ask the readers

Reader Subrata asks:

Is leave encashment on superannuation taxable? I’m nearing retirement and would have accumulated 300-days of leave.

I have absolutely no clue on this topic (and I can’t remember the last time I accumulated leave). Therefore, I thought I’d open it up for a wider audience right away.

Do you know the answer?

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Though I advocate against it now, early in my career, I made a couple of investments purely with the objective of reducing my income tax liability. These investments simply don’t fit in with any of my financial goals. That led me to this thought: a “for income tax savings only” investment portfolio.

You could put your National Savings Certificates (NSC), 5-year Fixed Deposits, Infrastructure Bonds, etc. — things you’re doing with the sole objective of reducing your income tax liability — in this portfolio. And when they mature, you could use the proceeds to augment whatever financial goals you have at that point in time.

What do you think?


I faced this dilemma not too long ago. Before I post my choice and my rationale behind it, I’d like to know your opinion.

Does the age when you need to make this choice matter?

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Ask the Readers: Financial Compatibility

by Vinaya HS on October 4, 2010

in Finance

This one’s for the married/soon-to-be-married folks. Came from a thought I had while writing on marriage and finances.

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Ask the Readers: Withdraw or Transfer Your EPF Corpus?

by Vinaya HS on September 27, 2010

in Finance

Thought I’d ask this question that many of us face when changing jobs. The choice becomes all the more difficult especially when you know that your EPF corpus is a significant amount.


Ask the Readers: The Card Protection Program

by Vinaya HS on September 20, 2010

in Finance

What do you think of the Card Protection Program India?


Ask the Readers: Evaluating Life Insurance Providers

by Vinaya HS on September 13, 2010

in Finance


A comment on this post caught my attention. Why shouldn’t a medical check-up be mandated prior to buying health or life insurance? What do you think?


Ask the Readers: Debt Management Programs

by Vinaya HS on August 30, 2010

in Finance

In a recent issue of Outlook Money, I came across Debt Doctor — a debt consolidation program. Outside of India, Debt Management Programs are a lucrative business. But given the local psychology, my question is:

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Ask the Readers: PPF and Retirement

by Vinaya HS on August 23, 2010

in Finance

Suppose you start at the age of 30. You save the maximum possible (currently, Rs 70,000) each year for the next 30 years. Then,


D asked,

I know there are clear-cut rules on your liability and what you should do upon losing your credit card. But what are the rules with respect to debit cards? What’s your liability and what should you do? I’m asking because my debit card doesn’t have my photo on it. Nor does the merchant even attempt to verify my signature. [Nor is it PIN verified.] A transaction on my lost debit card will immediately debit the funds from my account.

I don’t know the answer. It’s especially scary given the fact that many banks have hiked up the daily limits for shopping with your debit card. With a daily shopping limit of over Rs 1.5 lacs, would you even want to carry such a debit card in your wallet?

Coming back, what are the liabilities and lost-card reporting rules for debit cards? Do you know the answer?


I have a question:

In general, is it possible to make part prepayments (towards the outstanding principal) on your car loan? My specific situation: a car loan from Axis Bank that I intend to close by the end of this year.

If the answer to my question is a YES, how do I go about doing it?


In response to my post on why you shouldn’t opt for a decrease in your Employee Provident Fund contributions in lieu of an increase in your take home pay, reader Siva commented:

But, in need, it’s always a problem to get back your money from the Government PF office. When a friend wanted to start on his own, he had big troubles while withdrawing the PF money from his previous employments. In fact, it was a nightmarish experience for him at the Government PF office.

I’ve heard similar stories in the past and hence thought I’d open up this question for you to answer. How easy (or difficult) is it to withdraw your EPF balance?

Do you have an experience to share?


D, had an interesting question to ask.

Suppose I’m unable to collect cash from the ATM cash dispenser within the stipulated time (usually 30 seconds). What happens to such a transaction? Is it automatically reversed? What happens if this situation occurs at a third-party ATM?

I couldn’t find an answer to this question. Have you faced such a situation before? What was your experience?


In response to my post about guidelines on detection and impounding of counterfeit notes at Indian Banks, a reader asks,

Has anyone got a fake currency note through an ATM? What is the process to be followed in such a case? Does the bank keep track of each and every note fed into the ATM?

With most banks outsourcing to a third-party the loading of cash into ATMs, I’m not sure where the accountability and audit trail lies. I’ve never faced such a situation. How about you? If you have, what did you do?


A reader asks,

I have lost my acknowledged (i.e. stamped) income tax returns (form ITR-V) for last year. What is the procedure for obtaining a duplicate?

My opinion: Visit the income tax office in your geography and meet your assessing officer. A requisition letter along with an unacknowledged copy of your income tax returns (Form 16, or ITR-V, or whatever you have) should be handy. You might want to carry your PAN Card along too.

Have you ever been in a similar situation or know someone who was? What do you think this reader should do?


A reader asks:

I am shopping for a term insurance plan and am a bit confused. Having seen the travails of insurance companies such as AIG et al., I am inclined to go with the Life Insurance Corporation of India (LIC) given their sovereign guarantee. But LIC’s premium for term plans seems to be 40-50% higher than those from private insurance companies. Plus, LIC doesn’t offer any riders (e.g. Accident Death Benefit, Disability, Critical Illness, etc.).

I am also not sure about the claims process of various insurance companies. How easy or difficult is it for survivors to claim insurance benefit from these companies? What use is it having an insurance policy when your loved ones have to run from pillar to post to claim the proceeds? What has been your readers’ experience in this area?

I do not have enough experience with claiming life insurance proceeds. We’ve only claimed life insurance once from LIC — but this was nearly a decade ago and the policy proceeds weren’t substantial to begin with. I’ve tried purchasing a term insurance plan from LIC in the recent past, but the agent and the TPA (Third Party Administrators) managed to royally screw things up and my policy proposal was finally declined with the status “accepted but can’t be issued because the agent’s agency has been terminated.” I’ve resolved to never again use an agent for any financial purpose.

But, what has your experience been? Which life insurance company offers a hassle-free experience?


Following my post on failed ATM transactions, a reader wrote in with his story.

On October 15, 2008, I tried to withdraw Rs 4,000 using my Citibank debit card at an HSBC ATM. The peculiar thing about HSBC ATMs is that the transaction slip is printed before the cash is dispensed. Unfortunately, there was a power failure after the transaction slip was generated but before the cash could be dispensed. Even my debit card was swallowed by the ATM. I lodged a complaint with Citibank who issued a new debit card and gave a temporary credit of Rs 4,000 (on October 22, 2008). Having received the temporary credit, I discarded the transaction slip.

On December 31, 2008, the temporary credit was reversed, and upon inquiry, was given the reason that HSBC had presented this as a valid transaction. I lodged a complaint again; Citibank re-investigated and upheld the reversal. I have been fighting with Citibank but to no avail. Citibank says that the best they can do is to issue a letter in order that I can pursue the case with HSBC. What should I do? I’m not sure if it’s worth going to consumer court for Rs 4,000.

I realized that other readers of this blog might have faced a similar situation and hence asked this reader for permission to post his question. What do you suggest that this reader do in order to resolve this problem?

My advise was to lodge a complaint with the nearest banking ombudsman.