House Rent Allowance rules and regulations

House Rent Allowance means, if you are a salaried person and staying in a rented accommodation, then you can claim tax exemption for the rent paid. The rent can be partially or fully tax exempt

House Rent Allowance (HRA) is exempted under section 10(13A) of the Income Tax Act.

House Rent Allowance rules and regulations

Under House Rent Allowance rules and regulations, you will get exemption up to a minimum of the following 3 amounts:

Actual House Rent Allowance (HRA) received by the employee in the year.Rent paid by the employee for his accommodation in excess of 10% of his salary.50% of the salary, if he stays in any of the 4 metro cities of Delhi, Mumbai, Kolkata or Chennai; otherwise, 40% of the salary.

The salary for this calculation means the basic salary which includes dearness allowance if the terms of employment provide for it and commission based on a fixed percentage of turnover achieved by the employee.

Please note that if the employee is staying in his own house or not paying any rent, he will not be eligible for the above tax exemption.

Most salaried individuals get confused when it comes to claiming exemption on one’s House Rent Allowance (HRA) while filing tax returns. However, here is a lowdown to make the process simple for the taxpayer.

It is important to know that you can claim HRA exemption benefit only when you are living in a rented house. Those who live in their own house cannot avail tax exemption benefit on HRA.

Much before you get your Form 16, the exempt HRA amount can be seen in the tax projection statement provided to you by your employer at the beginning of the financial year. The employer deducts the HRA from salary. When it comes to filing of ITR, you can view the deduction in Part B of your Form 16.

Declare the rental to the employer

The best way to get HRA exemption is to mention the amount in the declaration form provided to you by your employer at the start of a financial year. Dhamodharan, Financial Counsellor with LIC OF INDIA said it is advisable that the employee claims HRA through the payroll to avoid a mismatch between the tax return and Form 26AS. In case the employee is unable to claim the same through the employer, then he or she can claim the same while filing the yearly tax returns. “This can be done by computing the amount of exemption for HRA and reflecting the same in the place provided in the salary appropriate schedule in the return form,” he said.

“While seeking tax benefits on HRA, if one fails to justify the deduction of the amount from the total income it can attract penal consequences under the provisions of the Income-tax Act, 1961. The amount of HRA, in any case, will get reflected in Form 16 issued by the employer,” said Dhamodharan, Financial Counsellor with LIC OF INDIA

Documents required for claiming HRA benefits

The deduction for House Rent Allowance (HRA), under section 10(13A), is generally availed by the employee through the payroll by providing requisite supporting documents and also, meeting the necessary conditions. To claim HRA, you need to have relevant documents with you. The supporting documents for this purpose would be
rent agreement,
rent receipts.
If the amount of rent exceeds Rs 1 lakh per annum the PAN of the landlord is also necessary.
In case the landlord does not have a PAN, a declaration to this effect should be obtained from him, along with his name and address details.

An employee generally has to submit all relevant documents with their company Human Resources department. However, the tax authorities do not require an employee to submit documents to them. “While supporting documents are not required to be submitted with the tax return, it is necessary to ensure the same is readily available in case there is a query from the tax office/Central Processing Centre (CPC),” said Dhamodharan.

Also, individual taxpayers not receiving a house rent allowance (could be non-salaried individuals as well) could claim a deduction for their rental expenses based on Section 80GG subject to specified limits.

Do not claim false HRA while filing ITR

You should not file wrong information in ITR forms otherwise you may have to pay a penalty. Dhamidharan said that a new provision introduced vide Finance Act, 2016, brought in the concepts of underreporting of income and misreporting of income.
“Mis-reporting of income has been defined to mean, inter alia, misrepresentation or suppression of facts or claim of expenditure not substantiated by any evidence.
Therefore cases involving the wrong claim of exemption HRA by furnishing false rent receipts, where rent cannot be justified would clearly attract penalty at the rate of 200% of the amount of tax payable,” he said.

Can you claim HRA if you own a house?

The answer to this question is both – Yes and No.

You cannot claim house rent allowance (HRA) if you are staying in your own house.You can claim HRA if you are staying on rent, not in your own house.

Can  pay rent to employees' mother/brother/parents and claim HRA?

Yes, employee can claim HRA if you are paying rent to your mother, brother or parents but they need to show the income as Income under House Property.

Can HRA be claimed by both the husband and wife?

Yes, HRA can be claimed by both the husband and wife if:

Both husband and wife, are paying rent to the landlord.Husband and wife are giving separate receipts for the rent paid to the landlord

The husband and wife can claim HRA exemption proportionately but both can not claim the entire rent paid to landlord.

What is 80GG claim deduction for HRA?

Section 80GG applies for HRA claim deduction under the following conditions:

If your employer does not include HRA in your salary, andSelf employed people

You can still claim deduction under 80GG.

How to save income tax through your family members? What you must know

How to save income tax through your family members? What you must know

Saving tax through family! Surprised! Yes, we can save tax through our family members, i.e., parents, major children and wife. To save tax through family members we need to invest in ways that our tax burden shifts to our family members and we can take the benefit of income tax slabs. Saving tax through family means not only saving in tax but also means higher post-tax returns on your investment.
Here is how we can save tax through our family members.

Save tax through parents

You can save tax through parents as well as through parents-in-law. To achieve this goal, you need to give away a portion of your funds, either as a gift or a loan, to your parents as well as your parents-in-law so that in years to follow your income tax burden becomes lighter as the income on funds transferred by you to them would bring in income which would be taxed in their hands.

Let’s assume that both your parents are senior citizens. Here’s how you go about it. Income tax deductions allow senior citizens a tax-free income of Rs 3 lakh. To exhaust this limit, say, you gift `28 lakh to each parent in cash. Of this, both can individually put Rs  15 lakh in a senior citizens savings scheme that earns a return of 8.3% and pays interest every quarter. Each will get yearly interest of nearly `1.2 lakh. If they invest the remaining `13 lakh each in the State Bank of India’s (SBI) fixed deposit (FD) of eight years (at an interest rate of 7.25%) that pays interest each quarter, it will fetch them each an income of nearly `0.95 lakh annually. That means your parents have individually earned `.215 lakh each year. With the tax-free limit at `3 lakh they don’t even need to file tax returns.

Same planning can be done for parents in laws.

Save tax through major children All your adult children are as solid as a rock to help you save income tax. After October 1, 1998, the provisions relating to gift tax have ceased to exist. Now you are free to gift away your money to your children without attracting gift tax. Investment made by major children out of the gift received by you will be taxed in the hands of your children. If for any reason you are inclined to make gifts to your major children, then you may give interest-free loans to your adult children so as to legally reduce your taxable income.

It is lawful to grant interest-free loans to adult children from your own funds.

Save tax through your wife

Married taxpayers can make a substantial saving of income tax by setting up two separate independent income tax files, one for the husband and another for the wife. If your wife is already filing Income Tax Return then she may continue filing the return with her new surname (in case she has changed it) and address or with her old surname and address. However, care should be taken to ensure that no gift or transfer from husband is made to the wife as clubbing provision may get attracted.

Don’t forget to mention these small things while filing income tax returns

Don’t forget to mention these small things while filing income tax returns

It is July. The first quarter of the financial year has come to an end and appraisals too are behind for most of salaried employees. Most of you must have got your Form 16 from your employers. That paves the way for filing of income tax returns as the July 31 deadline is fast approaching.

Income tax return filing is an important act and has its own benefits if you do it before the deadline. Here are a few seemingly small things that all salaried individuals should take care of while filing their income.

Check your Form 26AS

 

This is the buzzword and do not miss it. “Tax authorities match the entries in Form 26AS with your submissions,” points out Akhil Chandna, Director, Grant Thornton India LLP. “You must check your Form 26AS online and ensure that there are not any mismatches between your income tax returns and the contents of Form 26AS.”

 Check the year and format

“You must be careful while filing your income tax returns. Do confirm if you are filing for the correct assessment year and you have chosen the right format,” says Balwant Jain. There are multiple formats for different types of tax payers. Also these formats change over the years. If you are filing income tax returns for multiple years, you have to be doubly careful.

Mutual fund investments

Mutual fund investments are catching up big time and there are many first time investors in India. Though there was no long-term capital gains on equity funds till last financial year, the taxes on short-term capital gains on both equity and non-equity funds were payable. So was the case with long-term capital gains on non-equity funds. That necessitates you to run through your mutual fund statements and your bank statements. “If you have opted for systematic investment plans (SIP) or systematic withdrawal plans (SWP), you will have to compute taxes and file accordingly,” says Balwant Jain.

Interest income

“Do not forget to mention the interest earned on your saving bank accounts and fixed deposits,”says Balwant Jain, certified financial planner based in Mumbai.  You should be adding this interest income to your gross income and then proceed to compute the income tax. Do check your bank account statements for interest earned by various fixed deposits and bonds you hold. If you have invested in a bank fixed deposits

Income of minors

“If you have a minor son and daughter then the interest income earned in their name must be added to your income and then offered to tax,” says Balwant Jain. The income earned in the name of kids must be added to the income of that parent whose income is higher among two.

Provide correct bank details

Last but the most important, mention your correct bank account details while filing income tax returns. This is essential to process your tax refund, if any.

Filling Income Tax return? Don't miss these 9 tax breaks

Income tax return filing is a process that is often completed mechanically.

However, investing a little time and thought into it can allow you to claim deductions you might have failed to while submitting your investment declarations. Read on to see how you can maximise your tax breaks.

1. Savings account interest
The balance in your savings account earns interest every quarter, which is considered part of your total income. However, the income tax (I-T) department, under Section 80TTA, allows exemption of up to Rs 10,000 on this interest. Interest earned on post office savings will also fetch a similar benefit.

2. Rent exemption without HRA
Many taxpayers shell out house rent but can’t claim deductions due to the absence of the house rent allowance (HRA) component in their salary. Under Section 80GG, you can avail of the benefit for the rent even if your salary package does not include HRA, provided you are not eligible for any housing benefit. You will not qualify for this break if you, your spouse or child owns the house you live in. The exemption is limited to the least of: rent paid less 10% of total income; or Rs 5,000 a month; or 25% of total income.

3. Breaks for specified illnesses
Keeping in mind the fact that treatment of ailments like cancer, kidney failure or AIDS entails huge expenses, the income tax rules allow relief under Section 80DDB to tax-payers suffering from such diseases.

Specified diseases under Sec 80DDB
Taxpayers can claim up to Rs 40,000 in deductions if he suffers from any of the following ailments
Ataxia, Full-blown AIDS, Malignant cancers, Dementia Cholera, Hemiballismus, Thalassaemia, Chronic kidney, failure Parkinson’s disease, Haemophilia, Motor neuron disease, Dystonia, Aphasia

They can claim a tax deduction of up to Rs 40,000. “If the person is a senior citizen, then the deduction can go up to Rs 60,000,” says Chetan Chandak, Head, Tax research, H&R Block. If the afflicted taxpayer happens to be a super senior citizen, the relief is enhanced to Rs 80,000. However, if the expenses incurred have been reimbursed by employers or through insurance policies, the taxpayers will not qualify for the deduction. If the reimbursement is partial, they will be eligible for the tax break on the balance amount.

4. Ancillary home loan charges
Home loan borrowers know that one of the chief benefits of this loan is the tax benefits it offers on the principal repayment (Section 80C) and interest paid (Section 24). However, few know that even the processing fee paid can be claimed as deduction under Section 24. The processing fees and other ancillary charges are considered as interest and qualify as exemptions.

5. Loans for down payments
Home loan-seekers often borrow from friends and relatives to arrange for the downpayment. They either do not pay any interest on such loans or if they do, fail to claim deductions under Section 24, despite being eligible. Section 24 also covers interest paid on any loan taken for the purchase, renovation or reconstruction of a house. However, you should draw up a loan agreement with the lender. The interest earned by the lender will be taxed as his income.

6. Deduction for disabilities
If a taxpayer suffers from 40% disability (as certified by a medical authority), he/she can claim a deduction of up to Rs 75,000 under Section 80U. Expenses incurred in respect of a disabled dependent will fetch a deduction of Rs 75,000 under Section 80DD. In both cases, if the disability is severe (more than 80%), the deduction is Rs 1.25 lakh. This is a flat deduction. The disabled should dependent on the taxpayer for maintenance.

7. Income of disabled child
If you have made investments in the name of your spouse or minor child, the income earned will be clubbed with your income under Section 64 and taxed as per the slab applicable to you. However, in case the child is disabled, income from investments made in his/her name will not be clubbed with the income of parents. The latter can use this provision to invest in taxable instruments like FDs and debt funds.

8. Setting off losses
If you lost money in investments during the previous financial year, you can adjust some losses against capital gains from the sale of stocks, property, gold or debt funds. Short-term capital losses can be set off against both short-term capital gains as well as taxable long-term capital gains. Long term capital losses can only be set off against taxable long-term capital gains.

9. Benefits for donations made
Typically, deductions under Section 80G on donations made do not reflect in Form 16. So, this exemption can be claimed while filing returns. Depending on where you have contributed, you can claim a deduction of 50-100% of the donation made. However, it cannot exceed 10% of your total income. “If the donation was made in cash, no deduction is allowable if the amount exceeds Rs 2,000,” says Dhamodharan, Tax Savings and Investment counselor.

2018 the year real estate died

New Delhi: We all know somebody who has made a mini fortune by investing in a flat or residential plot at the right time. Despite the usual ups and downs, there exists a deep-rooted sense among Indian investors that residential property is a sure-fire investment which delivers excellent returns. This wisdom has been passed on from generation to generation.

Yet, unless you’ve been living under a rock, it’s evident that residential real estate has been down in the dumps. According to National Housing Bank data, property prices in Mumbai and Bengaluru increased annually by just about 7.50% and 5.75% respectively between June 2013 and September 2017. In Delhi, prices actually fell by -0.70% annually during the same period. Beyond the data, we hear numerous stories of investors in distress with their money stuck in delayed projects. There are also stories of many brokers, in fact the entire realty ecosystem, struggling to cope with this slowdown.

 

However, many feel that real estate has bottomed out. Their logic is that from now on, or soon, the cycle will reverse and prices will start moving upwards. In reality, this is either wishful thinking by people who are stuck with depreciated assets or an illusion created by stakeholders. The fact is, investing in residential real estate will not get you 20-30% annual returns or double your investment in about 3-5 years any more, as it did back in the golden days of 2001-2007.

This time it is different. There are various factors which indicate that the lull in the real estate is here to stay. Therefore, it certainly does not make sense to buy a residential property from an investment point of view at this point in time. “Considering the rising interest rates and high maintenance cost and tax on rentals and capital gains, I would not suggest investment in physical real estate,” said Nishant Agarwal, managing partner and head, family office, ASK Wealth Advisors.

 

Considering the rising interest rates and high maintenance cost and tax on rentals and capital gains, I would not suggest investment in physical real estate- Nishant Agarwal, managing partner and head (family office), ASK Wealth Advisors

 

The reason low returns are expected from real estate is that there has been an irrational increase in property prices in the past. Moreover, even after prices have remained largely stagnant for few years now, in many locations property is overpriced. Many investors who bought property 3-4 years ago are finding it difficult to get a buyer even after reducing the price lower than the purchase value.

Remember, any asset class, be it realty, gold or equity, has its own cycle. No asset classes will give you positive returns forever. Nor will it constantly give you a negative return. With that caveat out of the way, read on to understand why real estate will take much longer to recover.

Black swan moments

 

Demand in real estate started declining from 2013. By 2016, it had hit an all-time low. The overall market was going through a bearish phase when it was impacted by two major ‘black swan’ events. In May 2016, the Real Estate (Regulation and Development) Act or RERA was enacted. And six months later, the government demonetized high-value currencies—it washed out 2016 and 2017 for residential real estate.

One of the aims cited for demonetisation was that it would help curb the rampant use of black money in real estate transactions, especially in the secondary market. Black money is what lubricates the real estate sector, as anyone who deals in cash finds it the easiest investment to channel funds into. This is so because of the difference between the circle rate, which is fixed by the government, and the market rate of properties. For instance, in Delhi’s posh Defence Colony, circle rates are around ₹2.45 lakh per sq. m whereas the market rates are above ₹5 lakh per sq. m. This is why homebuyers, who don’t have unaccounted funds or cash, find it difficult to buy properties in these localities.

“Initially, there was a setback, but once again cash is back in the market. However, the magnitude of cash proportion has declined to some extent,” said Vasant Kumar, a south Delhi-based real estate agent. But the general attack on black money has had some impact. Many buyers and sellers are now not comfortable dealing with cash. What this translates into is a lower supply of money flowing through the real estate segment—many feel that this will continue for a long time.

 

On another front, it will take years for RERA to make any significant impact on ground. Only a few states have implemented RERA effectively; many have diluted the key provisions of the central act. These dilutions include exempting a majority of under-construction projects from RERA’s purview as well as easing penalties for builders who do not comply with the act. Once all states implement RERA, developers will take time to comply with the regulations. It is expected that homebuyers or investors will also wait for things to settle down. Effective implementation of RERA is important to restore confidence among homebuyers. Until then, demand will remain muted.

Relax, pay more tax

The tax man has not been kind to the real estate sector. Now investors have to calculate how much profit can be retained after taxes. The implementation of the goods and service tax (GST) from July 2017 disturbed real estate transactions, stretching the lull. In fact, over the past few years, the government has introduced many changes in the tax regime, which have negatively impacted homebuyers and investors.

 

While earlier, a service tax had to be paid for under-construction properties, now GST has to be paid. The effective rate of service tax was 4.5% of the property’s value, while the effective rate of GST is 12% with inputs tax credit (ITC). Though the government believes that after taking ITC into consideration, the tax proportion would be lower. But, “there is still confusion about the amount of rebate that a prospective homebuyer is entitled to on the back of the pass-over of ITC. The confusion is not only about the percentage of ITC but also the mode and tranche of the rebate,” said Anuj Puri, chairman, ANAROCK Property Consultants.

In addition, after buying a property, the buyer has to register it by paying stamp duty and registration fee, which are in addition to GST. Stamp duty is levied by state governments and usually varies between 5% and 8%. This means that GST and these other fees constitute about 20% of a property’s value. Such high transaction costs make real estate unattractive for investors. Worse, there are other taxes: income tax is levied on rental income as well as capitals gains made from property transactions. But, many tax benefits and exemptions of have been scrapped or restricted in the last couple of years. In short, investing in real estate is no longer tax friendly.

Supply, over supply

 

The slowdown will also linger because of an over-supply—a huge inventory pileup—at developers’ end. What makes it worse is the mismatch in demand and supply. For instance; there are about 120,000 apartments in Pune lying unsold, followed by Bengaluru with about 100,000 units lying unsold.

When the going was good, most developers were focusing on mid-category, luxury and premium-housing projects. At the moment, the demand is for affordable housing units. Therefore, there is huge unsold inventory of other units across most micro markets, mostly in the suburbs and far-flung areas of metros. “The developers failed to ascertain the need of homebuyers and launched projects which were not in line with their demand,” said Samantak Das, chief economist and national director -research, Knight Frank India.

It’s obvious that when there are few takers for the current inventory, developers will not even think of launching new projects. Even clearing the inventory will take time—at the current sales volume, it will take 85 months to clear the current inventory in Greater Noida. Obviously, prices will remain subdued.

 

Clearly, greed, over-ambition and financial indiscipline of developers are the main reasons investors are shying away from realty. According to 360realtors.com, a real estate portal, there are about 340,000 residential units running behind schedule of construction in Mumbai. The situation is similar in many other cities. There are many homeowners and investors who are stuck in real estate projects, with their finances in a mess. They are paying rents and paying off their loans, but possession is a distant dream.

The number of projects running behind schedule is reducing because developers have stopped launching new projects. Even so, it will take a long time to bring the sector back on track. As per ANAROCK , “During 2017, out of the total 5.8 lakh residential units slated to be completed across the top seven cities in India, 4.3 lakh units (74%) actually missed their stipulated completion deadlines.”

Even big developers like Unitech Group, Jaypee Group and Amrapali Group have failed to deliver projects. The impact of long delays, poor quality of apartments, failure to deliver the amenities promised and non-compliance with rules and regulation will take a long time to fade away. Homebuyers will wait till things improve or buy only ready-to-move-in apartments.

The investment scenario

To make matters worse for real estate, other investment avenues are flourishing. According to data from Association of Mutual Funds in India (AMFI), total assets under management by assets management companies (AMCs) as of 31 May 2018 was about ₹22.6 trillion. On 31 may 2013, this figure was about ₹8.68 trillion— that’s an average year-on-year increase of 21%. During the same period, according to www.valueresearch.com, hybrid equity oriented funds had given an average annual return of 16% and liquid funds around 8% per annum.

Since 2001, real estate has performed poorly in comparison to equity and gold. “Real estate as an asset class has lost its sheen (in terms of investment asset) given the various reforms (demonetization, RERA and GST) introduced in the last two years and especially when other asset classes like equities have been doing well,” said Rahul Jain, head - Edelweiss Personal Wealth Advisory.

With all these factors working against real estate, we can at best expect a nominal return in next decade or so. A low rental yield of below 3% is also a big deterrent. At best, experts feel, one should invest in real estate for diversification—irrespective of the low returns. “Equity is a highly volatile, whereas real estate is not that volatile. We must understand that real estate is cyclical in nature,” Binaifer Jehani, director, CRISIL Research, said. In the present scenario, “if you have a horizon of about 15 years, you can go ahead and invest in real estate,” she added. Clearly, invest in real estate only if you have the patience to play a very long waiting game.

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero 

Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history. The cryptocurrency’s 2018 crash may help cement its place in the bubble record books.

Down about 70 percent from its December high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78 percent peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and other red-hot initial public offerings that flamed out in the early 2000s.

While Bitcoin has bounced back from bigger losses before, it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest. Bulls point to the Nasdaq’s eventual recovery and say institutional investors represent a massive pool of potential cryptocurrency buyers, but regulatory and security concerns have so far kept most big money managers on the sidelines.

“You’ll have to see the market reverse before you see” institutions pile in, Peter Smith, chief executive officer of Blockchain Ltd., which introduced a crypto trading platform for professional investors on Thursday, said in an interview on Bloomberg Television.

Read more on how Bitcoin’s rally compared to history’s biggest bubbles.

Bitcoin declined as much as 4.2 percent to $5,791 on Friday, the lowest level since November, according to Bloomberg composite prices. The cryptocurrency recovered on Saturday in Asian hours, rising 8.6 percent to $6,397 at 11:35 a.m. in Tokyo, according to Bitstamp.

Still, Bitcoin is down around 55 percent this year, according to Bitstamp. Other coins including Ether and Litecoin slumped more, while the combined value of tokens tracked by CoinMarketCap.com declined to $236 billion. At the peak of crypto-mania, they were worth about $830 billion.

While it was difficult to find fresh catalysts for Bitcoin’s drop on Friday, hacks at two South Korean exchanges and a regulatory clampdown in Japan have weighed on sentiment in recent weeks. Regulators around the world have stepped up scrutiny of cryptocurrencies on concern that they’re a breeding ground for illicit activity including money laundering, market manipulation and fraud.

Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4 percent of coins with market caps from $50 million to $100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group.

Bitcoin may not go to zero, but it’s “very much” a bubble, Robert Shiller, the Nobel laureate economist whose warnings about dot-com mania proved prescient, said in an interview with Bloomberg Television’s Tom Keene on Tuesday. Last year’s Bitcoin surge was “not a rational response,” he said.

WHY WILL?

WHY WILL?

A Will can ensure your properties are distributed as per your Wishes and not as per the legal process or succession laws of your religion - to ascertain who your legal heirs are. A Will can assure you that the family bonding remains intact. Every individual must know “Why Will is necessary”, and there are many valid reasons like:-

Many individuals get insurance policies for themselves and family members because we all accept the truth that life is full of uncertainties, and death is inevitable for all individuals, at any age. So, if a person has taken an insurance policy for the financial stability of his / her family members but he has not arranged to give written instructions as to how insurance claim should be distributed within the family, in such a situation how can you expect proper or smooth distribution of insurance claim after you leave them without informing about your wishes?

Hence, be it small or big properties a Will is must for all ages. Even for a single Insurance policy a Will is required to know your wishes – who should get what from your assets, wealth, properties. 

If your Will is available to your family, they shall have very clear instructions to obey your wishes with all respect, no confusions / hassles or any disputes within the family.

All NRIs should have a separate Will made, according to the Indian laws for their all properties in India.

It is only a Myth in many people’s minds - that if Nominations or Joint Accounts are made for various properties like flat, bank accounts, shares, lockers etc. it is not necessary to make a Will. However, all must know that as per law it is a misconception that nominee or joint holder automatically becomes a legal heir. A Nominee / Joint Holder can only be a Trustee of your properties / your joint holding share and it is duty of Nominee / Joint Holder to distribute your share in properties to your legal heirs as per your WILL or succession laws. However, physical shares hold in companies with nominee is an exception as per current law; hence nominee of physical shares in a company becomes a legal heir.

Through a Will, one can spell out his / her feelings, wishes as well as guidance or tips in addition to distribution of properties which can help your family to take actions in future when you are not with them.

Many individuals make a Will as a part of Estate Planning or Tax Planning to avoid heavy tax burden.

If there is No-Will, all properties will be distributed as per succession law applicable to you as per the religion you follow like Hindu Succession Law etc – and not as per your wishes.

As per Hindu Succession Law – if a person dies without a Will – his properties are distributed equally to living Mother, Wife, Sons and / or Daughters as Class 1 heirs and if no legal heir is available in Class 1, then the properties goes to Class 2 heirs equally viz.  Brothers, Sisters etc.

Not making a Will may create undue disputes within the family due to confusions about your wishes, their understanding about succession laws and sometimes these disputes end in a long-drawn legal litigations in court of law / media. We have seen many such cases in India as well as all over the World.

A Will made by a Parsi or Christian before getting married are to be treated as cancelled / revoked on marriage.

In Muslims, a Will is allowed only upto 1/3rd of total owned properties and the rest is distributed equally to the family as per religious Islamic laws like Sharia. There are different laws for Shia, Sunni and other caste in Muslims religion. A Will made by Muslims require a detailed understanding about applicable religious laws and family of the person.

K Dhamodharan.,M.Com.,LL.B.,HDCM

Personal Financial Planner

+919940857995., +917358210672

licdhamu@gmail.com