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India Stack
In September 2010, India set out on an arduous journey. A journey to provide every one of its billion plus residents with a unique identification number. A journey that would prove to be the beginning of a FinTech revolution for the country.
INDIA STACK
What is India Stack?
In simple terms, India Stack is:
- A paperless and cashless service delivery system.
- The India Stack is a set of APIs that allow governments and private companies to deploy cashless and paperless technology products.
- The stack is a new technology paradigm that is scalable to handle massive data inflows, and is poised to enable entrepreneurs, citizens and governments to interact with each other transparently.
- It is an open system to electronically verify businesses, people and services.
- It gives the data to the concerned individual and lets him decide who he can share the data with. The smartphone will be the delivery platform for services such as digital payments, identification and digital lockers.
- It is the largest application programming interface (API) on the planet.
- Poised to change the lives of 1.1 billion Indians.
- On December 1st 2016, in a much-awaited press conference, Mukesh Ambani, CMD of Reliance Industries, announced that Reliance Jio had crossed 50 million subscribers – a feat it had achieved in a mere 83 days. This made Jio the world’s fastest growing tech company surpassing the likes of Facebook, WhatsApp, and Skype. This astonishing achievement was made possible by the strategy of rolling out e-KYC across all outlets in India, allowing SIM activation in under 5 minutes. 95% of activations were done using e-KYC resulting at a staggering average rate of addition of 6 Lakh subscribers per day.
- It gives data to the concerned individual and lets him decide whom he can share data with. The smartphone will be the delivery platforms for services such as DIGITAL PAYMENTS,IDENTIFICATION AND LOCKERS.
Here are the 5 tenets of India Stack and the Startups leveraging it
- Paperless identification
- Aadhaar’s 12-digit unique identification number, floated by the UIDAI in 2009, has more than one billion Indians registered who have became the basis for the India Stack.
- This system of identification and delivery of services is already being used by the startup world.
- Aadhaar to deliver banking services to citizens.
- Paperless payments
- mobile payments through the smartphone. This can become India Stack’s signature delivery mechanism to make India a digital cash economy.
- Also, Nowdays the short term online loan is being provided by the companies in just a click without paper work through your smartphones
- Digital payments platform Paytm has announced partnership with major NHAI toll concessionaries like Reliance Infra, Sadhbav, IRB, MEP, L&T and GMR to enable cashless payments at all state, national and city toll plazas.
- Paperless documents
- Although digitisation is growing, India consumes the largest amount of paper.
- the per-capita consumption of paper is 9kg and is all set to double by 2020 because of the growth of the education industry.
- But with smartphone prices dropping, at least financial services and the healthcare industry can move to a paperless scenario in major cities with the help of India Stack.
- The Stack’s APIs allow startups to bring solutions that can make documents go digital. Like for example taking online loans can help in saving the all paper documentation and verifications.
- E-KYC
- Abbreviated as electronic Know Your Customer
- A key challenge for the customers while opening bank accounts is providing address proof, identity proof and physical copies of documents.
- E-KYC simplifies the customer experience for the Aadhaar-registered individuals to open bank accounts.
- Digital signature
- This would be the last mile to cross, and can be made simple between two or more parties executing contracts over the mobile.
- Today, most HR offers are online documents that contain digital signatures.
How it affects India?
- Citizens
Brings millions of Indians into the formal economy by reducing friction.
- Software ecosystem
Fosters innovation to build products for financial Inclusion, healthcare & educational services at scale.
- Government
Brings a paradigm shift in the way government services are delivered in a transparent, accountable and leakage free model
How Fibe uses India Stack for enabling E-KYC & Faster loan disbursement.
- Fibe provides short term cash to salaried individuals without any paperwork or documentation, thus following the digitized route.
- The transfer of money into an individual’s bank account is a seamless process without any physical layer involved.
- The paperless process not only helps in management of time and resources but also avoids redundancy.
- Because of digitization, the process becomes smoother, as opposed to the traditional banking systems that turn out to be cumbersome and time-taking.
Rise of Online Loan Lending Platforms
With the evolution in the field of information technology, the lifestyle of people started changing gradually. It started showing its effect on various sectors and one of them is banking and finance sector. Before the evolution, the process of completing a financial transaction was tough and physical presence of both person (borrower and lender) was must. But nowadays everything has changed even the way of money is being borrowed has changed by online lending platforms. One can easily borrow a sum of loan/money from the lender without knowing each other or meeting each other. The transactions are carried out in short time period with the help of information technology.
How it all started?
Lending has existed for thousands of years and has taken on many different forms throughout. At the very end of the 20th Century, First Internet Bank emerged. Consumers could apply for an online loan from their home or office computer, and they didn’t actually have to visit a bank or speak with a loan official.
The number of start-ups in the online consumer lending space has grown significantly from a mere 2 in 2013 to 30 in 2015. These firms either operate as NBFCs, intermediaries for banks/NBFCs or serve as a P2P lending marketplace. People conduct all kinds of business transactions online that they used to perform in person. This includes shopping, paying bills, researching business decisions, and of course, applying for loans. As both consumers and business owners grow more comfortable with conducting business over the internet, online lending is also expected to continue to grow.
Today, online money lending is in full swing and only getting bigger day by day with lakhs for transactions and crores of the loan being distributed per month.
How one may lend money online?
The process of lending short term loan online is quite easy. It is divided into the 4 simple steps as shown
For instant loan the borrower needs to apply online, once the lender receives an application they will check for eligibility and approves/dis-approves the application. Once the application is approved the disbursement of the loan takes place.
These online platforms work more like a bank. When a person applies for a personal loan online there is evaluation of creditworthiness and repayment capacity of an individual. The only difference between banks and the online lending platforms is that there will be no executive visiting to collect the documents and provide other services A borrower needs to scan and upload documents for KYC, such as photo, PAN card, Aadhar card and passport. Then, they need to provide income-related documents such as six months’ bank statement, three months salary slip and income tax returns.
We are one of them
We all have gone through the situations where we are left with empty pockets and being broke at the end of the month is a common problem.
We at Fibe.in offer quick short term loans to salaried individuals. We plan to help provide a small bridge loan to tide over that short difficult period till your salary reaches your account. The process of applying for a loan on EarlySalary is very simple. It is consisting of three easy steps. The first step is that one needs to log in and apply for the loan after which loan request will be approved or rejected (depends upon credit worthiness) and at last as soon as the request is approved the cash will be transferred into your account immediately.
Sounds good? Let’s try it out here and get your salary in advance with Fibe.
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A Detailed Guide to Income Tax Deductions in India
Getting your salary is a wonderful feeling. It makes you feel rewarded for all the hours of dedicated work that you put in. But the happiness fades away when a large chunk of your hard-earned income gets converted into tax. It is essential to figure out how you can avoid that high deduction in tax.
Income
The components that make up your salary include your Gross Salary, Provident Fund, Insurance, Leave pay, Gratuity Employee State insurance and Labour Welfare Fund
This income that is received by an employee is taxed under “Income from Salaries”.
You need to find out the slab that your salary will pertain to. After figuring that out you need to be prompt in declaring your investments. This allows the employer to take into consideration the portion of your earnings that you have invested and they will accordingly deduct tax from your salary.
Declaration helps you to avoid the cumbersome process of filing for refunds from the Income Tax department.
Tax Calculation
Taxes are calculated on the annual income of a person, and an annual cycle (year) in the eyes of the Income Tax law starts on the 1st of April and ends on the 31st of March of the next calendar year. The law recognises and classifies the year as “Previous Year” and “Assessment Year”.
Income Tax Slab Rates
Income tax slab rates are for different categories of taxpayers who are taxed progressively higher based on their earnings.
In all the tables listed below, Education Cess of 2% and SHEC of 1% will be levied on the tax computed using the rates given below.
Under Section 87(A), an Income Tax Rebate of ₹b2,000 is provided for all individuals earning an income that’s less than ₹ 5 lacs per annum.
Income Tax Slabs for male individuals below the age of 60 and HUF:
| Income Tax Slabs | Income Tax Rates |
| Total income less than ₹ 2 lacs 50 thousand. | -NIL- |
| Total income greater than ₹ 2 lacs 50 thousand but less than ₹ 5 lacs. | 5% of the amount by which it exceeds ₹ 2 lacs 50 thousand. |
| Total income greater than ₹ 5 lacs but less than ₹ 10 lacs. | 20% of the amount by which it exceeds ₹ 5 lacs. |
| Total income greater than ₹ 10 lacs. | 30% of the amount by which it exceeds ₹ 10 lacs. |
Income Tax Slabs for female individuals below the age of 60:
| Income Tax Slabs | Income Tax Rates |
| Total income less than ₹ 2 lacs 50 thousand. | -NIL- |
| Total income greater than ₹ 2 lacs 50 thousand but less than ₹ 5 lacs. | 5% of the amount by which it exceeds ₹ 2 lacs 50 thousand. |
| Total income greater than ₹ 5 lacs but less than ₹ 10 lacs. | 20% of the amount by which it exceeds ₹ 5 lacs. |
| Total income greater than ₹ 10 lacs. | 30% of the amount by which it exceeds ₹ 10 lacs. |
Income Tax Slabs for all individuals above the age of 60 – Senior Citizens:
| Income Tax Slabs | Income Tax Rates |
| Total income less than ₹ 3 lacs. | -NIL- |
| Total income greater than ₹ 3 lacs but less than ₹ 5 lacs. | 10% of the amount by which it exceeds ₹ 3 lacs. |
| Total income greater than ₹ 5 lacs but less than ₹ 10 lacs. | 20% of the amount by which it exceeds ₹ 5 lacs. |
| Total income greater than Rs.10,00,000. | 30% of the amount by which it exceeds ₹ 10 lacs. |
Income Tax Slabs for all individuals above the age of 80 – Super Senior Citizens:
| Income Tax Slabs | Income Tax Rates |
| Total income less than ₹ 5 lacs. | -NIL- |
| Total income greater than ₹ 5 lacs but less than ₹ 10 lacs. | 20% of the amount by which it exceeds ₹ 5 lacs. |
| Total income greater than ₹ 10 lacs. | 30% of the amount by which it exceeds ₹ 10 lacs. |
Deductions: There are various sections under which you can invest your salary and reduce the taxable amount.
Deductions for your taxable amount are available under various sections of the Income Tax act 1961. They are as follows: –
1. Public Provident Fund (PPF):
By contributing to your PPF account, you can get a tax deduction under Section 80C, the Indian Income Tax Act, 1961.
2. Life Insurance Premiums:
You can get an income tax deduction for paying premiums towards life insurance policies for self, spouse and child under section 80C of the Indian Income Tax Act, 1961. The amount received on maturity of the policy is free from tax. However, it is subject to the terms and conditions mentioned in your policy.
3. National Saving Certificate (NSC):
The amount invested in NSC is eligible for tax deduction under section 80C of the Indian Income Tax Act, 1961. National Saving Certificates are one of the highly secured modes of investment in India. But, the interest earned from NSC is taxable. As an NSC is a cumulative scheme, interest is reinvested and qualifies for a tax deduction.
4. Bank Fixed Deposits (FDs):
You can get a tax deduction by investing in fixed deposits for a tenure of 5 years under section 80C of the Indian Income Tax Act, 1961. Many banks in India offer tax-saving fixed deposits. However, the interest accrued on FDs is subject to tax
5. Senior Citizen Savings Scheme (SCSS):
Senior citizens can get a tax deduction by investing in the Senior Citizen Savings Scheme offered by banks. These schemes are eligible for tax deduction under Section 80C of the same act. The interest earned from these schemes is entirely taxable.
6. Post Office Time Deposit (POTD):
Investing in a five-year POTD, you can get a tax deduction under Section 80C. However, interest accrued on the same is fully taxable.
7. Unit-linked Insurance Plans (ULIP):
Investing in ULIPs for yourself, your spouse and your children, you can get tax deductions under Section 80C.
8. Home Loan EMIs:
Equated monthly instalments paid to repay the principal amount of your home loan are eligible for income tax deductions under section 80C of the same act.
9. Mutual Funds & ELSS:
Investing in mutual funds and equity-linked savings schemes, you are eligible for tax deductions under section 80C, the Indian Income Tax Act, 1961.
10. Stamp Duty and Registration Charges for a Home:
Stamp duty and registration fee paid for transferring property are entitled to income tax deduction under section 80C, the Indian Income Tax Act, 1961.
11. Retirement Savings Plan:
You can also get income tax deductions by investing in retirement plans offered by LIC or other insurance providers. Contribution to the National Pension Scheme is also eligible for a tax deduction.
12. Tuition Fees:
The tuition fee paid for your children’s education qualifies for income tax deduction under section 80C. However the fee needs to be paid for full-time education in an Indian university, college and school for any two children. The tuition fee does not include any donations or development fees for education institutions.
13. Medical Insurance Premiums:
A health insurance premium paid for self, spouse and children qualifies for income tax deduction under section 80D of the Indian Income Tax Act, 1961. The deduction allowed under this section is ₹ 25,000 for youngsters and ₹ 30,000 for senior citizens.
14. Infrastructure Bonds:
Investing in infrastructure bonds, you become eligible for income tax deductions under section 80CCF of the Indian Income Tax Act.
15. Charitable Contribution:
Donating to charitable tasks will help you reduce your taxable income under section 80G of the Indian Income Tax Act, 1961. However, make sure that you declare the whole contribution before 31st December each year.
16. Treatment of Disabled Dependents:
Under section 80DD of the Indian Income Tax Act, 1961, you can get income tax deductions for medical expense incurred in the treatment of any disabled dependent of yours.
17. Deduction for Preventive Health Check-ups:
An amount of ₹5,000 spent for preventive health check-ups of an individual or their family members qualifies for tax deduction under section 80D of the Indian Income Tax Act, 1961.
18. Interest Paid on Education Loan:
You can get a tax deduction on the interest paid for an educational loan under section 80E of the Indian Income Tax Act, 1961. The loan can be taken to pursue higher education by the employee or for their spouse, children or a student to whom the employee is a legal guardian.
19. Deduction on House Rent Paid:
An employee can get an income tax deduction for the house rent paid if the employee or their spouse does not own residential accommodation at the place of employment. This deduction is usually applicable for salaried taxpayers under section 80GG of the Indian Income Tax Act, 1961.
Income Tax E-Filing:
Once the tax is deducted, any tax refund is facilitated only when you submit your income tax return for that year. So any TDS on rent payments for NRIs or TDS deduction by banks on your fixed deposits will be refunded only once you file your tax returns and claim the desired tax deduction. You will need to file for tax refunds online once you file your ITR for that year.
You can e-file your Income Tax Return, TDS return, AIR return and Wealth Tax Return online, e-filing your return has obvious advantages like the fact that you won’t have to deal with the hassle of paperwork and waste time sorting through it all. You can simply log on to the secure website and e-file your return.
Hope this article gives you a clear picture of how taxes are deducted from your salary and how you can take measures to reduce your taxable income.
Overdraft Facility (OD) – Features, Process to Apply & How it Works
An overdraft facility lets you borrow extra money from your bank, even if your balance is low. It works like a short-term credit line linked to your account. You can use the funds for urgent needs like bill payments, medical expenses or business cash flow.
For answers to the question, “What is an OD loan?” and to learn about the process to get one, read on.
What is an overdraft facility?
It’s a credit line that is sanctioned to an individual against their assets. This financial instrument lets you withdraw money from your current or savings account against a sanctioned OD limit. The bank sets this limit and levies an interest rate on this facility.
Remember that this limit and the rate of interest rate are determined based on:
- Your account balance
- The nature of the asset you pledge as collateral
- Your financial stability
- Your credit score and history
- Your relationship with the lender
You can pledge your FDs, insurance policies, shares, bonds, etc., as assets to avail of an overdraft facility.
Features of an Overdraft Facility
Here are a few key features of overdraft facilities:
- Linked to your account: The facility is usually tied to your savings or current account.
- Pre-approved limit: You can withdraw more than your available balance up to a set limit.
- Interest on usage: You pay interest only on the amount you use, not the entire limit.
- No paperwork each time: Once active, you can use it anytime without fresh approval.
Why is there a need for an overdraft facility?
Listed below are the reasons is to how an overdraft facility can support you when funds run low:
- Manages sudden expenses: Helps you deal with unexpected costs like medical emergencies or urgent repairs.
- Covers delayed income: Useful when your salary or business payments arrive later than expected.
- Avoids loan delays: You get instant access to extra funds without applying for a fresh loan.
- Supports low balances: Offers a quick cash buffer when your account balance isn’t enough.
This is when an overdraft account comes in handy. This facility is a great way to raise funds for the short term if used wisely.
How does an overdraft facility work?
With the overdraft facility, you can withdraw funds from your account even after your account balance reaches zero. The bank will set an overdraft or OD limit. You can withdraw cash and transfer funds via cheques, net banking, online banking, etc., within this limit.
This pre-approved, short-term credit can help you manage your finances and fulfil all your requirements. Your bank will charge daily interest on the amount you withdraw from your account. You can prepay the overdraft amount along with the interest charges anytime to replenish your limit.
Know the Benefits of an Overdraft
This facility offers support when you need quick cash. Some of the top benefits include:
- Quick access to funds: No long process or waiting period involved
- Useful in emergencies: Helps you manage sudden expenses without stress
- Flexible usage: No restriction on the usage of funds
- No fixed EMI: Repay based on how much and how long you use the amount
The Overdraft Limit
The overdraft limit is the maximum amount you can withdraw beyond your account balance. It’s not the same for everyone. Your bank sets this limit based on a few things. Factors include your income, how you’ve used your account and your repayment habits.
This limit can change over time. If your usage or credit score changes, the bank can increase or reduce it. So whether it’s ₹20,000 or ₹2 lakhs, your overdraft limit depends entirely on your financial profile.
Also Read: What is Demand Draft?
However, if you need quick and easy funds without pledging your assets as collateral, then Fibe’s Instant Personal Loan can help you. We offer personal loans of up to ₹5 lakhs within minutes with minimum documents and a quick application process.
Download the Instant Loan App or log in to our website and get started.
FAQs on the Overdraft Facility
What is an overdraft facility in simple words?
The overdraft facility is one that allows you to withdraw funds from your bank account despite having an account balance of zero. The bank, in turn, charges interest on the amount withdrawn.
Is overdraft good or bad?
It depends on how you use it. An overdraft can be helpful during short-term cash crunches. But if you overuse the facility or don’t repay on time, it can lead to extra charges. Which could hurt your credit score.
Celebrating Valentine’s Day with Early Salary
It’s the time of the year when promises are made new beginnings are carved, and bonds are strengthened.
It is the Valentine’s week. This is the week where people express their love for each other. This is the time when people exchange gifts with each other to showcase their affection.
However often we find ourselves in a state where our finances dwindle, and we are not able to fulfill our desires.
It is sad to acknowledge the fact that the most romantic day is approaching and we are low on cash. This makes us feel helpless and stressed. We even go in a state where we do not see the point in celebrating the day.
But EarlySalary never wants the lovebirds to miss out on such a day. We would want people to enjoy the day to it’s fullest without having to worry about cash.
With Fibe’s instant cash option, you can avail money whenever you want.
We would want you to cherish this day and make the most of it.
And not just the day of Valentine, Fibe would even suggest you to be the Earlybird where you get something unique for your loved one in the week prior to Valentine’s day.
Presents are always overwhelming, but they are even more endearing when given to people at the time when they are least expecting it.
With EarlySalary’s cash option, you can make Valentine’s day special in various ways. We can suggest some to give you a slight idea!
- You can take your better half on a dinner date and celebrate the occasion in the grandest of days.
- You can plan a holiday for your loved one, and travel to explore and experience
- Valentine’s day falling on a weekday should not deter you in celebrating elaborately. You can make the weekday better than the weekend and paint the town red! You can take her out to the grooviest club and dance the night away!
- You can get them something unique that will cause them to smile like never before
- You can fill their wardrobes with the latest clothing and accessories
- You can plan a weekend getaway for them away from the hustle and bustle of city life
We strongly believe that you all have a creative head and you can implement this Valentine’s day in the most special way for your loved one. EarlySalary’s always there as a friend when you need it!
What is the Right Way for the Twenty Something’s to Spend Money
When you are in your twenty’s, you get perpetual recitations on money saving and management
This indeed is a great thing, because an advise like this is always treasure worthy.
However apart from managing finances and saving money, it is also crucial to master the art of spending right.
Let’s discuss about where you should be spending your money.
Health Insurance
Health is something that should be kept on top priority. You might not want to think about health when you are young, but health insurance is one of the things 20-somethings should spend their money on. While being a student you maybe covered under your parent’s health plan. However beyond that stage, you need to invest in order to be better prepared when an emergency strikes.
Medical bills are scary, especially when they get piled up. So it is imperative to sort out these finances in order to escape the last moment distraught.
From personal experience, one trip to the emergency room can cost thousands of dollars, which can easily deplete your savings account.
Even if you can’t afford the best coverage, some coverage is better than none.
Life Insurance
There are various life insurance policies to opt for in india.
Life insurance is relatively cheap if you’re a young adult with no major health problems.
If you’re single with no dependents, you may feel life insurance is unnecessary at this point in your life.
However, a policy can pay off your debts.
Plus, the death benefit can cover your funeral and burial, taking the financial burden off your family.
CIBIL Monitoring
You should monitor credit report once in a year. This helps in keeping a check on your credit scores.
Even if you do not have a credit history or a long credit history, it is imperative to stay on top of your report.
Erroneous credit has many implications on future loan requests and applications.
You can evaluate your credit once on CIBIL by paying Rs 550. Then there are different plans that you can take to monitor your account at regular intervals.
Building a retirement account
Retirement is a far-fetched idea. Thinking about retirement is one of your least priorities.
However money grows exponentially if you start investing at the right time. This would create a very comfortable and at ease retirement phase for you.
Investing in property
Most of you twenty-something’s would not think of buying a home. A rented space is what you need at this stage.
However with approaching stability and firm finances, thinking of investing in property is a great step indeed. This helps in safeguarding your future
You can build equity, and when you’re ready to sell your starter home, you can put the proceeds down on a nicer place..
Investing in reliable and cost-effective vehicles
It is a sensible decision when you choose to buy a vehicle that is both reliable and cost-effective.
You need to avoid buying new used cars, or stop dealing with numerous repairs that drain your pocket. A wiser decision is to purchase a newer model car that requires optimum maintenance. You can pay off the loan for the car gradually.
Money can be employed in various ways. But the best ways are something that you need to seek out. This helps in planning your present and future in a much better fashion.
Salary Advance
Some situations demand the need for that extra cash. The hammer of Emergencies can strike us anytime, and can cause a financial imbalance.
The very situations can put us in an embarrassing spot where in we have to resort to sources for borrowing personal loans.
One such source is our work place. Salary advance is the solution that we think of falling back onto. However getting an advance from our employer is not often an easy task.
There are various factors that impede our decision to ask for money from employer. We will list down some below
1. Work Environment: The work culture, and organisational policies are influential in determining the granting of salary advance. Some organisations post their salary day guidelines on their website. Some do not. In such cases seeking permission from the HR head or your boss may seem like an unachievable task. Explaining the need is an even more cumbersome task. You would have to figure out the perfect time to visit your boss, so that your request is not over looked.
These situations might push your bosses to look deep into your private finance management, which is not a great thing.
2. Paperwork: Layers of paperwork deter our will to ask for a salary advance. We dread taking a loan, because we do not want to surmounted by innumerable documents.
While some smaller organisations might agree for a loan with a handshake, others might ask you to deep dive into piles of documentation.
The documented agreement could talk about a repayment date. This could be your next salary date or a pre-decided period within which you need to repay the loan.
The paperwork could also include a clause that permits your employer to debit the repayment amount from your future paycheck. Some employers may even charge a few bucks to cover the paperwork.
3. Official agreements are binding: Borrowing from your employer is very different from borrowing from family or friends. You cannot have the attitude of “ I will pay whenever I can”. There is a fixed date, and failure to repay might be consequential in a bad way.
4. Your image perception by others: – Before you borrow, you are also enveloped by thoughts like “ What If I am unable to repay? What will my colleagues think of me” “Am I putting my reputation at stake by borrowing ?” “Will I strain my relationship with my boss?” All of these thoughts pester you even if you are borrowing for the first time. Also if this is a lifestyle issue, then resorting to your employer is a big no-no.
5. Acceptability : The higher you go up the corporate ladder, the probability of you getting a loan will be lower.
Instead of going through the hassle of asking for a loan from your employer, use Fibe. Fibe is a one stop solution to all your cash worries. You do not have to think twice before asking us for money. Procedure for online application is very easy. The money transfer is an instant process, there is no paperwork and hesitation involved.
Fibe offers personal loans at a very low rate in the quickest possible way.
Fibe is a win-win solution for both the employees and the employers. The employers too would not have to bear any financial constraint. They would escape the paperwork involved.
Fibe renders a happy employee and employer situation.
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The World of Fintech
The world of Fintech
The combination of Startups and Finance has lighted the thought bubble of Techies.
This has prodded them to move forward to build a space that blends both.
Basically Fintech organisations use technology to help users avail financial services effortlessly and on the go.
Fintech encompasses all technology-based companies operating in insurance, payment, loans, asset management etc.
Fintech is taking the technological space by a storm. With the introduction of these startups, the technical space the distance between technology and money has been bridged.
With the emerging industry of Fintech, there is an increased accessibility to the finance, along with an elevated awareness amongst the users of finance and technology. These firms offer instant, constant and efficient financial services to the users. They also serve as a competition to the conventional banks that exist.
The aim to integrate technology so that various systems in place interact has lead to the seamless processing of information and data transfer. This leads to better decision making processes(for cash, loans, credits etc) and also diminishes the cost.
With the emergence of multitudes of NBFC( Non-banking financial companies), Payment banks , mobile wallet companies etc have rendered a surge in the Fintech sector.
There are various verticals for Fintech
There are numerous startups that have ventured in the services of lending . These startups surpass the conventional financial institutions by offering alternative credit models, and also enhance the accessibility of users to money and money matters. Basically users can gain access to capital much faster and at a cheaper rates through these.
- • Fintech has also entered Remittance. Remittance otherwise is a lengthy process with unending steps to achieve the goal. This holds true for both outward and inward transfer of funds. Also the costs associated are extravagant in nature
- • They also provide both private and businesses to accept payments over the platforms of web and mobile. These Fintech startups intend on integrating payment processing into mobile and web apps without putting in extra efforts to maintain the merchant accounts. Steps are taken to ensure that there is no fraudulence that happens. The transfers have to be made directly into the bank account that is linked to the payee.
- • Yet another bracket of Fintech companies exist that help individuals save manage and invest money. These Fintech companies essentially help in Personal Finance and retail Investment services. Also they help the individuals make better financial choices. Be it them wanting money or them wanting to save it.
- • The infrastructural pertaining to old-age financial institutions are also be solved by these new Fintech organisations. There supremacy in technology and efficiency in finance is becoming popular amongst the people. They have enormously improved access to financial data and analytics is much easier and quicker now to get through to.
- • Another intriguing Fintech Platform is providing access to crowdfunding . crowdfunding helps organisations in nascent stage to raise money and develop in the right direction.
- • These companies initial focus lay on the core of finance, risk management and the incrementing revenues. However now it has expanded to user-friendliness and customer experience.
Fintech has not only disrupted traditional banking institutions, but has also made banking much easier for individuals. EarlySalary is one such organisation in the Fintech world. We at EarlySalary provide Personal loan upto a lakh in minutes through your smartphone. And it is a very simple process! Just login through your Facebook account, fill in a few details and get instant cash. So wanna get some cash?
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What is Allowance in Income Tax and its Types?
As a novice taxpayer, understanding what the connection between your salary and allowances is essential. An allowance is a part of your salary structure that the employer pays at regular intervals. These allowances are added to your salary and taxed under the salaries as per the Income Tax Act guidelines.
Tax-free allowances in salary are allowances that are usually paid to an employee as compensation to manage specific expenses. The Indian Government offers different allowances, so handling various costs becomes easier.
To learn more about it, read on.
You can divide salary allowances into 3 categories, which are:
- Taxable
- Non-Taxable
- Partly Taxable
To better understand their differences, here is a brief overview of types of tax-free allowances income tax and how they work.
Types of Tax-Free Allowances in Income Tax
House Rent Allowance (HRA)
Among the various types of allowances, this is a popular one paid to an employee. As per Section 10(13A) & Rule 2A of the Income Tax Act, HRA is the amount an employer pays to compensate for the rent paid by an employee.
To make this a tax-free allowance, you have to reside in rented accommodation; else, it becomes taxable. The tax deduction for this allowance depends on the following factors:
- The rent you pay
- Your salary
- HRA provided
- Place of employment
- Your residence location
HRA is 50% of your basic salary and a dearness allowance when residing in a metro city. However, if staying in a non-metro city, you may get 40% HRA, including the dearness allowance. The exempted amount would be the lowest of the 3 – actual HRA received, 40% to 50% of the salary if rent paid less is 10% of the salary.
Also Read: 5 Tax Tips for Workforce
Education Allowance for Children
As you continue to familiarise yourself with what allowance is in income tax, note that the amount spent on your child’s education is actually tax-free. As per the provisions, you can get an exemption of up to ₹200 per month for up to 2 kids (₹100 each, ₹2,400 yearly).
In case both your kids are studying in a boarding school, you can avail of an additional exemption of up to ₹600 per month for 2 children (₹300 each, ₹7,200 yearly). However, note that you can claim these allowances only for a maximum of 2 children.
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Special Allowance
When considering salary and allowances, take note of special allowances. For instance, say you hired an assistant to help complete your professional services. This can also exempt you from paying taxes.
As per Section 10 (14), you can get a tax-free allowance to the extent of the amount as per the older regime. This helps you manage the expenses incurred in paying the assistant who is helping you with your official duties.
Transport Allowance
This is another allowance paid to employees to manage transportation costs when travelling to the workplace from home. According to Section 10(14), this allowance helps you meet the expenses you incur on your daily commute.
Currently, the income tax division has combined transport with medical allowance by implementing a standard deduction value. The standard deduction was ₹40,000 initially, the amount has been revised to up to ₹50,000.
Leave Travel Allowance (LTA)
As a salaried employee, you can avail of an LTA exemption according to the Income Tax Act. Simply put, LTA includes the travel expenses incurred during your leave duration. However, this does not include food, entertainment and shopping expenses.
You are eligible to claim LTA twice in a gap of 4 years. If you do not claim it within a block of 4 years, you can carry it forward to the next block. However, you can claim LTA only for domestic travel and not for international travel expenses.
Here, the mode of travel must be public transport, train or plane to claim the LTA.
Now that you know more about allowances income tax and have an idea about a few tax-free allowances, you can plan your taxes better and save more.
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FAQs On Income Tax Allowances
What are tax-free allowances in salary?
Tax-free allowance means the allowance on which you can claim tax benefits or get a tax exemption.
How do I calculate my salary allowance?
This differs based on your employer’s policies and salary structure. However, you can calculate your salary and allowances by deducting your basic salary and PF contribution from your total package. Another way to look at it is by deducting your gross pay from your basic salary.
To understand better,
- Basic salary = Remuneration for your services
- Gross salary = Remuneration for your services + Allowances + Benefits + Bonuses
How do tax-free benefits work?
Tax-free benefits help you avail tax exemptions on special allowances, thereby helping you save tax.
What are non-taxable allowances?
Non-taxable allowances are entirely exempt from taxation and they are also known as tax-free allowances. An example of this includes compensatory allowance, helper allowance, daily allowance, uniform allowance and many more.
Is allowance an income?
Yes, you need to add allowances under the income from salaries as per the Income Tax Act rules.
Which allowance is fully taxable in salary?
The below allowances are taxable:
- Dearness allowance
- Overtime allowance
- Cash allowance
- Holiday allowance
- Telephone allowance
How much amount is exempted from allowances?
The exemption amount will differ depending on which type of allowance you are talking about. However, in most cases, 60% of your salary is allowances and are eligible for tax exemptions.