Dear Readers
We are introducing a column, wherein your questions and queries regarding any kind of financial matter pertaining to Banking, financial markets, taxation and insurance will be replied by a Certified Financial Planner. You can send your questions on the email address: and

Question:  I am a State Government employee. My Drawing and Disbursing Officer did not release my salary for the month of February because of non-payment of income tax and unilaterally deducted my entire salary towards the income tax. However, my income does not qualify for payment of any income tax, because I have taken an education loan of Rs 12 lakh from a nationalized bank for my son who is studying abroad and interest of Rs 1.80 lakh has been charged by the bank on this account during the year and I have been told that this interest amount will be deducted from my salary before calculation of income tax. I informed my employer accordingly and submitted the relevant bank certificate to him, which he refused to accept and asked me to claim refund from the Income Tax Department.  Please guide me in this matter.
Answer: There is no question of unilateral deduction, because every Drawing and Disbursing Officer is duty bound to deduct income tax at source from the salary of all his employees in terms of the prevalent income tax laws. It is also the duty of every employee to provide details of all permissible exemptions to his employer well in advance. In your case, you have not provided full details regarding the salary drawn by you and investments, if any made by you. Regarding the education loan raised by you for overseas study of your son, I am afraid that I may not be in a position to actually guide you properly without knowing the details of your case. Still for your convenience, I would try to explain the matter in its real perspective so that you are in a position to frame an opinion for yourself. In terms of the prevailing rates, in case of an individual income up to Rs 2.50 lakh is exempt from income tax and for incomes beyond that amount up to five lakh income tax is charged at the rate of 10 percent and at the rate of 20 percent for amounts beyond that up to 10 lakh, with a further educational cess of 3 percent on the tax payable as such. In case of incomes up to Rs 5 lakh, there is however a relief of 10 percent in tax payable subject to a maximum of Rs 2000. Besides, in terms of various sections of income tax act, there are certain exemptions whereby individual is exempted from payment of income tax upon certain investments. A maximum amount of Rs 1.50 lakh if invested out of the yearly income towards Provident Fund, Life  Insurance premium , Post Office National Saving Certificates, Unit Linked plans and tuition fee paid for education of two children, besides a good number of other plans and schemes  would be exempted from payment of income tax. In addition to these permissible deductions of Rs 1.50 lakh, there are certain other special exemptions like payment of health insurance premium up to a maximum amount of Rs.25000, expenditure up to a maximum of Rs 40000 incurred for treatment of self or a dependant relative in case of certain specific diseases, expenditure up to a maximum of Rs 75,000 or Rs 12,5000 in some cases incurred for treatment of a handicapped dependant relative, payment of interest of Rs one lakh or two lakh in some cases on the loan raised for constructing or purchasing a residential property and interest paid on Education Loan raised for self or children. In your case, you need to therefore understand that the amount of interest charged by the bank on the education loan raised by you for your son can be claimed as an exemption by you provided the charged interest amount of Rs 1.80 lakh has been paid by you to the bank out of your salary income for the year. I am confident that by accounting for all applicable exemptions in your case, you can easily calculate whether any tax is payable by you or not. In case your employer has already remitted the tax deducted to the Income Tax Department, there is no option for you other than filing your income tax return for claiming the refund of the amount paid.

Question: I am a young entrepreneur running a small unit, but not in a position to establish myself because of paucity of funds. I have been maintaining my account with a leading bank for the last one year. When I approached them for a loan of Rs 10 lakh, I was asked to provide a suitable security. I couldn’t provide that, hence the loan was not sanctioned. Kindly let me know whether there is any such scheme under which a loan is sanctioned without security?
Answer: There are a good number of schemes for entrepreneurs like you, whereby commercial banks can very easily sanction collateral free loans. In fact only a year back, the Prime Minister of India launched a new scheme known as Mudra, whereby loans up to 10 lakh are sanctioned to non-agricultural micro enterprises without any collateral security. Only security to be provided in case of such loans is the charge on assets that will be created out of the bank loan. Besides, there are clear provisions and guidelines formulated by RBI, whereby collateral free loans can be sanctioned up to an amount of rupees one crore. Such loans are secured by a guarantee cover provided by Government of India and SIDBI sponsored “Credit Guarantee Fund Trust for Small and Micro Enterprises” on payment of one time guarantee fee and an annual service fee. These fees have to be borne by the borrowers. However, in case of J&K state, the Government of India has asked all public sector banks to bear any service fee in excess of 0.25 percent.

Question: Last year my bank manager made me to fill a form for buying insurance under a newly launched scheme by Government of India. Premium of Rs 330 was deducted from my account. What is the benefit of this scheme and whether the premium paid is for life time?
Answer: You have been enrolled and covered under a social security scheme launched by the Government of India last year under the name “Pradhan Mantri Jeevan Jyoti Beema Yojna”. The premium of Rs 330 paid by you is not for life time, because the cover under the said policy is subject to renewal every year. The premium will be automatically debited from your saving fund account before 31st May every year till you attain the age of 55 years. Insurance cover under the scheme entitles the nominees of the insured person for a claim of Rs two lakh in case the insured person dies due to any reason whatsoever before attaining the age of 55. Insurance cover will automatically expire, once the insured person lives beyond 55 years. As regards the premium paid by you, the same is towards the cost of insurance only and would not be repayable back to you under any circumstances. This insurance cover will be in addition to any other insurance policy that you may be having. If, for any reason, premium of the policy is not paid in subsequent years, the policy will automatically expire and the insurance will cease.

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