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Loan Default – What happens If I am unable to pay Loan on time?

Loan

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February 13, 2020

Loan Default – What happens If I am unable to pay Loan on time?

Loan Default – Recently I got one email from one reader saying his financial condition is not good he is unable to pay the loan on time. What happens in the case of loan default? Well, as per rule when you take a loan, you have to repay the loan on time via EMI. However, due to financial crises such as job loss, accident or due to other reasons if you are unable to make the loan payment on time your loan can go to default.

Loan default generally happens in two conditions either person is not willing to make payments or not in a position to make payments due to financial crisis. There are different consequences when loan default take place. In this post, I will share how to save yourself from loan default as well as the consequences of loan defaults.

loan default

How to save yourself from Loan Default?

Few proven ways to save yourself from the Loan Default are given below.

Restructuring of Loan

The first option to save yourself from loan default is the restructuring of a loan. Most of the bank provides facility for the restructuring of a loan. This facility depends upon the bank and type of loan taken by you. You have to have a dialogue with a bank for the restructuring of a loan. Restructuring means increasing the duration of the loan. Once the duration is increased your EMI will come down and you will get relief. However, in the long run, you will end up paying more money as interest would be higher. This facility is also known as rescheduling debt.

Deferring Payment for Few Months

Deferring Payment for a few months is the next option. If you are likely to stay in a financial crisis situation for the few months you can opt for this option. Bank provides the facility of deferring payment. Some bank charges additional money in order to provide this facility.

One time settlement

One-time settlement is the next option. In this option, you need to negotiate with the bank for a one-time settlement. You need to show your financial situation and convince the bank about a one-time settlement at a lower amount. The bank may or may not allow this. Sometimes banks may ask you to declare bankruptcy at this point. If this is the case, speaking with experts like those at Stone Rose Law is advised to ensure this is the right path for you.

Conversion of Loan

Conversion of loan is a very good option in case of an unsecured loan. In this case, you need to convert your loan from unsecured by secure by providing collateral to the bank. The conversion helps to reduce interest rates and EMI burden.

Taking help from the relatives

You can select any of the options given above in order to save yourself from loan default. If none of the above options worked out you can take help from relatives or friends asking for money. The financial help from relatives or friends may save you from a bank default situation.

Consequences of Loan Default

In case you are unable to pay the loan on time (loan defaults) bank will take strict actions including taking possession of the asset (for a secured loan). The various consequences of loan default are given below.

Personal Loan

Personal loans are unsecured loans. Bank has no collateral or asset against the loan. Bank will take the following actions in case you are unable to pay a personal loan on time.

Bank will issue a notice to you will time frame of repaying EMI in the next 7-15 days. It will be the first notice issued by the bank.
If you are unable to pay EMI in time, the bank will call you for the negotiation. You have to settle the case on the table in order to save yourself from litigation. Bank may ask you to convert your loan from unsecured to secured loan. If negotiation fails bank may file a court case. It will be a civil dispute case where arrest can not be made.
Bank may make use of the post-dated cheques given by you at the time of availing a loan. In case cheques are not cleared as per rule arrest can be made.

Vehicle/Automobile Loan

In the case of vehicle loan banks generally take the following actions if you are unable to pay the loan on time.

Bank will issue a notice to pay the loan within 7-15 days. If you are unable to pay EMI within a given time period bank will take possession of your vehicle.
If you are unable to pay EMI within notice period, pre-sale notice will be issued to the borrower. It will be for seven days. The notice will include details about contact person for payment and release of vehicle. If you repay loan you can submit the proof and take possession of vehicle.
In caes you are unable to pay EMI in the notice period bank may take further step to acution your vehicle for recovery of loan. It generally takes 90 days for this process.

Home Loan

Default on Home Loan payment has different types of consequences. Details are given below.

A notice will be issued to borrower under SARFESAI act. For issuing notice asset must be classifed as NPA by the bank.
The customer can regularize the notice by paying EMI within 60 days time period.
If the borrower failed to pay money, bank will issue demand possession notice and take possession of the property for which home loan is taken.
In case a borrower does not come forward to settle loan, bank will take further steps to action the property. Bank intimate venue and time of auction to a borrower. It generally takes 90 days after taking possession.
During above timeline if the borrower settle the due by making payment, possession of the property will be again given to the borrower.

Final Words

Loan default can have serious consequences, you may face phone several calls from recovery agents, legal notice from advocate and even seizure and action of your assets. If a loan goes to litigation you need to spend additional money for court cases.

Even you opt for rescheduling your debt or opting for one-time settlement your credit score will be impacted negatively. The history of your loan rescheduling or deferment will be captured in your credit report. You will face a problem when you want to take another loan.

So, don’t get lured with offers given by banks for loans. Go for a loan if you are sure that you will be able to pay EMI regularly without fail.

Intraday Trading or Delivery Trading – Which one to select?

Stock Market

Shitanshu Kapadia

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February 11, 2020

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Intraday trading or delivery trading

Intraday Trading and Delivery Trading are two different types of trades used in the stock market. Intraday trading and delivery trading both have different modus operandi. It is generally seen that people who wants to earn money in the short time prefers Intraday trading and long term investor prefers delivery trading.

In this post, we will take a look at details about Intraday trading and delivery trading. In addition to that I will also share advantages and disadvantages of both trading strategies. It will help you to decide which trading strategy to use while dealing with stock market.

Intraday Trading or Delivery Trading – Which one to select?

What is Intraday Trading?

Buying and selling stocks in the stock market is called trading. If trading activity of buy and sell is done on the same day, it is known as Intraday Trading. In Intraday trading stock is purchased with the aim or earning profit in the short time. Intraday trading is done by expert traders who is aware of technical analysis.

The activity of buy and sell in this case is done on the same day during market hours. In case individual forgets to sell position, the trades are executed automatically during the closing hours.

To participate in Intraday trading, you require online trading account. There are multiple companies offering online trading accounts. Here is list of Best Demat Trading accounts in India.

Advantages of Intraday Trading

Allowed to buy share on margin money

You need to pay only margin money to execute the trade. This means investment requires for intraday trading is very low. You can gain more by investing less.

Short Selling

Short selling is allowed in the Intraday. This means if you feel that price of share is likely to fall, you can square off your position by doing short selling.

Low Brokerage

Brokerage charges associated with trading account is very low. There are multiple discount brokers offering trading account at very low cost

Disadvantages of Intraday Trading

Monitoring

You require detail monitoring when you opt for intraday trading. If you don’t track market minute to minute you may end up losing your money.

Time frame

The time frame requires for executing trade is very low in intraday trading. As time period is low it is very difficult to predict movement of stock. You need to cut off your position on the same day. Sometime it may lead to losses.

No Dividend

You will not get any benefits of dividend, bonus etc. which are additional benefits announced by the company for the shareholders.

Also Read – Intraday Trading in Stock Market as Career Option

What is Delivery Trading?

Delivery Trading is one of the most common trading method used by investors in the stock market. In delivery trading stock is purchased with the aim of capital appreciation over long run. In this trading, before buying a stock investors generally carryout fundamental analysis. This is to ensure that stock gives good returns over the longer duration.

The delivery trading is done without any time constraints. This means you can hold stock for indefinite period of time. You require demat account in order to carryout delivery trading.

Advantages of Delivery Trading

No Time Limit

You need not to worry about time limit in delivery trading. You can hold stock for the month, year or couple of years. You are likely to earn more profit over the long run the stock.

Benefits of Bonus, Dividend

In Delivery Trading you will get benefits of dividend, bonus, right issue, share split etc. This gives you additional benefits. It is not available in the intraday trading.

Low risk

The risk involved in delivery trading is very low. You can hold stock for the longer duration and sell when you are earning higher profit.

Disadvantages of Delivery Trading

Full Payment

You need to make full payment for executing trade. Your trade will not be executed if you are unable to provide full payment for the trade.

High Brokerage Charges of Demat Account

You need to open demat account and pay maintenance charges for the demat account. You also need to pay high brokerage fees for delivery based trading.

Wait Period

Sometimes it takes time to get return out of stock. This means wait period in delivery trading is higher compared to intraday trading.

Intraday or Delivery Trading – Which one to select?

Well, intraday and delivery trading both trading techniques are different. A person who wants to make lot of money in shorter span go for intraday trading. Intraday trading requires monitoring of stock market minute by minute. It also requires extensive knowledge about technical analysis, charts and algorithms.

A beginner who is not comfortable with such approach should stay away from intraday trading. Intraday can help you to make quick money but chance of losing money is also very high. If you got expertise to quickly square off positions based on market condition for making money you can opt for Intraday trading.

If you have patience and if you can invest money for the longer duration you should go for delivery trading. Delivery trading usually requires knowledge of fundamental analysis.

Income Tax Calculator FY 2020-21 (AY 2021-22) – Excel Download

Incometax

Shitanshu Kapadia

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February 8, 2020

3

Income Tax Calculator FY 2020-21 (AY 2021-22) – Excel Download

Download Income Tax Calculator FY 2020-21 (AY 2021-22) in Excel Format. This calculator is designed to work with both old and new tax slab rates released in the budget 2020. You can calculate your tax liabilities as per old and new tax slab. It will help you to make an informed decision to opt for a suitable tax structure.

Income Tax calculation is one of the complex tasks for the taxpayer. To help taxpayers here is a simple excel based Income Tax Calculator for the financial year 2020-21 (AY 2021-22). The calculator is made using simple excel formulas and functions. You can use this calculator for calculating your tax liability for FY 2020-21 (AY 2021-22).

Before downloading excel based income tax calculator let’s get acquainted with Latest Income Tax Slab for FY 2020-21 and Income Tax changes made in the Budget 2020.

Income Tax Slabs for FY 2020-21 (AY 2021-22)

A new Income Tax Slab Section 115BAC is announced in the budget 2020. This tax slab is applicable with effect from AY 2021-22.

The current slab rates, surcharge, and health, and education cess remains unchanged. An option is provided to individuals and HUF taxpayers to opt for reducing tax rates as per new tax regime.

New tax rates u/s 115BAC are as below:

Income Tax Slab	% Rate
Up to Rs. 2,50,000	NIL
Rs. 2,50,001 to Rs. 5,00,000	5%
Rs. 5,00,001 to Rs. 7,50,000	10%
Rs. 7,50,001 to Rs. 10,00,000	15%
Rs. 10,00,001 to Rs. 12,50,000	20%
Rs. 12,50,001 to Rs. 15,00,000	25%
Rs. 15,00,001 and above	30%

In case an individual or HUF opts for the new tax rate, certain exemptions, deductions and set-off of losses will not be available. This includes 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80TTA, 80TTB etc.

Salaried people can exercise this option every year before filing the return of income.

An employer should seek confirmation from the employee whether he/she is opting for new tax rate or continuing under old tax rates.

The option of switching from old to next tax slab and vice versa is not available if an individual or HUF have business income.

Also Read – Income Tax Slab FY 2020-21 – Budget 2020-21 Review

Download – Income Tax Calculator – FY 2019-20

You can download the latest income tax calculator FY 2020-21 from the link given below. This calculator is divided into two parts.

Part 1 – Calculator as per Old Tax Slab

The first sheet contains a calculator as per the old tax regime, where deductions & exemptions are allowed.

To calculate your income tax liabilities as per old tax slab, you need to provide inputs such as your gross income, exemption amount. In addition to that, you need to provide information about the investment made by you under various sections. The sheet contains inputs for various sections such as 80C, 80D, 80CCD, etc.

After filling up this detail you need to go to the bottom section where you need to make a selection of applicable tax slab by selecting Male/Female, Senior Citizen and Very Senior Citizen Options.

You will be able to see your tax liability instantly in the Tax Liability with Cess Section.

Part 2 – Calculator as per New Tax Slab

The second sheet contains a calculator as per the new tax regime with reducing tax rates, where deductions are not allowed.

To calculate your income tax liabilities as per the new reducing tax rate slab, you need to provide only single input your gross income.

The calculator will calculate tax liability automatically and display it in the Tax Liability with Cess Field.

Click on the following image to download the income tax calculator.

Note – It is not a comprehensive calculator, it is designed to give you a quick idea about your income tax liabilities so that, you can start tax planning. It also helps you to select an appropriate tax slab.

Key Features of this Income Tax Calculator are given below

This calculator is two-in-one calculator. You can make use of this calculator for calculating tax liabilities as per old as well as new tax slab.
You can compare your tax and decide which tax slab to opt.
This calculator is designed exclusively for the salary income only.
It is an Excel-based calculator. You can download and use it forever.
This calculator is for people with a single home.
You will not able to calculate long-term capital gain tax from this calculator.

I hope this Income Tax calculator FY 2020-21 will be useful to you.

Do share your feedback in the comment section. It will help me to add new features and improve this calculator.

How to Change NPS Fund Manager Online on NSDL Website?

Investment

Shitanshu Kapadia

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February 6, 2020

0

Now you can change NPS fund manager online on NSDL Website. In addition to changing the fund manager, you can also change the investment choice of NPS. i.e Active or Auto choice. You can also switch your allocation between Equity (E), Corporate Bonds (C), and Government Securities (G).

This facility will surely help NPS investors who are planning to change the NPS Fund Manager. The said facility is available for both Tier I and Tier II subscribers.

In this post, we will take a look at the step by step process for changing NPS fund manager online on NSDL website. This includes changes like active to auto, auto to active and allocation changes.

How to make changes to NPS Account Online?

At the time of opening the NPS account, you need to select a type of account & mode of investing – active or auto. You can also select a pension fund manager and decide the percentage in which proportion investment will take place such as equity, corporate or government bonds.

If you have selected an auto mode the investment proportion percentages change based on your age. If you want to manage the investment percentage on your own, you need to switch to active mode. Apart from that if you are not satisfied with fund performance you can also change your pension fund manager.

You can change your pension fund manager once in a year. Allocation of scheme and active/auto choice can be changed two times in a financial year. The change in a fund does not involve any additional taxation or exit load.

There are two methods to make changes (1) Offline method (2) Online method

Also Read – NPS Online Payment – How to make NPS Online Payment?

How to make change in NPS Account Offline?

You need to download application form for the scheme preference changes from NPS website. This form is also known as UOS-S3/CS-S3.
The form includes details such as PRAN number, name of subscriber, PFM name, investment option, asset allocation etc.
The POP will provide acknowledge number receipt to you.
Separate forms to be submitted for Tier I and Tier II

How to change NPS Fund Manager (PFM) Online?

Login to CRA system (https://cra-nsdl.com/CRA/) with user ID and password or IPIN for NPS. You can also make use of NPS mobile app which is available for Google Play or IOS store. If you don’t have IPIN you need to generate IPIN via CRA website.

After successful login click on the Transact Online button given in the menu bar. Similar option is also available in the mobile app. Click on the “Change Scheme Preference” sub menu.

Change PFM NPS

After clicking change scheme preference, you need to select account Tier type. On drop down make selection between Tier (I or II) and click on the next button.

In the next screen, you need to select PFM change and scheme preference change button. Check mark on both field and click on submit button.

You will be able to see scheme preference type selection button. Now select the preference type. There are four preference type.

Active Choice
Moderate Auto Choice
Aggressive Auto Choice
Conservative Auto Choice

You can select the option for the required change. You will be able to see only three option for the selection on screen. (As you have already opted one option from above)

After making a selection of preference click on the Add button. You will be able to see various PFM option as shown in the image below.

Change NPS Fund Manager

Select the PFM name from the dropdown menu and click on the submit button.

You will be taken to the page asking for confirmation. You need to click on Send OTP button.

NPS Fund Manager Change Confirmation

On clicking send OTP button system will send OTP on your registered mobile number for making changes. On entering OTP, you will be able to see acknowledgement number on the screen. The CRA system will also send an email to your registered email ID once request is processed.

How to Change Percentage Allocation in NPS Fund?

The option of changing allocation in the NPS fund is given only if you have selected Active Choice while opening the account. If it is auto choice you will not able to change any allocation percentages. In auto choice fund percentage are allocated based on life cycle.

The process of changing fund allocation percentage is somewhat similar.

Login to CRA system (cra-nsdl.com) via User ID and IPIN and password.
Click on Transact Onlinefrom menu bar and click on the Change Scheme Preference sub-menu.
Select a Tier Type from dropdown and provide the type of Tier (I or II) in which you want to make changes,
Make selection of Scheme-preference % change and Click on the submit button.
Click on the Add button and
Click on Add Button, select the Pension fund from drop down options. Once scheme is selected change the percentage contribution by making entry in the Percentage Contribution
Once you are done click on submit button. You will see confirmation page. Click on Send OTP button.
OTP will be sent to registered mobile number. On entering OTP system will show acknowledgement number for the changes.
The changes shall also be intimated via SMS and email.