggest better options if tax is reducing returns.
– Regular reviews with a CFP help avoid such confusions.

? Disadvantages of Fixed Deposits

– Returns are low compared to inflation.
– Taxable every year.
– No indexation benefit.
– TDS cuts liquidity.
– Not suitable for long-term wealth creation.

? Alternative Options for Tax Efficiency

– Actively managed debt mutual funds offer better post-tax return.
– They allow better planning for income and withdrawals.
– Short-term and long-term capital gains can be staggered.
– Professional fund manager brings risk control.
– Certified Financial Planner and trusted MFD can help align these.

? Don’t Fall for Index Fund Hype

– Index funds offer low-cost but no flexibility.
– No scope of outperformance during market shifts.
– Poor downside protection in falling markets.
– Better to use actively managed funds guided by experts.
– This helps optimise portfolio across market cycles.

? Disadvantages of Direct Mutual Funds

– Direct plans need your own research and monitoring.
– No access to guidance from a certified mutual fund distributor.
– Most investors lack time or knowledge for this.
– Errors in fund selection or exit timing hurt returns.
– Regular plans via MFD give advice, handholding and long-term value.
– A CFP-aligned MFD ensures aligned goals, reviews and discipline.

? Don’t Rely on Endowment or Investment Policies

– If you hold LIC or Postal policies for investment, evaluate ROI.
– Most of them yield low post-tax returns.
– Consider surrender and reinvest into better options via SIPs.
– A Certified Financial Planner can help this switch efficiently.

? Final Insights

– Tax on FD interest must be paid every year, not just at maturity.
– Interest accrues yearly and is taxable even if not received.
– TDS doesn’t mean your full tax is paid.
– Declare interest each year in ITR.
– Collect interest certificate yearly for accurate tax filing.
– For better returns, explore tax-efficient debt mutual funds.
– Avoid direct funds and index funds without advice.
– Get professional support from CFP and trusted MFD.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: Hello Himanshu
Prefer CSE @ VIT Bhopal if possible.

Good luck.
Follow me if you receive this reply.
Radheshyam

Ans: You have already taken thoughtful steps. Your goals are clear and well-prioritised. Now let’s do a complete 360-degree analysis.

Your profile shows that you are sincere and serious. Let us create a clear path forward.

? Income, Salary and Monthly Commitments

– Your net salary is Rs. 47,000 per month.
– NPS contribution of Rs. 5,000 is already deducted from salary.
– Loan EMI is Rs. 10,500 per month till June 2027.
– Monthly living expenses are between Rs. 25,000 and Rs. 30,000.
– LIC premium is Rs. 5,000 monthly.
– You have limited room for investment surplus right now.
– But this will improve after June 2027.

? Analysis of NPS Account

– NPS balance is Rs. 4 lakh as of now.
– You are contributing Rs. 5,000 monthly.
– That will continue till retirement in 2044.
– NPS is a disciplined and tax-efficient tool for retirement.
– Let it grow without any withdrawals.
– Avoid reducing the NPS contribution in future.
– After retirement, only 60% of the corpus will be tax-free.
– Remaining 40% may require annuity or structured withdrawal.
– NPS alone may not be enough for full retirement need.

? LIC Policy Assessment

– You pay Rs. 5,000 monthly till 2039.
– Policy offers Rs. 21 lakh maturity with Rs. 10 lakh death benefit.
– LIC is a mix of insurance and low-return savings.
– Estimated return is likely around 4% to 5% per year.
– You may consider surrendering this plan.
– Reinvest this into long-term mutual funds.
– Mutual funds offer higher returns and better flexibility.
– Insurance should always be separate from investments.
– Use term insurance for risk coverage.
– Use mutual funds for wealth creation.

? Review of PPF Account

– You are contributing a small amount irregularly.
– Current balance is Rs. 1.7 lakh.
– Maturity is due in 2033.
– PPF is safe and tax-free.
– But it offers modest returns of 7–7.5%.
– Use this only as part of your debt portion.
– Avoid treating it as your main growth engine.
– Increase contribution slightly if possible.
– But don’t overdepend on it for goals like education or retirement.

? Current Debt Structure and EMI Analysis

– EMI of Rs. 10,500 will end in June 2027.
– That’s about 25% of your current investable surplus.
– Once cleared, you will have higher monthly savings.
– Do not take another loan immediately after this one ends.
– Use that EMI amount for goal-based SIPs.
– Avoid using loan for buying car or land.
– Try to stay debt-free after 2027.
– That will help you build wealth faster.

? Insurance Planning Review

– LIC is not term insurance.
– You did not mention any pure term plan.
– Please buy one immediately with Rs. 50 lakh to Rs. 1 crore cover.
– It is low-cost and essential to protect your family.
– If anything happens to you, your son’s future is at risk.
– Term insurance is the best way to secure his education and upbringing.
– Review and ensure nominee names are correctly added.

? Goal 1: Your Son’s Education Planning

– Your son is 6 years old now.
– Engineering or medical education costs can be high.
– It may require Rs. 25–30 lakh or more in total.
– You have 10–12 years to plan this goal.
– Start a separate SIP dedicated only for this purpose.
– Choose diversified mutual funds with active management.
– Avoid direct or index funds.
– Direct funds lack expert guidance and periodic review.
– Index funds only copy market and offer no protection.
– Instead, regular mutual funds through a Certified Financial Planner are better.
– You will get yearly reviews and strategy adjustments.
– Increase SIP once your loan EMI ends in 2027.
– If possible, start with Rs. 3,000–5,000 monthly from now.
– Even this small start will grow with time.

? Goal 2: Buying a Car

– A car is a depreciating asset.
– It should never be bought with long-term loans.
– Try to buy a car with savings only.
– Delay the purchase till after 2027.
– You can set up a 3-year recurring deposit or short-term SIP.
– Use balanced or hybrid mutual funds for this goal.
– Do not disturb your son’s education corpus for car buying.
– Keep car budget simple and realistic.
– Avoid costly models with high EMI burden.
– Remember, a car is a comfort, not a goal.

? Goal 3: Buying a Piece of Land

– Real estate for living is a lifestyle choice.
– But do not treat it as an investment.
– Real estate lacks liquidity and transparency.
– Also, it brings added costs like stamp duty and maintenance.
– If you must buy land, do it only after key goals are covered.
– Never delay your child’s education or retirement for this.
– Avoid taking a big home loan again.
– If you still wish to buy land, start a separate SIP now.
– Use equity mutual funds with 8+ years horizon.
– Do not compromise your other long-term financial goals for land.

? Emergency Fund Planning

– You didn’t mention any emergency corpus.
– This is very important for salaried families.
– You need at least Rs. 1.5–2 lakh in liquid funds.
– Build this over the next 6–8 months.
– Use liquid or ultra-short mutual funds for this.
– Don’t keep money idle in savings bank account.
– This money is for medical, job loss, or family emergencies.

? Long-Term Retirement Strategy

– You retire in 2044, which gives 19 years.
– NPS will continue to grow till then.
– But NPS alone is not enough.
– Start a separate retirement-focused SIP now.
– Choose long-term equity mutual funds with active fund managers.
– Direct or index funds don’t give such customisation.
– Regular mutual funds via CFP-led guidance bring structure.
– Post 2027, increase retirement SIPs aggressively.
– Build two retirement sources – NPS and mutual funds.
– This dual structure gives tax and liquidity balance.
– Avoid any plans that mix insurance with retirement.

? Suggested Cash Flow Plan From Now

– Monthly net income is Rs. 47,000.
– EMI is Rs. 10,500 till 2027.
– LIC premium is Rs. 5,000.
– Expenses are Rs. 30,000 at max.
– That leaves very limited room today.
– Still, try SIP of Rs. 2,000–3,000 for your son’s goal.
– Also set aside Rs. 1,000 in liquid fund as emergency base.
– After EMI ends in 2027, divert that full amount to SIPs.
– Split that into retirement, car, and home planning SIPs.
– Don’t increase lifestyle expenses after loan closure.
– Instead, increase savings commitment.

? Maintain Financial Discipline

– Avoid borrowing for car, travel, or celebrations.
– Track all your expenses monthly using an app or diary.
– Update nominee details in all your accounts.
– Review all your investments every 6 months.
– Set financial reminders for SIP dates and insurance renewals.
– Don’t stop SIPs even if market goes down.
– Stay invested for long-term compounding.

? Benefits of Active Mutual Funds Over Index and Direct Funds

– Index funds copy market and offer no active strategy.
– They can fall badly when markets crash.
– They don’t help in risk reduction.
– Direct mutual funds are also risky for non-experts.
– They give no guidance, no regular review, and no help during crisis.
– Regular mutual funds through a Certified Financial Planner are better.
– You get yearly check-ups, goal mapping, and corrections.
– A planner keeps your emotions under control.
– That helps build long-term wealth safely.

? Finally

– You have good habits and clear goals.
– But some product choices need correction.
– Surrender the LIC and replace it with term insurance.
– Build your son’s education fund with SIP.
– Create a car fund only with savings.
– Don’t rush into land purchase.
– Build emergency fund and retirement fund gradually.
– After 2027, your cash flow will improve.
– Use that to increase SIPs and reach your goals easily.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment