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Credit card or debit card It’s your choice

Shitanshu Kapadia
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Credit card or debit card It’s your choice

Many of us regularly get calls /e-mail offers from banks appealing to us to take a credit card. Bank in which you hold your account might have given you ATM (Any Time Money) cum debit card & told you that it is convenient to use a debit card for shopping.

Now confusion begins you already have a debit card and the bank is calling you for taking a credit card saying that a credit card is most convenient for shopping. For those of you who are confused like this, here are the pros and cons of using credit and debit cards.

While credit cards and debit cards look the same as plastic cards (seem similar) but they are totally different in the way they work and the services they offer. In this article, we will cover the advantages and disadvantages of each which will help you to pick your choice credit card or debit card.

credit card debit card

Debit Card

The word debit means deduction and, your debit cards behave in the same manner as per name and deduct money immediately from your account as and when you use that for purchasing goods.

Advantages of Debit Card

  1. You need not carry hard cash for shopping.
  2. It takes a shorter time to complete a purchase since one doesn’t have to wait for a check to get approved. Further, you wouldn’t have to carry a checkbook, traveler’s check, etc.
  3. You can use a debit card as an ATM card and withdraw money from the ATM machine.
  4. You will not end up spending extra money as you will be allowed to make over-draft payments.
  5. You need not to pay any interest and penalties or any additional fees.
  6. You will get money anytime (24 x 7) you need from the nearest ATM center.
  7. No need to visit a bank, stand in queues, or wait for check clearing for withdrawal of money.
  8. Need not remember payment dues after purchase.

Disadvantages of Debit Card

  1. You will not get any credit.
  2. If you happen to be at a place that doesn’t take a debit card you cannot do shopping with a debit card.
  3. If you use this ATM card at another bank ATM machine you have to pay an additional charge to the bank.
  4. Fraud may happen if you use a debit card for online shopping and your debit card number, security code, and expiration date goes into the wrong hand.
  5. Money taken/deducted from your account instantly no grace period will be given.
  6. Mostly all credit cards come with some additional services like insurance or cashback etc. Debit card does not offer that.
  7. You have to track your spending you will not get any statements as you get on the credit card.
  8. In case of purchase, goods are faulty or you had disputes like this you will be in a weaker position as you have already made payment through a debit card.
  9. You will not gain a credit score as transactions made by debit card are not reported/given to other companies/credit agencies etc.

Credit Card

As the name suggests it is credit provided to you for making a purchase. A credit card allows you to do shopping on credit meaning you are borrowing money while doing shopping, this money will not be debited directly from your account like a debit card. Mostly by month, you will get a bill of the sum of items purchased by you.

You can make payment in full or in part, if you choose to make payment at a later stage you will be charged with interest amount.

Advantages of Credit Card

  1. You need not carry hard cash for shopping & it is not necessary to have a bank balance in your account for making purchases.
  2. You can purchase goods today but the actual payment will be done by you later. (At your convince)
  3. It will act as a blessing if you want to purchase some items which are beyond your budget but still, you need that.
  4. You will get benefits given by the bank about cash back, free insurance, reward points, etc.
  5. Mostly accepted at all places hence shopping will be joy.
  6.  You can make full/part payments at your convenience.
  7. You can keep your records up to date as you will receive consolidated credit card statements every month.
  1. You can withhold payment of merchandise in case of the product purchased by you is faulty/defective.
  2. Some credit cards also provide the facility to withdraw money from ATMs.

Disadvantages of Credit card

  1. You have to remember the payment due date, you will be liable to pay a penalty / more interest rate on slippage of this date.
  2. You may end up spending more amount, which you may not afford in short card encourage you in making a purchase of goods/service which you really can’t afford.
  3. Your shopping will become more expensive as interest rates are high and there may be additional hidden costs.
  4. Lost/Stolen cards may result in unwanted expenses and a lot of inconveniences.
  5. Extensive use of Credit card increases your debt and affect your finances adversely.
  6. Apart from Interest, some bank keeps additional charges so, you need to be careful & understand the terms and condition before taking a credit card.
  7. Purchasing things on credit may become a habit that will be dangerous.

Indeed, irresponsible credit card use can result in many debts and other bills. So, if you’re struggling to repay your debts, credit card debt consolidation can be a great financial solution. This way, you’ll enjoy a lower interest rate, more flexible terms, and smaller monthly payments. To avail of a debt consolidation process and look forward to financial freedom, work with professionals specializing in credit card debt settlement.  

On the other hand, there are additional things that you should keep in mind when dealing with a credit card. For instance, a wise thing is to understand terms and conditions you should know whether there are any annual fees or other fees for specific transactions. Also, make sure you know the policies and fees for using your debit card at ATMs belonging to other banks. You should report the loss /damage of the card immediately to stop unauthorized usage.

Factors To Consider When Choosing Between A Credit And A Debit Card  

Now that you know the advantages and disadvantages of a credit and a debit card, it’s time to familiarize yourself with a number of factors for choosing which will work best for your personal needs. These can include: 

  • Spending Habits: If you tend to overspend, having a credit card may not be an excellent option because it’s easy to spend more money when it’s not your own money. As such, a debit card may be a better option since it’ll limit your spending on the money you have in your bank account.  
  • Credit History: If you have a poor credit history, you may have to pay a higher interest rate on a credit card. This makes a debit card a better choice as you don’t need to worry about interest rates. But if you have a good credit history, you can qualify for a credit card with a lower interest rate. This can help you save money if you carry a balance from month to month with interest charges.  

Other factors that you need to keep in mind include safety, financial goals, and the like.

Conclusion: – In the current scenario Debit card facility is a must for all but you have to make a choice to take a credit card or not, Credit card use wisely within the limit is a boon, but overuse lead to several financial implications.

FAQs

1. Can I use a credit card and a debit card interchangeably?

No, Credit cards and debit cards function in unique ways and have specific characteristics and purposes. Even though both types of cards can be used for buying things, they have distinct payment methods and financial consequences.

2. Will using a credit card negatively impact my credit score?

Using a credit card responsibly can actually help improve your credit score by demonstrating your ability to manage credit responsibly. However, missing payments or carrying high balances can have a negative impact on your credit score.

3. Are there any fees associated with using a debit card?

Although debit cards generally have lower fees compared to credit cards, some banks might still impose fees for specific transactions or services like overdrafts or using out-of-network ATMs. It is important to go over the terms and conditions of your account in order to be fully aware of the possible charges that may come with using your debit card.

4. What should I do if my credit or debit card is lost or stolen?

If you lose your credit or debit card, it is very important to quickly inform your card issuer or bank. They have the ability to disable the card to stop unauthorized usage and provide you with a new card as a replacement.

5. How can I monitor my credit card or debit card activity for fraudulent transactions?

Mostly all banks and credit card companies provide online or mobile banking options that allow you to track your account activity instantly. Establish transaction notifications and consistently monitor your statements for any unfamiliar or unauthorized fees. If you believe there is fraudulent activity, get in touch with your bank or card issuer right away to report it.

Real Estate synonyms of Black Money

Shitanshu Kapadia
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Real Estate synonyms of Black Money

Black money refers to money removed from the official economy (via corruption, bribery, tax evasion, etc.) and stored in terms of cash within or outside of the country. Any monetary transaction which is done in cash and not shown officially on any documents is the source of the generation of black money.

Real estate is a market in which sources confirm that 50 % of business are done in cash. Most real estate developers do so to save tax which is actually wrong. If you try to approach any builder they will say openly that terms of payment will be 40 % in while 60 % in black like that. Unfortunately No transparency exists in the real estate market. Some of the developers still prefer to have 100% white money transactions but those are only a few.

Black money in the real estate sector is commonly seen due to actions like undervaluing properties, cash deals, benami transactions, and the utilization of shell companies to hide the actual origin of funds. These behaviors not only corrupt the credibility of the housing market but also drive up property costs.

The influx of black money causes property prices to be distorted, making it harder for legitimate buyers to purchase homes. This inflated market, which is created artificially, makes it difficult for first-time homebuyers to enter and worsens income inequality.

There are multiple reasons for asking for black money during property deals:-

  1. As per the process, the builder/developer has to get approvals from different agencies in the government/municipality in each state malpractice/ bribery is involved, which causes the builder to pay money in cash to get approval for the project. The builder is passing on this burden to the customer.
  2. In order to save Tax and hide white transactions seller is asking for black money.
  3. Builder/Developer has to make payments to other suppliers like cement, and steel building material suppliers in cash which forces the builder to ask for black money.

real estate black money

Synonyms of Black Money in Real Estate

Cash Transactions

Cash transactions are frequently used as a common method for black money to infiltrate the real estate market. The utilization of unrecorded cash allows purchasers and vendors to avoid paying taxes and submit lower values for property transactions, resulting in decreased government revenue.

Under-Reporting of Property Value

Understating the value of property is another strategy used to enable transactions involving black money. Individuals can hide the actual value of their assets and avoid paying taxes on profits by underestimating the value of properties in registrations or sale deeds.

Benami Transactions

Benami transactions occur when the property is bought in another person’s name in order to hide the real beneficiary. This secret activity enables people to put unreported funds into real estate without alerting tax authorities.

Real Estate Smart Ownership In India – How It Works?

Government Initiatives to Combat Black Money in Real Estate

Real Estate Regulation and Development Act (RERA)

The main goal of the Real Estate Regulation and Development Act (RERA) is to ensure transparency and accountability in the real estate industry through project registration requirements and transaction regulations. RERA aims to reduce wrongdoing and safeguard the rights of homebuyers with strict regulations.

Demonetization

Demonetization in 2016 was a strong action taken by the Indian government to reduce black money and encourage the use of digital transactions. Even though the real estate sector was greatly affected in the short term, there is still ongoing discussion about the lasting consequences.

Anti-Money Laundering Laws

The importance of anti-money laundering laws in fighting the circulation of illicit funds in the real estate sector cannot be overstated. These measures aim to prevent illegal activities by implementing stringent KYC norms and reporting requirements.

Recent Government Initiatives

The Indian government has implemented different strategies to address the issue of black money in the real estate sector, such as implementing the Goods and Services Tax (GST) and taking strict actions against benami properties. These actions demonstrate a dedication to improving transparency and integrity within the industry.

We will try to discuss briefly the effects of black money in the real estate market.

Effect on Society

If you closely observe in many rural areas prices of land have gone extremely high because of this black money, hence many farmers prefer to sell their agricultural land and live life like rich people, rather than farming. Consider that if the majority of farmers does this it could create an alarming situation, if we don’t do anything then food security will be under threat.

Effect on Middle-class people

Now consider the case if a middle-class person who wants to purchase a home. He selects a home worth 30 Lakhs while asking for payment terms. The builder usually asks for payment for 50 % in black by cash and 50% in white by cheque. So the total amount required for purchasing this house is 15 Lakh in black, 15 Lakh cash, and an additional amount required for the registry.

If a person is a salaried person who has only white income, he/she usually plans to purchase a home by taking a “Home Loan”. Bank usually provides 85% loan sanction of total property value, hence for the above case one will get the loan amount on the white value declared for the property i.e. for 15 lakh declared value one will get loan sanction for 12.5 lakh. So one has to arrange for 15 lakh black amount (cash), 2.5 lakh white amount for down payment & 1.5-2 lakh for registry apart from home loan amount for purchasing a home worth 30 lakh, which is somewhat unsustainable for middle-class people.

Only the following options are left with them:-

  1. Make arrangement of this amount.
  2. Increase loan amount by making documents of extra work.
  3. Covert white amount (if they have) to black by withdrawing in cash
  4. Forget that house and search for another.

Conclusion

Real estate has become most popular parking place for all illegal wealth (Black money), which has a terrific effect on middle-class people who want to purchase a home. Addressing this issue requires a multi-pronged approach involving stricter enforcement of laws, greater transparency, and concerted efforts to promote ethical practices in the real estate sector.

Importance of 15G 15H form

Shitanshu Kapadia
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0
Importance of 15G 15H form

In India, Form 15G and Form 15H are used to prevent TDS deduction on interest earned during the financial year on fixed deposits, recurring deposits, or other similar investments. Form 15G is meant for individuals below 60 years of age, while Form 15H is for senior citizens aged 60 years and above. Both these forms help in ensuring that individuals with lower taxable incomes do not face unnecessary tax deductions on their earnings. Both these forms help in ensuring that individuals with lower taxable incomes do not face unnecessary tax deductions on their earnings. Below is the explanation as to how it works.

Suppose you have invested in FD in some bank worth Rs 5 lacs on interest rate @ 7% for 3 years, you will earn yearly interest 38573 Rs/-. If we consider that you don’t have any other income then this interest income is tax-free as it is below the tax slab limit, but the bank will deduct TDS @10 % and pay Rs. 3857 to the government as Income Tax and at year end bank will issue a TDS certificate to you. Then you have to file an income tax return and wait for the refund amount.

This is a regular process by the bank they will deduct TDS on interest earned on Fixed Deposits if it is above Rs. 10000 Per Annum. Once TDS is deducted one has to file an income tax return and wait for a refund. Form 15G or Form 15H helps to prevent this TDS deduction.

Note: – This form has to be submitted every year means if you have placed FD for 3 years then you have to furnish every year fresh 15 G/15 H to the bank.

Form 15G Form 15 H

Importance of 15G/15H form

To circumvent time-consuming procedure of Income Tax return filing and refund, you must attest that you do not have any income subject to taxation. The sole purpose of these forms is to provide written confirmation in duplicate that no tax is owed on the individual’s entire income. In this situation, the payer is not required to withhold any taxes. If your yearly earnings do not fall under the taxable bracket of income tax, you are advised to submit this form to the bank where you have opened this fixed deposit account.

First and foremost, filling out these forms can prevent unnecessary TDS deductions and guarantee individuals receive their complete income without deductions. This is especially advantageous for people who depend on interest earnings from their investments. Additionally, individuals can effectively manage their tax liabilities by avoiding TDS deductions, thus maintaining their liquidity. Finally, Form 15G/15H makes financial transactions easier by eliminating the need to reclaim deducted tax amounts.

Form 15G/15H is important for different groups of people. These forms are beneficial for salaried individuals, particularly those who receive extra interest income, to better handle their tax responsibilities. Form 15H is very beneficial for elderly individuals because it helps them maintain their retirement savings without any unwanted reductions. Likewise, NRIs can use these forms to avoid TDS deduction on their Indian earnings, effectively managing their tax strategy.

How to Submit Form 15G for EPF Withdrawal Online?

Eligibility Criteria

To submit Form 15G, an individual must fulfill certain criteria. Primarily, the individual’s total taxable income for the financial year must be below the taxable threshold. Similarly, Form 15H can be submitted by senior citizens if their tax liability on estimated total income is nil. These forms essentially declare that the individual’s total income is below the taxable limit and thus, no TDS should be deducted on their earnings.

How to Fill Form 15G/15H

Filling Form 15G or Form 15H is a straightforward process. Individuals need to download Form 15G or From 15H from respective bank’s website.

Individual needs to provide their personal details, including PAN, address, and financial year for which the declaration is made. Additionally, they must specify the nature of income and the estimated total income for the relevant financial year. The declaration must be signed and submitted to the concerned financial institution where the investment generating interest income is held.

Forms 15G/15H can be filed through either online or offline methods, as per the individual’s choice and the financial institution’s regulations. Many banks and financial institutions provide online facilities for submitting these forms, simplifying the process for taxpayers. However, individuals can also opt for the traditional offline submission method by physically submitting the forms to the respective branch or office.

Download New 15G -15 H Forms

Validity and Renewal

Once Form 15G/15H is submitted, it stays valid for the current financial year. Nonetheless, it is crucial to update these forms at the start of every fiscal year if the person’s financial situation stays the same. Not renewing the forms may result in TDS deductions that are avoidable, which goes against the reason for submitting them initially.

Consequences of Providing False Information

Including incorrect details in Form 15G/15H can lead to severe repercussions, both in terms of the law and financially. Should the Income Tax Department determine that the information given is inaccurate or deceptive, they have the authority to impose penalties on the individual. In addition, intentional fabrication could result in legal action, damaging the person’s financial standing.

Common Mistakes to Avoid

Individuals should be careful to avoid making common mistakes when filling out Form 15G/15H. These consist of providing inaccurate PAN information, incorrectly calculating total earnings, or not promptly renewing the forms. In order to prevent mistakes, people should thoroughly review all details before submitting and keep themselves informed about any updates to the form or submission procedure.

FAQs

What is the purpose of Form 15G/15H?

Form 15G/15H is used to declare that the individual’s income is below the taxable limit, thereby preventing TDS deduction on certain incomes.

Who can submit Form 15G?

Individuals below 60 years of age with total taxable income below the threshold limit can submit Form 15G.

What is the penalty for providing false information in Form 15G/15H?

Providing false information can lead to penalties imposed by the Income Tax Department, along with legal repercussions.

Can Form 15G/15H be submitted online?

Yes, many banks and financial institutions provide online facilities for submitting Form 15G/15H.

How often should Form 15G/15H be renewed?

Form 15G/15H should be renewed at the beginning of each financial year if the individual’s income situation remains unchanged.

Conclusion

In conclusion, Form 15G/15H plays a crucial role in the tax-saving strategy of individuals in India, particularly those with lower income levels. These forms assist individuals in preserving their income and managing their tax liabilities more efficiently by avoiding unnecessary TDS deduction. Taxpayers must grasp the eligibility conditions, submission procedures, and repercussions of providing incorrect details in order to fully benefit from Form 15G/15H.

Fix or Floating Rate Home loan option

Shitanshu Kapadia
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0
Fix or Floating Rate Home loan option

Home loans available from banks have two options either you can opt for a fixed interest rate option or a variable (floating) interest rate option. In the Fix Interest rate option rate of interest remains the same throughout the home loan. In the floating rate option rate of interest varies (decided by the bank based on the declaration by RBI about the Reverse Repo Rate) This rate varies every quarter. 

If you are planning to take a home loan to purchase a home “BIG” question must be arising in your mind about whether to choose a fixed or floating rate option. In this article, we will provide you guidance about whether is it good to opt for a fixed or floating-rate home loan option.  

Home Loan

Fixed interest rate home loans 

As the name indicates in this type of loan rate of interest remains the same over the loan period, every month one has to pay EMI on a fixed interest rate decided during the disbursement of the loan. As you may be aware during the early years of loan tenure the majority of monthly payments EMI goes into interest components and a small amount goes to principal components. 

Advantages of fixed-rate home loans 

If anyone opts for a fixed rate home loan option then he has an advantage over a floating rate in a manner that if the market pressures interest rate for upward movement then also this rate will be unchanged & the borrower has to pay a fixed EMI. This option is best suited for a person who wants to keep himself secure from varying interest rates and wants to keep a fixed amount/fixed tenure for the payment of a loan. 

Disadvantage of fixed-rate home loans 

The main disadvantage of fixed-rate home loans are its the rate is usually 1.5% -2 % more than floating-rate home loan options. The second thing by any chance interest rate in the market falls the fixed rate home loan does not get the benefit of this reduced rate and the rate remains the same. Fix-rate home loan options are best suited if the economic scenario depicts that the rate will rise. 

Another option available is the fixed rate option for some years which will be converted into to floating rate option. 

How Home Loan Calculator Makes Your Financial Planning Easy?

Floating rate home loan 

In this loan option interest rates are tied with base rates (Prime Lending Rate) and floating elements (usually linked with RBI Reverse repo rate) , if that base rate varies home loan interest rate varies. 

Advantage of floating interest rate home loan 

Floating rate home loans are available cheaper by 1.5% -2% compared with fixed rate option, meaning if you are getting a home loan by the bank with 11 % then the fixed loan may be offered with 13%. In this case if the floating rate increases by 1.5% or so then also your loan will be at 12.5%, the Floating rate does not always rise over some time it will fall also which brings an advantage for floating rate customers as EMIs will average out. 

Disadvantage of floating interest rate home loan 

The disadvantage in the case of the floating rate option is monthly investment EMI / Tenure although is fixed at the start of the loan will vary over a period of time as the rate may increase/ decrease. If the rate increases you have two options keep paying the same EMI and increase tenure or loan or increase EMI so that tenure will remain the same. In both cases, you will be paying more money. Another disadvantage is that you cannot predict exactly how much amount you need to pay for a home loan. 

FAQs

How do I determine which option is best for me?

To determine the best option, consider factors such as your financial goals, risk tolerance, and market conditions. Consulting with a loan advisor can also provide valuable insights tailored to your specific situation.

Can I switch between fixed and floating rates during the loan term?

Some lenders offer the flexibility to switch between fixed and floating rates, albeit with certain terms and conditions. It’s advisable to inquire about this option before finalizing your mortgage agreement.

What happens if market interest rates change?

Market interest rate fluctuations can impact both fixed and floating rate mortgages differently. With a fixed rate mortgage, your payments remain unaffected by market changes, while a floating rate mortgage may result in adjustments to your monthly payments.

Are there any additional costs associated with each option?

Both fixed and floating rate mortgages may entail additional costs such as origination fees, closing costs, and prepayment penalties. It’s essential to factor in these expenses when evaluating the overall affordability of each option.

What steps should I take before applying for a loan?

Before applying for a loan, it’s advisable to review your credit report, assess your financial situation, and gather necessary documentation such as income statements and tax returns. Additionally, exploring pre-approval options can provide clarity on your borrowing capacity.

Conclusion:-

Home loan customers mostly select floating-rate home loans to take advantage of floating rates, data shows that 80% of people opt for home loans with floating rates. It is up to the borrower to decide the option rate of interest but keeping in mind the current situation fixed-rate home loan will provide more advantages of security but one has to see that he is not paying more premiums on interest rates.

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