Employment & NRI Times

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August 29 - September 4, 2014
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E
mployees with a monthly salary
of over Rs 15,000 in their first
jobs would no longer be able to
contribute to the Employees Pension
Scheme (EPS) run by the provident
fund department.
The step is triggered by fears that
the hike in the salary ceiling for stat-
utory PF contributions to Rs 15,000
per month from Rs 6,500 per month,
would have a major adverse impact on
the Pension schemes financial viabil-
ity. According to the pension schemes
latest valuation, its unfunded liabil-
ity or deficit has shrunk by around Rs
51,000 crore from around Rs 62,000
crore in 2009 to around Rs 10,900 crore
in 2012. The schemes entry norms are
being tweaked to ensure that high-in-
come workers do not abuse the benefits
of a deficit-ridden scheme that enjoys a
subsidy from the central government.
The finance ministry has called for a
fresh valuation to assess the impact of
Union Minister for Food Processing Harsimrat Kaur Badal with CEO of
PepsiCo Indra Nooyi in New Delhi.
First salary cap of Rs 15,000 for EPS
the hike in the salary ceiling on PF con-
tributions and calibrating the schemes
benefits on the basis of a fresh valua-
tion. The last time the salary ceiling
was hiked, in 2001, from Rs 5,000 per
month to the present Rs 6,500 cap, the
pension schemes liabilities had jumped
by Rs 10,000 crore. Over 8.5 crore for-
mal sector employees have a Provident
Fund account, where 24pc of their sala-
ries is diverted to guarantee a lump
sum retirement nest-egg and a monthly
pension through the EPS. A little over
a third of this contribution (8.33pc of
salary) is parked in the EPS that was
launched in 1995 and is the only pen-
sion scheme in the world that defines
both contributions and benefits.
The government currently brings in
around Rs 1,200 crore a year into the
nearly Rs 2 lakh crore pension scheme,
contributing 1.16pc of every scheme
members salary up to the salary ceil-
ing. Less than 21pc of the schemes
beneficiaries get a monthly pension of
Rs 1,000 or more, with over a third get-
ting less than Rs 500. The government
has okayed a minimum pension under
the scheme to Rs 1,000 along with the
hike in the salary ceiling for statutory
PF contributions, but the finance min-
istry has set some stiff riders and con-
ditions before concurring.
The major changes being simultane-
ously introduced are designed to keep
out high income workers from availing
the pension scheme that currently of-
fers a pension linked to the salary paid
in their last 12 months in service.
Most importantly, the membership
of EPS is being restricted to persons
whose salary at the time of joining ser-
vice was less than Rs 15,000, the PF de-
partment has informed its board mem-
bers. If someones salary moves beyond
Rs 15,000 a month during the course of
their career, EPS contributions would
still be restricted to 8.33pc of Rs 15,000.
F
or all the premia one pays
throughout the term of a life in-
surance policy, the most crucial
responsibility is to ensure who will be
the beneficiary of the monetary relief
upon the death of the policyholder.
Considering that the purpose of
life insurance is primarily to provide
the benefit to the family of the policy-
holder after his death, it is crucial that
the details regarding the nominee are
clearly stated in the proposal form.
Serving as an instruction for the
insurer, a nomination simply clarifies
who the claim amount should be paid
to, in the unfortunate event of the poli-
cyholders death. In select cases, there
may be a possibility that in the absence
of a nomination, the policyholders fam-
ily members have to go through a lot
of hassles. Usually, the insurer would
call for a succession certificate or title-
holder from the claimant, which is is-
sued by the court of law. In most cases,
getting this certificate is a cumbersome
procedure, which can be avoided sim-
ply by taking care of it during the pro-
posal stage.
In the simplest of terms, a nominee
is the person proposed by the policy-
holder for receiving the claim amount
of the life insurance policy, upon his/
her death. It is important that the nom-
inee should have an insurable interest
in the life of the insured. Thus, insur-
ers insist on full details of the nominee
Significance of nomination
in life insurance cover
and relationship with the policyholder,
which needs to be mentioned clearly in
the proposal form.
An important rule of nomination is
that your nominee has to be a legal heir
or the nomination will not be valid.
This implies that the proceeds from the
insurance policy do not belong to the
nominee and he/she is only a custo-
dian of the same. The family members
who are eligible for nomination, as per
Indian Personal Law are ones parents,
spouse and children. While filling in
the nomination, you must give specific
names and particulars of your wife/
children/parents and refrain from men-
tioning them only as a category.
Minor nominee
In case the nominee is a minor, the
insured is required to appoint a custo-
dian to whom the claim amount would
be given till the appointed nominee
turns 18. You would need to mention
your childs date of birth; the name of
his/her natural guardian and the nature
of the relationship with the guardian
will also have to be specified. In some
cases, there can be a variance between
the nomination and will. In case you
have a will in which you have specified
the beneficiary of your insurance pro-
ceeds, the will takes precedence over
any nomination that might have been
made. A nomination is not a mode of
making an inheritance.
For better understanding, a nomina-
tion is like telling the company When
I die, please call person X and tell him
to collect the policy money from you.
Creating a will, on the other hand, is
saying that This asset should finally go
to person Y. Here person X and Y can
be same or different, as you choose.
If the nominee dies?
* Inform the nominee or any other
member of your family about the poli-
cy and the nomination so that they can
make the best use of the sum assured
in your absence. * In the unfortunate
event of the nominees death during
the term of the policy, it is important
that a new nominee is appointed. This
needs to be done by informing the in-
surer of the alternate/new nominee.
* A situation of multiple nominees is
normally a complicated one and could
end up as a legal dispute too. Since the
insurer would prefer to hand over the
entire claim amount to only one of the
nominees on getting consent from oth-
er nominees for doing so, the dispute
could come in terms of submission of
such consent among the various nomi-
nees. *n In case there is more than
one legal heir, the insurer will call for
a joint discharge statement, waiver of
legal evidence and an indemnity bond.
These documents safeguard the insur-
ers interest, in case of any dispute on
settlement of the claim.
Is NRO account taxable ?
What are the tax implications of open-
ing and maintaining a non-resident
ordinary (NRO) account?
Interest earned from deposits in
NRO account is taxable in India. Fur-
ther, such an amount would be subject
to tax deduction at source in India.
Nevertheless, you may be eligible to
claim any benefits that may be avail-
able under the Double Taxation Avoid-
ance Agreement (DTAA) which India
might have entered into with the coun-
try of which you are a tax resident. You
may consult your tax adviser for fur-
ther guidance.
What are the consequences of an NRI
not filing return of income?
Any person who is required to file
return of income but has not done so
would be subject to the following con-
sequences: -Pay interest at the rate of
one per cent for every month or part
of a month starting from the date im-
mediately following the due date and
ending on the date of filing the return
of income or where the return is not
furnished, ending on the date of com-
pletion of assessment. Interest would
be payable on the amount of tax on the
total income that is due after giving
credit to advance tax, tax deducted at
source, relief (if any) under the appli-
cable DTAA and so on, losses (if any)
will cease and the NRI will not be able
to carry forward and set-off such losses;
Penalty for concealment of particulars
of ones income which may extend up
to three times the tax sought to be evad-
ed; Penalty of Rs.5,000 for not filing the
return of income by end of the relevant
assessment year and if the failure to file
the return of income is willful, then the
assessee could be punished in the fol-
lowing ways: a) In case the tax sought
to be evaded exceeds Rs.25,000, with
rigorous imprisonment for a term not
less than six months but which may
extend to seven years and with fine; b)
In any other case, with imprisonment
N
ew Zealand has emerged as a popular destination for Indian students.
There was an increase of 83 pc in the number of student visas issued to
Indians between January and July this year compared with the same pe-
riod last year, New Zealand High Commissioner to India Grahame Morton said.
According to latest figures released by the state-run Education New Zealand
(ENZ) department, first-time student visas issued to Indians for studying in that
country shot up by a staggering 123pc in 2014. New Zealands economic future
is very much linked to our key relationships. India is a major export market for
New Zealand and is one of the fastest growing large economies in the world,
Morton remarked. In 2013, about 11,984 Indian students were studying in New
Zealand, representing a 12pc chunk of the international student population in
that country. This year, the first-time student visas shot up by 123pc or 4,195 be-
tween January and July while the total student visas (first timers and renewals)
increased by 83pc compared with the same period last year. In the past 10 years,
there has been a 700pc increase in Indian students preferring to pursue academ-
ics in New Zealand. Management and commerce (38pc ) were the top favourites
among Indian students, followed by IT (15pc), engineering and health (10pc).
ENZ regional director Ziena Jalil said education fairs would be held in Indian cit-
ies. Immigration New Zealand area manager Nathanael Mackay said the country
has made changes to its work rights programme which permit more international
students to earn and learn. Besides, there are a range of scholarships for people
interested in studying there, including the recently-announced New Zealand-
India Sports Scholarships.
for a term which shall not be less than
three months but which may extend to
two years and with fine. However, if
the return is furnished before the ex-
piry of the assessment year or the tax
payable does not exceed Rs.3,000, then
the person will not be subject to the
prosecution provisions.
T
ata AIG General Insurance Com-
pany has launched three new
health insurance products--Me-
diPlus, MediSenior and MediRaksha.
While MediPlus is a smart and af-
fordable top-up health policy, MediS-
enior is a health cover for senior cus-
tomers ( above 60) and MediRaksha is
a basic medical insurance plan aimed
at residents in the semi-urban and ru-
ral locations and for the
economically backward sec-
tions. With the ever-rising
costs of healthcare services
and rising inflation, senior
citizens are grappling to
keep up with basic medical
expenses.
These new plans are
a comprehensive offering
with a unique set of features
that distinguishes itself from the exist-
ing gamut of health insurance products
currently available for all, Tata AIG
General Insurance CEO KK Mishra re-
vealed.
With empathy and trust being the
hallmark of the company, we will con-
tinue to provide world class services in
health and mediclaim space, he added.
Tata AIG launches unique health policies
The policy offers a waiver of deduct-
ible feature, which allows the customer
to migrate to the private sector general
insurers full-fledged indemnity-based
health insurance policy (without any
deductible) for an insured sum of Rs
5 lakh during his/her retirement years
between 58 and 60.
This feature is available to all cus-
tomers who hold/held a medical policy
from the company before
the age of 50. The entry age
for MediSenior is 61 years
and there is no restriction
on the maximum age at en-
try. MediSenior provides
comprehensive coverage
against in-patient hospitali-
sation, pre- and post- hos-
pitalisation, daycare pro-
cedures, domiciliary and
organ donor expenses, emergency am-
bulance.
Policy holders can use the cash-
less claim settlement across an exten-
sive network of hospitals, Mishra said.
MediRaksha, is a cover specifically de-
signed for tier two and three markets
or for those who fall under the lower
income class of society.
S
howering accolades on the tech-
nology prowess and start-up eco-
system prevalent in Bangalore,
British Deputy Prime Minister Nick
Clegg inaugurated the UK India Business
Councils (UKIBC) Bangalore centre.
This centre will be an invaluable
resource for any UK company looking
to realise their full potential in this in-
credible market. It will bring together
the very best expertise and business
support under one roof, he said. Clegg
praised the Indian voters who brought
about a regime change in the country
with their aspiration for change. It
is a recipe for change. Besides having
long historical ties, UK is currently the
largest investor among the G20 coun-
tries, he said. Joining hands of these
two great countries will bring out path-
breaking products and services for bil-
lions of people, he said.
The centre will deliver a range of ser-
vices and policy advice to build trade
and investment ties between the UK
UK Dy PM opens UKIBC centre
and South India. It will assist UK com-
panies to connect with local businesses
keen to work with British companies.
Besides providing support, advice and
networking for UK businesses across
sectors, UKIBCs Bangalore centre will
impart focus on tech-rich sectors.
The UKIBC Bangalore centre will
also host TechHub, the UK headquar-
tered international startup network,
which will give a unique co-working en-
vironment to catalyse technology start-
ups. Addressing the gathering, TechHub
Global Project Director Andrew Tibbitts
said: Our mission is to bridge the phys-
ical distance between each TechHub
and give our start-up members and cor-
porate partners access to the brightest
minds and ideas in the field.
If a company isnt taking advantage
of the Indian market, theyre missing
out on one of the largest emerging tech-
nology markets in the world and the
incredible R&D experience and innova-
tion possibilities it affords, he said.
NZ popular with Indian students