Creditvidya.com | Updated On: March 15, 2015 12:27 (IST) | NDTV Profit
If you are new to using credit cards or have been using one without knowing what a bunch of things mean on the credit card statement, let’s make things a little simpler for you. Let’s de-jargonise some credit card terms for you so that you can handle your credit responsibly and in turn help you keep up a good Cibil score.Many financial terms on your statement stand for basic things that are easy to understand. Here’s a closer look.
The credit limit is the maximum amount of money that you can swipe or borrow on your credit card. This is a prestipulated amount that is fixed by the card issuer. How much of the credit limit you utilise, also has a large bearing on your Cibil score. Ideally the utilisation rate on your card should not exceed 30 per cent of the total limit that has been allotted to you. If you display good credit behaviour your credit limit may be enhanced by the lender, but do not use it as an excuse to become reckless on your spend. Reckless spending may lead you to penalties and as has been noted in some cases, even account suspension by the bank.
The cash limit on your credit card should not be confused with the credit limit. The cash limit is the maximum amount of cash that you can withdraw from the ATM using your credit card. Issuers of credit cards often allow cardholders to obtain a maximum amount of cash with their cards where the cash limit is usually a per cent of the overall credit limit. This feature makes credit cards similar to bank debit cards. However, the striking difference between debit and credit cards cash withdrawal is that in the case of debit cards the cash belongs to you and is at your disposal whereas in case of credit cards, a very high rate of interest is applicable from the day the cash is withdrawn to the day it is repaid.Therefore, cash withdrawal through credit cards should be made only in emergency situations.
Annual percentage rate (APR):
The annual percentage rate (APR) is the interest rate charged on outstanding credit card balances outside the due date. APR is expressed in per cent per annum. A common misunderstanding about credit cards is that interest is charged on everything you swipe or borrow through your card. However, the truth is you will be charged for keeping an outstanding balance on your account over the interest-free grace period, which is usually 30-45 days from the payment due date (differs from bank to bank). So effectively if you pay the entire outstanding amount within the billing cycle, you will never have to pay interest on the money you use on credit.
The billing cycle is the time between the credit card bill statements. The billing cycle and credit card statement dates are confirmed to you at the time of the issue of your card by the card issuer. The due date remains the same each month. Since you already know the due date, it gives you the headroom to plan your credit in a smarter way and avoid making late payments.
Minimum amount due:
This is usually a small per cent (usually 2-5 per cent) of your total amount outstanding. This is the minimum amount a cardholder should pay within the pay-by date to keep the account from going into default.
The due date is the date by which you must make at least pay the ‘minimum amount due’ in the case where you are not able to pay your bill in full. Paying outside the due date will cost you late fee charges as well as get reported on your Cibil report as a negative mark. Some card issuers allow you to set your convenient date for card payment and others set a standard due date. For payments whose due dates fall on weekends or holidays, the due date would be the next business day.
Sometimes during online transactions, purchases may not go through for various reasons – including the transaction being non-compliant with the merchant account rules or a dispute by cardholders. In such cases, the amount charged previously on the credit card is credited back to the card holder through a reverse (credit) entry. This is called a charge-back.
Late payment fee:
A late payment fee is charged when you miss paying the minimum amount due by the payment due date. Late payments may affect your Cibil score negatively even if your entire outstanding balance is paid in full at a later date.
It is the process of moving outstanding credit card balance from one card issuer to another, usually from a high APR issuer to a low APR issuer in order to reduce the interest charges for the cardholder. However, balance transfer also involves payment of fees to the low APR issuer.
It refers to rewards program on your card that return to you (by crediting your card account) a percentage of the total amount spent on your credit card over a specific period of time. This feature can be beneficial only if you use your credit card regularly and pay the entire outstanding amount on your bills every month.
CVV (card verification value):
It is a 3 digit number printed on the back of the card. It stands for “card verification value” code and helps verify the legitimacy of a credit card. The CVV number is essential while making payments online. Since this is sensitive information you must never reveal this number to anyone including your Financial Planner to the customer care executive at the bank.
These cards use computer chips to store and process information instead of, or in addition to a magnetic stripe. A personal identification number (PIN) is required at the point of sale for the card payment to go through.Similar to CVV, this is also classified information that you should not be share with anyone.
Once you have these jargons demystified, it will be easier for you to understand how your credit card works and thus plan to make repayments accordingly.
Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
Source : http://goo.gl/3FrGf8
By Bindisha Sarang | 03 Nov, 2014 , 11.16AM IST | Times Of India
If you are suffering monetary losses due to laziness and ignorance, have an ECS arrangement in place or set up phone reminders, says Bindisha Sarang.
1.Missing your insurance premium date
How you lose: Irrespective of the reason for missing the payment date for your insurance premium, you stand to lose a lot of money. Insurers usually give a 15-30 day grace period, but if you miss even this, your policy can lapse. Depending on the time lapsed, you have to pay the premium, along with the revival charges, to retain the policy after the grace period is over.
What’s your loss? The revival charge varies among different insurers. Typically, it is a flat fee of around Rs 500 or an interest on the outstanding premium, which is usually around 0.75% per month. The revival charges also depend on the type of policy.
2.Forgetting your credit card payment
How you lose: Among financial products, there’s nothing as easy to use and as complicated to understand as a credit card. If you miss a credit card payment, you stand to suffer losses in three ways. You will be slapped with a late payment fee; you will have to pay interest on the out standing sum, and you will have to pay more for any purchases that you make in the next billing cycle.
What’s your loss? Usually, the late payment fee ranges between Rs 300 and Rs 700, depending on the payment due.The interest charged is 2-3% on the outstanding bill. You will have to pay an extra 2-3% for the purchases made in the next billing cycle. Your credit score will also suffer.
3.Ignorance about depositing advance tax
How you lose: Advance tax is required to be paid in three instalments. At least 30% of the tax by 15 September, 60% of the tax by 15 December, and the remaining by 15 March. If you fail to pay advance tax, you will have to pay interest on the defaulted amount.
What’s your loss? Penalty is 1% simple interest per month on the defaulted sum for three months. The penalty is the same (1%) if you missed the 15 December deadline. If you miss the final date of payment, you will have to pay 1% simple interest on the defaulted amount for every month until the tax is fully paid.
4.Delay in paying utility bills
How you lose: A family of four easily pays 6-8 utility bills a month, which includes mobile bills, electricity bills, Internet charges, among others. If you manage to miss these, you have to shell out the late payment fee.
What’s your loss? Miss a couple of utility bill payments a month and you could be spending Rs 300-500 on late payment charges.
5.Forgetting the loan EMI payment
How you lose: This is again a doubleedged sword. If you miss home or car loan instalment, not only are you slapped with a penalty, but your credit score also suffers.
What’s your loss? A late payment fee for a missed EMI on a personal loan with HDFC Bank is 24% per annum on the outstanding sum from the date of default. A late payment charge for a missed EMI on a home loan with ICICI Bank is in the range of Rs 5005,000.
Source : http://goo.gl/vMBmwv
Deepa Venkatraghvan | Jul 12, 2013, 05.20 PM IST | Times of India
July 31st is the last date for filing your Indian income tax returns for the financial year 2012-2013. If you are a Non Resident Indian (NRI) and are trying to figure out if you need to file a tax return in India, this guide will help you.
Should you file returns in India?
If you are an NRI, you would have to file your income tax returns for 2012-2013 if you fulfill either of these conditions:
– Your taxable income in India during the year 2012-2013 was above the basic exemption limit of Rs 2 lakh OR
– You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.
“What this means is that firstly, NRIs do not get the benefit of differential exemption limits on basis of age or gender that is available to Resident Indians. Secondly, for NRIs, certain short term or long term capital gains from sale of investments or assets are taxed even if the total income is below the basic exemption limit. These include short term capital gains on equity shares and equity mutual funds where tax rate is 15% and long term capital gains on securities and assets where tax rate is either 20% or 10% without indexation,” explains Vaibhav Sankla, Director, H&R Block India.
Are there any exceptions?
Yes, there are two exceptions:
– If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns.
– If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below Rs 2 lakh but the bank deducted tax at source on your interest amount, you can claim a refund by filing your tax return. Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return.
What is the last date for filing India tax returns?
The last date to file returns for the financial year 2012-2013 is July 31st 2013. However, remember the following:
– If you do not have any tax payable (that is all your tax has been deducted at source), you can still file your tax return by 31st March 2014 without any penalties
– If you do have tax payable, you can still file your returns by 31st March 2014 but you will be charged an interest of 1% per month for every month of delay starting from 31st July 2013 till the time you file your tax returns
– If you do not file your tax returns even by the 31st of March 2014, you may be charged a penalty of Rs 5,000 for every year of delay.
Should you have paid advance tax?
As per the provisions of the Income Tax Act, you must pay advance tax in three instalments during the year in case the tax payable, after adjusting TDS is likely to be Rs 10,000 or more. “There are interest implications in case of default in payment of any instalments or lesser payment of advance tax. The interest is generally 1 percent per month for the default amount and extends till the date of payment. Therefore, NRIs should evaluate if they were liable to pay advance tax and whether the same was paid in time. If not, they would need to calculate the interest for default and deposit the same before filing the tax return,” explains Vineet Agarwal, Director, KPMG India.
What is the best way to file your returns?
There are 3 ways in which you can file your tax returns. You can do it yourself using online efiling portals. In fact, from financial year 2012-2013 onward, the income tax department has made it mandatory to efile returns for in case your taxable income is over Rs 5 lakh. The income tax department provides a free method to upload your tax return online. If you are looking for a more user friendly approach, paid efiling portals might be a good choice. Many of these paid service providers do offer special packages for NRIs.
If you are not comfortable doing the entire filing by yourself, you can choose to go to assisted preparers. You can get professional advice along with help with filing your tax return.
Lastly, you can opt for the traditional route where your regular chartered accountant with whom you have a long term relationship with files your tax return.
Source : http://goo.gl/P3ky0
22 May, 2013, 03.03PM IST|Sreenivasulu Reddy Senior Tax Professional, Ernst & Young| Economic Times|
Tax refunds – only few of us get on time, while most of us may have to wait for a long time. There could be several reasons for delays in tax refunds: mismatch in the tax paid details, error in bank account details, technical problems at the department, growing number of tax payers, change in mailing address etc.
Let us look into some basic things about tax refunds, the process and how you can ensure timely receipt of tax refunds:
When are you eligible for tax refunds?
Normally, employees declare their investments or the details of tax saving investments to their employers at the beginning of each Financial Year (FY). The employer deducts the tax based on the declaration provided by the employees. Failure to declare the investments leads to higher deduction of tax, which in turn results into tax refunds.
Other reasons could be excess deposit of advance tax on other income, change in the housing loan interest repayment, and claiming of deduction for donations at the time of filing the tax returns.
How the refund process works
Once the tax return is filed, the tax department verifies the information and process the return. If any excess tax is paid, the same will be granted to the tax payer. Ideally, the refund cheque will reach your mailing address or the refund amount will be credited to your bank account through the electronic clearing system (ECS).
Reasons for the delay in refund
Income tax refund can be delayed if the amount you claim as taxes paid does not match with the Government’s online record (Form 26AS).
Incorrect bank account details: In case of refund through cheque, one should ensure that along with the account details, address mentioned in the return is correct.
Treaty claim in the tax return: In case of cross border employees claiming the tax relief, Centralised Processing Centre (CPC) may re-direct the returns to the respective ward to verify the claim and process the tax refunds. The additional procedure results in delay in issuing refunds.
Non submission of ITR-V within the prescribed timelines: ITR-V generated upon filing of the tax return has to be signed and delivered to the CPC within the prescribed timelines. The tax return is considered not filed until the ITR-V reaches the CPC.
Incorrect Permanent Account Number (PAN) and other personal details (name, assessment year etc)
Can you track your refund?
The ‘Refund Banker Scheme’ introduced in 2007 is now operational all over India and covers returns processed at CPC. As per this scheme, the refunds will be transmitted to the State Bank of India, Mumbai branch for further processing.
Status of refunds, being paid other than through ‘Refund Banker,’ can also be viewed at http://www.tin-nsdl.com by entering the ‘PAN’ and ‘Assessment Year’.
An individual can track the refund status as given below :
-Visit tin.tin.nsdl.com/oltas/refundstatuslogin.html -Enter PAN -Select Assessment Year -Click Submit
Individual taxpayers can also send emails to firstname.lastname@example.org or email@example.com for any refund related queries.
How to deal with delays in tax refund
If you do not receive your tax refund within a reasonable time frame (normally one year from the date of filing the tax return), you can visit the tax department for a follow up of the refund or you can write a letter to the concerned tax officer. However, if no action is taken by the concerned tax officer, the tax payer can move up the hierarchy and write to the jurisdictional Commissioner.
Important points for a faster refund
- Verify the tax paid details as per Form 16/ 16A with the Government’s online record (Form 26AS). In case of any discrepancy, contact your employer or the concerned person for the rectification. The Part A of recently notified Form 16 will have the tax paid details as per Form 26AS.
- Retain all the supporting documents for the investments, deductions and expenditures. This will help hassle free audit by the tax department and speedy processing of tax refunds
- Provide permanent mailing address where refund has opted through cheque
- Submission of ITR-V within the prescribed timelines
- Ensure accurate bank account details are mentioned in the tax return, like bank account number, MICR code, ECS facility etc.
- Other details in the tax return, like PAN, name, assessment year etc.
One of the main objectives of introducing e-filing of the tax returns is speedy processing of tax refunds. The Government had recently issued a notification for setting up of Centralised processing cells for computerized processing of TDS statements which may help to reduce the processing time of tax refunds.
The delay in processing tax refund claims, besides causing inconvenience to taxpayers, is also resulting in higher interest outgo for the Government. Hence, the Government is taking various steps to reduce the processing time of tax refunds. Also, the tax payers should ensure that accurate details are mentioned in the tax returns to avoid any delays resulting from their end and also to receive refunds on time.
(Views expressed are personal)