NRIs to be Taxed on their global income

NRIs to be Taxed on their global income

A new bill pending in India’s parliament proposes to tax NRIs on their global income if they spend more than 60 days in a year in India. Under existing Income Tax laws, NRIs are taxed on global income only if they spend over 182 days in India in a year. NRIs are also liable for Indian taxes if they reside in India for a period of more than 365 days over a four-year period.


The taxes will kick in on the global income of NRIs who live in countries with which the country has Double Taxation Avoidance Agreements (DTAA) , and that have lower income tax rates than India. India has DTAAs with 74 countries, including the USA, Singapore, UK, Australia, New Zealand, Thailand, South Africa and Saudi Arabia. The liability will be even higher for NRIs living in non DTAA countries, as they will be subject to double taxation, both in India and their foreign country of residency.

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NRI in support of NDA

Non resident Biharis are also showing interest and curiosity on assembly election in Bihar, Nitish Kumar seems to be the most favored candidate among NRI Biharis and they offering suggestions about improvement in the energy sector by wooing new investors.

Rajiva Ranjan Das, a consultant colorectal surgeon at DR Gray’s Hospital of Elgin, UK says “Nitish Kumar has turned out to be honest and hard working who has tried for development in his five year term. He should again return with a maximum majority.” According to another UK based NRI doctor, Ganesh Sarin, “Development should be the motivating factor for voters. When the works done in last few decades is compared with the progress of the last five years, it is undoubted that the present NDA government has achieved better.”

Sarin also stated “Starting a journey from scratch and achieving 10-15% growth in five years is a remarkable achievement. It was surely a challenge for the government to achieve this development.” Shashi Shekar, another private consultant at US feels that Nitish Kumar government should go for another five years term and try to boost the energy sector. He says “Bihar has failed in the energy sector till now. To make improvement, it is needed to look into the power scenario.”

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NRI investment in property or home loans

NRI investment in property or home loans

Most NRIs give a lot of thinking before investing in property in India and most of the time put off the plan due to effort, research and planning involved and in some instances if they do not have enough funds for the same. For such individuals there is always the NRI home loan.

RBI defines NRI as "An Indian citizen who holds a valid Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI."

Purpose of the NRI Home Loan
The NRI loans are made available for the following purposes:
Self-construction of a property on a plot of land
Finance the purchase of a plot of land allotted by a society/development authority
Renovate/improve an existing property in India
Purchase of a house either under construction or on a resale

Non-resident Indians are also permitted to purchase an existing house or flat. The RBI has not prohibited banks from providing financing to NRIs for the purchase of a second house, but the loan on the house is for the self-occupation of the NRI upon their return to India. Loans are also offered to NRIs against NRE deposits. These loans can be repaid out of NRE funds but the interest would be charged at a commercial rate. Loans to Non-Resident Indians are also provided against FCNR deposits.

Difference between a normal & NRI Loan
NRI home loans can be availed by any NRI with as much ease and convince as any resident would avail a home loan. However some difference between the two kinds of loans exists in terms of tenure, documents, repayment etc. Interest rate is little costlier for NRI than Indian residents, it is 0.25% to 0.50% more for NRIs. The NRI gets the only 85% cost of the property as a loan amount. The tenure of loan is also short ranging from 7 years to 15 years. The size of the loan depends upon the borrower's repayment capacity. Up to 36 times of the gross monthly earnings of the applicant may be issued as loan. However, there is a maximum limit. Calculation of eligibility is same as that of Indians living in the country.

The re-payment can be made as equated monthly Installments (EMI) through Non - Resident Ordinary (NRO) account or the Non Resident External (NRE) Account.

For security, most banks insist that the first mortgage of the property should be in their name. If the property is under construction then adequate additional security is required such as guarantee of third party (either resident or non-resident).

Tax benefits
NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation where they work and earn. However, they need to file tax returns to become eligible for home loans. However, if they pay tax in India for income earned in India, they can claim tax rebate for the home loan.

The current scenario
An estimated 25 million NRIs living in 130 countries have remitted US$52 billion so far this year (December 2009). In fact India topped the list of countries in remittance flow followed by China and Mexico, according to World Bank report on Migration and Development Brief.
The impact of global slowdown, job losses and unviable job offers has necessitated a section of NRIs to return to Indian shores.

According to housing finance companies and banks disbursing home loans to NRIs/PIOs in Dubai, there has been a sudden surge in demand for residential property across Indian cities and particularly for Tier II cities in the wake of the economic slowdown in the emirate. Southern cities in particular Bangalore, Chennai and Hyderabad are driving the demand though minimal level demand exists for other cities as well. Most of the NRIs keen to invest in real estate back home are looking for home loans as they are unable to get loans locally due to the current tight liquidity situation across US.

What experts say?
Experts agree that despite turbulence in mature markets, the "emotional appeal" of buying a property in India may be stronger now. However, this in turn has created a price increase in the last six months.
Popular property portals claim that the number of queries from NRIs has surged nearly 15-20 per cent over the last two-three months. However, just how many of these 'queries' translate into actual sales remains to be seen, say people behind the business. The focus on NRIs for these portals is stronger now as many are looking to come back to India apart from those who wish to invest in properties.

Another factor that seems to favour NRIS is the FDI Policy that permits FDI up to 100% from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available. The easy interest rates on housing finance and the improved lifestyle that developers have created has enabled NRIs to acquire property not only for investment, but also for personal use.

Access to NRI loans - at the door step
The response to the real estate market has been so encouraging from the overseas community that it has prompted housing finance companies (HFCs) to set up branches in countries where there is a high NRI concentration, as in the case of ICICI Bank. The bank has representative offices in Dubai, New York, Bahrain, Singapore and the UK to tap potential property investors there.

ICICI Bank, Sundaram Home Finance Limited, LIC Housing Finance, HDFC, CanFin Homes, Citibank and a host of other scheduled banks are vying for lending opportunities to NRIs. However the final decision on whether the time is right to buy a house, whether to use one's own funds or to take a loan, whether to go for an independent house or an apartment, and which home loan provider to use must be made by the NRI himself/herself after careful analysis.
What this means for the realty market

Builders are looking to make up for the huge losses in the past year or so. With growing NRI interest in Indian properties, reports suggest that the realty prices have rebounded to 2007-2008 levels, which however cannot be good news for people scouting for homes with toned down prices. This is again an example of how a reaction in one corner of the globe can affect another. Sometime back the same scenario happened with rentals, which shot up with a lot of NRIs returning home to take up jobs in India.

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CAR insurance soared by a record 40.5 per cent in year in UK

CAR insurance premiums have soared by a record 40.5 per cent in year in UK

The average comprehensive policy now costs £703.79, according to research by the AA.

Meanwhile, third party, fire and theft cover - often used by young and higher-risk motorists - has soared to an eye-watering £1,098. Seven people are killed or seriously injured every day in accidents involving young drivers, leading more than half of insurance firms to refuse cover to anyone under 21.

Those males between 17 and 22 who can get insurance saw their premiums rocket 46.6 per cent to £2,457.

Women in the same age group faced an even higher 58.7 per cent jump, but their policies still average a lower £1,423.

The huge rises have come as insurance companies paid out an average of £123 in claims and costs for every £100 received in premiums.

The AA described that as "unsustainable" and blamed a combination of rising fraud and increased personal injury costs.

It said the insurance industry had been unprofitable for years as intense competition kept premiums artificially low. And it warned steep increases were likely to continue next year to counter rising claims costs.

The AA pointed out that one car insurance company had gone into administration in the past year, while three more had either left the market or intended doing so.

Others were hiking premiums and being more selective about who they insured.

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Nearly a third of male drivers killed or seriously injured during 2009 were under 25, with under 21s TEN times more likely to have an accident than those over 30.

The cost of their claims was also three times greater than for the older age group.


Read more: http://www.thesun.co.uk/sol/homepage/motors/3177228/Car-insurance-up-by-40-in-a-year.html#ixzz12EU4ZfGN

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Reliance Life Insurance Highest NAV Advantage ULIP Plan

Reliance Life Insurance Highest NAV Advantage Plan
Reliance Life Insurance Company (RLIC), part of Reliance Capital promoted by Anil Ambani , Tuesday announced the launch of a new unit linked insurance plan (ULIP).

The Reliance Life Insurance Highest NAV Advantage Plan offers guarantee on maturity with the highest Net Asset Value (NAV) per unit achieved during the entire 15-year policy term.

"Our new unit-linked plan fulfils the diverse needs of customers across different segments while addressing their need for long-term wealth-creation and increased life protection," said Malay Ghosh, executive director and president, RLIC.

This is the first ULIP launched by Reliance Life after the insurance regulator, Insurance Regulatory and Development Authority, came out with revised guidelines a few months ago.

The plan pays the beneficiary double the sum assured plus total fund value in the event of accidental death for the base cover portion. The unique plan also offers the benefit of up to 100 per cent equity exposure during the policy period.

The plan, which is available for customers in the age group of 7-65 years, also provides liquidity through partial withdrawals after fifth policy anniversary and loan after the completion of second policy year and top-up option to the policyholder.

It is available under two minimum payment options. The regular option allows customers to pay Rs.20,000 annually, half yearly, monthly and quarterly. In the single premium option, the customer pays a minimum of Rs.50,000 only once at the beginning of the policy tenure.

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India’s top IT firms TCS, Infosys and Wipro to hire nearly 90,000

India’s top IT firms TCS, Infosys and Wipro to hire nearly 90,000

For over two million software professionals in India recovering from last year’s recession blues, when employers trimmed payrolls and froze hiring, there’s finally some good news ahead.

According to software industry lobby Nasscom , India’s top IT firms, including Tata Consultancy Services , Infosys and Wipro , are set to hire nearly 90,000 this year, compared with only around 20,000 last year. For the first time since the global economic crisis forced IT companies to freeze hiring and shed jobs in December 2008, employment in the sector is now looking up.

Recruitment firms and HR honchos at leading IT firms say the sector has witnessed the highest-ever job creation in September, with staff strength growing over 50%, similar to pre-recession levels.

“This is the highest hiring growth recorded in the IT sector since recession. We expect similar momentum till November since companies will be required to complete their annual hiring plan before next year,” says E Balaji, director & president, Ma Foi Randstad. He estimates IT hiring to have grown 20-22% during August-September over the same period last year.

Till 2008, even a 15% attrition rate was conservative in an industry where some firms struggled to keep it below 20-30%. However, with lar GE customers like JPMorgan, Citibank and GE sending more projects to India and with firms such as IBM and Accenture under pressure to hire more in low-cost locations like India, the war for retaining and hiring talent is back.

Apart from looking to serve new projects with fresh recruits, companies are also beginning to build bench strengths for future business. “IT biggies are stocking up skills and training them in advance in anticipation of new contracts they are expected to bag in the near future,” said Pradeep Udhas, executive director and head of IT advisory, KPMG.

“Some of them are also expecting attrition, and hence a preventive measure. All major companies like TCS , Infosys, and Cognizant have exceeded their expected earnings levels,” he added. He expects the renewed hiring momentum to continue for another year.

MphasiS, which declared a manpower base of 38,275 in its last quarterly results when it added 1,156 employees, says there are currently more than 2,000 vacant positions within the company.

“We never stopped hiring even during the downturn. What is encouraging is that some of the other companies that ceased recruitment have again started hiring,” says MphasiS chief human resource officer Elango R.

Headhunters say recruitment in tier-I companies are at pre-recession levels, but they say it will still take some time to pick up in the mid-level as the market landscape has changed. However, they say specialist companies like those in product development, analytics and testing are still growing and so has recruitment in tandem.

“Recruitment may be back, but there is much more sanctity now,” says Ikya Human Capital Solutions MD Ajit Isaac. “Recruitment is much more planned now with a small bench. Companies are also much more disciplined and avoiding employees who frequently change jobs,” he says.

Interestingly, Mahindra Satyam, which is on a comeback trail, plans to recruit some 3,000 by February next year. The company, with some 27,000 employees on rolls, has been hiring fresh talent for the past few months now and has already added 3,000 people during May-July.

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India is most mobile global job market in the last six months

India is most mobile global job market in the last six months

India has seen the maximum number of job switchovers in the last six months, making it the most mobile global job market, according to a report by Ma Foi Randstad, a leading global hiring agency.

According to the survey, which was conducted among 35,400 employees across 26 countries, India has the highest mobility index of 141. This implies that more employees from India switch jobs as compared to their global counterparts.

“This is corroborated by the findings of the factual job changes in the past six months, where again the scores are the highest in India followed by China.

Also, a significant proportion of employees in India, China and Mexico are confident of finding another job,” the survey report said.

According to the survey, the mobility intent index of 148 was highest amongst those in the age group of 25-34 years and this trend is similar to the last quarter.

With relatively higher focus on promotion, this is the most vulnerable group in Indian organisations in terms of attrition as compared to employees in other agegroups,” it said.

High inflation, coupled with high aspiration levels, is the key reason for the high mobility intent for employees in this age group, the report added. Eight out of ten Indian employees surveyed in this age group said they would move to an organisation that promises faster and better development.

At 153 the mobility intent index is the highest among people earning between Rs 90,000- 2,00,000 and the factual job change in the past six months is relatively high within this group. The report says that this is a result of high inflation, which is bringing down the real purchasing power and, thus, resulting in the need to earn more.

Among the four metro cities the mobility index was highest in Delhi followed by Bangalore. The factual job change in Delhi was relatively high at 51 per cent.

The report pointed out that satisfaction with the employer is highest in Mumbai at 82 per cent and lowest in Delhi at 69 per cent. Also, employees in Mumbai were less likely to switch jobs as compared to the last quarter.

“The differential scores between Mumbai and Delhi indicate that employees in Delhi have higher expectations from their employers compared to their counterparts in Mumbai,” the survey added.

The survey showed that the temporary workforces were more likely to change their jobs and the trend was likely to continue in future.

“On the back of economic recovery most organisations have been opting for increased flexibility leading to high demand for temporary workforce. This has increased the opportunities for the temporary workforce leading to higher mobility,” it said.

K. Pandia Rajan, chief executive officer, Ma Foi Randstad (India & Sri Lanka), said, “ Though the study reflects an increase in the mobility, it also brings to light the fact that employees would be satisfied with organisations that are better equipped to handle their developmental plans.” “ This should give great insights to organisations to focus on employee engagement and development,” he added.

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Fixed Deposits as popular investment option

Fixed Deposits as popular investment option
Fixed Deposits (FDs) have always been a very popular investment option. Safe, secure and good returns - these features have worked in favor of FDs making them a 'must have' in everyone's investment portfolio.

However, with the rising popularity of mutual funds and investors seeking high returns, FDs seemed to have lost their charm amongst savvy investors. Low interest rate on FDs was a major factor contributing to the reason that investors started looking out for other options. Recently though, interest rates on FDs are on a rise and investors are again considering investing more in FDs.

Difference between fixed maturity plan and fixed deposit?

Fixed maturity plans, or FMPs, are schemes floated by mutual funds and they work almost like a bank fixed deposit (FD). They come with different maturities like three months, six months, one and two years and rarely for three years.

FMPs invest in instruments of matching maturity and this gives investors a rough idea about the likely returns you can hope to pocket at the time of subscription. Since the portfolio is locked, investors are also shielded against interest-rate risks.

Also, FMPs with a maturity of over one year have a tax advantage over fixed deposits. Investors in FMPs have an option to pay tax on long-term capital gains at 10% without applying indexation or 20% after applying indexation to the cost of acquisition.

Interest from FDs is taxed according to the tax bracket applicable to the person. However, don’t go by the post-tax returns alone, as unlike bank FDs, FMPs do not offer assured return or capital protection.

If you plan to invest in FMPs, always look at the reputation of the fund house. This is very important because during the economic downturn two years ago, many fund houses got into trouble as they invested in low-rated papers from dubious companies, especially in the real estate sector. They just about managed to come out unscathed because of timely regulatory intervention and support.

However, the tricky thing about investing FMPs these days is you neither have an indicative portfolio nor return. So everything hinges on the integrity of the fund house.

Though an investor is supposed to stay invested till maturity in FMPs, fund houses also list FMP on stock exchanges so that investors can exit if they need money urgently. However, this does not guarantee enough liquidity and attractive price.

In short, consider investing in FMPs if you are comfortable with the concept and want to take a little risk to make superior tax-efficient returns.

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Saral Maha Anand - New ULIP product of SBI Life Insurance

Saral Maha Anand - New ULIP product of SBI Life Insurance
SBI Life Insurance on Monday said that it has launched a new unit-linked insurance plan (ULIP) called Saral Maha Anand.

This is the third ULIP product launched by the insurer since the introduction of the new ULIP norms by the insurance sector regulator, IRDA, last month.

SBI Life had earlier launched two products -- Smart Performer and Unit Plus Super.

Saral Maha Anand , its new ULIP product, is available at an affordable yearly premium starting from Rs 15,000 onwards and the product has been designed to cater to investment and protection needs of the middle-and-low-income segments, a press release issued in Mumbai stated.

The product is exempted from medical-examination. SBI Life Insurance's managing director & CEO, MN Rao, said, "the product offers simplicity and affordability so that a larger section of society can participate and benefit by systematically investing over a long-term horizon."

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