Suddhasatya Samanta, Kolkata Niloufer Shaikh, Mumbai
I opened a Public Provident
Fund account 15 years ago.
But a few years back, my
status changed to a non-
resident Indian (NRI). Last
month, I had requested State
Bank of India to extend my
PPF account for another five
years. Can an NRI maintain
a PPF account once it
matures? What should I do? Suppose I own a house in
city A and but live on rental
in city B. I take both HRA
as well as the tax benefits
on interest and principal
amount. If I buy another
flat in city A for investment
purposes which would be
rented out on receiving
possession, will I still get
HRA benefit after buying a
second home on loan?
As per the 23 February 2018
directive released by the Department
of Economic Affairs, an Indian
resident who has subsequently
become a non-resident Indian can
continue his or her Public Provident
Fund account till maturity. But an
extension of PPF is not possible for
non-resident Indians. You will have
to inform your bank immediately of
this anomaly and close the account.
Steven Fernandes
Founder & Chief Planner
Proficient Financial Planners
The HRA benefit is related to the
rent that you are actually paying
in City B while the tax benefits on
interest and principal payment of
loan is related to your own house
in city A. You can claim both
these benefits now. The interest
component paid during under-
construction stage of the additional
property can be divided in five equal
installments and amortised over five
years beginning from the year of
possession. However, the technical
loss (difference of interest paid over
rental income) shown under ‘income
from house property’ cannot be set
off for more than `2 lakh in a given
year. Any additional loss which
is not adjusted that year can be
subsequently carried forward and
adjusted against rental income only
over eight years.
Steven Fernandes
Founder, Chief Planner
Proficient Financial Planners
Arnab, Guwahati
What is the difference
between post office MIS and
SWP in mutual fund. What
happens to the invested
capital in SWP Plan?
Both are schemes that enable
regular interval cash inflows from
investments made. However, they
differ in certain aspects. PO MIS
provides monthly cash inflows
at fixed rate of returns where the
capital is protected. In SWP, you
Ravi Rastogi, Surat
I am a 37 years old teacher. I have savings
worth `25 lakh. My son is in Class 8 and my
daughter is four years old. I earn `40,000
per month. How should I plan my retirement,
children’s education, and marriage, and
make provisions for critical illness and for
one vacation from my savings and monthly
income?
Considering your present monthly income,
you have done a good job of saving a decent
amount. You need to first secure yourself with
a good term insurance cover of `1 crore and a
family floater Mediclaim cover of ` 5 lakh. Create
an emergency fund of `2 lakh, which you can
maintain in a fixed deposit or ultrashort term
debt funds. You will need funds for your sonr’s
education when he completes his 12th standard.
Invest part of your savings in balanced funds
for him. Evaluate your risk profile and invest the
remaining part of the corpus in a suitable asset
allocation. For example, if your risk profile is
moderate, you can invest 50 per cent in debt and
50 per cent in equity funds. Since your daughter
will need funds for her higher education only after
14 years, you can start an SIP for her in a multi-
cap mutual fund scheme. For example, if you
need `50 lakh for her education that time, then
you need to start an SIP of `11,500 for her. For
your annual vacation budget of `50,000, start a
recurring deposit of `4,000 per month.
Steven Fernandes
Founder & Chief Planner,
Proficient Financial Planners
www.outlookmoney.com June 2018 Outlook Money
11