How to improve your CIBIL or Credit score

 

How to improve your CIBIL or Credit score

Business and personal needs drive a person to reach out for a loan. But getting loan is not an easy task as it seems. You need to have a good credit rating for getting a loan apart from your financial stability. The biggest fact about this lending industry, which I have learned in all these years of my experience. Is that loan is not provided to the needy, it is provided to the greedy. One who has the capability to repay it. Apart from your financial papers, net worth calculation, income proof, CMA and income source, the think which plays a crucial role in the sanction and approval of your loan is your “CREDIT SCORE”.

You must have seen or evident many occasions where you come across the testing of your Credit Score like, “Get your Credit Score” or “Test your Credit Score”. Many of you must have got your loan application rejected or declined due to poor credit score. Now the biggest question which is right now popping in your mind is, “what is the Credit Score”, “Why is it so important for loan approval” and “how to improve it” etc.

Credit Score or CIBIL

Credit Score is the rating provided by a credit bureau which denoted your credit worthiness and potential to repay the loan or debt. It provides the estimate to the bank or financial institution about your capability to repay their loans. It’s a three digit score. It ranges from 300 to 900. The higher your score is, the better your rating and chances to get the loan sanctioned. In India mostly credit score is been addressed as CIBIL or CIBIL Score which is not official correct but due to daily practices it’s apparently considered correct. In India there are four concerns or in correct words, bureaus authorized by RBI (Reserve Bank of India) to provide credit score. Credit Information Bureau (India) Limited [CIBIL] is one of the most preferred credit bureau that is the reason why credit score in India is referred as CIBIL Score or CIBIL.

Credit score is only for individuals or persons. For others like company, firm, business entity and even including individuals the credit analysis is called as credit rating.

Anybody can check their credit score from various websites available.

Importance & Benefits of Credit Score

A good Credit Score provides many privileges and benefits to an individual. Every finance seeker desires to have a high Credit Score. A credit score above 700-750 is considered good score. The importance and benefits of high credit score are :-

1. Easy loan sanction – the people with good credit score gets the loan sanctioned easily. The loan sanction process starts with the checking of credit score. A person with good credit score has the higher chances of getting the loan application approved and loan sanctioned. A bad credit scope gets the loan application rejected right at the face.

2. Get low interest rates – the person with good credit rating may get competitively low interest rate as the banks and financial institutions try to capture the prospective client. A person with good credit rating has a high negotiating power to negotiate and lower their interest charging rates.

3. Charges waiver or decrease – the person with good credit rating may get financial charges and other charges waiver or decrease which results in financial cost saving in complete life cycle of loan. Even such category of persons may also negotiate with the bank or financial institution to waive their charges.

4. Lower processing Fee – the person with good credit rating may lower or decrease the processing fee over their loan after negotiation.

5. Higher and more rewards – In case of credit card, the person with better credit rating gets more rewards likes cashback, discount, coupons etc.

Credit Rating Issuers

In India, credit rating is provided by four Bureaus authorised by RBI (Reserve Bank of India). We will not go in detail about these Bureaus.

1.    Credit Information Bureau (India) Limited (CIBIL)

2.    Equifax

3.    Experian

4.    CRIF High Mark

How to improve Credit Rating

This is the most crucial part to discuss. With the help of this knowledge anybody can improve their credit rating. The following will help to improve your credit rating:-

1. Use credit card regularly – If you have credit card use it regularly. If credit card is not used properly then the credit rating is affected as it shows low financial needs and utilisation.

Here is a trick to show your credit card limit usage. If you are not using credit card for shopping or other lucrative purchases, pay your routine bills by your credit cards and get its usage reflection in records.

2. Pay you loans and credits before due date – Pay your loans and credit cards dues a little before their due dates. It reflects the healthy money flow. And holding the payment till the last date degrades your credit track record.

3. Don’t check score frequently – Mostly it is recommended to check your credit score frequently but I have seen in the past that individuals with poor credit score use to frequently check there credit score and it resulted in further decreasing their credit score. So if your credit rating is low don’t check it very frequently. First build a little sound investment record and then check at least after 6-8 months. For better results try to file a good income tax return in the mean while time (between this 6-8 months gap).

4. Diversify your investment portfolio – As now a day’s your investments accounts are linked with Aadhar, your investment details are available at a common pool for access to authorised authorities like credit bureaus. People with diversify investment portfolio have better credit scores always. So just won’t keep your investments in fixed deposits or saving accounts but diversify. Purchase shares, securities, bonds, mutual funds other than just solid assets like real estate. 

Here is a way to easily improve your credit score. This is from my personal experience, I have tried this on my clients and it does provide a positive result. If are very conservative towards your investment plans, just go for this plan to improve your credit score. Create few FDs’ (Fixed Deposits) with a maturity period of 2 years or more and few RDs’ (Recurring Deposits) with a maturity period of 1 year more. These investments should show a composition of 20%-30% of your annual earning at least.  Wait for 6-8 months and then check credit score. The reason behind this is that your asset base or in other words your net worth reflects your good financial health and credit worthiness. So the credit score improves. 

5. Regular Income Tax Return filing – Income Tax Return is the source of financial record for every authority like  Income Tax and credit rating bureaus. The financial records are traced by these bureaus from the income tax returns filed by you. People with no income tax return filing record mostly have poor credit rating.

6. Longevity of Credit life – People with sound and long credit life record like running term loans in the past and timely payments, have better credit score. Take your credit usage and repayment seriously. And if you are not getting long term loan funds then try to get short term small credits for your various usages which will start building your credit usage track record.

7. Avoid defaults – Bank and financial institutions stay away from defaulters. Yes it is obvious that no one knowingly does any default but many times our ill-planned financial cycle or calendar invites payment default. Always run with cover transaction to ensure fund availability for loan payment on due date.

8. Get a credit card – Yes it is correct. Your credit card can help you to get a good credit score. So if you won’t have a credit card get one soon. As it is evident that people with credit card and its good track record have good credit worthiness.

9. Balanced Credit Mix – It is important to even diversify and maintain your credit portfolio. Have a balanced loan structure which reflect an appropriate usage and finance cost maintenance (interest and charges). Use long term funds for long term usage and short term for short term usage. Use specialized fund for specific purpose, like home loan for housing finance etc. All this builds a good credit score.

 

Do’s and Don’ts

In case of building an attractive Credit score. You should :-

Do’s

- Have a credit card.

- File income tax return regularly.

- Diversify your Investment and loan (Credit) profile.

- Keep Loan defaults at bay.

- Check your credit score atleast once in every Six Month.

Don’ts

- Avoid late payment of loan installments.

- In case of default, negotiate with your lender to have an out of court settlement & avoid to be listed in defaulters list.

- Don’ts associate yourself in joint loans with financially unsound individuals and entities.

- Avoid providing guarantee for financially unsound individuals and entities.

- Avoid getting to many loans.

Here is my best try to provide you the information about credit score and ways to improve it from my experience and knowledge. Friends I‘am putting my strongest efforts to provide you all the details in simplest language, please show your support and follow my blog. Do share with your friends and family to spread the knowledge.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

Flipkart Pay later - benefits, uses and activation

 

Flipkart Pay later : benefits, uses and activation process

Managing finances is a day to day activity now a day. As the inflation is rising worldwide, people are looking for alternative ways to plan their monthly bill payments. There is limit in everyone’s purchasing power but certain unalarmed needs knock everyone’s door now and then.

Diwali is at its arrival and we are all geared with our shopping list. Diwali is the biggest festival in India. Festival season is something which add lots of gifts to our shopping basket always and deep down in our minds everyone wants festivals to be full of gifts, sweets, new cloths and latest products. But the question is, “How to get the extra money to pay” or "Loan & credit to pay".

Look honestly not all of us have any access to any credit facility like short term loans, credit cards etc. And no want to bear the exhausting, complicated, time taking process of loan approval. Loan approval in itself requires a lot of paper work which is not a cup of tea for a common person like a student or a homemaker. In addition to this, short term loans and credit facilities (like Credit Cards) require paying charges and interests on regular basis.

So here I’am with an easy solution for all these issues. We are all now very much familiar with online shopping and e-commerce platforms. So why not to use these platform facilities to plan our finances. Flipkart  is out with a very useful feature of “Flipkart Pay Later”. Its quite old now but still, people are not much aware of it and its benefits.

Flipkart Pay later

Flipkart Pay Later is a kind of credit facility or loan facility offered by flipkart in association with IDFC First Bank, in which you can pay after the purchase of your product. The payment system is basically of two different types i.e. single payment in the subsequent month (Pay Next Month) or EMI payment. Flipkart Pay Later (EMI) is currently available for select products where transaction amount is greater than ₹ 2,500.

This facility can also be used with their partner platforms such as Myntra and 2GUD. Flipkart Pay Later (EMI) is not available on their partner platforms. But my main emphases is over  Pay Next Month because it does not charge any interest.

No interest, hidden Charges and processing fee

The best think about Flipkart Pay Later in that it won’t charge you any processing fee and interest for the facility. Flipkart Pay Later (EMI) does incorporate interest element in its EMI (every month installment) but in Pay Next Month there is no interest charged. There is a nominal usage fee of ₹10/- will be added to the customer’s dues if the credit usage for the month is higher than ₹1,000/-.

Benefits

1. Instant credit upto ₹ 70,000.
2. Few minutes application processing time.
3. No documentation i.e. e-KYC ( Electronic Know Your Customer)
4. Credit for a month without any charge (except ₹ 10) like annual maintenances, service charge, interest charge etc.
5. Affordable EMI without any loan approval or credit approval process.
6. Easy adjustment of refunds on cancellations from dues payable.
7. One bill payment of all purchases made last month or previous months. So individual record keeping.
8. Any time cancellation or surrender of the facility after payment of all dues.
9. 24*7 customer support.

Penalty

We talked about all the pros, now is the point to discuss the cons. As it is a financial credit or loan so conclusively in case of default, there will some penalty too. Penalty will be charges if you defaulted to pay or failed to pay the due amount or minimum amount due (partial payment). Penalty will be calculated on the outstanding dues (includes outstanding principal amount, interest or late payment panality) as on 5th of each month.

Bill Amount (in ₹)                     Late Payment Charge Amount (in ₹) 

100-500                                                60    

501-1000                                            125    

1001-2000                                          175

2001-4000                                          300

4001-5000                                          410

5000 & Above                                     600

Minimum amount due is the sum total of "10% of your Pay Later purchases" plus "Convenience fee for the partial payment option" plus "Any rolled over (or unpaid) amount from the previous month(s)" plus "Any late payment charges from the previous month(s)".

Convenience fee is calculated on the amount you carry forward to the next month.

Carry Forward amount to next month	Convenience Fee for Partial Payment	Late Payment Charges for payments after the due date
<= ₹ 500	₹ 60	₹ 60
₹ 501 - ₹ 1000	₹ 60	₹ 125
₹ 1001 - ₹ 2000	₹ 120	₹ 175
₹ 2001 - ₹ 4000	₹ 240	₹ 300
₹ 4001 - ₹ 5000	₹ 330	₹ 410
₹ 5000 & above	₹ 475	₹ 600

Note : all charges are inclusive of all taxes

How to Avail and due payments

One can activate Flipkart Pay Later by Aadhaar OTP-based e-KYC (Electronic Know your client) which is valid only for 12 months from the date of activating your Pay Later account.

For this you have of to visit the Flipkart Pay Later section under 'My Account' and refer to the ‘Pay Later’ section in the Flipkart mobile Application or website.

The due payments are to be done by the 5th of the subsequent month(s).

How to activate

It is a three stage process. First stage is the Pan Activation. Second stage is the Aadhaar OTP-based e-KYC. Last stage is the Bank confirmation.

Step 1 : In the Flipkart App or website. Login and go to Pay Later section under 'My Account'  or simply you can search Flipkart Pay Later over the search bar provided in the Flipkart App or website.

Step 2 : Enter your PAN (Permanent Account No). Click on “Activate Now” button.

Step 3 : Verify Aadhaar : Fill in your Aadhaar no and verify by the OTP received in the registered mobile with Aadhaar. Click on “Verify” button.

Step 4 : Fill in the OTP (one time password) in the pop up dialogue box.

Step 5 : Review and submit your application. Check your details, name, address etc.

Step 6 : Verify your Bank account by filing your UPI Id or Bank Details. Click on “Confirm and Submit” button.

Step 7 : Rupee one will be credited in your bank account linked with Aadhaar.

Step 8 : Your eligibility will be checked.

Step 9 : Now your will be informed about your credit limit for Flipkart Pay later (Pay Next Month).

There is also a offer on the first purchase by using Flipkart Pay Later, you can get 15% off subject to the maximum of ₹150/-.

If you want to see the complete process, then you can visit the my youtube link : https://youtu.be/FxYMP4onRek

For Flipkart Pay Later (EMI) your have to check on individual product eligible for it and then proceed. For more details you can visit Flipkart official website and mobile application. I hope this blog helps you out to finance your Diwali shopping plans. I tried best to provide you the best information.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

 

How to Check Income Tax Refund Status

Waiting is always tiring. In this covid pandemic scenario people are worried about there income tax refund a lot. As the refunds are coming at snail speed, the anxiety among assesee is increasing day by day. Many a times it is really annoying to call consultants and tax associates to asks for the refund update. I have been regularly receiving calls from people asking about there refund status for F.Y. 2019-20. With this blog I would like to share the process through which anybody can know about his income tax refund in a very simple and easy process. Will explain you the related facts and process in the most simplest way so that a common person can very easily understand.

Dear friends I try to provide you the best details and information, this require research and time. Your support and love provide me encouragement to keep on doing this. Please show your love and support by liking and sharing by blogs. Please don’t forget to follow my blog to so that we can stay connected.

If you wish to see the complete process of finding the income tax refund status with live example go to the video link :  https://youtu.be/n-_dWBgnOd0

What is Income Tax Refund ?

In simple words, Income tax is a statutory liability of the citizen of the country towards government for earning income, which accrue or arise by any source within the country. Against the income arising in the country the income earner (called as assessee) has to pay tax to the government.

“TDS” stands for tax deducted at source and “TCS” stands for tax collected at source.  As per respective provision of the Income Tax act, the payer of the income has to deduct tax from the earning of the payee on behalf of assesee (payee) and deposit it to the government in the form of TDS. TCS is a tax collected by the seller of specified commodities (specified in the Income Tax Act) and paid to the government. I will do come out with a separate blog over TDS and TCS very soon as it a huge topic to cover and explain.

The assessee whose income is subject to TDS and TCS, if does not have a taxable income files income tax return and claim the tax deducted for the financial year in return from the government.  This claiming of excess tax deducted from the income of the assessee in return is called as Income Tax Refund.

How to get Income Tax Refund ?

In order to get your income tax refund you have to file your income tax return for the financial year.

How to Check Income Tax Refund Status ?

After filing your income tax return when the refund is issued can be seen by tracking Income Tax Refund Status. You can do so by following the below simple process :-

Step 1 : Go to www.tin-nsdl.com

Step 2 : Service Menu

At the home page, go to the menu bar and click over “Services” menu.

Step 3 : Status of Tax Refunds Menu

From the Drop-down Menu, Select “Status of Tax Refunds” and wait for the next page to appear.

Step 4 : Status Tax Refund

From the page appearing on the screen. Go to “Status Tax Refunds” and click over “Refund Tracking”. And wait for the page to appear.

Step 5 : Refund Tracking

From the Refund Tracking screen. Go to Taxpayer Refund (PAN) and click over “Proceed”

As we are tracking our own refund status and we are tax payer that is why we are selecting the respective option. And additionally we are tracking our Refund on the basis of PAN (Permanent Account number) so it’s a PAN base search.

Step 6 : Fill in PAN no and Assessment Year

In the “Refund Tracking” screen, fill in your PAN no and Assessment Year. Assessment year should be the one for which you want to know the refund status.

Now, fill in the Captcha Code in the space provided. Fill the Captcha code same as it is shown at the time. Putin the no and alphabets as they are appearing, like be very careful about form of letter i.e. they are capital letter and small letter. As the Captcha code is case sensitive.

Click over “Proceed”

Step 7 : Status of Income Tax Refund

Your Status of Income Tax Refund will be shown. It will mention :

1. PAN – It will show your PAN.

2. Assessment Year - Assessment Year for which Income Tax Refund status is shown.

3. MODE of payment – It will show mode of payment :

        > Direct Credit – this means direct credit to your bank account linked with PAN.

        > NECS – National Electronic Clearing Services is electronic fund transfer.      

4. Reference no -  It the refund transaction reference no.

5. Status – This shows the exact status of refund with additional comments. It mostly have following comments :

I. Refund is already credited to your bank, please contact your bank

II. Account has been closed - Electronic credit rejected by the bank of the assessee as the account number provided to the ITD has been closed. Contact your assessing officer for change in account details and fresh release of refund

III. Account has been closed - Electronic credit rejected by the bank of the assessee as the account number provided to the ITD has been closed. Contact your assessing officer for change in account details and fresh release of refund

6. Account -  It is the account to which refund is transferred. This is the bank account linked with PAN and chosen for refund purpose (if more then one).

7. Date -  It is the date on which refund is provided to you. This will be the date of transfer of refund to your bank account.

This is how you can check your income tax refund status. Don’t forget to like, subscribe my blog. Do share with friends and family the useful information. 

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

How to do Income Tax Return Filing for Salaried Persons by Own

Today I'am going to share with you all, how to file your Income Tax Return if you are salaried person. As we all are well aware that the last date for Income Tax Return filling for the financial year 2018-2019 is 31 August 2019. Many of us are still in hassle for filing there income tax return for F.Y. 2018-2019. I'am going to share simple and easy way to file your income tax return by your own-self without hiring a Chartered Accountant or Income Tax Consultant. But before starting this, you should have a clear idea about the different sources of Income you are earning.

As the title says very clearly, its "for salaried person". But if in addition to your salary you have, income from one house property & income from other sources and Agricultural Income upto Rs.5 thousand; and your total income is  upto Rs. 50 Lakhs then this blog is still useful for you. 

There are many website which provide you facility for filing income tax return for free like www.cleartax.in etc. but I personally use, prefer and recommend our government website for the same. So we will be talking about Income Return filling from our government website https://www.incometaxindiaefiling.gov.in/home.

I will be dividing the discussion in three segment :-
1) Salaried Employees having Form 16 (TDS Deducted by Employer)
2) Salaried Employees not having Form 16 (TDS Deducted by Employer)
3) Salaried Employees with Income under Exemption limit (Rs. 2,50,000 having age less than 60 years, Rs. 3,00,000 for age 60-79 years, Rs. 5,00,000 for age 80 years or more, on the last day of the relevant previous year, etc.)

Segment 1 - Having Form 16

You are in the most comfortable segment. As the details which you had provided to your employer regarding income and deduction must have been considered duly. And automatically filled (auto generated) in the Form while online filing. On the other hand if you missed any details of income and deduction then you can show the same in your return and claim TDS refund. You can use Form 16 for filing the details of your income in respective places. As Form 16 is in a standard format which shows all details like Gross Salary, HRA (House rent allowance) Deduction, Professional Tax deducted, Other perquisites provided, deductions under Sec. 80C-80D etc. To increase your ease ask for "Form 16" from Employer. For filling the return keep reading.

Segment 2- Not having Form 16

If you are not having "Form 16" then also. "do not worry". Just go with your income details and idea about investments and deductions. Remember key details to file the return i.e. gross salary, HRA (House rent allowance), Travelling allowance and other allowances & perquisites provided by employer and there deductions & exemptions. Remember about standard deduction provided from salary under Section 16(ia) of Rs. 50,000 (F.Y. 2022-23, now limit amended) to be claimed. Fill in your deductions under Sec. 80C-80D etc. Now most important get your TDS details from 26 AS available in account registered with website https://www.incometaxindiaefiling.gov.in/home.

Segment 3- Income under Exemption limit

Under this, the persons having total income under exemption limit after all deduction and rebate will come. The have to fill there gross salary, HRA (House rent allowance), Travelling allowance and other allowances & perquisites provided by employer and there deductions & exemptions. Remember about standard deduction provided from salary under Section 16(ia) of Rs. 50,000 (F.Y. 2022-23, now limit amended) to be claimed. Fill in your deductions under Sec. 80C-80D etc.

Filing of Income Tax Return will be in ITR 1 for all the above segments. I will be telling you the most easiest and simplest process. All the process which is completely working online over screen. You have to fill ITR form online, Submit it and E-Verify. And your Income Tax Return is uploaded. There are three methods for E-verification of Income Tax Return, but the one I'am telling is the simplest and quiet. For E-verifying the return we should generate OTP (ONE TIME PASSWORD) from the mobile no linked with aadhar. The process is explained below : 

Now sit back and relax for an year.

Please leave your valuable comments. And if you want me to write on a particular topic, do let me know.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. It has no connection with the websites mentioned in its contents. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.