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Old 10th January 2014, 13:56   #421
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Investment gurus,

Can some one advise if investments made in Non Convertible Debentures (NCD's) offered by private companies is worthwhile investment option if I had to park a lumpsum money for 3 years. The interest rates offered beats that generated by Equity Mutual funds or Bank Fixed Deposits.

Any body invested in any NCD's? Pls share your experience regarding the returns and risk involved.
A typical middle class Indian would prefer a bank FD over the NCD because of the stability and liquidity. If you're willing to take risk then go for the NCD.

Normally the unsecured NCD carry a better interest rate and these are not backed by an underlying asset for security. Do check the rating of the issue and the company before investing.
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Old 10th January 2014, 14:01   #422
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Do check the rating of the issue and the company before investing.
Thanks for the advise. Where do I get the actual defintions of the ratings advertised by various rating agencies?
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Old 10th January 2014, 17:07   #423
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Need help in choosing a good Term insurance.

Checked online policies and found LIC 3 times costlier than HDFC, SBI and ICICI !
Which company should I go for (other than LIC) and reasons ?
Just my two pennies:

Avoid buying life insurance online and go through your friendly neighborhood agent. In the unfortunate event of a claim, he will become the single point of contact between our family and the insurance company, taking care of all the formalities and paperwork. They may have to run from pillar to post otherwise.
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Old 10th January 2014, 17:46   #424
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Just my two pennies:
Sorry, but I disagree. The LIC policies are costly because they literally pay off the agent for all our premiums. That's why LIC agents are so keen to find bakra, it's like an annuity plan for them. For each premium paid, they get a slice of the pie, thus taking the premium amount much higher than online policies.

As you still get a physical copy of the policy, and most of the times all that is required is death certificate, I doubt how much help an agent will be.

In old days, it might have been ok. But given the vast price difference (I have a 1cr policy for some 8k per year, I can't even dare to ask premium of 1cr policy in LIC!), it is totally worth to go for online policies.

In fact, the added comfort is too good. They come to your house once for medical test, and rest all is done online.

BTW I use Aviva iprotect (IIRC), because I found they gave maximum tenure with comparable rates to other online policies. Other company's products had less tenure than this.
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Old 10th January 2014, 19:03   #425
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Default Re: Income Tax savings, Investments and Insurance

Talking about life insurance and the beneficiaries, please consider investigating e-insurance as well.
How long can someone safeguard a policy document? 10 years/ 20 years/ more?

Converting from physical to electronic format might help our survivors?

What is the strategy to consolidate and share important information (bank accounts/ investments) after we are no more?
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Old 10th January 2014, 23:52   #426
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Hi guys, Required help regarding income tax. I have a plot and have taken loan from axis bank. The bank has given loan in the form of plot and home construction though I intend not to construct home. I am already claiming HRA, could I also claim housing loan part ? If yes how? And if I claim home loan, after loan is paid can't I claim HRA again? Thanks very much in advance. Regards, ramki
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Old 11th January 2014, 01:59   #427
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Hi guys, Required help regarding income tax. I have a plot and have taken loan from axis bank. The bank has given loan in the form of plot and home construction though I intend not to construct home. I am already claiming HRA, could I also claim housing loan part ? If yes how? And if I claim home loan, after loan is paid can't I claim HRA again? Thanks very much in advance. Regards, ramki
Not an expert, but AFAIK exemption on housing loan can be claimed only on possession meaning the house is certified as build complete and you have moved in. It is possible that you can claim both HRA and housing loan exemption under special circumstances. Once scenario is where the house you built is in another city than the work where you work. You can claim loss on property as the interest paid minus the income received in rent.

I was given a suggestion by a customer care executive of ICICI bank that sounded plain stupid to me and I said no thanks.
The suggestion was, sir you are maintaining good balance in your account, for privileged customers like you we are offering an unique RD product. In this all interest earned above 50k is Income Tax free.
I asked several times, are you sure? Yes sir, if you don't believe me I will transfer the call to my supervisor. Well thanks but no thanks, I told her.
May be there is any (little bit of) truth in what she claimed may be it of use to my fellow Team BHP'ians lol

Last edited by selvagp : 11th January 2014 at 02:05. Reason: avoiding back to back post, added response to ramki067
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Old 11th January 2014, 08:05   #428
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Default Re: Income Tax savings, Investments and Insurance

Team,

Can someone shed light on claiming exemption for two home loans on properties in the same city ?

1 property will be rented out with a rent upto 12K per month
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Old 11th January 2014, 12:58   #429
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Team,

Can someone shed light on claiming exemption for two home loans on properties in the same city ?

1 property will be rented out with a rent upto 12K per month
Interest paid on the second home loan is completely tax free; no limits of 1.5L. If not rented, it will be deemed rented, and notional income will have to be declared.

However, principal paid towards the second home loan is not eligible for section 80C.
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Old 13th January 2014, 11:14   #430
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Default Re: Income Tax savings, Investments and Insurance

What if the second home is not in the same city? Does the exemption still apply?
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Old 13th January 2014, 13:10   #431
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What if the second home is not in the same city? Does the exemption still apply?
I believe so.

The first property will always be assumed to be "Self Occupied". Principal paid will be considered for section 80C, and interest paid will be exempt from tax upto Rs.1,50,000/-.

Second property will be deemed rented, and the entire interest paid will be exempt from tax. I don't recollect any limitation on second property being in the same city.

Interestingly, if both/all owned properties are in a city other than your work place, you can also claim HRA
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Old 13th January 2014, 13:18   #432
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Default Re: Income Tax savings, Investments and Insurance

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Originally Posted by selvagp View Post
The suggestion was, sir you are maintaining good balance in your account, for privileged customers like you we are offering an unique RD product. In this all interest earned above 50k is Income Tax free.
May be there is any (little bit of) truth in what she claimed may be it of use to my fellow Team BHP'ians lol
Was she suggesting "below" 50k? Tax free interest "above" 50k is height of absurdity. The basic tenet of income tax is anything earned more is taxed more.
BTW, for your query: AFAIK there is no tax exemption what-so-ever for RD. The only tax related entity with respect to RD is that the tax will not be deducted at source (no TDS unlike savings a/c or FD). But still you have to pay tax for the interest you earn from RD.

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Originally Posted by kalpeshc View Post
What if the second home is not in the same city? Does the exemption still apply?
It does not matter where the second home is located.
For first home, you can claim principal repayment exemption u/s 80c and interest repayment (max 1,50,000) u/s 24.
For second home, you can claim only interest repayment exemption. There is no limit on the interest repayment for second home however you have to show rental income from second property. Even if idle or not utilized, a notional amount is to be shown as rental income.
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Old 13th January 2014, 13:48   #433
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Originally Posted by iamswift View Post
Was she suggesting "below" 50k? Tax free interest "above" 50k is height of absurdity. The basic tenet of income tax is anything earned more is taxed more. BTW, for your query: AFAIK there is no tax exemption what-so-ever for RD. The only tax related entity with respect to RD is that the tax will not be deducted at source (no TDS unlike savings a/c or FD). But still you have to pay tax for the interest you earn from RD.
No she kept repeating above 50k, I even asked don't I have to declare it as income from other sources, while filing my returns. She kept repeating no tax sir. Thanks to you now I understand she could have mis-informed me no TDS as no tax itself. I was sure it can't be tax free and wasn't interested in the product anyway
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Old 13th January 2014, 15:10   #434
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Sorry, but I disagree. The LIC policies are costly because they literally pay off the agent for all our premiums. That's why LIC agents are so keen to find bakra, it's like an annuity plan for them. For each premium paid, they get a slice of the pie, thus taking the premium amount much higher than online policies.
Another important reason why LIC policies were costly is because LIC has been using old Mortality Table (circa 1991) for calculating their Insurance Premiums, whereas other insurers are using tables of 2005. And average life expectancy has increased since 1991 for better.

New plans have been launched with newer premium rates (and host of other changes) as IRDA's new regulations came into existence from Jan 2014.

More details are documented here.
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Old 13th January 2014, 16:46   #435
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Default Re: Income Tax savings, Investments and Insurance

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Originally Posted by ghodlur View Post
Investment gurus,

Can some one advise if investments made in Non Convertible Debentures (NCD's) offered by private companies is worthwhile investment option if I had to park a lumpsum money for 3 years. The interest rates offered beats that generated by Equity Mutual funds or Bank Fixed Deposits.

Any body invested in any NCD's? Pls share your experience regarding the returns and risk involved.
I sometimes invest in NCDs, and intend to invest in Edelweiss NCD which offers 11% plus interest (with monthly payout). First you need to understand that NCDs are quite different from Fixed Deposits. A few points -

1) NCDs can be quite safe if the credit ratings are high. Look at the CARE/CRISIL rating. Do a Google search on what the credit rating (AA, AA+, BBB etc) mean before you invest. Thumb rule -> higher the interest rate, riskier the investment.

2) NCDs are almost always backed by assets. That is, a home loan company offering NCD will offer the real estate as guarantee.

3) NCDs are great investment tool if you FEEL that interest rates will fall over the next few years. You can sell your NCD online when the interest rates start falling and get a nice profit.

Example: Let's say you invest Rs. 1 Lac in Edelweiss NCD. Over the next 12 months, if RBI keeps slashing the interest rates, the "value" of the NCD you are holding goes UP. You can probably sell your NCD for Rs. 1.15 Lacs and pocket a profit of Rs. 15,000.

4) If interest rates go up, no problem. Just hold the NCD till expiry and collect your higher interest.

5) If this is too complicated for you to understand, invest in long term bond mutual funds. These guys invest in corporate NCDs and trade in the market for you.
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