Understanding Your PAN

Permanent Account Number (PAN) is a unique 10 character code issued by the Income Tax Department to identify tax payers or assesses in India. It is Alpha-numeric. PAN is mandatory for all assesses who file returns and for financial transactions where it is necessary to quote the same.

PAN enables the IT Dept. to link transactions like tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on to the person who has been allotted the same. In short it is an identifier for the Tax Dept. and it helps detect any tax evasion by the assesse.

A typical PAN card has the name of the person or establishment and date of birth or incorporation in case of a company. In case of individuals it also has the Father’s name. The PAN in the sample is AAPFA3421J.

  1. The first three letters AAP is the alphabetical series from AAA to ZZZ.

  2. The fourth character denotes the status of the PAN holder. In this case it is ‘F’ which stands for firm.

           Notations are as follows

  • P – Individual

  • F – Firm

  • C – Company

  • H- HUF

  • A – Association of Persons (AOP)

  • T- Trust

  1. The fifth character is the first letter of the PAN holder’s last name or surname in case of individuals and the first letter of the name in case of Non-Individuals.

  2. The next four characters are sequential numbers from 0001 to 9999.

  3. The last letter is an alphabetic check digit.

When is PAN necessary?

It is compulsory for the following transactions

  • Sale or purchase of any immovable property valued at five lakh rupees or more.

  • Sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle]

  • Any fixed deposit more than Rs50, 000 with a banking company

  • Any deposit more than Rs50, 000 with Post Office Savings Bank.

  • Sale or purchase of securities of contract value exceeding Rs1Lakh.

  • Opening a bank account.

  • Making an application for installation of a telephone connection (including a cellular telephone connection).

  • Payment to hotels and restaurants against their bills amounts greater than Rs.25, 000 at one time.

  • Payment for purchase of bank drafts or pay orders or banker’s cheques exceeding Rs50, 000 on a single day.

  • Cash deposits in a bank more than Rs50, 000 during any one day.

  • Payments exceeding Rs 25,000 for foreign travel at any one time.

  • Making an application for credit card or debit card.

  • Mutual Fund investments of Rs50, 000 or more in a single purchase.

  • Amounts exceeding Rs50, 000 to a company for acquiring its shares.

  • Payment of Rs50, 000 to a company or an institution for acquiring debentures or bonds issued by it.

  • Any payment of Rs50, 000 or more to the Reserve Bank of India.

  • Insurance premiums exceeding Rs50, 000 for a year

How to get the PAN Card?

Pan card can be easily obtained through submission of Prescribed application to authorized agency or through online in NSDL website. The documents required are 2 recent passport size photos, proof of ID – Date of birth and address and the prescribed fee. The PAN card will be received in 10-15 days through registered post.

There are lot of fake PAN cards in circulation which is a major cause of concern. Obtaining multiple PAN cards is a malpractice and a fine of Rs 10,000 is laid on illegal PAN card holders. So, while applying for PAN card, one should be careful not to trust fraud agents who claim to provide PAN card directly in hand. Also only two authorized online websites are available for PAN card issue – NSDL and UTI. Hence refrain from resorting to duplicate websites that promise to issue PAN cards.

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A dummy’s guide for calculating your Income Tax

“Today it takes more brains and effort to make out the income tax form than it does to make the income”

-Alfred E. Neuman


Let us see if we can simplify this seemingly complicated monster. Before we get to the calculation part we need to understand a few terms that are used here.

Financial Year (FY) – This refers to the period between 1 April – 31 March of the following year and all the financial reporting made during the same.

Assessment Year (AY) – This refers to the period between 1 April -31 March of the year following the Financial Year and is the period in which the income is assessed. For E.g. For the current financial year FY2015-16 the Assessment Year is AY2016-17.

Previous Year (PY) – This is the year preceding the Assessment Year. For e.g. In the Assessment year 2015-16, the income is assessed for the year 2014-15.

Taxable Income – For Residents all incomes earned in India as well as global are taxable. However for NRIs only incomes earned in India are Taxable.

Receipts – Receipts are categorized as Revenue Receipts and Capital Receipts. Revenue receipts refer to incomes like salaries, rents, interest on investments etc. and are taxable unless there is a specified exemption. Capital receipts refer to incomes due to sale of property, loans, gifts etc. and are usually exempt from tax unless specified otherwise.

Income Tax Slabs – Depending on the income earned and the age there are four slabs under which the incomes tax rates are applicable.

  • No tax or Nil
  • Income taxed at 10%,
  • Income taxed at 20%
  • Income taxed at 30%.

The Income categories for these slabs are divided into three groups based on age

  • Below 60 Years of age
  • Between 60 -80 years of age (Senior Citizens)
  • Above 80 years of age (Very Senior Citizens)

Income Heads

First we need to list down all Incomes. Incomes may classified under different heads as per the Income Tax Act. They are the following

Income from Salary

Salary includes basic salary or wages, any annuity or pension, gratuity, advance of salary, leave encashment, commission, perquisites in lieu of or in addition to salary and retirement benefits. The aggregate of these incomes after exemptions is taxable. There are certain allowances under this head which are taxable after a limit. There has to be an employer employee relationship for Income to be under this Head.

Income from House Property

Any Residential or Commercial property you own is taxed. Even if the property has not been let out it is considered as earning rental income. However it is taxed on its capacity to ear rental income and not actual rent.

Income from Business or Profession

This income is under the head “Profits and Gains of Business or Profession”. Here income from any trade, commerce, manufacturing etc. is taxable after deducting specified expenses

Income from Capital Gains

Any income from transfer of assets like property, financial investments, jewellery etc. comes under the head of Capital Gains.

Income from Other sources

Any income that is not chargeable under the above four heads and not exempt from tax is placed under this head. E.g. Bank Deposits, Lottery etc.

The sum of the income under the above heads is the Gross Income.


Deductions are allowed from the Gross Income under Section 80 of the Income Tax Act for Tax Planning purposes to reduce your outflow of tax. These include investments in PPF, Sukanya Samriddhi account, ELSS, Insurance, NSC etc. to name a few. You could use the tax planning tool to find out more options under this section.

The Gross Income – Deductions = Taxable Income

The respective tax slabs are applied to this to calculate the Tax Payable. (Check Annexure)

Tax Deducted at Source (TDS) – TDS is deducted by banks on fixed deposits and by employers on your annual income. You can deduct all the TDS amounts from your Tax Payable amount.

The Tax Payable – TDS = Final Tax Payable.


Tax Rates for Assessment Year 2016-2017

For Individuals below 60 years of age

Taxable Income

Tax Rate

Up to Rs. 2,50,000


Rs. 2,50,000 to Rs. 5,00,000

10% of the amount exceeding Rs 2,50,000

Rs. 5,00,000 to Rs. 10,00,000

Rs.25,000 + 20% of the amount exceeding 500,000

Above Rs. 10,00,000

Rs.125,000 + 30% of the amount exceeding 1,000,000


For Senior Citizens above 60 but below 80 years of age

Taxable Income

Tax Rate

Up to Rs. 3,00,000


Rs. 3,00,000 – Rs. 5,00,000

10% of the amount exceeding 300,000

Rs. 5,00,000 – Rs. 10,00,000

Rs.20,000 + 20% of the amount exceeding 500,000

Above Rs. 10,00,000

Rs.120,000 + 30% of the amount exceeding 1,000,000


For Super Senior Citizens above 80 years of age

Taxable Income

Tax Rate

Up to Rs. 5,00,000


Rs. 5,00,000 – Rs. 10,00,000

20% of the amount exceeding 500,000

Above Rs. 10,00,000

Rs.100,000 + 30% of the amount exceeding 1,000,000

In addition to the above tax rates there is an Education Cess (3%) and Surcharge if Taxable Income Exceeds 1 Crore.

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

b) Education Cess:  The amount of income-tax and the applicable surcharge shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

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All you need to know about National Pension Scheme (NPS)

NPS was launched by the Govt. of India in 2004 with the aim of providing retirement income to the citizens and bring more people under the social security cover. Although initially it was restricted to new appointees in the Govt. sector today the scheme is available to any citizen of India. This scheme encourages citizens in the age group between 18 and 60 to save up for retirement.

How does it work?

NPS is regulated by the Pension Fund Regulatory Development Authority (PFRDA). The PFRDA appoints professional fund managers to invest the pooled funds into securities as per the guidelines.


Tier I Account: This is the non-withdrawable permanent retirement account into which the accumulations are deposited and invested as per the option of the subscriber. The investor is allowed to withdraw 60% of the amount on attaining 60 years of age and the remaining 40% has to be invested in an Annuity Plan of an approved Life Insurance Provider.

Tier II Account: This is a voluntary withdrawable account which is allowed only when there is an active Tier I account in the name of the subscriber.  The account holder is allowed to withdraw from this account any time.


Government Sector Model

  • 10%of (basic +dearness allowance) and an equivalent sum from the Govt. is invested in NPS on a monthly basis
  • The contributions are allocated in a predefined proportion to Three Pension Fund Managers (PFMs) viz: – SBI, UTI and LIC Pension Funds.
  • The investment pattern is upto 55% in Govt. Securities, upto 40% in Debt, upto 15% in Equity and upto 5% in Money Market Instruments

Corporate Model

  • Contributions by the employee and employer can be equal, unequal or made by either of the two.
  • Minimum amount per contribution is Rs500 and per year is Rs6000. Minimum no of contributions per year is 1 for Tier I
  • If the contribution is less than Rs6000 for the year the account is frozen and has to be reactivated by paying a penalty of Rs100 per year of default.
  • Minimum amount per contribution is Rs200; Minimum balance at the end of each financial year is Rs2000. Minimum no of contributions per year is 1 for Tier II
  • If the minimum balance is not maintained there is penalty of Rs100 levied on the subscriber.
  • There are two choices for asset allocation
  1. Active Choice: In this option the investor decides the allocation between three asset classes viz: – E (Equity capped at 50%), C- Fixed Income Instruments other than Govt. securities and G-Govt. Securities.
  2. Auto Choice: In this option the allocation to the three asset classes are made according to a pre-defined portfolio based on the age of the subscriber and changes as the age increases.
  • PFMs are LIC, SBI,UTI,ICICI Prudential, Reliance Capital, HDFC, Birla Sunlife and Kotak Mahindra

Swavalamban scheme: This was a co contribution facility extended by the Govt. to people working in the unorganised sector. This has now been replaced by Atal Pension Yojana (APY) in which the Govt. would contribute 50% of a subscriber’s contribution or Rs1000 per year whichever is lower for the next five years till 2019-20. The subscribers have to contribute between Rs1000 and Rs12000 per year to be eligible for this benefit.


The subscriber can register for the scheme by submitting the form and KYC documents at the Point of Presence (POP). The PFRDA has authorized 58 institutions including public sector banks, private banks, private financial institutions and the Department of Posts as Points of Presence (POPs) for opening NPS accounts. The subscriber is allotted a unique Permanent Retirement Account Number (PRAN). This can be used in any location in India.

Tax and Tax Benefits

Currently the NPS is under EET (Exempt,Exempt,Taxed) which means that it is tax free at the contribution and accumulation stages but taxed on Maturity or withdrawal. Tax benefits include a deduction of Rs. 1, 50,000 under section 80CCD. Additional deduction of Rs. 50,000 under section 80CCD (1b) (Effective from 1 Apr 2015)

The NPS has been lauded as the one of the cheapest and best structured Pension Schemes in the world. However it is only now the awareness of the same is growing.

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What are the different types of ITR forms ?

Tax payers in India are required to declare to the Income Tax Department of Govt of India a summary of income and tax paid during the year (April to March of next year). There are several ITR forms such as ITR-1 (Sahaj) ,ITR-2 ,ITR 2A, ITR-3, ITR-4 and ITR-4S( Sugam), ITR-5 and ITR-6. These forms are released every year by Income Tax Department.  To file Income tax returns one needs to fill the appropriate Income Tax return form.

The Finance Ministry recently announced new ITR2 varieties dropping the controversial obligatory disclosure of overseas journeys and dormant financial accounts. The new types of ITR forms – ITR 2 and ITR 2A have three pages and different particulars in schedules. ITR2A has been introduced by the ministry and filled by a person or HUF who doesn’t have capital goods, revenue from enterprise/ career or overseas revenue / asset. At current people/HUFs having revenue from multiple home property and capital positive aspects are required to file Form ITR-2. The final date of submitting returns has now been extended to August 31.

The form to fill income tax returns is based on the types of income earned. Income Tax Department classifies income into different types as given below:

  • Income from Salary: Income is charged under this if there is or was an employer-employee relationship between the payer and payee. Pensions also are included under this head.
  • Income from Profits and Gains of Business or Profession: Income earned through business or profession (ex-professional working as freelancer) is charged under this category. This is taxed taking into account deductions such as depreciation of assets, rent, expenses and travelling.
  • Income from House Property: Any residential or commercial property that you own will be taxed. Rental income is taxed subject to some exemptions for example on Home Loan.
  • Income from Capital Gains: Any profit or gain arising from transfer of capital asset – it could be property or gold, held as investments are chargeable to tax under the head capital gains.
  • Income from other Sources:  Any income that does not fall under any of the four heads of income above is taxed under the head income from other sources. This includes income from fixed deposits, winning a game show etc.

A tabulated representation on what form can one use for ITR filing based on your income sources:






1. Income from salary/pension: or
2. Income from one house property
3. Income from other sources( excluding winnings from lottery and income from races horses)



1. Income from salary/pension
2. Income from house property
3. Income from other sources (excluding winnings from lottery and income from races horses)
4.Income from Capital Gains.
5. Income from foreign assets.

They should not have Income from Business or Profession.



Being partners in firms and not carrying out business or profession under any proprietorship.



It is applicable for small businessmen and professionals from business or profession and gross receipts upto Rs. 60 lacs a year



Having income from business or profession (such as insurance agent, doctor, CA, lawyer etc.) with gross receipts of more than RS. 60 lacs a year

ITR-Forms                                          Source file  : http://www.bemoneyaware.com/blog/which-itr-form-to-fill/

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Facebooks Initiative To Stop Fake Likes

The biggest complaint of late is that community managers are complaining that their Facebook pages don’t have the reach as expected. This could be because of reasons included increased competition in the newsfeed, focus on ads by Facebook and the initiative that Facebook is on to reduce the number of spammy promotional posts. Pages have to work doubly hard to stay visible to their target audience, causing business owners to worry if likes still have value and if there is merit in investing in them.

Does it pay to buy likes?

It does pay to buy likes but only through those purchased via Facebook advertising. This makes the reach of your ad or post cheaper and more effective in reach – means that these fans have already opted-in to receive brand messages. This in turn means they will respond positively at higher rates. Also when target consumers get product or service recommendations from person they trust, the interaction with the brand is far more valuable for a marketer. Facebook imitates this concept when fans engage with brand content by serving ads with “social context.” When fans engage with an ad, their friends are shown the ad with the context that someone in their network liked that particular ad.

So what’s the fuss about fake likes?

Business page owners on Facebook get fake likes very often and this makes their pages to be viewed by less genuine leads and prospects see their posts. If fake profiles are seeing a business page owner’s posts then they won’t be engaging them. Target prospects and genuine customers will be excluded from seeing the business’ posts.

In case of consumers, fake likes can mislead users into thinking a brand is more authentic and popular than it actually is.

What is Facebook doing then to prevent fake likes?

The first step in this is to prevent the use and creation of fake Facebook profiles. Making a Facebook profile requires mobile phone verification especially if multiple accounts are created in the same machine.

Off late Facebook has upped its detection and elimination drive for ‘fake’ likes which could inflate a brand’s importance and visibility artificially. It was important to identify from where the fake likes originated from. Fraudulent likes originated from click farms (armies of low-paid workers), fake accounts and malware. These are sold to page owners who want to boost their exposure on Facebook. In reality they do not improve sales or get actual customers. Facebook has improved its technology for detecting suspicious patterns of likes.

Facebook began letting page owners know about the instances when it blocked or removed fake likes from their pages since March 2015.

Because of the practice of selling fake likes, smaller businesses and some brands face a challenge on how to grow this business and not get lost in the noise. Facebook’s initiative of removing fake likes only helps these businesses who are seeking genuine customers and leads. At the same time Facebook also says that brands and businesses should focus on business objectives – like increased app downloads, or clicks on the website and not rely on likes. Because of Facebook’s war against fake likes a large number of vendors hawking inauthentic likes are likely to go out of business.

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Tips for Secure Banking Transactions

Banking has been evolving continuously over the years primarily focusing on convenience to the customer. Today online and mobile banking make life much easier for us on this front enabling virtually all kinds of transactions possible without even visiting the branch. However, with this convenience comes an increased level of risk leading to an increasing number of frauds. It is also true that most of the times the victims had fallen to phishing and such tactics employed by fraudsters and could have avoided the situation. While banks do follow their respective security policies in offering us the convenience of banking at our fingertips, we could on our part take precautionary steps to make sure that it is safe too.


  • Use ATMs located public and well lighted locations. Assailants usually choose remote and isolated areas for their job.
  • Do not write your ATM PIN on card
  • Be aware of people looking over your shoulder while entering the PIN.
  • Avoid counting your cash or waiting with cash inside the ATM.
  • Do avoid using unmanned ATMs at remote locations.

Secure Online Terminals

  • Ensure that your browser and computer systems(antivirus, firewalls etc) are updated with the highest security features and settings which are installed from a trusted source. Do not install any application software from unsolicited vendors or sites.

  • Avoid using public terminals like in cybercafes or locations with online Wi-Fi connections or networks that you do not control for your banking transactions as your accounts are most vulnerable to hackers/fraudsters here.

  • If you are using the computer at your office make sure the security aspect is in place and ensure you clear the cache (on any terminal)after transacting so that no one else can view your confidential data.

  • Do not select the option of storing or retaining your user ID and password online as this information could easily get picked up from the browser.

  • Always ensure you log out and exit the browser after each session.

Secure Online

  • Always enter the banks URL or web address in the browser to make sure you are in the right page. Avoid following any embedded links in any email to the website.

  • DO Not disclose your account details(card number,PIN, user ID password) on email, phone or any webpage other than your bank site as no bank personnel would ask you to divulge such confidential information. Most of the banking frauds take place when people fall victim to phishing.

  • A locked padlock symbol should appear in your browser window when you are on your banking site.

  • Use a strong password for your account. Avoid using names and birth dates of your family which can be easily guessed. Include numericals and special characters as part of the password. Also avoid using the same password for multiple bank accounts or any other online account(facebook, twitteretc.)

  • Use the virtual keyboard to enter the password especially on public terminals.

  • Change your log in password at regular intervals

  • Enable Two- Factor Authentication offered by the bank. This way every time you log in to your account you get a One-Time-Password(OTP) on your registered mobile number which has to entered online in addition to your password.

  • Check the ‘last logged in’ panel when logged on.

  • Do not leave the terminal unattended when logged on to your account.

  • In case of any unexpected pop ups or suspicious windows that appear while you are logged in immediately exit and inform the bank.

  • Check your balances and statements regularly.

Secure Mobile Banking

  • Preferably use the banking application when transacting on your smartphone.

  • Avoid logging in when you are using public wireless networks.

  • Do not connect to another device when you are logged in to your account.

  • Lock your phone with a PIN or secret pattern so that it is not easily accessible.

  • Do not reveal any personal details on any of the links, smses or calls that you receive.

A few safety measures taken while transacting can go a long way and perhaps secure us from becoming the next statistic of banking fraud. Get professional guidance from best finance planner in India for safe transaction.

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Aadhar card holders now exempt from posting ITR-V


New tax forms released have exempted taxpayers with Aadhaar cards from submitting their ITR-V by post after filing their returns online. The entire procedure of filing returns is now truly paperless for those who don’t have digital signatures as well! This comes as good news to taxpayers who e-file their taxes. Assesses filing I-T returns online will no longer have to send the paper acknowledgement by post. The new Aadhaar-based electronic verification code has been launched by the IT department to authenticate this document.

This move comes after the IT department has linked the electronic verification system endorsed Aadhar card to the ITR form, submitted by a tax payer. The Central Board of Direct Taxes (CBDT) has introduced a new column in the ITRs for 2015-16 where the e-filer can provide his Aadhaar number. The Aadhar number will have to be authenticated on the official website of the department using an OTP (One Time Password).

The process will need the e-filer to register his Aadhar number in the ITR after which the UIDAI database will send an OTP to the registered mobile umber of the taxpayer. The mobile number will have to be authenticated on the e-filing website. The authentication of the filed return thus takes place electronically.

So far online filing was paperless only if the person had a digital signature. Taxpayers without a digital signature had to mandatorily post a physical copy of the ITR-V to the CPC (Central Processing Centre) in Bengaluru within 120 days of filing tax returns online. The physical submission of the ITR-V acknowledgement slip did not allow the e-filing from becoming a completely online process. The new forms which incorporates details of Aadhar card makes e-filing easier. The new procedure will also ease the process of quick generation of refunds of taxpayers.

Several e-filers skip sending their ITR-V forms to CPC assuming the job was done once their return was e-filed. The IT department doesn’t consider a tax return as filed unless the ITR-V reaches them within 120 days of filing the return. The ITR-V needs to be signed and printed properly with the bar code clearly visible. ITR-Vs that did not have these details would get rejected. Complaints of postal delays and losses in transit also were the bane of the procedure. Seamless online filing will rid the system of these hiccups and made many more investors e-file their taxes with ease.

The new forms need a detailed declaration of bank accounts held at the time during the year in ITR-1 including those that have been closed during the payer. ITR-2 seeks particulars of foreign bank accounts and assets held, details of overseas travel and expenses on the trip.

For those who don’t have an Aadhar card yet, they can continue sending the physical documents to CPC as before. You can do that even if you have an Aadhar Card. This new system of verification is a method to ease the process for those who have an Aadhar card – an alternative way to e-file taxes.

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What Is Net Neutrality ? How does it affects Taxpayers if it is Dead

Source: A Good Cartoon

In this globalized world, where country boundaries no more restrict trade, people tend to become more dependent on each other across country borders. Now that we are so dependent on the most used technology that is Internet, a new concept on net neutrality has come into the picture.

The success of the internet in adopting innovation, access to a huge knowledge base and upmost freedom of speech due to the principle of net neutrality. Net neutrality is the concept that internet service providers give and are suppose to give their customers and users equal access to all lawful websites and services on the internet. They should not have the authority to give priority to any website over another.

Due to penetrating urge by the telecom operators, the Telecom Regulatory Authority of India (TRAI) is making plans to authorize and allow the operators to block applications and websites to squeeze more money from consumers and other users. This is an extreme violation of what we call net neutrality.

In this era when we are dependent on Internet right from talking to our friends to online shopping, from paying taxes online , from recruiting to overseas deals,taxing the users for paying each extra service they use is unethical. That is what I feel. I would request you all to kindly put forward your views regarding the same. Each one of us can make a difference. What do you feel…. is this new regulation in the pipeline right?

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