Knowledge Series For Commerce Students: Know Your Home Loan

Home Loans cater to your needs or possibly a renovation, construction, or additional repairs…

Read More

Home Loans cater to your needs or possibly a renovation, construction, or additional repairs to your humble abode. It is affiliated with a plethora of facets that the borrower needs to take into consideration before he/she can finally attempt to avail of such a loan.

How Much Of A Loan Amount Are You Eligible To Avail?
The predominant requirement is the eligibility of the borrower in the repayment of the loan that would determine the tenure, interest rates, and down payments attached to the loan amount. Your surplus income will drive the lender to figure out the actual amount of loan that you are eligible for.

So, your total assets, total liabilities, and the apparent stability of income play a pivotal role in gaining the lender’s trust. At the end of the day, a bank needs to ensure that your financial stability will not pose any problem for them in the repayment of the loan amount.

Additional Charges And Figures That You Need To Be Aware Of
Statistically, the bank assumes that as much as 50% of your income would suffice for your loan repayment, furthermore, the desired tenure, as well as pegged interest rate, will also impact the decision of assessing the amount of loan.

The majority of lenders expect around 10 to 20 per cent of the amount of home’s purchase in the form of a down payment on your part, and the remaining portion of the loan is eventually financed by the lender.

Now, this aggregate amount of loan encompasses certain charges, for instance, registration, transfer, stamp duty etc. You may be eligible for a larger amount but it does not necessarily mean that you have to get that much amount financed, even a significantly smaller amount can also be availed which directly relies on your requirement.

It is advisable, however, that keeping the ratio of down payment relatively higher than the ratio of loan amount so that the ultimate cost of interest payable can be mitigated and be kept at the desired level.

The Necessity Of A Co-Applicant
Additionally, having a co-applicant is an indispensable requirement to fulfil, so if you are the only owner of the property under scrutiny, then, in this case, an immediate sibling or any other family member can be anointed as a co-applicant.

What Specific Documents You Will Require For The Loan?
The documentation process is another integral and intrinsic phase where a checklist of specified documents is handed out by the bank which is to be filled accurately to steer clear of future ramifications.

Your unique identity proof, proof of residence, form 16/Income tax returns and recent salary slips which has to be decidedly authenticated by your employer and has to be self-attested.

But generally, in most cases, collateral security is also warranted such as insurance policies, units of mutual funds or any other significant investment. In most cases, the designated property is purposefully mortgaged in favour of the lender in the form of security until the loan has been repaid in its entirety.

Should You Secure Your Home Loan With An Insurance Policy?
It is vehemently advisable to secure insurance in favour of the home loan so that the liability does not fall on anyone else, but you alone will be secured enough to repay it. Now there are two prominent plans which are prevalent in today’s scenario, i.e. pure term insurance and the other one is a Mortgage insurance plan.

Now the loan amount should be equivalent to the insurance amount. As far as the premium is concerned, then a single premium, as well as regular premiums, will be the coveted choice. However, it is not mandatory to avail of insurance cover but a sense of self-assurance is generated by availing of such service.

Disbursement Of Loan
The documentation process is the precursor of the disbursement of the loan. The magnitude of the loan amount is solely scrutinised based on the documentary proof and that entails the procurement of a sanction letter from the bank which explicitly states the final amount of loan, duration, and applicable interest rate etc.

So in a nutshell, when the loan has finally been confirmed from the bank, it is commonly referred to as disbursement of the loan after getting through entire technical and legal or valuation activities and handover the cheque or demand draft in favour of seller after successful execution of sale deed and mortgage deed of the house.

Types Of Interest Rates
Rates of home loan can be distinct in the form of fixed or flexible. Calculation of EMI varies as per the various financial institutions/banks from where your loan has been sanctioned. Underlying additional charges also apply in tandem with the payment of the EMI such as processing fee which is generally about 0.5 to 1% of the loan amount. Now, repayment in the form of EMI begins right after the month when the loan has been disbursed.

Repayment Through ECS
Electronic Clearing System (ECS) is one of the avenues through which the repayment of the loan can be done, which involves direct payment of the loan amount from your salary account on a specific date of the repayment.

If you are eligible to pay higher EMI, then it will certainly benefit you since it acts as a long-term advance. Clearing the obligated amount faster will alleviate and relieve your mental stress easily.

The borrower always has this option at his disposal to pre-close his/her loan way ahead of the specified duration. However if the interest on your loan is of floating nature, then you will not be bound to pay additional charges, whereas if it is of a fixed nature, then certain charges may be applicable.

Every financer or lender should explicitly state in their statement the total interest as well as the principal amount payable at the very beginning of the financial year. This will eventually serve as a propellent factor to the department of accounts regarding your proof of investment for necessary tax deductions.

This phenomenon will serve you to reap tax benefits at the end of the year. It is prudent to pick the lender that renders the lowest EMIs option which can mean that you are paying a significantly lesser amount of money in the form of repayments as compared to other applicants from any other financial institution.

How Your Grievances Can Be Addressed
There may be incidences that a borrower may not be satisfied with the services rendered by the bank or some other pertaining relevant problem might occur.

So in that case, you can mention your grievance specifically in writing delineating the factors that displeased you, which needs to be addressed at the concerned branch and if however, the bank does not resolve or overlooks your concern then you have the option at your disposal to lodge your complaint with the ombudsman.

Income Tax Benefit of Housing Loan
Interest payment for housing loan is deductible under the head income from house property. The maximum limit is Rs. 2 Lacs p.a. u/s. 24(b). Moreover, we can also get benefit u/s. 80C of income tax for the principal repayment of housing loan with maximum limit of Rs. 1.50 Lacs. The stamp duty and registration charges paid at the time of registration of sale deed is also deductible u/s 80C of Income Tax Act, 1961.

Accounting for small business

Accounting has been major worry for small businesses. Timely entries, filing timely returns of…

Read More

Accounting has been major worry for small businesses. Timely entries, filing timely returns of GST, TDS etc. and year end finalisation.

All this has been a headache. Right? Especially, when you are not having any knowledge / understanding of accounting. So what to do?

You have three solutions:

1. Hire a part time accountant:

Well you can do that. It is a good option. We have tried to enlist pros and cons of this alternative for you.

– Hiring a part time accountant’s service removes burden from entrepreneur.
– Well this solution is of course the most cost effective solution in our opinion.
– When you remuneration to part timer, you can assign responsibility to them.

– Many part time accountants are very unprofessional and at times have low level of expertise.
– Being part timers, they are quite irregular in service, since they have other commitments at other firms.
– Leakage of proprietary information has been a major worry.
– Many times these people force clients to take service of their so called ‘tied up’ Chartered Accountants.

2. Learn Accounting / Tally:

Do it yourself and that too with perfection. Sounds good. So what can be done.

You can learn accounting, tally, taxation, excel etc., which is useful in getting you through your task by joining Executive of Commerce Course of Super 20 Training Institute or such other course. You can get more information about the course from S20.

Now let us understand pros and cons of this approach.

– No dependence on somebody.
– No leakage of proprietary information.
– Even if you hire an accountant, he cannot fool you, since you yourself know the knitty gritties.
– You can have time flexibility and do it at your own convenience.
– Zero rupee cost. (Has time as a cost).

– You may not be as good as a pro. (You can take help of a Chartered Accountant for returns and finalization, so this problem can be solved)
– Will take your own time. You can invest this time in other important activities.

3. Outsource to a professional firm:

In this case, you are hiring a professional firm, who specialize in accounting, taxation etc.

You can contact consulting team of www.S20.in/consulting which is an offshoot of Jigar Patel & Associates (A CA Firm) or such other firm.

Now let us understand pros and cons of this approach.

– These people are professionals, so no questions about the quality of service.
– They have non-disclosure ethics, so no leakage of proprietary information.
– Outsourcing accounting service removes burden from entrepreneur entirely.
– Even it is better than hiring a full time employee in certain cases, because you do not need to monitor the employee here.

– On and average 20-50% costlier than hiring a part time accountant.

So, entrepreneurs, all the best. You cannot ignore accounting, but you can manage it.

Mutual Funds in India

Mutual Funds in India   Friends, let us take a stock of some basic…

Read More

Mutual Funds in India


Friends, let us take a stock of some basic information of mutual funds in India.


  1. Structure:

In India, Mutual Funds are having three tier structure. Mutual Fund is set up as a trust, which is sponsored by a sponsor entity. Sponsor entity takes approval from SEBI to launch mutual fund. This entity then establishes a trustee company to become trustee of the mutual fund. Most importantly, the sponsor establishes Asset Management Company (AMC) to manage the mutual fund assets. Hence, the structure will look like as below. Further, every scheme of the mutual fund needs specific separate clearance from SEBI and then can be launched.










  1. Features:

Some of the features of mutual funds are lower investment sizes, professional management, transparency, diversification, liquidity are unique and offer advantages to investors.

  1. Types of Schemes:
  2. Equity Schemes: Invests primarily into various shares and equity instruments. (Generally, 65-100%). LTCG beyond 1 year is tax free for resident Indians.
  3. Debt Schemes: Invests primarily into debentures, bonds, debt market instruments, money market instruments, Govt. Securities etc. LTCG beyond 3 years is applicable with indexation for resident Indians.
  4. Hybrid Schemes: As the name suggests, it is a combination of Equity + Debt in varied proportions. If more than 65% assets are in Equity, taxation of Equity Schemes are applied. Otherwise, taxation of debt schemes are applied.
  5. Funds of Funds: As the name suggests, these schemes invest in various mutual fund schemes. If more than 65% assets are in Equity funds, taxation of Equity Schemes are applied. Otherwise, taxation of debt schemes are applied.
  6. International Funds: As the name suggests, these schemes invest in international securities / funds. Taxation would be same as Debt Schemes, if less than 65% of the assets invested in Indian Equity Instruments.
  7. Exchange Traded Funds: As the name suggests, these funds are listed on a stock exchanges and gets traded like a share. Hence, investors can buy / sell them freely.
  8. Index Funds: As the name suggests, these funds are replica (copy) of some index like Sensex, Nifty etc. and provides matching returns of relevant index.
  9. Closed-end Funds: These funds are closed for subscription / redemption.
  10. Interval Funds: These funds are closed for subscription / redemption for a fixed interval.
  11. Open-end Funds: These funds are open for subscription / redemption on continuous basis.


  1. Transaction Types:
  2. Lumpsum Investment:

Investing any amount of money in a mutual fund scheme at one go.

  1. Lumpsum Redemption:

Withdrawing any amount of money from a mutual fund scheme at one go.

  1. Switch Transactions:

Switching-out from existing scheme of a mutual fund and switching-in the same into another mutual fund scheme. (Basically, transferring from one scheme to another).

  1. SIP (Systematic Investment Plan):

One can put every month / quarter fixed amount in a mutual fund scheme as a regular investment.

  1. SWP (Systematic Withdrawal Plan):

One can withdraw every month / quarter fixed amount from a mutual fund scheme as a regular income / withdrawal.

  1. STP (Systematic Transfer Plan):

One can transfer every month / quarter fixed amount from one scheme of mutual fund to another.


  1. Mutual Fund Industry in India:

There are around 45 mutual fund companies in India with total Assets Under Management (AUM) as on 30-Jun-17 of approx. Rs. 17 lakh Crore. E.g. ICICI Prudential Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, Franklin Templeton Mutual Fund etc. MF industry in India a growing at a very fast pace recently and is projected to grow multifold in years to come. Thousands of schemes are launched by these companies for the benefit of investors. For more knowledge and information about mutual funds India, one can visit websites of




  • By Tejas Patel

Income Tax for Individual

What is Income Tax? Income tax is the tax levied by the government on…

Read More

What is Income Tax?

Income tax is the tax levied by the government on the total income earned by the assessee.

Types of Income

There are 5 head of income in which the earning or total income can be catogarised as per Income Tax Act, 1961.

  1. Income from Salary
  2. Income from Business and Profession
  3. Income from House Property
  4. Income from Capital Gain
  5. Income from Other Sources

Available Deduction

If any individual makes investment in some of the specified investment schemes or does expenses for some specific purposes, then it would be available as deduction from the gross total income earned by the assessee as given under :



MF-ELSS, PPF, PF,LIP, Tax saving Fixed Deposit, Repayment of housing loan, tuition fees of children, etc.



Mediclaim of self, child and spouse

For parents (Rs. 30,000/- in case of senior citizen instead of 25000)



80GDonation to charitable Institute

  50% of net total income


Interest on Higher Education  Actual Interest paid


Interest on Housing Loan  Max uptoRs. 2 Lacs



Taxability of the income (For the A.Y. 2018-19)

Income tax is levied on the income earned by the assessee as per the slab of the income as mentioned hereunder

For Ind/HUFSenior CitizenVery senior CitizenRate of Income Tax

Upto 250000

Upto 300000Upto 500000Nil








Above 1000000Above 1000000Above 1000000



Rebate uptoRs. 2500/- is available to the assessee if total income of the assesseedoes not exceeds Rs. 3,50,000/-

On the Income tax calculated as above education cess and secondary and higher education cess is to be calculated @ 3%.

The surcharge will be 10% of the taxable Income between Rs. 50 lakhs to Rs. 1 crore

The surcharge will be 15% of the taxable Income above Rs. 1 crore

Types of banks

Friends in my today’s article, we will try to understand types of banks operating…

Read More

Friends in my today’s article, we will try to understand types of banks operating in India.

Let us take a very simplistic approach of classifying banks by their ownership structure. Simply going by ownership structure of the banks, we can classify banks as below:

  1. PSU Banks
  2. Private Banks
  3. Co-operative Banks
  4. Foreign Banks
  1. PSU Banks:

Public Sector Undertaking Banks are banks in which Govt. Holding is more than 50%. So in a way these banks are primarily controlled by the Govt. of India. Most of these banks were nationalized by Indira Gandhi Govt. So many people identify them as nationalized banks.

E.g. State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India etc.

  1. Private Banks:

Private Sector Banks as the name suggests are majority owned by private players. In India, due to professional management, higher standards of customer service and adoption of technology private banks have grown to be a significant part of banking sector, which two decade back was a very negligible part of banking system.

E.g. ICICI Bank, HDFC Bank, Axis Bank, Kotak Bank, DCB Bank, IDFC Bank etc.

  1. Co-operative Banks:

Co-operative Banks as the name suggests have a co-operative ownership structure. These banks basically came into the existence and then later on very widely promoted when the nation went through co-operative revolution. Many district co-operative, commercial co-operative, multi-state co-operative banks came into existence and are now part of mainstream banking serving large part of customer base.

E.g. Saraswat Bank, Kalupur Bank, Ahmedabad District Co-operative Bank, Cosmos Bank etc.

  1. Foreign Banks:

As the name suggests foreign banks are owned by their foreign parent. RBI issues separate license to these foreign entities to carry out operations in India. Foreign banks have not been able to make a mark in mainstream banking are mostly serving their foreign customers in India apart from serving some HNI as well as limited set of customers in India.

E.g. Citi Bank, HSBC, BNP Paribas etc.

Basic Overview of GST

GST is the biggest Indirect tax reforms in India. After implementation of GST there…

Read More

GST is the biggest Indirect tax reforms in India. After implementation of GST there will be One Nation and One Tax.

At Present there are various indirect taxes levied by central as well as by state government.

Taxes levied by Central Government are

  • Central Excise duty
  • Additional duties of excise
  • Excise duty levied under Medicinal & Toiletries Preparation Act
  • Additional duties of customs (CVD & SAD)
  • Service Tax • Central Sales Tax
  • Surcharges & Cesses

Taxes levied by State Government are

  • State VAT / Sales Tax
  • Purchase Tax
  • Entertainment Tax (other than those levied by local bodies)
  • Luxury Tax
  • Entry Tax (All forms)
  • Taxes on lottery, betting & gambling
  • Surcharges & Cesses

When GST is being implemented there will be only one tax that is called GST. There are four components of GST to be levied at different situation. These are SGST, CGST, UTGST and IGST.

If purchase and selling of goods or rendering of services done within a state then there will be CGST and SGST applicable on goods or services.

If inter-state or from foreign territory purchase and selling of goods or rendering of services done then there will be IGST applicable on goods or services.

If purchase and selling of goods or rendering of services done within a union territory then there will be CGST and UTGST applicable on goods or services.

We will talk more about GST in the next article.