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Financial Literacy Fast Becoming a Daily Need

Do you feel like you need to be a banker, accountant, economist and stock market analyst just to keep the family finances in check? Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement? Managing your finances might have seemed a lot simpler in the past but considering the early 1980’s had interest rates of 15% with inflation over 10%, we are not so sure! Economic conditions are always in flux, but what has really changed is the amount of information, resources and alternatives we have to “help us” manage our money— we are simply overloaded, and it can get overwhelming very quickly. For example, if you are looking for options to invest those hard-earned TFSA contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that’s only if you are already up to speed on the differences between mutual funds and ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs & TFSAs work and their many rules and regs, DIY online investment platforms, robo advisors… and the list goes on! The reality is that personal finance is likely to get more difficult and more complicated in the future. If you are lucky, a few employers are now offering financial literacy programs as part of their employee wellness and employee retention efforts. Enriched Academy is also working with the school system in several provinces to ensure that students have the opportunity to learn the basics of personal finance before they graduate from high school. This is great news for your kids and their financial future, but it isn’t going to do much for you unless you want to put them in charge of the household finances? The reality is that most of us are on our own when it comes managing our money./There are some great tools and information resources that can help immensely, but the easiest, most cost effective, and most reliable option for the majority of us is building our own financial knowledge. The good news is that mastering the basics is a lot simpler than most of us realize. You can still use a pencil and paper to track your expenses and one, hour-long webinar could easily cover the basics of/getting started with the stock market. The problem for most of us is that we focus way too much on making money and spend far too little time looking at where our money goes, or how to manage it better and make that money work for us. Earning more money won’t solve your problems for long if you continue to spend too much, make poor spending decisions, fail to invest, and have no goals to help guide you and measure your financial progress. The choice of how you improve your financial knowledge is up to you and the options are limitless. Websites, livestreams, online courses, employee wellness initiatives (if available), YouTube videos, blogsites, financial advisors, money coaches — there are ways to build financial literacy that suit every situation and every budget. 2022 is a new year and a new start! We hope your New Year’s resolutions include some concrete actions to improve your financial literacy and a plan to put that knowledge to practical use and better your financial situation.

Use of Rent Receipt and How to Generate it Free

If you have to avail of the tax benefit on House Rent Allowance (HRA), you need to submit rent receipts for the financial year along with the rental agreement to your employer as part of income tax documents. You are also required to provide the PAN number of your landlord in case the rent amount for the year exceeds INR 1 lakh. You can provide rent receipts on a monthly, quarterly, half-yearly, or on annual basis.

What are rent receipts and their uses?

A rent receipt is a documentary record of rent payment transactions to your landlord. Your landlord will provide the rent receipt upon collecting the rent, which can be used for tax and legal purposes. Following are the important elements of rent receipt:

Date of rent payment
Rental period
Landlord name
Your name as a tenant
Address of the rented house
PAN number of your landlord (if the annual rent exceeds INR 1 lakh)
Signature of the landlord
Revenue stamp (For cash payment of more than INR 5,000. Revenue stamp is not required for cheque payments)
Rent receipts can be used for the following purposes:

You can use rent receipts as proof of your expenses to claim tax benefits. You can avoid the last-minute hassles by arranging it online. You can generate rent receipts using the free rent receipt generator available online.
A rent receipt is also a legal document that endorses the payment made by you to your landlord for the rented house.
How to generate rent receipts?

House rent allowance that comes as a part of your job cost-to company (CTC) is also a tax avenue. In order to avail of the tax exemption benefit provided under Section 10(13A) of the Income Tax Act, 1961, you need to generate rent receipts get them signed by your landlord to submit them to the Human Resource Department of your employer. There is a free rent receipt generator that can help you generate rent receipts in no time. Here is a simple process to follow to generate rent receipt from ETMONEY’s free rent receipt generator:

Step 1: Log on to the ETmoney website

Step 2: Go to the ‘Rent receipt generator’ tab under the ‘tools and calculators’ section

Step 3: Fill in the required details such as basic details first

Your full name
Monthly rent amount
Step 4: Move on to the next section where you need to provide details of your rented property

Name of your house owner
House owner’s PAN number
Address of the rented property
Step 5: Move on to fill the last section that requires the below information

Start date of rent receipts
End date of rent receipts
Rent receipt format – monthly/quarterly
Step 6: Your rent receipt in the chosen format will be instantly generated in a PDF format. You can save the generated rent receipts and get them printed to take the landlord’s signature on those rent receipts.

Exempted amount of HRA is least of the below:

The actual amount of HRA that you receive from your employer
40% of your salary (for a non-metro city) and 50% of your salary (for a metro city)
Actual rent paid minus 10% of your salary (Basic + Dearness Allowance)
Use the free rent receipt generator tool which is simple to use for a smooth taxation process.

Deductions Qualifying For Tax Exemption

Salaried employees are major contributors to the bucket of taxpayers in a country. Income tax is paid as a part or percentage of the annual income that an individual earns. It is every citizen’s duty to pay his income tax for all the rights he earns in the country while he earns as a salaried employee or as an entrepreneur.

According to the Government of India’s e-Filing portal of the Income Tax Department, there were 8.83-crore taxpayers till 7th September 2021.

The money collected by the tax department is used to provide various facilities for the benefit of the citizens. How do you think the Government of India is able to provide facilities free of cost? For example, public utility services like metro construction, road construction, free health care facilities for the underprivileged, all come from the money that is paid when you pay taxes.

The Government has made various provisions to help its citizens gain tax exemption in India.

Paying tax is inevitable, however making smart investments that will help you save as well, is a smart choice people can opt for.

Tax exemption in India

Depending on the nature of the income, there are various categories for tax exemption in India. The most common of these are: House Rental Allowance (HRA), Education loan, car loan, Leave Travel Allowance (LTA), contribution towards Employee’s Provident Fund (EPF) Scheme, etc.

House Rent Allowance

If you are a salaried employee who lives in a rented house, you stand a chance to get the benefit of HRA. This amount could either be totally or partially exempted from income tax. However, if you are not living in a rented property but claim HRA, this entire amount will be taxable.

Leave Travel Allowance

If you are a salaried employee and your employer has the provision of LTA, you can claim for the exemption of your travel within India under Section 10(5) of the Income Tax Act, 1961. However, tax exemption does not include food expenses, shopping and stay, but, only for travel of the individual, their family including children.

Deductions under section 80C, 80CC and 80CCD (1)

This is by far, the most extensively used option to save tax. To encourage individuals to save and invest in retirements plans, the Indian Government has made provisions for individuals under these sections. These include Life Insurance premium, Equity Linked Savings Scheme (ELSS), Employee Provident Fund (EPF), Contribution to PPF Account, National Pension Scheme, National Saving Certificate (NSC), etc.

NGO donations under section 80G

An individual can get involved in philanthropic donations for tax write off. Charitable organisations give a platform for an individual to engage in humanitarian services as well as to appreciate the noble work by making you eligible for tax exemption too. The deductions under Section 80G of the Income Tax Act of 1961 towards charitable organisations are either eligible for 50% or 100% tax exemption depending on the NGO being supported.

When you contribute by making donations for tax write off, you are not only saving on your taxable income, but you also add goodness in your life for helping people in need. Thousands of not-for-profit organisations receive donations for tax write off, but the help that they provide to the organisation to work towards its cause is often gone unnoticed.

Benefits of making NGO donations

Gives inner satisfaction of helping people
Giving back to society makes an impact
Connects with like-minded people
Saves tax on your contribution
Draws attention to the cause
Helps people in need with what they require

Every little support to people in need gives them relief from their suffering. The Akshaya Patra Foundation is an NGO in India that provides free and unlimited food for education of children coming from challenging socio-economic backgrounds. It has the distinction of being the world’s largest NGO run school lunch programme spread across 60 locations in 14 states and 2 union territories of India.

Akshaya Patra provides nutritious and locally palatable meals to 1.8 million children coming from low-income sections of society.

Akshaya Patra is an NGO known for 21 years of relentless service, financial transparency, and credibility. All your donations above INR 500 made towards this NGO, are eligible for 50% tax exemption under section 80G of the Income Tax Act. You will also get a tax exemption certificate within seven working days with your name and contribution amount. So the next time you plan on making tax saving investment, think of the benefits of donating to NGOs.

Get Revenge on Your Boss by Starting a Consulting Business

As companies struggle to stay afloat using restructuring, reorganization and retrenchment strategies, nowadays it’s easy for even the most skillful employees to lose their jobs.

If you’ve been laid off due to cost-cutting measures, your unemployment could actually be a blessing in disguise as many have come to realize the benefits of starting a consulting business instead of applying for similar jobs in other companies.

Change in your job situation can be a good thing for as long as you open yourself to new experiences and challenges.

In the bestselling book “Who Moved My Cheese”, author and psychologist Spencer Johnson emphasizes the point that change in most aspects of life is inevitable and that the sooner we move to a new direction, the sooner we are able to find something better to replace them with. You, too, can move on from a terminated employment to a financially rewarding consulting business.

Tips for Starting a Consulting Business

* Work from home: You don’t need to spend your exit compensation or savings just to start this business. Consulting is a flexible business that you can do from home, eliminating rent and other overhead expenses in the meantime. Some basic equipment that you’ll need is a computer, Internet connection, telephone and fax machine.

* Market to your immediate circle: Your first clients will most likely come from your innermost circle of relatives and friends who own small and medium-sized businesses that may need your expertise. From there, you can build your list of potential clients by asking for referrals and by attending social functions and gatherings where you can give out your business cards.

* Learn new skills: Update your skills by learning new techniques, applications or taking up a short course that can make you an expert at something and allow you to charge premium fees for your services. You can study these on your own or jumpstart your business by investing in a system or tools developed by experts. Tip: Learn a few Internet marketing techniques that most businesses need such as SEO, content writing and email marketing.

* Create your business plan: This need not be a complicated MBA-type feasibility study although you’ll need to set your goals, vision, business model and strategies at the onset.

If you are serious about starting a consulting business, you can choose to offer a full menu of services, specialize in one service or create information products that can teach business owners some of your skills which may be valuable to them.

Expect other income opportunities to present themselves as you venture into consultancy, something that you may not have the freedom to undertake if you were still employed.