Deduction under Section 80C
In order to encourage savings by individuals, the government gives tax breaks on investment in certain financial products under Section 80C of the Income Tax Act. Some kinds of expenses incurred are also allowed as deduction.
The maximum amount eligible is Rs. 1.50 Lacs from financial year 2022-23.
The amount of investment or eligible expenses you make under Sec. 80C is deducted from your taxable income. This reduces your tax liability.
The deduction benefit under Sec. 80C is available only to assesses falling under the category "Individuals" and "Hindu Undivided Family".
Yes. An NRI individual who is liable to pay tax under the Income Tax Act in India can also avail deduction benefit under Sec. 80C of Income Tax Act.
Deduction under Sec. 80C cannot be claimed on income arising out of the following sources:
- Capital gain on sale of an asset; and
- Income by winnings from lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature.
The investments made in following are allowed as deduction under Sec. 80C of Income Tax Act:
- Life Insurance Premium
- Deferred Annuity Scheme
- Employee Provident Fund(EPF) and Public Provident Fund(PPF)
- Equity Linked Saving Scheme (ELSS) of Mutual Fund
- National Savings Certificate (NSC)
- Notified Pension Fund set up by Mutual Fund
- 5-year Fixed Deposit with a Scheduled Bank
- Senior Citizens Savings Scheme
- 5-year Post Office Time Deposit
- Sukanya Samriddhi Account
- Senior Citizen Savings Scheme
Note: There may be conditions attached depending upon your specific circumstances.
The following expenses are allowed as deduction under Sec. 80C of Income Tax Act:
- Children's Tution Fee Payment
- Principal repayments on Loan for purchase of House Property
- Stamp Duty and Registration Charges for a house
HRA exemptions can be claimed under Section 10(13A) or Section 80GG.
Yes the same can be claimed at the time of ITR filing even you have forgot to provide same to your employer.
You do not get any deduction over and above limit of Rs 1.5 Lakh.
You can claim deduction for life insurance premium paid only if the policy is in the name of your own life, life of your spouse or your children. Child can be married/unmarried, dependent/independent, male/female or minor/major.
No. Deduction under Sec. 80C is not available for the premium paid towards the life insurance of parents.
Yes, a HUF can claim deduction for premium paid on the life insurance policy taken in the name of any of its members.
- The premium must have been actually paid in the year in which deduction is being claimed.
- The premium amount paid should not exceed 10% of the Sum Assured.
- In case of Unit Linked policies, the premium must be paid for 5 years.
Contribution made by individuals in the name of self, spouse and minor child is eligible for deduction under Sec. 80C. However no deduction will be allowed for contribution made on behalf of your parents or major child.
Yes. HUF can also claim deduction under Sec. 80C for contribution made to PPF account in the name of its member(s). Please do note that no new PPF account can be opened in the name of a HUF.
Interest on NSC accumulates and is paid at the maturity. The interest amount accrued every year also qualify for deduction under Sec. 80C. However, the interest for the financial year in which the NSC matures does not qualify for deduction under Sec. 80C.
What deduction is available for children school fees under Sec. 80C?
Tution fees paid to any university, college, educational institution in India for full time education for any two children is allowed as deduction under Sec. 80C.
Yes. But the same is available under Sec. 80CCD(1b).
No, all mutual funds do not qualify for tax deductions under Section 80C of the income tax Act, Only investments in equity-linked saving schemes or ELSSs qualify for tax deduction under section 80C.
Health Insurance
Health Insurance is a type of insurance that covers your hospitalization expenses in the following situations:
- In case of a sudden illness
- In case of an accident
- In case of any surgery, which is required in respect of any disease which has arisen during the policy period.
The basic benefits of buying a Health Insurance policy are:
- Reimbursement for Hospitalization due to illness / disease / surgery.
- Reimbursement for Domicilary Hospitalization expenses in lieu of Hospitalization.
- Pre-hospitalization expenses
- Post-hospitalization expenses
- Ambulance charges
The major types of health insurance plans available in the market are -
- Individual Health Plan
- Family Floater Plan
- Critical Illness Plan
- Senior Citizen Health Plan
Well, it depends. If you plan to stay with the company forever, it may be ok. However, when you leave the company, your cover expires and you will have to buy a new policy. This may have implication. For example, any existing disease may not be covered if you go for a new policy. Considering this, you may consider buying an additional policy which will increase your coverage amount as well as come handy if you ever decide to leave the company.
Yes, if both husband and wife are covered from their respective employer, they can claim from insurance provided to them by either of the companies, but not both the companies.
The hospitalization charges generally cover:
- Pre-hospitalization expenses - Expenses incurred for the treatment of a disease, illness or injury during a specific period immediately before hospitalization.
- Hospitalization charges - Expenses incurred while being hospitalized and in the course of treatment.
- Post-hospitalization expenses- Routine expenses incurred for the treatment of disease, illness or injury for a specific period after discharge from hospital.
Domiciliary (Home) Hospitalization means medical treatment for a period exceeding three days for such illness/disease/injury which in the normal course would require care and treatment at a Hospital/Nursing Home but actually taken at home under any of the following circumstances:
- The condition of the patient is such that he/she cannot be removed to the Hospital/Nursing Home, or
- The patient cannot be removed to Hospital/Nursing Home for lack of accomodation therein.
Cashless facility is the benefiit of health insurance in which you will be able to avail the hospital services without making any advance payments. Hospital should be one out of the list of empanelled hospitals with the respective health insurance company.
You can avail the benefit of cashless facility through a health card provided to you by the TPA (Third Party Administrator) of your health insurance company.
You can contact your TPA for assistance at any time by calling on the helpline numbers provided to you on your health card.
No, generally your health insurance policy does not extend the coverage to international trips and is limited to geographical area of India, unless you have specifically bought an international health cover policy.
For this you need to buy a Foreign Travel Insurance Plan.
While taking a health insurance policy, one should check the following:
- List of hospitals that are tied up with the insurance company for cashless treatment
- Waiting period for pre-existing diseases
- Others exclusions
Yes, you can take multiple health insurance policies from the same company or different companies. In that case, you can make a claim either under any one policy or split the claim between the policies in proportion of the sum assured availed.
The premiums charged by the health insurance company is usually the same for specific age group. The premium usually remains constant as long as you are in the same age bracket. But once you shift from one age bracket to another, the premium will increase.
Yes. You can transfer your health policy from one insurance company to another and from one plan to another, without losing the renewal benefits for pre-existing illness. However, this benefit will be limited to the Sum Assured (including bonus) under previous policy.
This policy pays an amount equal to the sum insured upon first diagnosis of a critical illness covered under the policy. It pays the whole sum assured at the point of diagnosis, irrespective of actual cost incurred on treatment.
Generally, the following critical illnesses are covered :- cancer, multiple sclerosis, coma, heart attack, bypass surgery, stroke, paralysis, kidney failure, major organ transplant, etc. However, the same may differ from insurer to insurer.
A basic health insurance policy generally pays only for hospitalization bills. However the amount of health cover may not be enough for treatment if you are diagonised of a critical illness. It may also lead to loss of income, change in lifestyle and permanent disability. To help you combat these, the critical illness insurance plan pay you lumpsum money to meet your large medical cost as well as meet your day to day expenses.
In a critical illness policy, you are covered for certain mentioned critical illnesses only. If you have normal health insurance, you will get cover for normal disease as well as critical illness.
Yes, depending on your age, plan, sum assured and other factors, the insurer company may require you to undergo a medical check.
No, once a claim for a particular Critical Illness has been admitted and paid, the coverage under the Policy will automatically terminate for that insured person.
The Critical Illness Cover generally do not insure you against following:
- Critical illness diagnosed within first 90 days from the inception of policy
- Death within 30 days of diagnosis of critical illness or surgery
- Illness due to smoking, tobaco, alcohol or drug intake
- Illness occuring due to internal or external congenital disorder
- Critical conditions or consequences due to pregnancy or childbirth, including caesarean
- HIV/AIDS infection
- War, terrorism, civil war, navy or military operations
- Any dental care or cosmetic surgery
- Infertility treatment
- Hormone replacement treatment
- Treatment to assist reproduction
However, the above conditions may vary from insurer to insurer.
A Family Floater Health Plan covers all the family members under one single plan. The total sum insured is fixed and gets exausted as and when any member avails medical services and makes a claim.
The members coverable under a family floater can be the policyholder and his/her parents, spouse and children. Some plans also give option to cover parent-in-laws as well.
Life Insurance
Life Insurance is a contract between the insurance company (insurer) and the policyholder (insured), in which, in return for a consideration (the premium) paid by the insured, the insurer promises to pay a specified amount to the insured on the happening of a specific event such as death, disability or critical illness.
Everyone regardless of their age needs life insurance. It is more important for the bread winner of any family.
Life Insurance helps secure the future income for the family even in the absence of their bread winner and thus securing their present life style and their future dreams.
Life cover is useful to ensure the financial stability of your family in case you are unable to earn due to an accident or illness. The policy also pays the benefits to your beneficiaries in case of an untoward event. Procuring such coverage ensures that your family can to meet their expenses and sustain their lifestyles even in your absence.
One of the things to know about life insurance is that while it is not necessary, purchasing a policy is a smart investment decision. This is especially if you have dependents such as spouse, parents, and children. The life plan will provide financial security to your family if you are not around. Moreover, life policies offer several benefits and are a flexible instrument. Some of these include the flexibility of adding riders for greater coverage or withdrawing part of the accumulated corpus to meet expenses such as children’s education or wedding.
In addition to giving, you and your family a financial protection, buying a life insurance policy offers many other benefits such as -
- Encourages the habit of saving so you are provided with financial security at the time of retirement or your family is provided with financial assistance at the time of your demise.
- Through a Life Insurance policy, you can claim a tax benefit under section 80C of the Income Tax Act 1961, up to Rs. 1,50,000.
- The maturity benefits from a life insurance policy are tax-free subject to conditions as per section 10(10D) of the Income Tax Act.
- You can invest in a policy that offers you a loan against your amount invested if you need financial assistance in the case of an emergency. You can also take a loan from a bank or financial institution and put your policy up as collateral for the loan.
- You can invest in a policy that allows you to withdraw a part of your investment at the time of a financial emergency.
- You can add various additional benefits/riders like Accidental Death Benefit, Critical Illness Benefit etc. for a more comprehensive coverage. Accidental Death Benefit provides your beneficiaries an additional accident sum assured in case of death due to accident. Critical Illness Benefit provides critical illness sum assured to provide you some financial assistance in case you are diagnosed with any of the covered critical illnesses. You can also claim a tax benefit up to Rs. 25,000 as specified in section 80D of the Income Tax Act 1961 for the premium paid for critical illness benefit.
- You can also invest in policies in the name of your spouse and children and claim tax benefit, under section 80C of the Income Tax Act 1961, on those policies as well.
The maturity benefits primarily depend on the premium you pay during the policy term. This amount depends on several factors such as your lifestyle, spending habits, income, expenses, and debt obligations. It is recommended you procure coverage that is approximately between eight-ten times of your annual income.
The insurance cost depends on the type of policy chosen. In addition, factors like the sum assured, premium amount, age, and coverage influence the insurance cost. The total insurance costs include mortality charges, administrative charges, and investment fees. To know all about life insurance costs, you must read the policy document.
Yes, insurers provide several options for premium payment. You may choose monthly, quarterly, semi-annually, or annual payment options. Some policies are available with a one-time premium.
A grace period of up to 30 days is available from the premium due date. If you do not pay the same within this period, the policy becomes defunct and all benefits are lost. You need to pay the revival premium when you want to restart the coverage.
Married Women’s property act 1984 (MWP Act) was created to protect the properties owned by women from relatives, creditors and even from their own husbands.
The Act was enacted to safeguard interest/properties owned by married women from creditors, relatives (including husbands), and court and tax attachments. Section 5 and 6 of the MWP act covers life insurance plans.
Any married man can take a life insurance policy under MWP Act. This includes divorced persons and widowers. The policy can be taken only on one’s own name ,ie the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under MWP Act.
The beneficiary under MWP act in life insurance could be:
- The wife alone
- The child/ children alone (both natural and adopted)
- Wife and children together or any of them
At the time of making the application, a separate from has to be filled by the proposer for it to be covered under MWP Act. The form will seek details of the beneficiaries, the share of the benefits that are to be accrued to them and the trustees.
Mutual Fund
A mutual fund is a financial instrument that collects money from several investors like you, and invests it in various investment options like shares, bonds, etc. This fund is managed by experts.
A mutual fund company collects money from many investors, and invests it in various options like shares, bonds, etc. This fund is managed by professionals who understand the market well, and try to achieve growth by making strategic investments. Investors get units of the mutual fund according to the amount they have invested.
Fund managers are experts who have their pulse on the market and decide on the right pick of stocks, debentures, debt instruments, government securities among others to maximize gains on your investment.
AMC or Asset Management Company is the company that runs and manages mutual funds.
A Systematic Investment Plan (SIP) is a convenient method of investing in mutual funds. Under this plan, an investor contributes a fixed amount towards the mutual fund scheme at regular intervals, and gets units at the prevailing NAV.
Depending on where your money is invested, mutual funds can be classified into three types: Equity, Debt and Hybrid. Equity mutual funds invest in shares of companies listed on the stock exchange. Debt mutual funds invest in bonds of reputed companies and government bonds. Hybrid mutual funds invest in both, shares and bonds.
NAV can be calculated as follows: -
(Assets of the fund less Liabilities of the fund) / Number of units outstanding for that fund.
Arbitrage fund is a type of mutual fund that leverages the price differential in the cash and derivatives market to generate returns.
Theoretically, the price of a stock is in the Futures Market is higher than the price in the Cash Market. The difference between the price of the stock in the Cash and Futures Market in the income of the arbitrage fund.
An arbitrage mutual fund scheme purchases stock in the Cash Market and simultaneous sells that stock in the Futures Market.
A nomination is at folio level and all units in the folio will be transferred to the nominee(s). If an investor makes a further investment in the same folio, the nomination is applicable to the new units also.
No. Nomination made in your existing mutual fund folios will not be automatically updated for new folios created for fresh mutual fund purchases made by you. For all new folios, you will be required to make a separate nomination request.
Yes, an investor has an option to register up to three nominee in a folio and specify the percentage of the amounts that will go to each nominee. However, If the percentage is not specified, equal shares will go to each of the nominee .
Yes. You are permitted to nominate a minor. However, if you nominate a minor, you must provide the name and address of the minor’s guardian in the nomination request.
Yes. A non-resident Indian can be a nominee subject to the exchange controls in force, from time to time.
Investors in the Category of “Individuals” are permitted to make a nomination for their mutual fund units. Non-individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family and a holder of Power of Attorney are not allowed to nominate.
Nomination causes all rights and/or amount(s) payable in respect of your Mutual Fund Holdings to vest in and be transferred to your nominee upon your death. If your legal heir is different from your nominee, your legal heir cannot dispute this action as transfer by the respective AMC(s) in favour of a Nominee acts as valid discharge by the AMC(s) against the legal heir of the deceased holder.
Yes. You can cancel / change your existing nomination at any time before you redeem your mutual fund units.
No nominee can be registered under on behalf of minor account.
An investor can nominate person(s) called nominee(s) to whom his/her Mutual fund Units will
be transferred on his/ her demise. The units will get transferred to the nominee in case of Single holding or Joint holding in the following manner:-
Single holding of units in the folio: The Mutual Funds units will get transferred in the name of the registered nominee on the demise of the Single (primary) holder.
Joint Holding or more than one unit holder in a folio: The Mutual Funds units will get transferred in the name of the registered nominee on the demise of both the joint holder(s).
Registration of nomination will facilitate easy transfer of funds to the nominee(s) on the demise of the Investor. However, in the absence of nominee, a claimant would have to produce a host of documents like a Will, Legal heir Certificate, No-objection Certificate from other legal heirs etc. to get the units transferred in his/her name.
Yes. You can make nomination for your Mutual Fund units purchased.
You can nominate any individual as your nominee. However, you cannot nominate the following as your nominee with regard to your mutual fund units:
- Trust
- Society
- Body Corporate
- Partnership Firm
- Karta of a Hindu Undivided Family
- Power of Attorney Holder
Mutual fund companies send newsletters and information on their portfolio details to investors on a regular basis. In case you’ve not received the same, you may access the portfolio details on the respective mutual fund website.
You may choose the right mutual fund on the basis of:
- Your Age
- Time horizon: The amount of time you plan to remain invested
- Risk profile: The amount of risk you are comfortable taking with your investments
- Asset allocation: Diversifying your investments to bring down the inherent risk in each asset class
- Background of the mutual fund company
- The track record of the scheme over a period of time
Some Mutual Funds provide the investor with an option to shift his investment from one scheme to another within that fund. For this option the fund may levy a switching fee. Switching allows the Investor to alter the allocation of their investment among the schemes in order to meet their changed investment needs, risk profiles or changing circumstances during their lifetime
Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include exit load, if applicable.
The price or NAV a unitholder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable.
Exit load is a fee charged by the mutual fund houses if investors exit a scheme partially or fully within a certain period from the date of investment, as specified in the Scheme Information Document. Some schemes do not charge an exit fee. Mutual fund charges exit load to discourage investors from redeeming before a certain time period.
NAV is required to be disclosed by the mutual funds on a regular basis – daily or weekly – depending on the type of scheme.
Net Asset Value (NAV) refers to the price of one unit of a mutual fund scheme.
Under a Systematic Withdrawal Plan (SWP), an investor redeems a fixed number of mutual fund units at regular intervals.
Rupee cost averaging is one method to save regularly and minimize the effect of market volatility on investments. By investing through methods like SIP, you invest a fixed amount in mutual funds at regular intervals. So, you get more units when the NAV is low and fewer units when it is high. Eventually, your average cost per unit is brought down.
Investing in SIP offers two major benefits: –
- You can start investing with a small amount, and
- You can average out your investment, as SIP involves buying units at different points of time and at different NAV levels.
You can buy units of close-ended mutual funds only when a mutual fund company launches the fund. Once you buy them, you have to hold your investment for a fixed tenure.
Open-ended funds can be bought and sold at any time; they have no fixed tenure.
Equity Linked Saving Schemes (ELSS) are tax saving mutual fund schemes that enable you to get tax benefits under Section 80C of the Income Tax Act. Investment in these funds have a lock-in-period of three years.
Capital protection funds are mutual funds designed to protect your capital. These funds put a major portion of the investment in bonds, and a small portion in shares. Over time, the portion invested in bonds grows to the size of your original investment. So even if the portion invested in shares does not do well, your capital is still protected.
Liquid funds are mutual funds that offer high liquidity. This means, the units of these funds can be sold immediately, and the invested amount can be redeemed quickly.
Sectoral mutual funds invest your money in shares of companies of one particular sector. The main objective of these funds is to provide high returns from one particular sector that has the potential to grow.
A gilt fund is a kind of mutual fund that invest your money only in government securities. These funds are considered to be safe as they bear no default risk.
Index funds are passive mutual funds that invest in shares of companies comprising a particular index. These funds intend to replicate the performance of a particular index.
Exchange Traded Funds (ETFs) are funds that can be traded on a stock exchange, just like shares. These funds invest in shares, indexes or commodities.
Hybrid mutual funds invest both in shares and bonds. The portion invested in shares helps grow your wealth, while the portion invested in bonds offers stability to your portfolio.
Debt mutual funds collect money from several investors like you, and invest this amount in bonds of reputed companies and government bonds.
Equity mutual funds collect money from several investors like you, and invest this amount in shares of various companies. The primary objective of equity mutual funds is to invest in shares of different companies and generate good returns.
A fund of fund is a kind of mutual fund that invests in a variety of mutual fund schemes.
KIM or Key Information Memorandum provides detailed performance related information on the several schemes of a mutual fund company. So before you invest in any scheme you can have a look at the various scheme performances and take an informed decision. But always remember that a fund’s past performance is no guarantee of its future success.
An offer document provides details about a new mutual fund scheme entering the market. It provides information on the features of the scheme, risk factors, loads – entry or exit load, the track record of the mutual fund company among others.
NFO stands for a New Fund Offer. When a new fund is launched for investors, it is known as a NFO. A NFO could also be the launch of additional units of a close-ended fund.
The performances of Mutual funds are influenced by the performance of the stock market as well as the economy as a whole. Equity Funds are influenced to a large extent by the stock market. The stock market in turn is influenced by the performance of the companies as well as the economy as a whole. The performance of the sector funds depends to a large extent on the companies within that sector. Bond-funds are influenced by interest rates and credit quality. As interest rates rise, bond prices fall, and vice versa. Similarly, bond funds with higher credit ratings are less influenced by changes in the economy.
If you’re looking at investing in equity linked saving schemes (ELSS) the lock in period is three years, which means your money will remain locked in with the mutual fund company for a period of three years.
Yes. NRIs can invest in mutual funds.
Except for Exchange Traded Funds you do not need a Demat account to invest in mutual funds.
Mutual funds invest in a variety of financial instruments such as equities, debt, government securities to name a few. Note that the value of these investments could fluctuate, thereby influencing your mutual fund NAV. But since the risk is spread among a large pool of individuals you individually take on low risk through diversification and rake in high returns.
Some of the major benefits on investing in a mutual fund are: – Diversification – Professional management – Convenience – Liquidity – Variety of schemes and types – Tax benefits.
National Pension System
NPS is a voluntary contribution of funds for a sustained period of time (till the age of 60 years) to enable you to draw pension after you attain 60 years of age. The scheme has been introduced by the Government of India and is monitered by the Pension Fund Regulatory and Development Authority (PFRDA).
Any Indian citizen between the age of 18 and 70 years. (1st Sep'21)
Yes, an NRI can open an NPS account. Contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time. If the subscriber’s citizenship status changes, his/her NPS account would be closed.
No, multiple NPS accounts for a single individual are not allowed and there is no necessity also as the NPS is fully portable across sectors and locations.
The following table provides the complete information on the minimum contribution requirements:
| For All citizens model | Tier I | Tier II | |
| 1 | Minimum Contribution at the time of account opening | Rs. 500 | Rs. 1000 |
| 2 | Minimum amount per contribution | Rs. 500 | Rs. 250 |
| 3 | Minimum total contribution in the year | Rs. 6000 | Rs. 2000 |
| 4 | Minimum frequency of contributions | 1 per year | 1 per year |
Yes. Investment in NPS is independent of your subscription to any other pension fund.
Yes. Investment in NPS is independent of your contribution to any provident fund.
No. The return on investment will be market-linked.
| Intermediary | Charge Head | Service Charges | Service Charges | Method of Deduction |
| 1 | PRA Opening Charges | Rs. 50/- | ||
| 2 | Minimum amount per contribution | Rs. 500 | Rs. 250 | |
| 3 | Minimum total contribution in the year | Rs. 6000 | Rs. 2000 | |
| 4 | Minimum frequency of contributions | 1 per year | 1 per year |
No, there is no upper limit on maximum amount of contribution per year.
NPS is distributed through authorized entities called Points of Presence (POPs) and almost all the banks (both private and public sector) are enrolled to act as Point of Presence (POP) under NPS apart from several other financial institutions. To invest in NPS, you will be required to open a NPS account through the Point of Presence (POP) and who will assist the subscriber in opening the account including the filling up of necessary forms, providing the information about NPS and any other relevant information in this regard.
Points of Presence (POPs) are the first points of interaction of the NPS subscriber with the NPS architecture. The authorized branches of a POP, called Point of Presence Service Providers (POPSPs), will act as collection points and extend a number of customer services to NPS subscribers including requests for withdrawal from NPS.
POP-SP location can be accessed through website of PFRDA. This can also be accessed through below mentioned link of CRA website:
https://www.npscra.nsdl.co.in/pop-sp.php
CRA stands for “Central Record Keeping Agency”. It is managed by NSDL and its main function is record keeping, administration and customer service for all subscribers of the NPS.
Subscriber can check the status by accessing CRA website: https://cra-nsdl.com/CRA/ by using the 17 digit receipt number provided by POP-SP or the acknowledgement number allotted by CRA-FC at the time of submission of application forms by POP-SP. Once the PRAN is generated, an email alert as well as a SMS alert will be sent to the registered email ID and mobile number of the subscriber.
The following documents need to be submitted to the POP for opening of a NPS account: a. Completely filled in subscriber registration form b. Proof of Identity c. Proof of Address d. Age/date of birth proof.
NRI
Yes, Non-Resident Indians (NRI) and Persons of Indian Origin (PIO) can invest in Indian Mutual Funds on a full repatriation as well as non-repatriation basis. NRIs need to fulfil all KYC and regulatory requirements before investing in Mutual Funds.
A few countries such as US and Canada have restricted investments by NRIs in Mutual Funds without relevant disclosures. Some AMCs do not accept mutual fund applications from NRIs in Canada and the USA.
Yes, NRIs can invest through SIP.
Yes, NRI can opt for both Growth & Dividend options while investing in Mutual Funds in India.
The redemption proceeds received in NRE/FCNR A/c can be repatriated. But it cannot be repatriated from NRO A/c.
NRIs can choose from three major types of accounts. As an NRI in India, you can open an NRE (Non-Resident External) Account, NRO (Non-Resident Ordinary) Account and FCNR (Foreign Currency Non-Resident) Deposit Account.
An NRE(Non-Resident External) Account is a rupee-denominated account that NRIs can open. They can use the NRE account to deposit their foreign currency earnings. The advantage of an NRE account is that it has high liquidity and allows for full repatriation of funds from the account to the NRI’s country of residence when required.
An NRE account can be opened by an NRI, Person of Indian Origin(PIO) or a person who has become a non-resident under FEMA.
No
FCNR stands for Foreign Currency Non-Resident Account. This is a kind of fixed deposit account opened for depositing income earned overseas. The account is held in foreign currency.
The account can be opened by Non-Resident Indians (NRI) and Overseas Corporate Bodies (OCB).
A Non-Resident Ordinary (NRO) Account is a popular way for many Non-Resident Indians (NRIs) to manage their deposits or income earned in India such as dividends, pension, rent, etc. This account allows you to receive funds in either Indian or foreign currency.
The Foreign Exchange Management Act (FEMA) is legislation which regulates the inflow and outflow of foreign exchange. The Central Government of India formulated the same to encourage external payments and across the border trades in India.
- NRIs need to open NRE, NRO or FCNR A/c with Indian Bank.
- NRIs need to submit a Mutual Fund Application along with the KYC Documents.
- KYC documents include latest Photo, attested photocopy of Pan Card, Passport, Address proof of Outside India and Bank Statement.
- NRI investors can select a POA holder to invest in his/her behalf. Signature of Investor and POA holder should be present in the document.
- NRI investors need to complete the KYC process along with investment proposals.
- If payment is made by a Cheque or Demand Draft then Foreign inward remittance certificate or letter from the bank is required.
- At the time of Redemption TDS is applicable as per highest tax bracket and remaining sale procedure gets credit in Bank A/c. If the investment is non-repatriable investment then proceeds get credited to NRO A/c only.
- NRI can submit an income tax return and get a refund of the excess TDS amount paid.
- Equity Taxation - 15% on short term and 10% on long term above Rs 1lakh without any indexation.
- Debt Taxation - Short term gains are as per tax slab of the investor and in the long term for listed schemes is 20% with indexation and for unlisted schemes is 10% without indexation.
For Equity oriented Mutual Fund TDS is deducted 10% for LTCG and 15% for STCG. Other than Equity oriented Mutual Fund TDS rate is 30% STCG and for Long Term 20% with indexation and 10% without indexation.
Any Individual, inclusive of NRI, if total Income exceeds 2.5 lakhs need to submit income tax return in India.
India has Double Taxation Avoidance Agreement (DTAA) with more than 90 countries across the globe. So if NRI residing in a country which has signed DTAA with India, investors can avoid double taxation.
- Resident and Ordinarily Resident in India(ROR).
- Resident but not Ordinarily Resident in India(RNOR).
- Non-Resident (NRI).
An HUF can become NRI provided all the members of coparceners become NRI.
For determining whether HUF is a Resident or not, the residential status of its 'Karta' for the relevant previous year is of no relevance.
Yes, NRI can Invest in ELSS Mutual Fund to get eligible for Sec 80C deductions of Rs 1.5 Lakhs.
- Life insurance premium payment.
- Children’s tuition fee payment.
- Principal repayments on loan to purchase house property.
- Unit-Linked Insurance Plan (ULIP).
- Investments in ELSS
- Investment in Public Provident Fund (PPF).
- Investments in National Savings Certificates (NSCs)
- Post office 5-year deposit scheme.
- Senior Citizen Savings Scheme (SCSS)
Interest earned in NRE & FCNR A/c is tax free but interest in NRO A/c is fully taxable in India. Interest in NRO A/c is subject to TDS without any threshold limit.
- NRIs are people who are Indian citizens but residing abroad.
- On the other hand, PIOs are people who are foreign citizens(Other than Bangladesh or Pakistan) but once held an Indian passport. If they were born abroad to Indian parents or parents who once held an Indian passport, they would qualify for PIO status, but not for NRI status.
An Individual is said to be Resident in India in any previous Year if he satisfies any one of the following basic conditions.
Basic Conditions:
- He was in India in the previous year for a period of 182 days or more.
- Stays in India for at least 365 days during 4 preceding years and 60 days or more in the relevant financial year.
Beside the basic conditions there are two additional conditions.
Additional Conditions:
- He has been Resident in India for at least two out of the ten previous years preceding the relevant previous year.
- He has been in India for at least 730 days in all during the seven previous years preceding the relevant previous year
If an Individual satisfies any one basic condition for being resident but does not satisfy two additional conditions, he is said to be Not-Ordinary Resident.
If the Individual does not satisfy none of the Basic conditions to become Resident, he is said to be Non-Resident Indian. Additional conditions are irrelevant.
An Indian Citizen, who is not liable to pay tax in any other country by reason of his domicile or residence and total income exceeding 15 lakhs other than foreign income shall be deemed to be Resident of India.
Term Insurance
Term insurance is a legal agreement between the insured (you) and the insurer (insurance companies) where death benefit is provided to the nominee if the life insured dies during policy tenure. Normally a term insurance provides a sustancial life insurance cover at an affordable premium.
- A term insurance provides substantial life insurance cover at an affordable premium.
- The sum assured helps your family members to live the same standard of living in your absence.
- It gives you peace of mind by ensuring your family will have financial support even when you are not there.
- Term insurance plans provide a substantial life insurance cover at affordable premiums.
- Premium paid towards term insurance provides tax benefits under section 80C up to Rs. 1.5 lacs.
- The sum assured your family receives is also tax free.
The thumb rule for deciding the cover of your term plan is that it should be at least 20 times your annual income. For example, a person earning ₹5 lakh annually must have a term policy of about ₹1 Crore for adequate support to his family after his death.
You can also use our HLV Calculator in the Premium Calculators section to calculate ideal term life coverage.
One can enjoy a tax benefit of up to ₹1.5 lakh under Sec 80C from the taxable income for paying the premium of the term insurance plans.
The proceeds received from a term insurance plan after the demise of the policy holder is also tax exempt under section 10(10D).
Yes. Non-Resident Indian can buy a term insurance plan in India.
You should buy term life insurance as it provides financial support to your family in your absence.
You can buy a term plan both online or offline.
Yes, you can always buy term insurance from two separate companies. Both the insurers from which you've purchased term insurance plans are liable to pay claim to the nominee in case of the policyholder’s demise during the policy period.
Yes, you should disclose the details of your existing term insurance policies at the time of applying for a new one.
The premium terms generally vary from a smoker to a non-smoker and these terms are generally higher for a smoker as she/he comes in a high-risk category.
For hassle free claim settlement kindly disclose personal habits of smoking or drinking.
An accidental insurance plan specifically provides the death benefit in case the policy holder dies in an accident. However, a term insurance plan includes death due to any reason, be it natural or accidental.
Normally term insurance offers a level premium throughout the term. This depends on several factors like addition of riders or declaration of habits like smoking, drinking etc. or the declaration pertaining to a hazardous employment nature etc.
A life insurance policy includes maturity benefits while a term insurance plan includes no such benefits and simply entitles the nominee(s) of the policy holder to the sum assured in the event of the policy holder's demise during the term of the plan.
Many insurance providers now-a-days include the clause for return of premium, which entitles the policy holder to receive the paid premiums in the event of plan maturity, although this increases the payable premiums substantially.
Yes. Term insurance, once in effect, entitles the nominee(s) of the person even if she/he has died outside India.
- Natural disaster or war / war like situation.
- Participation of criminal & hazardous or extreme sports activities.
- Misrepresentation or suppression of facts at the time of signing.
- Death occurred due to Drug, Alcohol abuse or Sexually Transmitted Disease.
- Death by Homicide if the perpetrator happens to be a nominee.
- Suicidal death not covered within 12 months from the purchase of policy.
Corporate Insurance plans provided by the insurer can prove beneficial. However, these covers are often not sufficient and you need a higher sum assured for your family’s security. In addition, the corporate insurance cover from your employer is discontinued once you stop working for them.
The tenure of a term plan must ideally be selected up to the length of your total earning span. For instance, if you plan on retiring at the age of 60, opt for tenure up to that age. In case you’re looking for a whole-life coverage, choose an option which covers your entire life.
Many Term insurance plan offer riders to the policyholders. Opting for riders enhances the value of your coverage. It is an additional protection layer for your long-term security. Moreover, analyze your needs before investing in riders.
- Level Term Plans.
- Increasing Term Plans.
- Decreasing Term Plans.
- Return of Premium Term Plans.
- Convertible Term Plans.
If you have started earning and there are dependent on your income then you should not delay in buying term insurance.
The Married Women's Property Act or the MWP is a legal safeguard available to protect the financial interest of a dependent wife, children or both in case of sudden demise of the policyholder. The MWP Act is applicable on term insurance and life insurance policies to ensure that the sum assured is protected for use of only wife/child/children or both (wife and children) and no other liability (loan payoff, debt payoff, joint family rights etc.) is attached to this sum.
At the time of buying the policy you need to fill a separate form for MWP. Once a policy issue under MWP Act, beneficiaries cannot be modified or changed.
