Tuesday, December 6, 2011

Prajna Capital

Prajna Capital

Know Your Client (KYC) and Mutual Fund - Part II

Posted: 06 Dec 2011 05:30 AM PST

Q How does the investor transact in Mutual Fund after completing the KYC process?

A Investors must attach their KYC Acknowledgement along with the Investment Application Form(s) / Transaction Slip(s) while investing for the first time in every folio. Applications Forms / Transaction Slips not accompanied by KYC Acknowledgement are liable to be rejected by the Mutual Funds.

Q In case of existing investors when and how will the KYC norms be introduced?

A KYC norms are applicable to all investors. It is in the interest of all Investors to obtain KYC Acknowledgement and submit it to the Mutual Fund to avoid any inconvenience in future.

Q Once an account is opened with a Mutual Fund by 1 st, 2 nd & 3 rd holder by completing the necessary formalities and the investor's return to make a fresh investment, do they need to furnish the necessary documents again?

A Investors must attach their KYC Acknowledgement along with the Investment Application Form(s) / Transaction Slip(s) while investing for the first time in every folio.

Q What are the consequences of KYC cancellation/rejection?

A In the event of any KYC Application Form being found deficient for lack of information / insufficiency of mandatory documentation, further investments will not be permitted.

Q Does the KYC Acknowledgement have an expiry date?

A No. Once the KYC Acknowledgement is obtained and informed to a Mutual Fund, it will be registered against the folio and quoted in all future account statements. The same will exist in perpetuity, unless cancelled by CVL.

Q What happens if I have multiple folios/ accounts with a Mutual Fund?

A You can inform the Mutual Fund to update the KYC Acknowledgement against all the folios/accounts you have with it. However, each of the holders in these folios / accounts should be KYC Compliant.

Q Is there a charge I need to pay to get myself KYC Compliant?

A Currently, KYC is being done free of cost.

Q I am an NRI residing outside India. How do I get myself KYC Compliant?

A The soft copy of these KYC forms will be made available on the website of all Mutual Funds, AMFI and Central Depository Services (India) Limited (CDSL). You may also approach your distributor for a form. The same duly completed along with the necessary attested documents can be submitted at the PoS or mailed to your representative or Distributor who can complete the KYC formalities for you.

Q Are there any special requirements for an NRI?

A Yes. In addition to the certified true copy of the passport, certified true copy of the overseas address and permanent address will also be required. If any of the documents (including attestations/ certifications) towards proof of identity or address is in a foreign language, they have to be translated to English for submission. The documents can be attested, by the Consulate office or overseas branches of scheduled commercial banks registered in India.

Q Is there any special requirement for a PIO (Person of Indian Origin)?

A The requirements applicable to an NRI will also apply to a PIO. However, additionally, he will need to submit a certified true copy of the PIO Card.

Q What about Minor becoming Major?

A Upon a Minor attaining the age of majority (i.e. on completing 18 years of age), he/she must be KYC Compliant and have KYC Acknowledgement of their own. The same should be informed to the Mutual Fund where he/she holds an investment, along with other details such as the Bank Details, Signature, etc as per the present requirements of such Mutual Fund.

Q Whom do I inform about change of Name/Address/Status/Signature etc?

A You should intimate your change of Name / Address / Status /Signature etc. to any convenient PoS. You need to quote / submit a copy of your KYC Acknowledgement, and proof (in case of new address). You should provide for at least 7 days for the change of address to take effect with all the Mutual Funds with whom you are invested. Please note that you should not write to the Mutual Fund or its Registrar for the change of address (unless as a designated PoS). The specified form can be obtained from the AMFI/Mutual Fund website. All details of the holders in the Mutual Fund records will be replaced by the address details available in the CVL record.

Q If I am already providing my PAN/PAN Proof for my investment in Mutual Fund. Is that not sufficient for meeting the requirement of KYC?

A The requirement of providing your PAN along with proof is sufficient for proof of identity. However, the current requirement for KYC requires the Mutual Fund to verify identity, address as well as obtain further information about the investor.

Exchange Trade Fund

Posted: 05 Dec 2011 08:13 PM PST

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges on real-time basis, in a similar fashion as stocks of companies are traded. ETFs, hence, also emulate the nature of a stock market index in that they hold securities. Most ETFs track an index, such as the Standard & Poor's (S&P) 500 , a commodity or other various assets similar to an index fund. Some of the unique features of exchange-traded products are that they come at affordable prices and are tax efficient. Because it trades like a stock, the net asset value (NAV) of an ETF is not calculated every day as in the case of a mutual fund.

The functioning of an ETF

In the case of normal funds, an investor buys and sells units directly from or to the fund manager. The money is first collected from the investors to form the corpus which is used by the fund manager corpus to build and manage the appropriate portfolio. Whenever and investor wants to redeem his units, a portion of the portfolio is sold and gets paid for those units.

Income Tax Rate for the Assessment Year 2012-2013 ( Financial Year 2011-2012 )

Posted: 05 Dec 2011 08:50 AM PST

 

Taxable income slab (Rs.)

Rate (%)

Up to 1,80,000
Up to 1,90,000 (for women)
Up to 2,50,000 (for senior citizen who is of the age of 60 years or more at any time during the previous year)

NIL

1,80,001 – 5,00,000
1,90,000 – 5,00,000 (for women)
2,50,000 – 5,00,000 (for senior citizen who is of the age of 60 years or more at any time during the previous year)

10

500,001 – 8,00,000

20

8,00,001 upwards

30

Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any.

 

The Qualifying age of senior citizen is reduced to 60. Earlier the age was 65. Now almost all retired employees will get this benefit. In addition to this relief for senior citizen a new category is introduced by Finance minister called Very Senior Citizen for those who have completed the age or above 80. The Income tax exemption for very senior citizen will be Rs. 500000.

 

 

 

Download Section 80CCF Tax Saving IDFC Infrastructure Bonds Application Form

 

https://sites.google.com/site/infrabondapplications/home/IDFC-Infrastructure-Bond-Application-Forms

 

Download Section 80CCF Tax Saving L&T Infrastructure Bonds Application Form

 

https://sites.google.com/site/infrabondapplications/home/l-t-long-term-infrastructure-bond-for-year-2011---2012

 

Find a collection canter:

 

Collection canter near you

 
 

 

 

 

 

 

Bargain hunt can cut car insurance cost

Posted: 05 Dec 2011 07:49 AM PST

Bargain-hunting before policy expiry can get you a better deal All vehicle insurance policies include a personal accident cover and an additional cover for a co-passenger

RENEWING your car or two-wheeler insurance is not a chore that should be done in a hurry, just a day before the policy expires. A little bit of planning and bargain hunting can help you get a better deal and save costs on vehicle insurance premium.

Compare insurance premiums online:

Like most other insurance policies, purchasing or renewing a vehicle insurance policy online is much cheaper than doing it through other means like a broker or your vehicle dealer.

Portals like easyinsurance.com help you compare vehicle insurance premiums charged by different companies. However, many of these sites also charge a service fee of around Rs 100150 for the facility.

Mention your no-claims bonus: For every year of zero claims, most insurance companies offer a 5 per cent rebate on the basic premium. This means you can claim 5 per cent rebate when your vehicle enters the second year without any claims, 10 per cent in the third year, 15 per cent in the fourth year and so on. Even if you change your insurer, you can claim this bonus on the basic premium or under the 'Own Damage' head.

Exclude unnecessary coverage:

Check for additional coverage offered by the insurance companies. If your car does not have a fancy audio system or gadgets, then you can clearly ask for an exclusion of those covers in the insurance coverage.

All vehicle insurance policies include a personal accident cover and an additional cover for a co-passenger. If you have a two-wheeler and mostly drive it all by yourself, you can ask for the exclusion of personal accident coverage of a co-passenger.

Some insurers like IffcoTokio may have a higher insurance premium but also offer facilities like cashless claims at many cashless garage networks across India. Check how useful these could be for you.


Include the essentials:

If you have a chauffer-driven car, make sure you take an addi tional personal accident cover for the driver. In case of an accident, the owner is legally liable to pay the driver and this is not an option to be excluded when insuring the vehicle.

Also, installation of an anti-theft device will help save 2.5-3 per cent of premium costs. Companies like HDFC Ergo offer a 5 per cent discount on premium for owner/drivers in the 3545 age group and a 10 per cent discount for those between 46-60 years of age.

Should you opt for voluntary deductibles? Many insurance companies provide the option of having voluntary deductibles that help you lower your premium. An insurance claim placed in a year will mean that the user cannot claim a no claims bonus the next year. By opting for voluntary deductibles, the user gives an undertaking that if his claim is up to a certain limit, say Rs 500 for two-wheelers and Rs 5,000 for cars, he can handle it all by himself without going through insurance claims hassles.

Opting for a voluntary deductible lowers premium costs and it is the user's call on whether to take it and how much deductible to opt for, he says.


Renew premiums on time:

Every vehicle plying on the road has to be insured according to the Motor Vehicles Act. Riding your vehicle on the road after the insurance policy expires is not only unlawful but will also become an ordeal when you try to renew the policy later.


A vehicle, whose insurance policy has expired, has to be taken to the insurance company branch and checked by a surveyor, for which there is a cost, adding to the expenses and trouble.
 

Know Your Client (KYC) and Mutual Fund - Part I

Posted: 05 Dec 2011 06:22 AM PST

Q What is KYC?

A KYC is an acronym for "Know your Client", a term commonly used for Client Identification Process. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries including Mutual Funds to 'know' their Clients. This would be in the form of verification of identity and address, providing information of financial status, occupation and such other demographic information. Applicant must be KYC compliant while investing with any SEBI registered Mutual Fund.

Q What are the KYC requirements for a Mutual Fund Investor?

A Individual investors will have to produce his Proof of identity (Photo PAN card copy or PAN card copy and copy of the passport, driving license etc.) and Proof of Address (any valid documents listed in section B of the KYC Application Form for Individuals). Non –Individual Investors will have to produce certain documents pertaining to its constitution/registration to fulfill the KYC process. A list of Mandatory Certified Documents to be submitted can be found in section C of the KYC application form for Non-Individual Investors. .

Q Where and how does one get to be KYC Compliant? Does the investor have to repeat the KYC process with every Mutual Fund?

A The Mutual Fund Industry has appointed CDSL Ventures Limited ("CDSL"), a wholly owned subsidiary of Central Depository Services (India) Limited, to carry out the KYC compliance procedure. CVL through its Points of Service (POS) will accept KYC Application Forms, verify documents and provide the KYC Acknowledgement (across the counter on a best effort basis). The list of PoS will be displayed on the websites of Mutual Funds, CDSL and AMFI. Once the KYC is duly completed in all repects, the investor needs to produce a copy of the acknowledgement to the fund where the investor desires to invest. There is no need to repeat the KYC individually for each mutual fund.

 

Q What is a KYC Application Form?

A A KYC Application Form has been designed for Individual and Non-Individual Investors separately. The soft copy of these KYC forms will be made available on the website of all mutual funds, AMFI and Central Depository Services (India) Limited (CDSL). You may also approach your distributor for a form. It is important to read the instructions printed on the KYC Application Form while filling-up the form.

Q Should the investor visit PoS personally to obtain KYC Compliance?

A No. If the investor is not in a position to visit PoS personally, the KYC Application Form along with the necessary documents (including originals if the copies are not attested) can be sent through the distributor or representative, who can arrange to fulfill the KYC obligation and obtain the KYC Acknowledgement through any of the PoS.

Q From what date is it mandatory for an investor to be KYC Compliant?

A With effect from 01 February 2008, any investor investing Rs. 50,000 and above was required to be KYC compliant. However, with effect from January 01, 2011, KYC compliance is mandatory for all categories of investors irrespective of the amount invested.

Q To whom is a KYC applicable? Is there any exemption?

A Currently, all investors (Individuals or Non Individuals) who wish to make an investment, irrespective of any amount will required to be KYC Compliant. Please find the list of personnel who are required to be KYC compliant:

Q To whom is a KYC applicable? Is there any exemption?

A Currently, all investors (Individuals or Non Individuals) who wish to make an investment, irrespective of any amount will required to be KYC Compliant. Please find the list of personnel who are required to be KYC compliant:

Joint Holders: Joint holders (including first, second and third if any, are required) to be individually KYC compliant before they can invest with any Mutual Fund.. e.g. in case of three joint holders, all holders need to be KYC compliant and copies of each holder's KYC Acknowledgement must be attached to the investment application form with any Mutual Fund.

Minors: In case of investments in respect of a Minor, the Guardian should be KYC compliant and attach their KYC Acknowledgement while investing in the name of the minor. The Minor, upon attaining majority, should immediately apply for KYC compliance in his/her own capacity and intimate the concerned Mutual Fund(s), in order to be able to transact further in his/her own capacity.

Power of Attorney (PoA) Holder: Investors desirous of investing through a PoA must note that the KYC compliance requirements are mandatory for both the PoA issuer (i.e. Investor) and the Attorney (i.e. the holder of PoA), both of whom should be KYC compliant in their independent capacity and attach their respective KYC Acknowledgements while investing.

Financiers will have to be KYC compliant at the time of Lien Marking.

For transmission (In case of death of the unit holder): If the deceased is the sole applicant, the claimant should submit his/her KYC Acknowledgement along with the other relevant documents to effect the transmission in his/her favour.

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