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Indian life insurance companies are set to hike premiums for their term insurance plans after several reinsurers increased rates for underwriting portfolios of these pure-protection covers. The move comes even as the domestic life companies face higher-than-expected mortality claims due to Covid.

The Insurance Regulatory and Development Authority of India (Irdai) has issued a notice warning the public against buying motor insurance policies from the fake website Digital National Motor Insurance with email id: digitalpolicyservices@gmail.com.

The insurance regulator clarified that Digital National Motor Insurance has been selling motor insurance policies, although it has not been licensed or granted registration by the regulator to sell insurance policies of any kind.

The insurance regulator has been constantly making public cautioned against spurious calls and fictitious offers.

Considering the fact that several complaints were received from members of the public relating to spurious calls and fictitious offers involving insurance products, IRDAI launched a multipronged campaign to caution members of the public through print, electronic and social media platforms and by way of specific directions to insurers to incorporate the caution in their publicity material in policy-related advertisements as well as advertisements in print, electronic media, and Television,” said the Irdai annual report.

The regulator has also launched several insurance awareness campaigns. Some of them are:

‘BimaBemisaal’ is the brand name for Irdai’s insurance awareness campaign. It is a consumer education initiative and has the tagline “Promoting Insurance. Protecting Insured”. BimaBemisaal educates policyholders about their rights and obligations and informs them about the complaint resolution methods available to them. It also creates awareness about insurance among the general public.

Television Campaign: Irdai has undertaken a pan Indian campaign where Television Commercials (TVCs) cautioning the public on Spurious Callers were telecast on Doordarshan and Private Television channels.

Radio Campaign: Radio Jingles on Life Insurance, Property Insurance, Health Insurance, Motor Insurance, Misselling in Insurance, etc. were broadcast across All India Radio and other private FM Channels throughout the country for the purpose of creating insurance awareness, as per the Irdai annual report.

Source:livemint.com

Previous Blog: Understanding REIT: https://shahfin.com/understanding-real-estate-investment-trust-reit/

This is for education purpose and the story is made up to simplify the concept, don’t take it at face value.

Lets say I am a Real Estate developer, K Raheja. I like a land in Mumbai & Hyderabad for some commercial development. I decide to buy it. Where will I get the funds to buy & construct it?

• Self

• Bank, NBFC, MF – Debt

• Partner – someone else investing as Equity

So I invest some funds, got some from banks & MF’s & I also got Blackrock to invest to buy the land & make the business park called Mindspace. I constructed around 23-mn sq ft with multiple building & I started leasing them out to companies who wanted rented office premises.

There comes a point where I needed more funds to build new building (6.4 mn sq ft), pay off the loans etc., where do I get the funds? So I decide to do an IPO. Not of the entire company K Raheja but only this project called Mindspace. So I formed a trust or corporation.

I committed to payout 90% of my rent income to the shareholders proportionately as dividends & I will use this money to invest a minimum 80% in completed real estate, which is generating rent and will use 20% in constructing new Real Estate.

Is the IPO a win-win?

• K Raheja gets more money 2 pay off debt, investment in more commercial real estate.

• Investors will receive dividends semi annually (from the rent income) which is tax free + as its listed on the exchange the stock prices can go up.

Why will the stock price go up?

• Rents increase year after year

•  The value of the land increases

•  New construction means more business.

Why invest in a REIT?

• G-Sec is at 6% and the rent yield in commercial RE is 7.5%-8%

• Diversification – It’s a combination of Debt (rent income) & Equity (listed so prices can move)

• Investment in RE with just 50K.

Tax Structure?

There are 3 types of income,

• Rent–Tax-free

• Interest – REIT’s can also loan money to another developer (maximum 20%) & receive interest. If you receive interest from the REIT, It will be taxed at the slab rate. Practically this is very less or zero.

• Capital Gain on the stock exchange – 15% Short Term Capital Gains Tax if you sell the REIT before 3 years and 10% Long Term Capital Gains Tax if you sell the REIT units after 3 years.

• Capital Gain on the stock exchange – 15% Short Term Capital Gains Tax if you sell the REIT before 3 years and 10% Long Term Capital Gains Tax if you sell the REIT units after 3 years.

What to look for before investing in a REIT?

• Weighted Average Lease Expiry – Higher the better

• Vacancy Rate – Lower the better

• Concentration of top 10 tenants – Lower the better

• Sector Concentration – Lower the better.

REITs operate exactly like MF’s

•  Sponsor – K Raheja and Blackstone

•  Manager – K Raheja (receives AMC fees for managing the properties)

• Trustee

But

REITs and real estate mutual funds are not the same.

Disclaimer: This is not investment advice.
Source: Kirtan A Shah, you can reach him on his twitter handle @kirtan0810

In a move that will enhance the flow of information between taxpayers and tax authorities, the Income Taxn Department has launched a revised form 26AS or Annual Information Statement from this assessment year, which will reflect details of all high-value transactions.

Since the details of high-value transactions will now be reflected to the taxpayers in the new form as against the tax department earlier receiving information from financial institutions and then acting upon it, there would now be a greater onus on taxpayers to comply in a voluntary manner.

List of specified financial transactions to be available in Form 26AS

The additional SFTs that will now be reportable and will be visible in the Form 26AS are:

1. Payment of educational fees/donations above Rs 1 lakh in a year
2. Hotel bills exceeding Rs 20,000
3. Purchase of jewelry, white goods, marbles, paintings etc. exceeding Rs 1 lakh in a year
4. Life insurance premium payment over Rs 50,000 per annum
5. Payment of property tax above Rs 20,000 per annum
6. Electricity bill payment above Rs 1 lakh per annum
7. Health insurance premium payment above Rs 20,000
8. Domestic business class air travel/ foreign travel (threshold limit not yet specified)
9. Share transactions/ demat accounts/ bank lockers (threshold limit not yet specified

The SFT transactions already reportable are:

1. Purchase of bank drafts or pay orders in cash (if more than Rs 10 lakh in a year)
2. Purchase of pre-paid instruments in cash (if more than Rs 10 lakh in a year)
3. Cash deposit in the current account (if more than Rs 50 lakh in a year).
4. Cash deposit in account other than current account (if more than Rs 10 lakh in a year).
5. Time deposit (if more than Rs 10 lakh in a year).
6. Payment for credit card (if more than Rs 10 lakh in a year through non-cash methods. Limit is Rs 1 lakh for cash payments)
7. Purchase of debentures (if more than Rs 10 lakh in a year)
8. Purchase of shares (if more than Rs 10 lakh in a year)
9. Buyback of shares (if the tendered value is more than Rs 10 lakh in a year)
10. Purchase of mutual fund units (if more than Rs 10 lakh in a year)
11. Purchase of foreign currency (if more than Rs 10 lakh in a year)
12. Purchase or sale of immovable property (if more than Rs 30 lakh in a year).
13. Cash payment for goods and services (if more than Rs 2 lakh in a year)
14. Cash deposits during a specified period of 9th Nov to 30th Dec 2016 (if more than Rs 12.5 lakh in a current account or Rs 2.5 lakh in other accounts)

The aforesaid information will only be reported in Form 26AS if the transaction crosses certain threshold limits. It is worth noting that this information was also available with the tax authorities for earlier years and was used at the time of assessment proceedings. Providing this data to the taxpayers beforehand is hence likely to increase transparency in the tax proceedings.

Information relating to assessment proceedings, both pending and completed, has been included and it will show if assessment proceedings have been initiated and if yes, whether they are pending or completed.

The information will reflect in Form 26AS within three months from the end of the month in which the said information is received by the tax authorities.

In addition to the name, permanent account number (PAN ) and address of the taxpayer, the new form will also have the date of birth, mobile number, email address and Aadhaar  number as per the tax department’s database.

Form 26AS will thus be an all-inclusive document for ease of reference for taxpayers both at the return filing stage and at the time of assessment proceedings.

Conclusion: New Form 26AS will increase the information flow to the tax authorities, especially the details of all high-value transactions which will help the government  to widen the tax net and get more and more people to file their income tax returns. A total of about 55 lakh or 80 per cent of the total returns are filed by people having an income of up to Rs 5 lakh, as per the Central Board of Direct Tax’s numbers as of July 31, 2020. Only 5,066 individuals, who have an income above Rs 1 crore file returns, accounting for 0.73 per cent of the total individual tax returns.

Disclaimer: The information provided herein is based on publicly available information and other sources
believed to be reliable, but involve uncertainties that could cause actual events to differ materially from
those expressed or implied in such statements

Gold is considered by many to be a safe-haven asset, i.e., the demand for gold usually increases during times of financial crises. As the current economic scenario is plagued by uncertainty caused by the Covid19 crisis, gold has seen an increase in demand. Since the beginning of the year, i.e., January 1, 2020, up to June 19, 2020, in India, gold has given an absolutely return of approximately 14.5% in USD terms. (Source:World Gold Council)

The demand for gold has also come from central banks around the world. In fact, globally, central banks have been net buyers of gold for the last two years, and they continue to do so in 2020. In terms of metric tonnes, global gold reserves have increased by approximately 2.7% from 33,974 tonnes on 31st March, 2018 to 34,892 tonnes as on 31st March, 2020.

As can be observed from the above chart, the price of gold had appreciated significantly since the 2008 financial crises, until it reached its peak around September, 2011. The reserves of gold held by global central banks also started increasing after the 2008 crisis. This correlates with the notion of gold being considered as a safe haven asset, whose demand increases in times of financial crises.

Experts believe that it is possible that gold reserves and prices may follow a similar trend in the wake of the current economic crises around the spread of Covid-19. Even though the price of gold has increased in recent years, the demand for gold is not likely to wane in the near future. The increasing covid-19 cases have increased concerns of a delay in economic recovery. Also, possible increases in inflation due to the push for higher liquidity, lower interest rates and stimulus packages by central banks may keep the demand for gold intact. Gold is generally considered a hedge against inflation, and therefore tends to benefit from stimulus measures.Indicative of sentiment that gold is often used a safer store of value in times of economic and political crises, the holdings of SPDR ETF, a world’s largest gold ETF, have increased and stood at around 1136.219 tonnes as on June 18, 2020.

Therefore, it will be interesting to observe the demand for gold in the coming months amidst the uncertainty created by the Covid-19 crises.

Sources: IMF, Goldhub, World Gold Council and other publicly available information.

Disclaimer: The information provided herein is based on publicly available information and other sources
believed to be reliable, but involve uncertainties that could cause actual events to differ materially from
those expressed or implied in such statements.

For the first time in history, the RBI’s foreign exchange (forex) reserves have increased to more than USD 500 billion. For the week ending June 5, 2020, RBI’s forex reserves increased by USD 8.4 billion. Since April 3, 2020, forex reserves have increased by approximately USD 27 billion.

Why have forex reserves increased?

The most likely reason for the rise in forex reserves is the rise in investments by Foreign Portfolio Investors (FPIs) and Foreign Direct Investments (FDI). Foreign investors have bought stakes in several Indian companies in the last two months, which include mega block deals in Reliance Group’s subsidiary Jio Platforms, Kotak Mahindra Bank and Bharti Airtel. In the first 15 days of June 2020, FPIs have bought in approximately Rs. 20,621 crore in Indian debt and equity markets.

Additionally, the narrowing current account deficit due to Covid-19 imposed restrictions is also believed to be a major factor behind increasing forex reserves. The fall in oil prices have significantly reduced our import bill, which saves a lot of forex reserves. The depreciation of the USD against other major currencies like Euro, Pounds and Yen, would have also resulted in revaluation gains.

How do rising forex reserves help us?

Large forex reserves play a significant role by making it easier for the Indian Government and the RBI to manage India’s external and internal financial issues. This is even more important at a time when the economy is impacted by Covid-19 induced slowdown. Currently, our forex reserves are enough to cover the import bill of more than one year. This is a big cushion to help the country from an economic standpoint. Analysts believe that the RBI has been increasing its reserves to guard against a possible downgrade of India’s credit rating by international rating agencies and protect against possible risk-off sentiments. The RBI can also use the reserves in managing and maintaining the stability of the Indian Rupee.

Large forex reserves is believed to provide the market some confidence of the ability of the country to meet its external liabilities. It also helps the RBI to assist the government in its foreign exchange needs and maintain a reserve for national disasters or emergencies.

Sources: RBI, NSDL and publicly available information

Disclaimer: The information provided herein is based on publicly available information and other sources
believed to be reliable, but involve uncertainties that could cause actual events to differ materially from
those expressed or implied in such statements.

“Jaan Hai Toh Jahaan Hai” was the war cry against Covid 19 when the Prime Minister announced the lockdown.
Staying at home brought the people protection although at the cost of loss of income.

This action was needed but was not sustainable. Staying at home was safe but not good for livelihood and certainly not tenable for the long haul.This “staying at home” may be compared with ‘Savings’ in which our ‘Savings’ kind of stay at home.Home for our Savings can be our cupboard, our Locker or even our Current Bank Account which earns less than the rate of Inflation.

After a few months of Lockdown came the term ‘Jaan Bhi Jahaan Bhi”.
People were asked to go out and get back to work. This was felt necessary to kickstart the economy and for wealth generation and sustainability.

Although this necessary action of going out to work was accompanied by some risk.However, by taking some precautions this risk was manageable.This going out to work can be compared to ‘Investing’.

While in the case of Covid, citizens were asked to step out and work, in the case of investing, Money is asked to step out and work.When money steps out to work, this money too is exposed to some amount of risk.

But this risk too is manageable if the investor follows the guidance of a professional Financial Advisor who with his professional practices manages the risk associated with investing.

While Masks and Hand Washing are the Practices to keep risk at bay for People, Diversification & Asset Rebalancing are the Practices to keep Risk at bay for our Money.

The Samsung Group is a South Korea-based conglomerate company that makes everything from dishwashers to smartphones, has become one of the most powerful and recognizable names in tech.

A lot of people are even lumping Samsung together with Apple, Facebook, Microsoft, Amazon, and Google as one of the most important tech companies right now.

So how did Samsung get to where it is today?

We took a look at the company’s history, starting way back in 1938 when it was a company that exported dried fish to China.

1- In 1938, Lee Byung-Chull launched Samsung in South Korea as a grocery shop.

2- In 1940, due to tight competition in the grocery segment, Samsung abandoned grocery for producing and selling of noodles.

3- In 1950, Samsung abandoned production of noodles for producing of sugar.

4- In 1954, Samsung left sugar and started a woolen mill in Korea.

5- In 1956, Samsung abandoned woolen mill and started selling Insurance and securities.

6- In 1960, Samsung left selling of insurance and securities for production of television – the black and white television. Not color television.

7- In 1980, Samsung switched to telecoms, producing telephone switch boards.

8- In 1987, Lee the founder and owner of Samsung died. The company now broke into four independent companies- department stores, chemicals & logistics, paper/telecom and electronics.

9- Same year, Samsung decided to focus on international investing, investing in plants & semi conductor facilities around the world.

10- In 1990, Samsung delved into real estate abandoning international investing in semi conductors. Samsung built the worlds tallest buildings: Petronas Towers Malaysia, Taipei 101 in Taiwan

11- In 1993, there was heavy recession and Asian markets went belly up, Lee’s son who had succeeded him as the CEO of Samsung began downsizing, selling subsidiaries and merged the rest.

12- With the merging of the electronics, engineering and? chemicals division, Samsung became the worlds largest producer of memory chips.

13- In 1995, Samsung switched to liquid-crystal displays and over the next 10 years became the worlds largest manufacturer of flat screen television.

14- In 2010, with liquid crystal displays becoming competitive, Samsung launches a 10 year growth strategy, with smart phones being a key focus.

15- In 2016, Samsung is worlds largest mobile and smart phone maker, outselling iPhone two to one.

Samsung sales today is more than $250 billion and produces more than fifth of South Korea’s total exports.

Don’t be afraid of change. If you don’t change, you become insignificant. Don’t be afraid of delving into new waters. Don’t get stuck doing same thing over and over again, it’s boring. The life is in the risk. The life is in the new!!!! If your idea isn’t working or you are stagnant, don’t stick to the Glorious’ past, take the risk and move on. It’s far better than being stagnant!

Source:Livewire.com

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme available for senior citizens.

The Indian Government launched a pension scheme and it can be taken from 4 May 2017 to 31 March 2020. In the 2018-2019 Budget Speech, the Government of India increased the maximum limit to Rs.15 lakh under the Pradhan Mantri Vaya Vandana Yojana scheme. 

The scheme can be bought via online and offline modes from Life Insurance Corporation (LIC) of India. The main aim of the scheme is to provide senior citizens with a regular pension during the time when there is a fall in interest rates.

Eligibility of PMVVY:
Given below are the eligibility criteria that individuals must meet in order to be eligible for the PMVVY scheme:

• Minimum age of entry: The individual must be 60 years or higher.
• Maximum age of entry: There is no limit.
• Duration of the policy: The tenure of the policy is 10 years.
• Minimum pension that is earned: The minimum pension for a month, quarter, half-yearly, and yearly are Rs.1,000, Rs.3,000, Rs.6,000, and Rs.12,000, respectively.
• Maximum pension that can be earned: Rs.10,000, Rs.30,000, Rs.60,000, and Rs.1,20,000 is the maximum pension that can be earned for a month, quarter, half-yearly, and yearly, respectively.

The entire family is considered when deciding the maximum pension ceiling. The family under this scheme consists of the pensioner, his/her dependents, and spouse.

How to apply:

A form needs to be filled up and requisite documents need to be attached along with the form. One can also invest in the scheme online at the following link: https://onlinesales.licindia.in/eSales/liconline;jsessionid=ED994DB57C625E21BF155420814808A0

Documents required:

• Copy of PAN card.
• Copy of address proof (Aadhaar, passport).
• Copy of cheque leaf or first page of bank passbook of the account in which pension needs to be credited

• The government recently announced many changes in PPF rules for benefit of account holders
• New PPF rules relate to deposits, loans and premature withdrawal

The government recently notified new rules for public provident funds or PPF accounts for the benefit of account holders. PPF is one of the most popular small savings schemes and it offers a guaranteed return.

PPF accounts have a maturity period of 15 years and the government announces interest rates for each quarter. For the current quarter, PPF fetches interest rate of 7.9% per annum.

Interest is calculated for a calendar month on the lowest balance at the credit of an account between the close of the fifth day and the end of the month. Interest is credited to the account at the end of each year.

New PPF rules explained in 5 points

1. According to new PPF deposit rules, an account holder can make deposits in multiples of ₹50 any number of times in a financial year, with a maximum of a combined deposit of ₹1.5 lakh a year. Earlier, a maximum of 12 deposits were permitted in a period of 1 year.

2. The government allows premature closure of PPF account only under specific circumstances only after five years after account opening. Under current rules, premature closure is allowed for (i)treatment of life threatening disease of the account holder, his spouse or dependent children or parents, on production of supporting documents and medical reports confirming such disease from treating medical authority and (ii)higher education of the account holder, or dependent children on production of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad. Now, the government has added one more criteria for premature closure of PPF account: On change in residency status of the account holder on production of copy of passport and visa or income tax return.
   It is to be noted that in case of premature closure of PPF accounts, the account holder gets 1% lower interest than the rate at which interest has been credited to the account.

3. An account holder can take loans from PPF accounts. Under the new rules, the rates at which the account holder can borrow from his account has been reduced to 1% above the prevailing PPF interest rate, from 2% earlier. In case of death of the account holder, the nominee or legal heir shall be liable to pay interest on the loan availed by the account holder but not repaid before his death. Such amount of due interest shall be adjusted at the time of final closure of the account.

4. In addition, the Department of Post, through a notification dated December 2, has allowed deposit of post office savings account cheque of any amount into your PPF account, subject to overall limit, at any non-home post office branch. The earlier limit was ₹25,000. The same rule applies for post office recurring deposit, PPF and Sukanya Samriddhi accounts.

5. “AII POSB cheques issued by any CBS Post Office, if presented at any CBS Post Office should be treated as at par cheques and should not be sent for clearing. POSB cheque can be accepted at other SOLs or service outlets ( without restriction of amount, for credit in POSB/RD/PPF/SSA accounts, subject to the limits, if any, prescribed in the scheme,” says the notification.

Source: livemint.com