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A Detailed Guide to Income Tax Deductions in India

Personal Loan to Cover Your Holiday Expenses

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: Meaning, Types, Eligibility & How to Apply

An overdraft facility allows you to withdraw money from your bank account even when your balance is low or zero, up to a pre-approved limit. In simple words, it works like a short-term credit line linked to your savings or current account. You pay interest only on the amount you use, not on the full sanctioned limit.

Let’s say your account has ₹3,000, but you need ₹15,000 urgently for a hospital bill. If your bank has approved an overdraft limit of ₹50,000, you can withdraw the extra ₹12,000 and repay it later as per the lender’s terms.

For answers to queries like ‘what is an OD loan?’ and ‘how OD account works?’, read on.

What is an Overdraft Facility?

An overdraft facility, also called an OD facility, is a credit arrangement offered by banks or financial institutions. It lets you withdraw extra funds from your linked bank account within a sanctioned OD limit.

This limit is usually decided based on factors such as:

Your income and repayment capacity

Account balance and banking history

Credit score and credit behaviour

Relationship with the lender

Type and value of collateral, if any

Nature of employment or business stability

Some overdraft facilities are unsecured, while others may be secured against assets such as fixed deposits, insurance policies, shares, bonds or property. The interest rate also depends on the lender’s policy, your profile and whether the OD is secured or unsecured.

Real-life scenario:

A salaried employee may get an overdraft limit based on monthly salary credits, while a business owner may get it based on current account transactions, business cash flow and collateral value.

Types of Overdraft Facility

Pre-arranged Overdraft Facility

A pre-arranged overdraft facility is approved by the bank in advance. The bank reviews your financial profile and gives you a fixed overdraft limit. Once activated, you can use the facility whenever needed, up to the approved limit.

Let’s say:

You run a small business and your supplier payment is due on the 5th, but your customer payment usually comes on the 10th. A pre-arranged OD can help you pay the supplier on time and repay the used amount once the customer payment arrives.

Instant Overdraft Facility

An instant overdraft facility is usually offered digitally and may be approved quickly based on your account activity, credit history or existing relationship with the lender. In some cases, it can be offered when you try to make a transaction but do not have enough balance.

Example:

You are making an online payment of ₹8,000, but your account balance is only ₹5,000. If you are eligible, the bank may allow you to use an instant OD facility for the shortfall, subject to approval and charges.

Features of an Overdraft Facility

Here are the key features of an overdraft facility:

Feature	What it Means
Linked to account	The facility is connected to your savings or current account
Pre-approved limit	You can withdraw funds up to a sanctioned OD limit
Interest on usage	Interest is charged only on the amount used
Flexible repayment	You can repay as per your cash flow, subject to lender terms
Revolving credit	Once you repay the used amount, your available limit gets restored
No fresh paperwork each time	After activation, you can use the OD without applying again
Short-term support	It is best suited for temporary fund gaps, not long-term borrowing

Example:

If your approved OD limit is ₹1 lakh and you use only ₹25,000, interest will be charged only on ₹25,000. After you repay ₹25,000 along with applicable interest, your full limit becomes available again.

A simple rule to follow is: ‘Use an overdraft as a bridge, not as a regular income source.’

When Do You Need an Overdraft Facility?

An overdraft facility can be useful when you need quick access to funds for a short period. It may help in situations such as:

Managing sudden expenses like medical bills or urgent repairs

Covering delayed salary, rent or business payments

Paying EMIs or utility bills on time

Handling temporary working capital needs

Avoiding failed transactions due to low balance

Meeting short-term cash flow gaps without taking a new loan

Real-life scenario:

Suppose your salary is usually credited on the 1st, but this month it is delayed by a few days. Your rent and electricity bill are due immediately. In such a case, an overdraft facility can help you make payments on time and repay once your salary is credited.

Business scenario:

A shop owner may need to stock inventory before the festive season, but customer sales will happen later. An OD can help manage this short-term gap without applying for a fresh business loan.

How OD Account Works

An OD account works by allowing you to withdraw funds beyond your available balance, up to the approved overdraft limit. The bank charges interest on the overdrawn amount for the number of days it remains unpaid.

Let’s say:

Your bank account balance is ₹10,000 and your approved OD limit is ₹40,000. You need ₹30,000 for an urgent expense. You can withdraw ₹30,000, out of which ₹20,000 will be treated as the overdraft amount. Interest will be charged only on ₹20,000, not on the full ₹40,000 limit.

When money is deposited into your account, the overdrawn amount may get adjusted. Once repaid, your OD limit becomes available again.

Another example:

If you use ₹20,000 from your OD limit for 10 days and repay it on the 11th day, interest is usually calculated only for the days you used that amount.

If the overdraft is not repaid within the agreed period, the lender may charge penalties, reduce or cancel your OD limit, report delayed repayment to credit bureaus or take recovery action as per the terms.

Overdraft Loan Eligibility Criteria

Eligibility may differ from one lender to another, but most banks and financial institutions check the following:

Age as per lender policy

Stable income or business cash flow

Good credit score and repayment history

Active savings or current account

Healthy average bank balance

Existing relationship with the lender

Employment or business stability

Collateral value, in case of secured OD

Example:

A salaried applicant with regular salary credits, a good credit score and a stable job may have a better chance of getting an OD facility. A self-employed person may need to show regular business income, bank statements and tax records.

Documents Required for Overdraft Facility

The documents required depend on whether the OD is secured or unsecured. Common documents include:

Document Type	Examples
Identity proof	PAN card, Aadhaar card, passport or voter ID
Address proof	Aadhaar card, utility bill, passport or rental agreement
Income proof	Salary slips, ITR, Form 16 or profit and loss statement
Bank proof	Recent bank statements
Business proof	GST registration, business registration or partnership deed
Collateral documents	FD receipt, insurance policy, property papers or demat details, if applicable

Real-life scenario:

If you apply for an OD against a fixed deposit, the lender may ask for your FD details along with KYC documents. If you apply as a business owner, you may need to submit bank statements, GST details and income records.

How to Apply for an Overdraft Facility Online: Step-by-Step

You can apply for an overdraft facility online through your bank or financial institution’s website or app. Here’s a simple process:

Check eligibility

Review the lender’s criteria for income, credit score, account type and banking history.

Log in to the website or app

Visit the lender’s online portal and look for the overdraft or OD facility section.

Choose the OD type

Select whether you want an overdraft against salary, current account, FD, property, securities or another asset.

Fill in the application form

Add your personal, income, employment and bank account details.

Upload documents

Submit identity proof, address proof, bank statements and income documents.

Wait for verification

The lender will review your profile, credit history and documents.

Get limit approval

If approved, the lender will sanction an OD limit and share interest rate, fees and repayment terms.

Activate and use

After accepting the terms, the OD limit becomes available for use.

Example:

Suppose you already have an FD with your bank. You may log in to the mobile banking app, select ‘Overdraft against FD’, enter the required details, accept the terms and get an OD limit based on your FD value.

Benefits of an Overdraft Facility

An overdraft facility offers many benefits when used responsibly:

Quick access to funds: Useful during emergencies or temporary cash shortages

Interest only on used amount: You do not pay interest on the full limit

Flexible usage: Funds can be used for personal or business needs

No fixed EMI structure: Repayment can be more flexible than a standard loan

Revolving credit: Repaid amount becomes available again

Helpful for cash flow: Especially useful for businesses with delayed payments

Let’s say:

You have an approved OD limit of ₹75,000 but use only ₹15,000 to pay a vendor. You repay the amount after 7 days when your customer clears their invoice. In this case, you pay interest only on ₹15,000 for the usage period.

However, it should be used carefully. Frequent overdraft usage may signal poor cash management and can increase your borrowing cost.

The Overdraft Limit

The overdraft limit is the maximum amount you can withdraw over and above your account balance. It is not the same for every customer.

Banks may decide your OD limit based on:

Monthly income

Credit score

Account usage

Average balance

Repayment behaviour

Value of collateral

Type of account

Example:

A salaried customer earning ₹60,000 per month may get a smaller OD limit based on salary credits. A business owner with strong monthly transactions and collateral may get a higher OD limit.

The lender may also increase, reduce or withdraw the limit depending on your usage and repayment behaviour.

Overdraft Facility vs Personal Loan: Key Differences

Point	Overdraft Facility	Personal Loan
Nature	Credit line linked to account	Fixed loan amount
Interest	Charged only on used amount	Charged on full loan amount
Repayment	Flexible, as per terms	Fixed EMIs
Best for	Short-term cash gaps	Planned or larger expenses
Limit reuse	Repaid amount can be reused	Cannot be reused once repaid
Collateral	May or may not be required	Usually unsecured
Tenure	Short-term or renewable	Fixed tenure

Real-life example:

If you need ₹20,000 for 10 days due to a delayed payment, an overdraft may be more suitable. But if you need ₹2 lakhs for a wedding, home renovation or education expense and want fixed monthly EMIs, a personal loan may be a better fit.

An overdraft is useful for temporary fund needs. A personal loan is better when you need a fixed amount for a planned expense and want structured EMI repayment.

If you need quick funds without pledging collateral, Fibe’s Instant Personal Loan can help. You can get a personal loan of up to ₹5 lakhs with minimum documentation and a quick digital application process. Download the Instant Loan App or visit the Fibe website to get started.

FAQs on Overdraft Facility

1. What is an overdraft facility in simple words?

An overdraft facility allows you to withdraw more money than what is available in your bank account, up to a limit approved by the lender. Interest is charged only on the amount used.

2. Is overdraft good or bad?

An overdraft can be good if used for short-term needs and repaid on time. It can become costly if you use it regularly, exceed the limit or delay repayment.

3. What is an overdraft loan and how is it different from a regular overdraft?

An overdraft loan usually refers to a credit limit that works like a loan but offers flexible withdrawal and repayment. A regular overdraft is generally linked directly to your bank account and lets you overdraw up to an approved limit.

4. Who is eligible for an overdraft facility in India?

Individuals with stable income, good credit history, an active bank account and healthy repayment behaviour may be eligible. Businesses may need to show regular cash flow, bank statements and business proof.

5. How do I apply for an overdraft facility online?

You can apply through your bank’s website or mobile app. Check eligibility, fill in the application form, upload documents, complete verification and accept the approved OD terms.

6. What documents are needed for an overdraft facility?

Common documents include PAN card, Aadhaar card, address proof, income proof, bank statements and collateral documents, if the overdraft is secured.

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.

Apply for Travel Loan Online

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.

As a salaried professional, you may also require funds to tackle unexpected emergencies.

In such cases, you can apply for a Fibe Instant Cash Loan. It requires minimal documentation and has a quick approval process. You can avail of a personal loan of up to ₹5 lakhs at affordable interest rates with flexible tenor.
Simply download Fibe Personal Loan App to apply online and get quicker disbursal.

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.

Fixed Deposits Versus Mutual Funds

In our financial space, we come to a state, where we have sufficient funds, and we wish to invest a chunk of it for future plans and goals.
Two very popularly used media for investment are Fixed deposits and Mutual Funds. We will distinguish between the two after we define them properly.

Fixed Deposits
Here we deposit money in a bank for a specific period of time that ranges from 7 days to 10 years. The amount invested earns an interest based on the tenure of deposition. It can be as high as 9% per annum(varies according to the banks and it’s schemes). After the tenure ends, the money is returned to us topped with the interest earned.

Mutual Funds
Mutual funds can be best described as a place where funds are consolidated by numerous investors. The fund accumulated is invested in one or many asset classes like equity, debt, liquid assets etc.
It carries the tag mutual because all the perils, awards, gains and losses in the invested sum are shared by all the investors in accordance to their contributions.

Difference between Fixed Deposits and Mutual Funds

Rates of Interests:

In case of Fixed deposits, the rate of interests are pre-determined and remain intact during the entire tenure of investment. The rates of interest vary for mutual funds as per the market conditions. In case of an uphill in the market scenario, the benefits of mutual funds surpass those of fixed deposits, as the returns are higher. While a downhill situation in the market renders fixed deposits as the winners in terms of the returns that are offered.

Liquidity:
In case of Fixed deposits, the tenure is fixed, and they offer medium and low liquidity options until you complete the entire tenure of deposit. Mutual Funds offer liquidity to the investors but with certain sets of terms and conditions.
There would be some penalty associated with pre-mature withdrawal of our fixed deposits, hence we would lose a chunk of our expected return. For mutual funds, after the minimum holding period is over the liquidity rate is high. However if we immediately withdraw after we invest that is within a year, then we are liable to pay an exit load cost of 1 percent.

Risk Factor
Fixed deposits are for investors with low risk appetite. However mutual funds are for people with high-risk appetite.

Investment Cost
There are certain costs associated with the mutual funds that we invest in, however fixed deposits do not levy any expense on the investor. The expense incurred depends on the kind of mutual fund that we choose. Liquid funds may have a low expense of up to 1% p.a., debt mutual funds may have anywhere between 0.5% p.a. to 2.25% p.a., and the expense of equity mutual funds may be up to 3% p.a. This expense is adjusted in your returns

Tax Scenario
We would all love to receive more amount of money post the tax returns from our investment
In case of mutual funds, you need not pay any long term capital gain tax on your investment in equity mutual funds
However for a short term gain, we need to pay taxes at 15 percent. The gains in long term investment in debt mutual funds are taxed at 20 percent with indexation and 10 percent without indexation. For liquid mutual funds, the tax is as per the tax slab.
Regardless of the tenure in fixed deposits, the interest that is earned in totality is taxable according to the tax slabs.

We have drawn a line of differentiation between Fixed deposits and Mutual funds. Hope this helps you out better with investment plans. Happy investing.

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Social Media Score can affect your credit score

We are aware of how vast and effective Social Media has become. In fact we owe our ability to be aware about what is going on to social media.
Social media has ceased to be just a platform for interacting and socialising. It is much more now.
Traditional verification to evaluate our monetary potential fails at times. Smart organisations have therefore found out these smarter ways to assess our abilities to pay back.
Credit agencies now assess your financial caliber on the basis of your social media existence and life.
For Lending platforms,having a good character value is critically important to them, because that is what allows them to have faith on our repaying ability.

There are many things that the credit agencies/bureaus look at before lowering or upping our credit score. Let’s jot down some primary elements that are considered by the credit agencies to grant or not grant loans.

1. Our lifestyles and daily routines can be well investigated through social media platforms like Facebook, Linkedin and Twitter.
2. They might look at whether we are into alcohol or drugs or at slightest of possibilities that can affect our ability to continue your job.
These results can potentially reduce our credit score
3. A pattern is cemented around our social behaviour on the basis of our activities and behaviour on social media. This is used to trace the ability in us to repay.
4. Our creditworthiness is judged through our two c’s on social media, they are: – contacts that we have and the contents that we post.
5. There are certain keywords encircled by the credit agencies. The profiles with words like wasted, trashed, smashed etc are scrutinised or put under the black list.
They might be potential defaulters in the eyes of the credit givers.
Posts that talk about Casinos, or the posts with ALL CAPS or that contain bad English are again looked at.
6. Our circle of friends is also encircled and pin pointed at in case of any doubts. So if there is anything off the road there, we might land up in their caution radar.
Most of the credit agencies utilise the social media for people who do not have a credit score, or have a very newly built credit history. This is also for people who have just migrated.
Also it is fair on the part of credit agencies to get acquainted with the borrower properly so that lending is a risk-free process for them.
We need to safeguard our creditworthiness by being cautious about what we post on our social media accounts. Also we need to discuss within our family and educate others about the potential decrease in the creditworthiness in case of a bad social media score

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Understanding Loan Repayment: A Comprehensive Guide

Have you ever looked at your loan statement and wondered, ‘How do I repay my personal loan faster without feeling broke every month?’ Well, you’re not the only one who feels like this. Most of us take loans at some point. Sometimes for emergencies, sometimes for big goals and then suddenly the EMIs start to feel heavier than expected. The stress usually kicks in not because the loan is bad, but because the repayments aren’t planned well.

The good news? You can actually take control of your EMIs, reduce your interest outgo and even shorten your loan tenure with a few smart tweaks. And none of these require big sacrifices. Curious how?
Let’s break down some simple, practical ways that genuinely help you repay your personal loan faster and feel financially lighter again.

1. Go for Bi-weekly Payments

One of the easiest ways to speed up loan repayment is by switching from monthly EMIs to bi-weekly payments. Instead of paying once a month, you make half your EMI every two weeks. This reduces your outstanding principal more frequently, which means you pay less interest over time.

Since your principal drops faster, your loan tenure also reduces naturally. Always check with your lender beforehand to ensure there are no restrictions or charges for increasing EMI frequency. If allowed, this method can help you close your loan much sooner without feeling a heavy financial impact.

2. Part-prepay your loan with every salary hike

Each time your salary increases, use a part of that hike to prepay your loan. Even small increases can make a big difference.

Allocate 4–5% of your salary hike towards increasing your EMI.

A higher EMI reduces your principal faster.

You end up saving a significant amount on interest.

Your loan tenure shortens naturally.

This strategy works well if your income grows steadily every year.

3. Refinance when you have many loans

If you’re handling multiple loans at once, refinancing can simplify your life and reduce your costs.

Take a new loan at a lower interest rate to close existing high-interest loans.

This helps reduce your overall debt burden.

You can also choose a shorter tenure for faster repayment.

It is effective if you have a stable income and a good repayment track record.

Refinancing often results in more manageable EMIs and reduced interest outflow.

4. Convert credit card dues to EMIs

Credit card interest rates are usually quite high and unpaid bills can quickly spiral into major debt. Converting dues to EMIs helps bring balance back to your finances.

Most credit card issuers allow conversion of large outstanding amounts into EMIs.

You can choose 6, 12, or even 24-month tenures based on comfort.

This reduces financial pressure and prevents late payment penalties.

It also helps protect your credit score.

EMI conversion makes big bills more manageable and predictable.

5. Bring in a wave of change in your lifestyle

Repayment becomes easier when your spending habits support your financial goals. Review your monthly expenses and identify areas where you can cut down like frequent online orders, entertainment subscriptions, impulse buys, or unnecessary travel.

Even a small reduction in lifestyle expenses can free up money for part-prepayments or increased EMIs. This not only helps you close your loan earlier but also prevents recurring debt cycles. Staying disciplined and avoiding late payments protects your credit score and keeps you financially stable in the long run.

FAQs on How to Repay a Loan Quickly

How to repay a loan faster?

To repay your loan quickly, you can shift to bi-weekly EMIs, increase EMI amounts after a salary hike, convert credit card dues to EMIs, refinance high-interest loans and control unnecessary expenses.

Will my interest reduce if I repay a personal loan early?

Yes. Whether you make a part-prepayment or foreclose your loan, the principal reduces, which lowers the total interest payable. However, always check if the lender applies any prepayment or foreclosure charges.