New Weapon in Government’s Arsenal Against Black Money is ITBA-PAN


With the storm over black money owned by a number of high profile Indian citizens sitting in tax havens like Switzerland and Liechtenstein still brewing, the government has unveiled a new weapon in its very public fight against black money. Called the Income Tax Business Application-Permanent Account Number (ITBA-PAN), the technology allows the Income Tax Department to identify duplicate PAN numbers and deactivate them each time an application for a new PAN Card by an existing PAN holder is made.

The software will do away with the cumbersome and error-laden manual process, where an official would go through the PAN database and verify if an individual or entity who already possesses an operational PAN number has applied for a new one.

This technology is long overdue and has been in development for a number of years, as the government tried to find a suitable way to combat the menace of taxpayers applying for duplicate PAN cards and evading tax by using it to funnel money away.


How ITBA-PAN Works

De-activation of Duplicate PAN

The government has released a statement explaining how the new technology will identify duplicate PAN cards. The existing PAN database will be migrated en masse to the new platform. Using this, any PAN application that is received by the Department will be run through the system. In case an existing PAN is found in the applicant’s name, the Department will inform the individual/entity of this and block the request.

If the platform finds a duplicate PAN card already present in the system will send a notification to the Department, who will in turn inform the individual/entity. The individual/entity will also be directed to approach the Tax Assessing Officer and give up the duplicate PAN card. In the event that the individual/entity fails to do so, the platform will automatically de-activate the duplicate PAN.

PAN Transaction History

The ITBA-PAN will also enable the Income tax Department to access an individual/entity’s PAN transaction history. All transactions for which the PAN was submitted can be viewed in chronological order by the Income Tax Department.

This tool will enable the government to trace the root of black money as it will be able to compare Income Tax Returns information against the PAN transaction history and check for discrepancies in the two.

In addition to this, liquidation, merger, de-merger, acquisition of assets as well as amalgamation of PAN can all be traced through the software.

This information can be captured by the software as the PAN card would need to be quoted in all of the above cases, thus leaving an electronic trail for Income tax Department officials to follow.

Given the two tools mentioned above, the funnelling of black money through multiple PAN cards as well as attempts to cover up additional income will now come to a stop as the software will be able to detect such attempts.

In addition to the above, the ITBA-PAN will also enable the holder to activate a PAN number that was wrongly de-activated and submit a request to deactivate a PAN number currently in use.

5 Investment Options for Retirement in 2016

Retirement can be the most rewarding stage of your life provided you make the right investments. There are several investment options to choose from. Some of the pertinent factors which should be taken into consideration when making investments include risk appetite, capital appreciation, inflation-adjusted returns, liquidity, quarterly or monthly payouts, premature/partial withdrawal facility, regular income, interest income, lump sum amounts, guaranteed returns and tax-efficiency among others.  


Investment Options

Below is a list of five investment options for 2016


  • Senior Citizen’s Savings Scheme
  • Fixed Deposits
  • Post Office Monthly Income Scheme (MIS)
  • Fixed Maturity Plans
  • Reverse Mortgage




Senior Citizen’s Savings Scheme (SCSS)

The Senior Citizen’s Savings Scheme, a central government scheme, is a traditional form of investment, opted by many retired persons across the country. Any individual aged 60 years or above can open a SCSS account in select public sector banks or post offices and invest up to Rs.15 lakh in it. A SCSS account has a maturity period of 5 years. Also, individuals aged 55 years or above but under 60 years who retired under VRS or on superannuation can also open this account. A SCSS account is transferable across post offices in the country. The interest offered on SCSS is 9.3% p.a with an option of quarterly payout. SCSS offers good liquidity courtesy the facility of premature withdrawal after 1 year (deduction charges apply). The invested amount qualifies for tax benefits under Section 80C of IT Act.  However, TDS is applicable in case the interest exceeds Rs.10,000 p.a.

Bank Fixed Deposits

Fixed deposits are one of the most popular financial instruments opted by millions of Indians. There are several reasons which account for its popularity such as assured returns, low risk, accessibility and convenience among others. Fixed deposits are offered by almost all banks with tenures ranging from one week to 15 years. While ‘safety’ of your investment  is often cited as one of the biggest advantages of fixed deposits, if your bank goes kaput, you will receive Rs.1 lakh only as per the conditions laid down by the Deposit Insurance and Credit Guarantee Corporation. Nevertheless, fixed deposits enjoy several benefits including flexibility in terms of interest payouts (quarterly, annual or half-yearly). Also, you can take a loan against your fixed deposit. As a senior citizen, you can avail of additional interest of 0.25 to 0.5% above the rate offered for regular depositors. However, TDS is applicable on the interest income above Rs.10,000. All the same, you can explore tax saver fixed deposits.


Post Office Monthly Income Scheme (MIS)

The Monthly Income Scheme  is often considered as one of the best available investment options for individuals in the lower income bracket who are in need of regular income. The interest income is credited into the savings account at a post office every month. You can invest up to Rs.9 lakh in a joint MIS account and Rs.4.5 lakh in a single MIS account. A post office MIS account has a maturity period of 5 years. The interest offered by the central government on post office MIS at 8.4% is less compared to Senior Citizen’s Savings Scheme which offers 9.3%. Under MIS, you can avail of a bonus (5% on the principal) upon maturity (applicable on accounts opened after December 8th, 2007 and before November 30th, 2011). Also, premature facility is available after one year of opening the account (deduction charges apply).


Fixed Maturity Plans (FMP)

Fixed Maturity Plans are closed-ended debt schemes which invest in debt financial instruments such as certificate of deposits, commercial papers and corporate bonds among others. Fixed Maturity Plans – offered for tenures ranging from three months to three years – differ from fixed deposits in many ways. For one, the yield on fixed maturity plans is only indicative compared to fixed deposits which offer assured returns. In case you opt for the dividend option, you will have to pay the dividend distribution tax while you have to bear the capital gains tax for the growth option. However, you can avail of indexation benefits (20%) on the long-term capital gains tax (above three years), which is cited as one of the advantages of FMPs. While FMPs offer low liquidity, the returns are higher (50 to 100 bps) compared to fixed deposits.


Reverse Mortgage

If you are a senior citizen who owns a house (self-occupied), you can avail of the reverse mortgage scheme for your financial requirements. The flat or house that you own should either be in your name or jointly with your spouse (clear title). You can mortgage your house for regular fixed payouts (quarterly, monthly, annual) or even a lump-sum amount. Reverse mortgage is, therefore, a type of loan which is offered against a collateral (your house) for a period of 15 to 20 years. It is important to note that you (borrower) do not pay any interest throughout the tenure (reverse mortgage). Also, the amount which is offered by the bank  is not taxable since it is primarily considered as a loan. The interest rate offered on reverse mortgage can be floating or fixed.   

Monthly Income Scheme and its benefits

Fixed deposits are perhaps the most popular form of investment cum saving in India, with millions of residents choosing to secure their finances by opening a fixed deposit for a particular period of time. Banks across the country offer a host of incentives to people, ensuring it is a win-win situation for everyone involved. Given the Indian mind-set to save every last rupee, a fixed deposit is a must in every household, offering peace of mind to all concerned.


Today, banks offer different options when it comes to fixed deposits, with multiple payment plans and bonuses available. One of the most popular fixed deposits relates to the monthly income schemes, which, true to their name, offer a monthly income to account holders.

Benefits of monthly income scheme

  • Regular income – Under a monthly income plan an individual is entitled to earn regular monthly income, supplementing his/her original income source. With rising expenses, an additional income source can be a necessity today, helping one meet financial requirements.
  • Tenure – Individuals can choose a tenure which suits their needs, with most banks offering tenures ranging from a year to 10 years.
  • Direct credit – The monthly income is directly credited to the savings or current account of an individual, ensuring that he/she doesn’t have to face any hassles of going to the bank and withdrawing it, saving time and energy.
  • High interest – Fixed deposits offer a decent interest, minus the risk involved with other such lucrative investments. This high interest helps your initial money grow over time, helping one beat inflation.
  • Additional interest for senior citizens – Senior citizens could benefit tremendously from a monthly income plan, given the fact that most of them do not have a regular income source post retirement. This income can help them lead a normal lifestyle, without having to worry about finances.
  • Nomination facility – Most banks provide a nomination facility wherein account holders can nominate an individual to receive the amount if something happens to them.
  • Liquidity – Most people are of the opinion that fixed deposits do not offer any liquidity in terms of finances, but a monthly income plan ensures that you have sufficient funds at your disposal, making it highly liquid. This ensures that any financial emergencies can be met without having to break a fixed deposit.
  • Overdraft/loan – Most banks offer an overdraft facility on the fixed deposit, thereby helping an account holder meet any additional financial requirements.

Opening a fixed deposit with a monthly income plan can be an extremely smart investment choice, offering flexibility and ease of use to individuals, apart from financial comfort to meet any contingency.

Online Calculators to Calculate Compound Interest

Today you have many online calculators to help you understand and calculate the interest you pay or earn on your financial transactions. Calculators are available for compound interest, simple interest, EMIs, car loans, credit cards and much more. Making an investment in stocks or deposits offering you a compound interest is always a good idea, compound interest is calculated on the principal amount and interest it collects.

Do you have any doubts of what is compound interest, and what is the compound interest formula used by banks and financial institutions? To make things clearer for you, read on. When you decide to invest into a term deposit for 1 year, and the interest is compounded on a quarterly basis then the compound interest will be earned as mentioned in the example below:

For example, if you have deposited Rs.10,000 at 4% annual compounded interest for a term of 5 years,  the total amount on maturity will be Rs.12,167. The calculated explanation on how the maturity amount has increased by Rs. 2,167

The interest for the first year is Rs.10,000*4/100 = Rs. 400

The interest for the second year is Rs.10,000+400 = Rs. 10,400*4/100 = Rs. 416.

The interest for the third year is Rs. 10000+400+416 = Rs. 10, 816*4/100 = Rs. 432.64

The interest for the fourth year is Rs. 10000+400+416+432.64 = Rs. 11, 248.64 *4/100 = 449.94

The interest for the fifth year is Rs. 10000+400+416+432.64+449.94 = Rs. 11,698.58 *4/100 = 467.94

The total interest is 400+416+432.64+449.94+467.94 =  2,166.52 and is rounded off to Rs. 2,167. The compounded interest has allowed you to make you investment Rs. 2,167 richer.

The compound interest formula used is: A = P (1 + r/n) ^ nt


A = amount after time t; P = principal amount (initial investment); r = annual nominal interest rate (as a decimal); n = number of times the interest is compounded per year, t = number of years

Compound Interest Formula

Using the online financial calculators like the compound interest calculator to work out the savings you make will help you understand the calculation and the savings earned. The first calculator uses the interest on the sum you’ve decided to save, and the second will allow you to add the interest earned on the initial sum  and compound it together and calculate the amount earned. The interest can be compounded on a monthly, quarterly, half yearly, or yearly basis.

Many financial institutions have varying terms of how they will compound their rates of interest, the frequency of the compounding the interest affecting the savings you make.

Most financial institutions tell you they can offer you a chance to double your saving with them, but before you believe them remember to make sure this is actually possible. All you need to do here is remember Rule of 72. Now, what is Rule of 72? If X bank is offering you at 12% interest rate, how long will it take you to double your savings? What you need to do is divide 72 with the rate of interest that’s 12, 6. That means it takes you 6 years to double your savings. If you have been told by the bank that you can double your money in 5 years, then divide 72 by 5 then the rate of interest is 14.4% that should be offered to you by the bank.

Companies sometimes also state that they’ll offer you a 12% annual nominal interest that’s compounded monthly, which means they are compounding 1% every month at 1% rate of interest.

Know how fixed deposit interest is calculated

A fixed deposit (FD) is a kind of savings product offered by banks to help you earn more on your savings than your regular savings accounts.  It is a type of savings certificate. You are not allowed to withdraw your fixed deposits before the maturity date determined by bank. But, giving prior notice to bank, you can withdraw your deposits. Bank may charge a nominal pre-withdrawal fee for withdrawing your deposits in advance. With these deposits, you can invest for different tenures based on your convenience at attractive interest rates.

Know how your FD interest rate is calculated

Normally banks pay interest on fixed deposits and regular deposits at quarterly or longer intervals. However, in its revised policy document, the Reserve Bank of India permits banks to pay interest on fixed deposits and regular savings at shorter intervals. But, so far, banks have not implemented what the RBI has declared in terms of paying interest rates. So, how do banks calculate interest on fixed deposits?


Your bank will provide you with three different options to choose from. Option 1 will help you reinvest the earned interest half yearly in one year. Option 2 will help you reinvest the earned interest at every quarter at a fixed rate of interest p.a. With option 3, you can choose to reinvest your interest every month. Now if you go by the third option, your interest will be calculated at monthly compounded basis and you would earn higher returns on your savings.  The more regular the compounding, the higher returns you get. This is how the calculations are done banks.

The calculation of interest on your fixed deposit is based on the following factors – your principal amount, annual nominal interest rate, number of time your interest is compounded and the tenure of your deposits. Interest for reinvestment is calculated at every quarter by most banks. Interest is reinvested with the principal amount and compounded as per the time period stated in the deposit

So, don’t overlook the frequency of compounding while investing in a fixed deposit. Along with interest rate and tenure of your deposits, you also need to consider the compounding frequency of your fixed deposits. You can ask your bank about the compounding possibility of your fixed deposit. The information about compounding frequency of fixed deposits will be available in the bank’s website. Otherwise, you can contact the branch personally to know about it. Normally, banks calculate interest rates on fixed deposits at quarterly compounding basis. However, in case of short term fixed deposits or deposits below the tenure of 6 months, you will be paid simple interest at maturity.

The compounding frequency of your deposits determines the interest amount that you will receive on your savings.  So, it is always advisable to calculate the compound interest rate on your fixed deposits. Either, you can use the mathematical formula to calculate the same or you can take the help of a compound interest calculator to know the exact compounding rate. Compound interest is calculated on the principal as well as the accumulated interest of the preceding periods of your deposit.  It is a kind of ‘interest on interest’ and helps you receive higher returns on your savings than deposits offering simple interest rates.

11 things to know when opening a fixed deposit with Bank of Maharashtra

Bank of Maharashtra is a public sector bank that services nearly 15 million customers. It is owned by the government of India, which holds 81.2% stake in the company. It was founded in 1835, in Pune, by V. G. Kale and D. K. Sathe among others.

The bank is known for providing a wide variety of services, like loans, savings accounts, recurring deposits and fixed deposits.

The most interesting thing, however, is Bank of Maharashtra fixed deposit rates. If planned properly, anyone can draw immense advantages from the banks FD schemes. They have been designed to suit almost varied needs of customers investing in fixed deposits.

Bank of Maharashtra

What customers should know about fixed deposits offered by Bank of Maharashtra?

  1. These fixed deposits bank can be opened by individuals and by groups of people like companies, societies, state/central government bodies, public sector undertakings, etc. Minors too can have fixed deposits opened in their names.
  2. The periods for which FDs can be held with the bank ranges from a minimum of 7 days to a maximum of 10 years. This period however, may be subject to the scheme chosen as some schemes may have a pre-defined minimum and maximum period for which deposits can be held.
  3. The minimum deposit that can be made is of Rs.100 and the maximum has not been defined but if customers want to make deposits over Rs.5 crore, they need to approach the bank’s branches or zonal offices.
  4. The bank offers nomination facilities which can be availed by customers who want to redirect maturity proceeds of the FD in the unfortunate event of their deaths.
  5. Fixed deposits held with them can be held as an individual or joint FD. However, it must be remembered that in case of schemes offering tax saver deposits, the benefits will be extended ONLY to the first holder.
  6. Fixed deposit interest rates offered by Bank of Maharashtra depend on the deposit period and the amount deposited.

The lowest interest rates offered are 6% per annum for deposits below Rs.1 crore and 6.5% per annum for deposits between Rs.1 crore and Rs.5 crore. The highest interest rate offered is 8.77% per annum for deposits under Rs.1 crore and 8.5% per annum for deposits between Rs.1 crore and Rs.5 crore.

  1. The bank also offers senior citizens a special interest rate of 0.50% above standard interest rates. This is subject to the conditions that the person be a resident of India, that the deposit amount be below Rs.1 crore and that the deposit be opened for periods of 91 days and above.
  2. Bank of Maharashtra also offers a tax saving fixed deposit scheme which offers an interest rate of 8.5% per annum. It can be opened for a minimum of 5 years and comes with a lock-in period of the same duration. The minimum deposit permitted is Rs.100 and the maximum is Rs.1,00,000 in a year.
  3. The bank offers loans against fixed deposits held with them. The loan amount may be as high as 90% but may differ from scheme to scheme. The one scheme that cannot be used to acquire a loan is the tax savings scheme.
  4. A fixed deposit held with them can be withdrawn at any time, except tax savings deposits. However, in case of premature withdrawals, a penalty will be charged. If the deposit has been made for up to one year then there will be no penalty. If the deposit time is higher than 1 year, the bank may pay the interest at 1% per annum BELOW the prescribed rate.
  5. Bank of Maharashtra also offers depositors the facility to transfer their fixed deposits from one branch to another. This facility is limited only to this bank and can’t be used to transfer the FD to any other bank.

One thing to keep in mind is that since the RBI has announced a cut in the repo rate, the interest rates offered on fixed deposits may come down too. It must also be kept in mind that the interest rates mentioned here may change without the bank providing any prior notice. There are a lot of advantages the bank offers to those looking to open fixed deposits with Bank of Maharashtra. The biggest advantage the fixed deposit provides, when compared to other banks, is that it provides a safe environment where your money can grow at a steady pace.

Effect of Kotak Mahindra, ING Vysya bank merger on FD rates

The Indian banking system is showing signs of maturity as many private sector banks are going in for consolidation. The latest to join the consolidation spree is Kotak Mahindra Bank which has decided to buyout ING Vysya bank in an all-stock deal valued at Rs.15,000 crores. Naturally, there are many questions being raised by ING Vysya Bank customers. These are—will the merger affect ING Vysya Bank FD interest rates? How will the FD calculations of ING Vysya Bank change after the merger?

The decision which was announced in November , 2014, has now moved forward with Kotak Mahindra’s shareholders approving it. In an extra-ordinary general meeting on January 7, Kotak Mahindra’s shareholders approved the merger. The merger will make Kotak Mahindra India’s 4th largest private sector bank and achieve its goal of a 1000-branch network a reality much sooner. However, there are several other statutory and regulatory bodies like RBI and Competition Commission of India to approve of the merger.

However, the merger proposal faces vehement protest from ING Vysya Bank employees who say the bank should be merged with a public sector bank. They are demanding a tripartite agreement with Kotak Mahindra Bank so that no employee is retrenched and their interests are protected.

In India, there are few cases of mergers. Earlier, PSU Oriental Bank of Commerce acquired Global Trust Bank way back in 2004. Similarly, HDFC Bank acquired private player Centurion Bank of Punjab in 2008.


Effect on interest rates

Usually the acquiring bank’s interest rates are all-pervasive. That means Kotak Mahindra’s interest rates will apply across all savings bank accounts in the new entity. Suppose if Kotak Mahindra offers 6 percent on its savings accounts and ING Vysya offers 4 percent, the latter’s customers could gain 2 percent on their savings bank deposits. However, interest rates are subject to revision of bank rates by RBI, so this may not apply over a long term.

Effect on FDs

Kotak Mahindra, the acquiring bank is supposed to pay the same interest rate as entered in the FD contract. So the FD depositors need not unnecessarily worry about their FD interest rates of ING Vysya or Kotak Mahindra Bank being suddenly changed. Only in exceptional cases like deposits over Rs. 1 crore, the acquiring bank may try to renegotiate interest rates.

What the changes might mean

Other than interest rates, ING Vysya customers may see few changes. ING Vysya and Kotak Mahindra have different quarterly account balance maintenance rules and charges, and this will be as per the acquiring bank rules when the merger takes place. ING Vysya’s customers might gain from Kotak Mahindra’s free demand draft upto Rs. 1 lakh per day offer.

The merger will take some time to come about, and the depositors will be intimated about any changes in interest rates etc. in due time. The bank will communicate the merger to ING Vysya customers and also reissue cheque books, debit and credit cards to ING Vysya customers and ask them for fresh KYC documents for compliance.