Archive for the ‘Finance’ Category

Buying a used car? Check the documents

used_carThe pre-owned car market is brimming with choices. Unfortunately, this semiorganised market is also teeming with unscrupulous sellers. So, if you don’t want to be taken for a ride, check the vehicle’s paperwork thoroughly. Besides, make sure that the seller informs the regional transport office (RTO) where the car was registered about the sale within 14 days of buying the vehicle. Here’s a list of documents that you should demand from the seller before finalising the deal.

Whether you’re buying a used car from an individual, a dealer or an auto company , the following documents are mandatory.

Registration certificate:

The RC is the most important document and provides vital information about the car, including its chassis nu m b e r and engine number. You need to check the state in which the car has b e e nregistered. If you plan to drive it to another state, you will have to get the registration done there. Since it’s a time-consuming process, most people avoid it but it can lead to problems in case you meet with an accident .

If the car is very old or was involved in a major accident, the engine may have been changed, so ensure that the RC has the new number. Also, verify that the acronym DRC does not appear on the certificate since it translates into duplicate registration certificate. If it does, ask the seller for the reason.


Get the insurance transferred to your name, otherwise it will be tough to process a claim in case of an accident. While transferring the policy, check if the premium has been paid regularly, the expiry date of the policy and if insurance has ever been claimed. The latter will help you know whether the vehicle was involved in an accident. Also find out if the car has a third-party or comprehensive insurance.

If the insurance has expired or is due to be renewed soon, you could bargain with the seller for reducing the price of the vehicle. “However, the buyer should get a third-party insurance immediately. With car insurance companies clamouring to woo customers, this should not be much of an issue unless the car is more than 15 years old.

Form 32 & 35:

You will need these documents if the previous owner had taken a loan to purchase the car. Before buying, ask the seller to give you a copy of the no-objection certificate from the finance company, which will clarify that the entire loan has been paid off. If you don’t take care of this detail, you could land in a soup. For, after you take possession of the car and the registration certificate is transferred in your name, the lender may ask you as the new owner to pay the pending loan.

Service book:

You should go through the service history of the vehicle, since it will reveal to you the condition of the car. A vehicle that has been serviced on time and through authorised centres will be in a better running condition than one that has been serviced infrequently.

Road tax receipt:

This tax is a one-time payment, which should ideally be paid by the first owner of the car when he registers the vehicle. If it hasn’t been paid, the penalty can run into lakhs of rupees over time, and you, as the new owner, will have to bear this financial burden. The tax varies among states and ranges from 2-18 %, so you should ensure that the seller provides you a receipt for the tax paid.

Car purchase invoice:

A dealer or a company will provide you a printed bill along with the car. However, this may not be possible if you are purchasing the car from an individual. “In such a case, you can demand a sale receipt from the seller.
Dual fuel certification for retro fitment:

If the car has been modified to run on two types of fuels, ask the seller for the dual fuel certification, as well as an NOC from the RTO, which certifies that the vehicle can run on both fuels. The retro fitment is a replaceable piece in the vehicle and has a guarantee of five years from the time it is installed, so you must ask the seller for its sale receipt too.

Who is a better seller?


Though looking for an individual buyer is time-consuming and cumbersome, it can help you get the best deal since no middleman is involved. Povaiah says, “It is laborious, but you can get the car at a lesser price. You will also be sure that what you see is what you get, with hardly any tinkering done to the vehicle.” However, a good idea will be to take a trusted mechanic along with you while checking the car. He will be able to ensure that you are not sold a lemon.

Pre-owned car dealer:

Buying from a dealer is less cumbersome as he takes care of the transfer of insurance and RC in the name of the new owner . However, verify that you are purchasing directly from the car owner and that the vehicle has not been transferred in the name of the dealer. “If the car is in the name of the dealer, who has bought it from the original owner, purchasing it will make you the third owner. This will reduce the resale value of the car,” advises Povaiah. You must also enquire if the dealer provides a warranty for the car. While some don’t , there are a few who offer a warranty of six months to one year.

Car company:

Almost all auto companies have their own pre-owned car outlets. Maruti Suzuki has True Value, Mahindra & Mahindra has First Choice, while Hyundai has First Advantage. Even four wheelers in the luxury space have a share in the burgeoning used car market in the country. Mercedes has Proven Exclusivity, while BMW owns Premium Selection.

Buying a pre-owned car from the auto company is probably the safest and easiest option since all the checks and documentation are done thoroughly by the company, which means that it will require minimum overseeing by you. Not only is the car serviced properly before being sold, but the company will also offer a warranty up to one year and 1-3 free servicings. Another advantage is that in case of any issue, you have an assured place to address your grievance. However, this convenience comes at a premium. If your existing car is from the same company, you could opt for an exchange offer and avail of a bonus.

Courtesy: TOI

Categories: Finance

Tax Exemptions

September 16, 2010 Leave a comment

These are some income, which do not come under the purview of Income Tax. If your income comes from these resources, you need not worry on the tax front.

1-Agriculture or any related work does not come under income tax boundary. If your father is a farmer and he gifts you a part of his income , then you don’t have to file tax returns with the condition that your father files tax return.

2-If you are a partner in the firm and its tax has been determined, then you will not be levied with any tax for the income from this firm. However, according to the Partnership Deed, your share of the amount of Profit would be taxable.

3-Any income upto Rs 5,000 (excluding prize money) that is not regular, can be reduced from your total income.

4-The money offered by your Company to you to roam along with your entire family anywhere in India, also covers the tax exemption limit. This claim can be made twice in 4 years.

5-Family includes your wife, children, parents, brother and sister (if both of these are dependent on you). However, if IT department enquires regarding this, then you have present original bills to support this.

6-The money that is result of any pension or death cum retirement gratuity scheme for an individual or his widow or his children or any of his dependent is eligible for tax exemption.
The gratuity money is calculated by multiplying the total years of service with half the amount of the average salary of previous ten months.

7-At the time of retirement if you accept cash in exchange for the rest of your vacation, then in this case also, there is no tax on this cash (applicable only for central/state government employees). Apart from government employees, the maximum period to encash the holidays is 10 months with the condition that each year the number of such holidays should not exceed 30.

8-In case of closure of the company, if you get something as compensation, then ypu need not have to bear the burden of income tax. VRS(voluntary retirement) money up to 5 million is also exempted from tax. Though the company offering VRS must have a structure for VRS as proposed by the Government.

9-Any kind of gain (including bonuses) from Life Insurance is not to be considered while calculating the total taxable income.

10- Any type of amount from Provident Fund which is valid under the PF Act and any kind of government PF fund covers the tax discount boundary.

11- If your company is paying your rent, this amount will not be taxable. However, if its your own house, then this rule does not apply.

12-Security Bond, Savings certificate or any type of investment issued by the Central Government get exemption benefits.

13-If you receive an award from an institution in the form of cash and it is the institution recognized by the Central or State Government, then you will get tax exemption benefit on this amount.

14-If you donate for PM’s Relief Fund, Student Fund or communal harmony Foundation Fund, this amount will be completely tax free.

Categories: Finance

Before you file your tax return

Every year we go through the tough task of compiling various documents required for preparing and filing our tax returns. Timely and meticulous planning on your part, however, can make this task easier for you.

After all, filing of tax return is compulsory for everyone whose gross total income exceeds the basic exemption limit, which is Rs 1.90 lakh for women below 65 years of age, Rs 2.40 for senior citizens and Rs 1.60 lakh for any other individual, for the financial year 2009-10 (ie for income earned between April 2009 and March 2010).

Some of us might have already finished our filings and can take it easy for now. For the rest, however, here’s a list of key points to be considered to ensure that tax returns are filed correctly and on time:

1. Due date for filing tax returns: The due date for filing the tax returns for financial year 2009-10 in case of individual tax payers (who generally get salary income) is July 31, 2010. The due date could be September 30, 2010 in case of individuals carrying on business, subject to certain additional conditions.

2. Documents to be compiled: The current tax return doesn’t require any documents to be annexed. However, in order to determine your own income, the following documents will be helpful. These documents will also help if any questioning comes up by the tax officer at a later stage.

Form 16: This is the certificate issued by an employer and helps the individual to know his salary income for the year and tax deducted by the employer.

Form 16A: It’s a certificate issued by banks, companies and other parties providing a summary of interest, rent, commission, professional fees, etc, paid to an individual during the year. Form 16A also provides a summary of tax deducted on such payments.

Bank statements/ passbook: Analysis of statements of accounts operated during the year will help collate / reconcile the details of income received, investments made during the year.

House property details: In case you have income from let out house property, copies of lease deed, details of rent received and receipts of municipal tax paid during year would be required to compute your income. In addition, if you have taken a housing loan, a certificate from the lending bank specifying the principal and interest payment during the year would also be needed to compute the exemptions.

Bills / Contract notes in respect of shares purchased or sold: You may find it comfortable to prepare a statement of sale and corresponding purchases of shares and other investments. This will help in arriving at the correct amount of long term/short term capital gain or loss. Your statement of demat account should help in case of investments made through such account.

Categories: Finance