Banks get time till June 30 to obtain PAN from account holders

New Delhi, April 7 (PTI): The Tax Department has given banks three more months till June 30 to obtain permanent account number (PAN) or Form—60 from all account holders as it looks to tighten the noose around evaders.

Though the deadline for getting the PAN or Form 60 (if PAN is not available) by banks ended on February 28, the tax department on April 5 notified the extension of the time till June 30.

In the notification, the Income Tax Department said that in Income—Tax Rules 114B, in the fourth proviso, “for the figures, letters and words ‘28th day of February’ the figures, letters and words ‘30th day of June’ shall be substituted.”

Rule 114B lists various transactions for which quoting PAN is mandatory. The tax department had in January asked banks, post offices and cooperative banks to document PAN or declaration of Form 60 received from account holders and maintain all records for transactions under Rule 114B of I—T Act.

It had said that persons who have not quoted PAN, or did not furnish Form 60 at the time of opening account, will have to provide the same by February 28. Form 60 is a declaration form filed by an individual without PAN.

Following the demonetisation move effective November 9, the tax department had asked banks and post offices to report to it all deposits above Rs 2.5 lakh in savings accounts and more than Rs 12.50 lakh in current accounts made between November 10 and December 30, 2016.

Also, cash deposits exceeding Rs 50,000 in a single day had to be reported. With an estimated Rs 15 lakh crore in junked currency notes coming back into the banking system post demonetisation, the tax department has started analysing the bank deposit trends.

Should you bet your money on NPS?

The National Pension System (NPS), opened to the common public with much fanfare in April 2009, is yet to take off. But there seems to be a growing buzz in favour of the product of late, with the insurance regulator stressing the need for revitalising the pension space and the pension regulator underlining the many advantages of NPS. But does it really merit a place in your portfolio? We try to help you take an informed decision.

Scheme outline 
This is a pension scheme launched by the government, which allows one to invest as little as Rs. 500 a month or Rs.6,000 a year.
There is no upper limit on investments, though tax benefits are available only to the extent of Rs.1 lakh, allowed under Section 80C.
The scheme allows you to choose from three investment options:
a)      In the first option, up to 50% of the investment is in equity, so it is clearly for those in a position to take risk;
b)      The second option is largely a mix of corporate debt instruments and other fixed income instruments from the government, with a small amount dedicated to equities. Understandably, the risk here is lesser than in the first option;
c)       In the third, the investment is mainly in government securities and the exposure to market linked instruments is very small. This, then, is the safest option of the three.
Anyone in the age bracket of 18-60 years can enter the scheme. Maturity will be at 60 years.

Positives 
The management expense in NPS is lower than in any comparable product. This could ensure that you have a bigger corpus by the end of the term, though there is no saying just how big or small your returns will be since there is no guarantee.
Also, since it doesn’t allow withdrawals before the age of 60, the plan could well serve the purpose of compulsory saving.

Drawbacks 
Unlike in tax-saving schemes such as the Public Provident Fund (PPF) or the Employees’ Provident fund (EPF), the money you receive at maturity in the NPS is taxable.
And if experts are to be believed, the post-tax return on these annuities is much less in comparison to what other options such as fixed deposits and Senior Citizens Saving Scheme currently offer.
Also, it does not allow withdrawal of 100% of the amount received at maturity, which is when the policyholder is of the age of 60 years. One has to necessarily use 40% of the amount to buy annuities from insurance companies empanelled with the government.
An annuity assures you of a regular payment — monthly, quarterly, half-yearly or annually, as chosen by you.
In case you need the money before you have turned 60, a withdrawal of only 20% is allowed in lump sum; you have to buy annuities for the rest of the amount.

Expert speak 
“The product has three major problems that take the sheen away from it,” says Manish Chauhan, who runs a personal finance website jagoinvestor.  “First, it offers very little flexibility in terms of product design. Secondly, the maximum investment in equity is limited up to 50%, which may not work in favour of a young investor who should ideally have or who might want greater exposure to equities. The third point is that there is no guarantee on the amount of money you will earn — that’s so paradoxical for a retirement product,” says Chauhan.
The restriction on withdrawals is a sore point, too.
“The fact that there are withdrawal limitations will work well for someone in the low income group. But for any other investor, this doesn’t augur very well,” says Harsh Roongta, CEO, ApnaPaisa.
The preset maturity date at 60 may not stack well either. “For anyone who is entering beyond 55 years of age, this will not work out very well,” says Suresh Sadagopan who runs a Financial Advisory Services.

Should you go for it? 
NPS may not be the best retirement product, suggest experts
Roongta, for one, believes the scheme will become an attractive investment once the Direct Taxes Code kicks in. As per the proposed draft, NPS, provident fund and superannuation schemes will get tax breaks up to Rs. 1 lakh per year. “When this happens, NPS will be the only scheme with an equity component on which tax benefits will be available,” says Roongta. Even so, it would be advisable to cap investments in NPS subject to the limit to which the tax break is available, he adds.

Alternatives to NPS 
Taking a pension plan with the idea of wealth accumulation is not a smart game plan, say experts. A combination of the good old PPF, EPF, mutual funds may work better, they suggest.
Of course, there are withdrawal limits even in the PPF. However, the returns are assured and the maturity amount is tax-free. It’s the same with EPF investments, which are tax-free beyond five years. As for mutual funds, retirement planning is best done through the systematic investment plan, or SIP, route.

Cutting fuel subsidy can cause 2.6% spike in inflation: RBI

New Delhi, August 6: Reserve Bank ofIndiaGovernor D Subbarao has said the proposed elimination of fuel subsidy can lead to a massive 2.6% spike in inflation, an assessment that makes it even more difficult for the government to bite the bullet.

While a hike in diesel and cooking gas prices may be long overdue, the government is hard-pressed to contain inflation ahead of crucial assembly polls inGujaratand Himachal Pradesh later this year. A hike in the price of diesel, which is used as fuel for transporting goods, immediately leads to a spiral in the wider economy.

Subbarao, who shared his assessment with Parliament’s standing committee on finance on Monday, pitched for a healthy single-digit growth coupled with low inflation. The RBI governor‘s approach was in stark contrast to the former economic advisor to the government, Kaushik Basu, who has said that the country can settle for an 11% inflation in the event of 10% growth. “The ideal situation would be a 7% growth and 5% inflation,” the RBI governor told the panel, as he appeared to emphasise on the need to contain price rise.

However, the government is not completely convinced with the central bank‘s approach. A recent note from the government to the parliamentary panel expressed its disquiet over the central bank’s decision to keep money supply tight. At the meeting of the standing committee, the panel’s chairman, Yashwant Sinha, said there was a difference in the approach of the government and RBI. The high subsidy bill and lower tax revenue have resulted in the government’s fiscal projections for 2011-12 going awry. The fiscal deficit during the fiscal was 5.8%, wider than the initial target of 4.6%.

In his presentation before the panel, Subbarao said that while liquidity was not an issue there was lack of appetite for investment. He agreed that deficient monsoon, high fiscal deficit, food inflation, suppressed inflation and rising global commodity prices posed a major challenge to the government. According to a member of the standing committee, the governor conceded that there was a sharp decline in investments. “It has now gone into the negative territory,” said a member, who did not wish to be identified.

What is adding to the problem is the reluctance of the banks to pump funds into the economy. “The banks have large exposures in depressed sectors such as power, fertiliser, civil aviation and real estate. How long can the banks go on extending loans to these sectors,” asked a member, who participated in the deliberations. Members of the opposition parties on the panel said the risk-averse approach of the banks was hurting critical sectors that require large investments.

Knowledge helpline for SBI staff launched

The Web-based service, will be useful to the employees to get their doubts clarified about banking and in turn be more helpful to the customer in their service.

 

Hyderabad, Aug. 3.: Reserve Bank Governor D. Subbarao launched a ‘knowledge helpline’ for the staff of State Bank of India. The Web-based service, will be useful to the employees to get their doubts clarified about banking and in turn be more helpful to the customer in their service. The RBI Governor, who also inaugurated the “Swarn Udyan” and the renovated hostel blocks was the chief guest at the golden jubilee celebrations of the State Bank Staff College here on Friday.

 

Speaking on the occasion, he said banks have to regain the trust and confidence of people. Banking sector is going to be involved and engaged in financial inclusion. It is required to understand the psychology and economy of poor people to enhance financial inclusion. There is a need for innovative infrastructure financing in India as we are supply constraint economy.

 

SBI Chairman Pratip Chauduri and other dignitaries from the SBI, the RBI, other banks and educational institutions took part in the event. The State Bank Staff College set up in 1961 has emerged as a premier training institute for the banking industry. The college trains more than 6,000 officers every year, mostly middle- and senior-level executives, in credit management, international banking, leadership development, marketing skills, negotiation skills and communication skills etc.

 

Several public and private sector banks in India as well as banks from developing countries like Sri Lanka, Ethiopia, Ghana, Maldives, etc., also send their officers for training. Several Govt. officials of revenue intelligence, enforcement directorate, CBI, income tax, central vigilance commission etc., are also trained in banking related areas at the College.

Knowledge helpline for SBI staff launched

The Web-based service, will be useful to the employees to get their doubts clarified about banking and in turn be more helpful to the customer in their service.

 

Hyderabad, Aug. 3.: Reserve Bank Governor D. Subbarao launched a ‘knowledge helpline’ for the staff of State Bank of India. The Web-based service, will be useful to the employees to get their doubts clarified about banking and in turn be more helpful to the customer in their service. The RBI Governor, who also inaugurated the “Swarn Udyan” and the renovated hostel blocks was the chief guest at the golden jubilee celebrations of the State Bank Staff College here on Friday.

 

Speaking on the occasion, he said banks have to regain the trust and confidence of people. Banking sector is going to be involved and engaged in financial inclusion. It is required to understand the psychology and economy of poor people to enhance financial inclusion. There is a need for innovative infrastructure financing in India as we are supply constraint economy.

 

SBI Chairman Pratip Chauduri and other dignitaries from the SBI, the RBI, other banks and educational institutions took part in the event. The State Bank Staff College set up in 1961 has emerged as a premier training institute for the banking industry. The college trains more than 6,000 officers every year, mostly middle- and senior-level executives, in credit management, international banking, leadership development, marketing skills, negotiation skills and communication skills etc.

 

Several public and private sector banks in India as well as banks from developing countries like Sri Lanka, Ethiopia, Ghana, Maldives, etc., also send their officers for training. Several Govt. officials of revenue intelligence, enforcement directorate, CBI, income tax, central vigilance commission etc., are also trained in banking related areas at the College.

ATMs may come loaded with more features

Third party service providers, which have won contracts to set up 62,000 ATMs on behalf of PSBs, are looking to incorporate special features such as multiple currency transactions.

Mumbai, August 2: Third party service providers are now seeking to incorporate special features in ATMs to meet the transaction needs of specific regions. This comes in the wake of nine service providers winning auction bids to set up a pan-India network of about 62,000 Automated Teller Machines (ATMs) on behalf of public sector banks.

Tata Communications Banking InfraSolutions (TCBIL), US-based NCR Corporation and Mphasis are some of the service providers which have won contracts to set up ATMs across States and Union Territories.

TCBIL on Wednesday announced the signing of a contract to deploy and manage nearly 14,000 ATMs across Tamil Nadu and Puducherry, West Bengal, Andaman and Nicobar, and Andhra Pradesh. These ATMs will be deployed over the next two years on behalf of 21 PSBs.



Currency converters

“We are evaluating the possibility of incorporating special features over and above the regular features in ATMs installed in tourist destinations. This, of course, will happen only after consultation with the banks,” said Sudip Kumar, President, TCBIL.

TCBIL is looking at introducing dynamic currency converters in these areas. This facility will allow customers to transact in multiple currencies. “Value-added features like airline ticketing, mobile top-ups and talking ATMs can also be installed in the ATMs if banks permit,” said Kumar. Starting October, TBCIL will roll-out ATMs according to their quarter-wise plan.

NCR has won auctions in popular tourist destinations such as Kerala and Lakshadweep, among other places. It will be deploying 7,400 ATMs (including in Bihar and Jharkhand) for 26 public sector banks in a span of two years.



Solar power

“In power-deficit rural geographies, we will install solar-powered ATMs. Nearly 15-20 per cent of the total deployment will be in this category,” said Navroze Dastur, Senior General Manager, South Asia Channel Partners and Strategic Alliance, NCR Corporation. NCR also plans to provide additional services such as utility bill and income-tax payments in multiple regional languages.

The banking space has seen considerable growth in ATMs in the last few years. Banks collectively have a network of about 90,000 ATMs at present.