Month: June 2017

Paying Income Tax Online- A Boon or Bane

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A majority of salaried individuals tend to get worried when they see the TDS deduction on their pay slip and most wish that taxes were lower. This year the government seems to have heard this vast majority as the lowest income tax rate was effectively halved from the earlier 10% to 5%. But it is easy to forget that it’s not just the salaried individuals that have to worry about paying income tax as even self employed as well as corporations are liable to pay income tax. Through the years, various changes have been introduced in the way taxes are calculated, collected and paid, so let’s see if these changes including paying income tax online have been a boon or a bane for the stakeholders.   

Fewer Paper Documents

The pinnacle of achievement for a digital society, according to many thought leaders, is a paperless existence. We in India might not be there yet, but with the introduction of the online income tax payment system, the submission of paper documents has definitely been eliminated to a large extent. In the past, everything required a paper submission and copies of these had to be stored carefully by the tax payer for up to 5 years in case there was an audit requirement. Moreover, when submitting these documents to the Income Tax Department, a prescribed order had to be followed and in case of a mistake, the papers often had to be filed anew. Thankfully these problems are in the past if you have been paying or have started paying your income tax online. The online system does not need any reordering of papers and in case you make a mistake while filling out the form, the error will get marked automatically allowing you to make the changes immediately. Additionally, rectifications and re-submissions too are a breeze as new documents just need to be submitted as scanned copies if required by the IT Department and not otherwise.

Quicker Turnaround

When paper documents are submitted, they have to be verified one at a time by hand and this requires a lot of time and effort. The online system uses interlinked databases like TRACES that automatically check the tax payer’s entries by running it through multiple databases simultaneously without any human intervention. The system automatically flags errors/mistakes/mismatching data based on the entries available on the various interlinked databases vs. the forms submitted by the income tax assessee. In case an error is detected by the system and the submission is flagged, the form is checked manually. Thus the system of paying income tax online saves time and there is lesser scope of errors creeping into the process.

Cheaper Cost of Collecting Tax

The old system of collecting taxes often required multiple tax collectors knocking on the tax payer’s door or sending out multiple notices to make errant individuals pay their taxes. Then there was the paperwork that had to be sorted through sometimes more than once to ensure that everything was in order. This required not just time but also an army of clerks, assistants, paper pushers, stenographers and so on. For the government especially the IT department, this was a problem because all these employees had to be paid out of the government’s coffers and thus the efficiency of income tax collection was quite low in the pre-digital age. When a tax assessee pays his/her income tax online, it no longer requires such a large workforce to corroborate these requirements due to the higher levels of automation that the online system provides.

Conclusion: Definitely a Boon

From the above points it is easy to conclude that the introduction of the system that allows individuals to pay income tax online is nothing short of godsend. The system is indeed a boon for both tax payer and the collection agency.  Furthermore, the system will work even better as it gets even more streamlined in the future with the introduction of more efficient systems and technologies.


A Complete Guide On How To Apply For PAN Card

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PAN or Permanent Account Number is a ten digit alphanumeric number issued by the Income Tax Department of India to individuals and companies. This important ID proof is mandatory for Indian residents, NRIs and international companies in order so that the government can track any financial transactions in the country and avoid any tax evasion.


Need of PAN Card in India

Other than serving as an important identity proof, PAN card is also needed to carry out important functions like:

  • To start a business in India
  • To open a bank account
  • To apply for credit/debit card
  • To file income tax returns
  • To apply for passport or visa
  • To apply for a loan
  • For sale/purchase of property above Rs. 5 lakh
  • To make an investment in mutual funds or shares above Rs. 50,000.
  • To exchange foreign currency
  • To deposit any more above Rs. 50,000 in bank
  • to pay for life insurance premium above Rs. 50,000 in a year
  • To purchase or sell vehicle/s

How To Apply For PAN Card In India?

Applying for a PAN card is extremely easy. One can apply for a PAN card by two means – Offline and Online.

Online Application of PAN Card

One can apply for PAN card online using Form 49A (for Indian residents and NRIs) and Form 49AA (for foreign citizens). This application form is available online on the official NSDL and UTIITSL website. Both are government authorized portals that issue new PAN card or make changes in the existing one. Here’s how it works:

  • Visit the official UTIITSL or NSDL website to fill the form. Ensure that one needs to fill Form 49A in case of Indian Residents or NRIs or Form 49AA for foreign citizens.
  • Fill in all the details in the form carefully. Recheck before you submit.
  • Once verified, you can click on “Make Payment” to proceed with the online payment.
  • You will be directed to the payment gateway where you can make a payment via credit card/debit card or net banking. You need to pay Rs. 107 (inclusive of service tax) in case of Indian citizen or Rs. 994 (inclusive of service tax) in case of foreign citizen.
  • Once the payment has been successfully done, you will get an acknowledgement number. Save that for future reference.
  • After this, take a print out of your application and affix same photographs and sign in the space given. Along with this form, send necessary documents (self-attested copies) through post to NSDL or UTIISL for verification. These documents are one proof of identity, one proof of address and one proof of date of birth. Don’t forget to mention the acknowledgment number on the envelope.
  • After successful verification, your PAN card will be delivered to your resident within 15-20 days.

Things to Remember While Applying For PAN Card

  • Some of the supporting documents that can serve as a proof of identity are Aadhaar card, voter’s ID card, passport, driving license, photo ID issued by central or state government. For proof of address, you can submit self-attested copies of electricity bill/water bill/landline bill/gas bill/credit card system/bank account statement under your name, passport, driving license, Aadhaar card, etc. The documents that can serve as a proof of date of birth are birth certificate issues by the municipal authority, marriage certificate, matriculation certificate, passport, driving license, etc.
  • If you have applied through UTIISL, send the documents to any of the following address

New Delhi region

UTI Infrastructure Technology And Services Limited

1/28 Sunlight Building, Asaf Ali Road,

NEW DELHI -110002

Mumbai region

UTI Infrastructure Technology And Services Limited

Plot No. 3, Sector 11, CBD Belapur

NAVI MUMBAI – 400614

Kolkata region

UTI Infrastructure Technology And Services Limited

29, N. S. Road, Ground Floor,

Opp. Gilander House and Standard Chartered Bank,

KOLKATA – 700001

Chennai region

UTI Infrastructure Technology And Services Limited

D-1, First Floor,

Thiru -Vi-Ka Industrial Estate, Guindy,

CHENNAI – 600032

  • In case you have applied through NDSL, send the documents to the following address:

Income Tax PAN Services Unit,

NSDL e-Governance Infrastructure Limited,

5th floor, Mantri Sterling, Plot No. 341, Survey No. 997/8,

Model Colony, Near Deep Bungalow Chowk, Pune – 411016′

  • Ensure that the documents and application should reach the concerned office within 15 days of filling the online application.

Effects of Early Loan Repayment on Credit Score

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Most of us don’t like the idea of taking debt unless needed. However, the vicious circle of credit wants us to first borrow money in order to build a positive credit history that would, in return, help us take a loan at considerable rate of interest in case of financial emergencies. Whether one has to lend money loan due to an emergency, to fulfil certain life goal or just to build credit, people tend to pay the loan amount early when they have extra cash in order to stay away from deb. But is it recommended? And how will it affect your credit score? Let’s find out! But, before we understand the effect of early loan repayment, let’s understand how loans affect our credit score.

Impact of Loans on Your Credit Score

Surprisingly, taking a loan is a step ahead towards creating a positive credit score, given that you pay the debt amount on time. Here’s how it affect your credit score.

Credit Diversity

If you already have a credit bill, then opening a new loan account will add diversity to your existing credit, which will enhance of your credit score

Duration of Credit History

Another thing that installment loans help you is to manage your credit over a long period of time. If you have a long history of great credit, then it will not only increase your credit score, thus making loan process easier for you.

Raise Credit Score with Timely Payments

Since, on time payments play the biggest role when it comes to increasing credit score, timely loan payments will not only improve your credit score but will make you an attractive borrower for future.

Loan Repayment

So, Should One Go For Early Loan Repayment?

Well, experts suggest that having an open loan/debt account is beneficial for your credit score rather than a closed one, which is what your installment loan becomes once it is paid off. So, if you have multiple debts, then you might consider closing one earlier. But in case of single loan, then you might consider it paying as per the schedule. Also, one must remember that paying off loans early will not have any positive impact of your credit score. However, depending upon your credit history, closing your loan account is not recommended in the following cases:

Limited Credit History

According to Experian, one of the major credit bureaus in India, open and active credit account enhances your score. So, in case you have limited or only open loan account, then it is not advisable to close it early. Yes, it will help you save money in interest but will not help in your credit score.

Establish Credit History

In case you have an established credit history, then with too much debt, the lender may see you as a risk. It is important to maintain the debt-to-income ratio. This is basically the percentage of your gross monthly income applied towards debt. This means that the gross income should be able to afford the debt taken.

Credit Utilization

Instead of paying off the loan, you can pay down the balance. One of the major factors affecting the credit score is the percentage of the available credit compared to the limit. Therefore, if you have taken a new loan or having an outstanding credit card bill, then paying off your personal loan can help lower the ratio.

Hence concludes that if you are paying off the loan early just to enhance your credit score, then don’t go ahead. Instead, you can invest that money in various schemes like mutual funds or fixed deposits or just save it for financial emergencies.  Whether you pay the loan amount early or as scheduled, one thing that every borrower should keep in mind is to always pay the due bill on time.

Credit Bureaus In India – CIBIL vs Equifax vs Experian vs Highmark

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When it comes to lending money, even the banks needs to be assured about the person to whom they are giving loan. Approximately 5 years back, customer background verification for credit worthiness was a difficult task. However, Credit Information Companies (or Credit Bureaus) have made this task easier. Credit Information Companies are financial institutions who collect and maintain credit and loan related information of individuals and commercial entities. Based on this information, they generate a credit report and score of every individual that helps the bank in approving or rejecting the individual’s loan application.

know your score

As per the latest guidelines, it is mandatory for every bank and financial institution to be a member of atleast one Credit Information Company in India. These companies collect and maintain the credit/loan information of every individual who has a PAN card from the member credit institutions. This information is updated regularly every month or on short intervals.

How Does Credit Bureaus Work In India?

As mentioned above, Credit Bureaus of Credit Information Companies collect, maintain and provide credit information (related to credit cards and loans) of an individual from banks and other member institutions and share the same with them that defines the credit worthiness of an individual. This helps the bank authorities to make a decision of whether to lend money and if yes, then at what terms and conditions. Here, one must note that CIC does not act as a watchdog. It caters the information related to salary, savings account, fixed deposits and other information are not shared by the members.

credit score rating

For example, if you wish to take a personal loan from a bank, your bank will contact the credit bureau for your credit report and score. This report contains all the payment history, including past defaults (if any). Based on the credit score and report, your bank will make a decision on whether the loan should be granted to you or not. More credit score means higher chance of getting a loan at a considerate interest rate.

In India, there are four credit bureaus namely TransUnion CIBIL, Equifax, Experian and Highmark.

TransUnion CIBIL

India’s first credit bureau/credit information company, TransUnion CIBIL plays an important role by helping banks and other financial institutions to manage their business. It is organized into 3 divisions, namely consumer bureau, commercial bureau and MFI bureau.

Year Of Establishment – August 2000

Scoring System – 300-900 (900 is the best credit score)

Charges – Free credit report once a year. Beyond that, it charges Rs. 550

Time taken to generate report – 7 days


Equifax India is a joint venture between Equifax USA, State Bank of India, Kotak Mahindra Bank, Bank of Baroda, Religare Finvest Ltd., Sundaram Financial Services and Union Bank of India. It offers a range of credit services including information, business analysts and risk management.

Year Of Establishment – 2010

Scoring System – 1-999 (1 being the lowest)

Charges – Free credit report once a year. Beyond that, it charges Rs. 400 (+taxes)

Time taken to generate report – 10 days


Experian Credit Information Company of India or simply Experian is a joint venture of GUS Holdings, Axis Bank, Union Bank of India, Indian Bank, Federal Bank, Punjab National Bank, Sundaram Finance Ltd, Magna Fincorp Ltd and VIC Enterprises Private Ltd to provide credit information services to banks and individuals in India. It has also tied up with online financial marketplaces like Paisabazaar to offer free credit report and score to its customers.

Year Of Establishment – 2006 (got license in 2010)

Scoring System – 300-900 (900 is the best credit score)

Charges – Free credit report once a year. Beyond that, it’s Rs. 399 (including taxes)

Time taken to generate report – 20 days


CRIF Highmark is the only credit bureau in India that caters the need of segments like MSME, commercial borrowers, retailer, micro-finance borrowers. It provides analytics, data management and related credit services in order to sustain the financial needs of business and customers.

Year Of Establishment – 2007 (got license in 2010)

Scoring System – Not Available

Charges – Rs. 399

Time taken to generate report – 5 minutes