Electronic clearing service ECS 26 Questions to know

What is Electronic Clearing Service, ECS

As the name suggests, electronic clearing service, ECS is an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs, investments in mutual funds, payment of insurance premium etc. 

The Electronic Clearance Service (ECS) scheme provides an alternative method of effecting bulk payment transactions like periodic (monthly/ quarterly/ half-yearly/ yearly) payments of interest/ salary/ pension/ commission/ dividend/ refund by Banks/Companies /Corporations /Government Departments. The transactions under this scheme move from a single User source (i.e. Banks/Companies /Corporations /Government Departments) to a large number of Destination Account Holders (Customers/Investors).

This scheme obviates the need for issuing and handling paper instruments and thereby facilitates improved customer service by the Banks and Companies/Corporations/Government Departments effecting bulk payments.

There are two types of ECS, like most other banking transactions, ECS credit and ECS debit. 

Electronic clearing serviceAn ECS credit is used by a bank account holder, usually a large company or an institution for services like payment of dividend, interest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.

ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. 

For example if you are investing in a mutual fund scheme through systematic investment plan (SIP), and every month a fixed amount of money goes out of your bank account, it must be through the ECS debit process.This could be used for payment of utility bills like electricity, telephone etc.

Electronic Clearing Service, ECS
Electronic Clearing Service, ECS

Q.1. What is Electronic Clearing Service (ECS)?

Ans : ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, cess / tax collections, loan instalment repayments, periodic investments in mutual funds, insurance premium etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa. ECS includes transactions processed under National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI).

Q.2. What are the variants of ECS? In what way are they different from each other?

Ans : Primarily, there are two variants of ECS – ECS Credit and ECS Debit.

ECS Credit is used by an institution for affording credit to a large number of beneficiaries (for instance, employees, investors etc.) having accounts with bank branches at various locations within the jurisdiction of a ECS Centre by raising a single debit to the bank account of the user institution. ECS Credit enables payment of amounts towards distribution of dividend, interest, salary, pension, etc., of the user institution.

ECS Debit is used by an institution for raising debits to a large number of accounts (for instance, consumers of utility services, borrowers, investors in mutual funds etc.) maintained with bank branches at various locations within the jurisdiction of a ECS Centre for single credit to the bank account of the user institution. ECS Debit is useful for payment of telephone / electricity / water bills, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc., that are periodic or repetitive in nature and payable to the user institution by large number of customers etc.

Q.3. At how many places in the country is ECS Scheme available?

Ans : Based on the geographical location of branches covered, there are three broad categories of ECS Schemes – Local ECS, Regional ECS and National ECS.These schemes are either operated by RBI or by the designated commercial banks. NACH is also one of the form of ECS system operated by NPCI and further details about NACH is available at NPCI web site under the linkhttp://www.npci.org.in/clearing_faq.aspx.

Local ECS – this is operating at 81 centres / locations across the country. At each of these ECS centres, the branch coverage is restricted to the geographical coverage of the clearing house, generally covering one city and/or satellite towns and suburbs adjoining the city.

Regional ECS – this is operating at 9 centres / locations at various parts of the country. RECS facilitates the coverage all core-banking-enabled branches in a State or group of States and can be used by institutions desirous of reaching beneficiaries within the State / group of States. The system takes advantage of the core banking system in banks. Accordingly, even though the inter-bank settlement takes place centrally at one location in the State, the actual customers under the Scheme may have their accounts at various bank branches across the length and breadth of the State / group of States.

National ECS – this is the centralized version of ECS Credit which was launched in October 2008. The Scheme is operated at Mumbai and facilitates the coverage of all core-banking enabled branches located anywhere in the country. This system too takes advantage of the core banking system in banks. Accordingly, even though the inter-bank settlement takes place centrally at one location at Mumbai, the actual customers under the Scheme may have their accounts at various bank branches across the length and breadth of the country. Banks are free to add any of their core-banking-enabled branches in NECS irrespective of their location. Details of NECS Scheme are available on the website of Reserve Bank of India at http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2345

The list of centres where the ECS facility is available has been placed on the website of Reserve Bank of India at http://www.rbi.org.in/Scripts/ECSUserView.aspx?Id=26. Similarly, the centre-wise list of bank branches participating at each location is available on the website of Reserve Bank of India at http://www.rbi.org.in/scripts/ECSUserView.aspx?Id=27


Q.4. Who can initiate an ECS Credit transaction?

Ans : ECS Credit payments can be initiated by any institution (called ECS Credit User) which needs to make bulk or repetitive payments to a number of beneficiaries. The institutional User has to first register with an ECS Centre. The User has to also obtain the consent of beneficiaries (i.e., the recipients of salary, pension, dividend, interest etc.) and get their bank account particulars prior to participation in the ECS Credit scheme.

ECS Credit payments can be put through by the ECS User only through his / her bank (known as the Sponsor bank). ECS Credits are afforded to the beneficiary account holders (known as destination account holders) through the beneficiary account holders’ bank (known as the destination bank). The beneficiary account holders are required to give mandates to the user institutions to enable them to afford credit to their bank accounts through the ECS Credit mechanism.

Q.5. How does the ECS Credit Scheme work?

Ans : The User intending to effect payments through ECS Credit has to submit details of the beneficiaries (like name, bank / branch / account number of the beneficiary, MICR code of the destination bank branch, etc.), date on which credit is to be afforded to the beneficiaries, etc., in a specified format (called the input file) through its sponsor bank to one of the ECS Centres where it is registered as a User.

The bank managing the ECS Centre then debits the account of the sponsor bank on the scheduled settlement day and credits the accounts of the destination banks, for onward credit to the accounts of the ultimate beneficiaries with the destination bank branches.

Further details about the ECS Credit scheme are contained in the Procedural Guidelines and available on the website of Reserve Bank of India at http://www.rbi.org.in/Scripts/ECSUserView.aspx?Id=1

Q.6. What is a MICR Code?

Ans : MICR is an acronym for Magnetic Ink Character Recognition. The MICR Code is a numeric code that uniquely identifies a bank-branch participating in the ECS Credit scheme. This is a 9 digit code to identify the location of the bank branch; the first 3 characters represent the city, the next 3 the bank and the last 3 the branch. The MICR Code allotted to a bank branch is printed on the MICR band of cheques issued by bank branches.

Q.7. How does a beneficiary participate in ECS Credit Scheme?

Ans : The beneficiary has to furnish a mandate to the user institution giving consent to avail the ECS Credit facility. The mandate contains details of his / her bank branch, account particulars and authorises the user institution to afford credit to his / her account with the destination bank branch.

Q.8. Is it necessary for user institutions to collect the mandates from beneficiaries?

Ans : Yes, in addition to the consent of the beneficiaries, the mandate also provides important information related to bank account details etc. which are useful for the user institution to transfer funds to the right accounts . A model mandate form has been prescribed for the purpose and is available in the ECS Credit Procedural Guidelines.

Q.9. Is there scope for the beneficiary to alter the mandate under the ECS Credit Scheme?

Ans : Yes. In case the information / account particulars contained in the mandate undergo any change, the beneficiary has to notify the changes to the User Institution so that the correct information can be incorporated in its records. This will ensure that transactions do not get rejected at the beneficiary’s bank branch due to inconsistencies/ mismatch in the data sent by the user institution.

Q.10. Can ECS be used to transfer funds to Non Resident External (NRE) and Non Resident Ordinary (NRO) accounts?

Ans: Yes. ECS can be used to transfer funds to NRE and NRO accounts in the country. This, however, is subject to the adherence to the provisions of the Foreign Exchange Management Act, 2000 (FEMA) and Wire Transfer Guidelines.

Q.11. Will beneficiaries be intimated of credits afforded to their account under the ECS Credit Scheme?

Ans : It is the responsibility of the user institution to communicate to the beneficiary the details of credit that is being afforded to his / her account, indicating the proposed date of credit, amount and related particulars of the payment. Destination banks have been advised to ensure that the pass books / statements given to the beneficiary account holders reflect particulars of the transaction / credit provided by the ECS user institutions. The beneficiaries can match the entries in the passbook / account statement with the advice received by them from the User Institutions. Many banks also give mobile alerts / messages to customers after credit of such funds to accounts.

Q.12. What will happen if credit is not afforded to the account of the beneficiary?

Ans: If a Destination Bank is not in a position to credit the beneficiary account due to any reason, the same would be returned to the ECS Centre to enable the ECS Centre to pass on the uncredited items to the User Institution through the Sponsor Bank. The User Institution can then initiate payment through alternate modes to the beneficiary.

In case of delayed credit by the destination bank, the destination bank would be liable to pay penal interest (at the prevailing RBI LAF Repo rate plus two percent) from the due date of credit till the date of actual credit. Such penal interest should be credited to the Destination Account Holder’s account even if no claim is lodged to the effect by the Destination Account Holder.

Q.13. What are the advantages of the ECS Credit Scheme to the beneficiary?

Ans : ECS Credit offers many advantages to the beneficiary–

  • The beneficiary need not visit his / her bank for depositing the paper instruments which he would have otherwise received had he not opted for ECS Credit.

  • The beneficiary need not be apprehensive of loss / theft of physical instruments or the likelihood of fraudulent encashment thereof.

  • Cost effective.

  • The beneficiary receives the funds right on the due date.

Q.14. How does the ECS Credit Scheme benefit User Institutions?

Ans : User institutions enjoy many advantages as well. For instance,

  • Savings on administrative machinery and costs of printing, dispatch and reconciliation of paper instruments that would have been used had beneficiaries not opted for ECS Credit.

  • Avoid chances of loss / theft of instruments in transit, likelihood of fraudulent encashment of paper instruments, etc. and subsequent correspondence / litigation.

  • Efficient payment mode ensuring that the beneficiaries get credit on a designated date.

  • Cost effective.

Q.15. Are there any advantages of the ECS Credit Scheme to the banking system?

Ans : Yes, the banking system too benefits from ECS Credit Scheme such as –

  • Freedom from paper handling and the resultant disadvantages of handling, presenting and monitoring paper instruments presented in clearing. Ease of processing and return for the destination bank branches.

  • Smooth process of reconciliation for the sponsor banks.

  • Cost effective.

Q.16. Is there any limit on the value of individual transactions in ECS Credit?

Ans : No. There is no value limit on the amount of individual transactions.

Q.17. What are the processing / service charges levied under ECS Credit?

Ans : The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise per transaction to the Clearing house and destination bank respectively. Destination bank branches have been directed to afford ECS Credit free of charge to the beneficiary account holders.


Q.18. Who can initiate a ECS Debit transaction?

Ans : ECS Debit transaction can be initiated by any institution (called ECS Debit User) which has to receive / collect amounts towards telephone / electricity / water dues, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc. It is a Scheme under which an account holder with a bank branch can authorise an ECS User to recover an amount at a prescribed frequency by raising a debit to his / her bank account.

The User institution has to first register with an ECS Centre. The User institution has to also obtain the authorization (mandate) from its customers for debiting their account along with their bank account particulars prior to participation in the ECS Debit scheme. The mandate has to be duly verified by the beneficiary’s bank. A copy of the mandate should be available on record with the destination bank where the customer has a bank account.

Q.19. How does the ECS Debit Scheme work?

Ans : The ECS Debit User intending to collect receivables through ECS Debit has to submit details of the customers (like name, bank / branch / account number of the customer, MICR code of the destination bank branch, etc.), date on which the customer’s account is to be debited, etc., in a specified format (called the input file) through its sponsor bank to the ECS Centre.

The bank managing the ECS Centre then passes on the debits to the destination banks for onward debit to the customer’s account with the destination bank branch and credits the sponsor bank’s account for onward credit to the User institution. Destination bank branches will treat the electronic instructions received from the ECS Centre on par with the physical cheques and accordingly debit the customer accounts maintained with them. All the unsuccessful debits are returned to the sponsor bank through the ECS Centre (for onward return to the User Institution) within the specified time frame.

For further details about the ECS Debit scheme, the ECS Debit Procedural Guidelines – available on the website of Reserve Bank of India at http://www.rbi.org.in/Scripts/ECSUserView.aspx?Id=25 may be referred to.

Q.20. What are the advantages of ECS Debit Scheme to the customers?

Ans : The advantages of ECS Debit to customers are many and include,

  • ECS Debit mandates will take care of automatic debit to customer accounts on the due dates without customers having to visit bank branches / collection centres of utility service providers etc.

  • Customers need not keep track of due date for payments.

  • The debits to customer accounts would be monitored by the ECS Users, and the customers alerted accordingly.

  • Cost effective.

Q.21. How does the ECS Debit Scheme benefit user institutions?

Ans : User institutions enjoy many benefits from the ECS Debit Scheme like,

  • Savings on administrative machinery and costs of collecting the cheques from customers, presenting in clearing, monitoring their realisation and reconciliation.

  • Better cash management because of realisation / recovery of dues on due dates promptly and efficiently.

  • Avoids chances of loss / theft of instruments in transit, likelihood of fraudulent access to the paper instruments and encashment thereof.

  • Realisation of payments on a uniform date instead of fragmented receipts spread over many days.

  • Cost effective.

Q.22. What are the advantages of ECS Debit Scheme to the banking system?

Ans : The banking system has many benefits from ECS Debit such as –

  • Freedom from paper handling and the resultant disadvantages of handling, receiving and monitoring paper instruments presented in clearing.

  • Ease of processing and return for the destination bank branches. Destination bank branches can debit the customers’ accounts after matching the account number of the customer in their database and due verification of existence of valid mandate and its particulars. With core banking systems in place and straight-through-processing, this process can be completed with minimal manual intervention.

  • Smooth process of reconciliation for the sponsor banks.

  • Cost effective.

Q.23. Can the mandate once given by a customer be withdrawn or stopped?

Ans : Yes. Any mandate in ECS Debit is on par with a cheque issued by a customer. The customer has to maintain adequate funds in his / her account with the destination bank branch to ensure the ECS Debit instructions are honoured when presented. In case of any need to withdraw or stop a mandate, the customer has to give prior notice to the ECS user institution well in time, so as to ensure that the input files submitted by the user do not continue to include the ECS Debit details in respect of the mandates withdrawn or stopped by customers. The process flow to be followed for withdrawing / stopping mandates is detailed in ECS Debit Procedural Guidelines.

Q.24. Can a customer stipulate any ceiling on the amount of debit, purpose or validity period of the mandate under the ECS Debit Scheme?

Ans : Yes. It is left to the choice of the individual customer and the ECS user to decide these aspects. The mandate can contain a ceiling on the maximum amount of debit, specify the purpose of debit and validity period of the mandate.

Q.25. Is there any limit on the value of Individual transactions in ECS Debit?

Ans : No. There is no value limit on the amount of individual transactions that can be collected by ECS Debit.

Q.26. What are the processing / service charges levied under ECS Debit?

25Ans : The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise and 50 paise per transaction to the Clearing house and destination bank respectively. Bank branches do not generally levy processing / service charges for debiting the accounts of customers maintained with them.

Steps for NRIs on how to sell a property in India!

Are you an NRI and inherit a property? Did you buy a home in India and got settled in other country. Are you planning to sell off that home. Here are the details. 

Steps for NRIs to Sell a Property in India

For expats, selling a property in India from abroad is a challenging process, especially if they left the country years back. There are rules for an NRI in selling his/her inherited property in India and it requires legal help. Here is the step wise procedure on how NRIs can sell a property (their inherited land or property) legally without any litigation:

tips for  NRIs on how to sell a property in India

The process is quite similar for residential Indians and non residential Indians except for the latter have tax implications and repatriation policies.

1. Title Transfer for Inherited Property

If the property is inherited, then the title should be changed to the seller’s name by the process of mutation of revenue records. This transfer requires a will or a succession certificate. If one cannot procure a copy of the will, then the local court can issue a succession certificate. With this certificate, one can apply for a title change in the mutation of revenue records office.

This procedure is time consuming and it is advisable to have them changed earlier.

2. Checklist of Documents Required for Selling

It is necessary to procure all the documents required for selling the property in India. Some of the documents include:

  • The title deed or mother deed of the property
  • No objection certificate to show the clearance of litigation and debts.
  • Occupation certificate issued by the municipal corporation
  • Plan approval/sanction certificate
  • Cooperative share certificate if the property is a part of a society building
  • Lawyer certificate, if any of the original documents were lost

Apart from these documents, the seller should have a PAN card number to sell properties that involve big amount transfers. The NRI can apply PAN to sell the properties or he/she can submit form 60 at the registrar office for the same.

3. Finding a Right Brokerage Firm

If there are no close friends or relatives to trust with the transaction, it is wise to consult a brokerage firm to assist in the selling process. However, if the seller has realty market sense and people to support then he/she can go ahead with the selling process on their own.

The brokerage firm can help you in suggesting the market situation, finding suitable buyers, price trends and risks involved. They can assist in fixing the selling price, applying for PAN and attorney service to obtain legal documents and tax implications. Although they provide end-to-end solutions, brokerage in India has no legal license and it could be troublesome if the brokerage fee is not fixed properly. It is advisable to find the right brokerage firm and fix the fee before initiating the selling process.

4. Sales Registration

It is essential to grant the power of attorney for the transaction to a PoA holder. There is no need to grant a complete power of attorney; instead the seller can give ‘Admit PoA’ rights to the PoA holder who will merely represent the owner in the registrar office. According to this, the seller should duly sign all the documents and the PoA holder will represent him in the sale registration.

However, issuing the PoA process differs from time to time and each firm will have a different process. Once the registration is complete, the seller should also concentrate on the tax implications.

5. Focus on Tax and Repatriation Issues

The NRIs have long term capital gains if the property was sold after 3+ years of purchase, the tax for which comes to 20.6%. Further, the basic exemption of Rs. 2 lakh is not applicable for NRIs. There are other tax exemptions available for the NRIs while selling the property.

The sale money can be repatriated through official dealers but it should not be more than US $1 million per year. If the property is inherited from one NRI to another NRI, then you need to get a special permission from the Reserve Bank of India. However, the brokerage firms will guide you through this process.

Do opt for a legal help. They act as best resort and pull you out from the property issues.

World Tourism Day – 27 September

Holidays can be a wonderful chance to get to know new places and people. As well as learning about a location’s geography, history, literature and language, visiting a new place can help break down stereotypes and misconceptions. Tourism can also benefit the communities being visited; many areas rely on tourism as their main industry. A massive 231 million people are employed in the tourist business, and recently there has been a dramatic increase in the number of holidays taken, with more people going away more often. 

What is World Tourism Day 

Since 1980, the United Nations World Tourism Organization has celebrated World Tourism Day on September 27. The purpose of this day is to raise awareness on the role of tourism within the international community and to demonstrate how it affects social, cultural, political and economic values worldwide.

Each year has a particular theme. With more than a billion tourists now travelling the world each year, the theme, “1 Billion Tourists, 1 Billion Opportunities”, for 2015 explores the potential of tourism for socio-economic development. The UNWTO has developed a global code of ethics for  tourism,  “to help minimise the negative impacts of tourism on the environment and on cultural heritage while maximising the benefits for residents of tourism destinations”.  It includes sections on ‘The Responsible Tourist’, ‘Trips for travellers’ and ‘Sustainable development’.

Why teach about tourism?

Tourism is a global phenomenon and is a great entry point into looking at other issues such as trade, climate change, sustainable development, workers’ rights and human rights. It naturally fits into the Geography and Modern Foreign Languages curricula, and can be used as a starting point for work in other subjects such as looking at statistics in Maths or sustainable technologies in Design & Technology.

Teaching about tourism raises pupils’ perceptions of the impact they can have on holiday, and can influence their choice of behaviour both while on vacation and towards tourists in their home.

Suggested WTD Activities 

The possibilities are endless to promote the theme. See below for just a few suggestions of how you can get involved.

Spread the word

The WTD website is full of resources you can use to spread the word .

The message of the UNWTO Secretary-General can be freely used in conference materials, brochures, documentaries etc.

You can feel free to upload the logo on your website. You could also use the logo to make your own WTD-themed materials, such as t-shirts, stickers, posters etc.

Hold an event 

WTD is a celebration. So concerts, festivals, shows and parades are a great way to take part.

Launch a competition

A competition – essays, paintings, videos – on tourism and sustainable energy is a fun and simple way to get involved in World Tourism Day.

Take a trip

What better way to celebrate WTD than enjoying being a tourist yourself? Whether it’s around the world or within your own country, with your family or your classmates.

On previous WTDs, a number of destinations and sites have offered free entry or special discounts to the public, so look out for special offers!

World Tourism Day Celebrations in India

People can visit Taj Mahal and nearly 200 other ticketed monuments and museums across the country for free on September 27 that coincides with the World Tourism Day. 

Apart from 116 ticketed monuments which include World Heritage Sites like Taj Mahal, Agra Fort, Vitthala Temple Hampi, Western Group of Monuments of Khajuraho and Buddhist Monuments at Sanchi, entry will also be free for 35 site museums and all other museums under the administrative control of the culture ministry, such as the National Museum and the Salar Jung Museum. 

Other ticketed monuments which will not carry any entry fee on September 27 include Golconda Fort, Charminar, Hydrabad Fort, site of Mauryan Palace, Kumrahar, Patna, Shershah Suri’s Tomb at Sasaram, excavated site of Vikramshila, Antichak, excavated Site of Nalanda, and ancient remains at Vaishali. 

Note : Check World wide  home loan interest rates  in http://goo.gl/lyDQn3.

I Am Using a Clay Ganesha..Are You..?

Vakrathunda mahaakaaya 

Surya koti samaprabhaa 

Nirvignam kurume deva 

Sarvakaaryeshu sarvadaa.

Ganapati is the god of wisdom and the benevolent deity of the dynasty of Peshwas who ruled Maharashtra inculcating a special culture in the state. He is the herald of auspicious beginnings and is the beloved deity of all. He is the one who can remove all obstacles to success. He is the giver of fortune and can help to avoid natural calamities.

Why is Ganesh Chaturthi Celebrated 

Ganesh Chaturthi is celebrated on the eve of the lord Ganesha’s birthday. Ganesh Pooja is preferred during Madhyahana on Ganesh Chaturthi as it is believed that Lord Ganesha was born during Madhyahana Kaal which is between 12:33 and 15:35.

There is always an innate pull towards Mushika Vaahana who has occupied a place in the hearts of elders and children alike.

How is it Celebrated 
The celebrations are usually so grand that everyone, irrespective of their age and gender, is involved. The proceedings involve getting a Ganesha idol, placing it in the proper place and performing pooja, also offering Ganesha a variety of  dishes.  Performing pooja and offering variety of dishes to Ganesha goes on either for a day or 3 or 5 or 7 or even 21 days. Finally, the Ganesha is immersed in a lake or sea.

Public celebrations of this festival are hugely popular, setting up different statues in each street or in each locality.The festival is also the time for cultural activities like singing and theater performances, orchestra and community activities like free medical check-up, blood donation camps, charity for the poor, etc.

How is Ganesha Made / From Clay Ganesha to PoP Gnaesha :
Though the Ganesha to be used should be made of clay, to make it attractive,  coloring the idol had begun. Slowly, Ganesha’s with Plaster of Paris (PoP) had come up. As they are lighter, a bit cheaper and can make it colorful, setting up different Ganesha idols had become a fancy, and also a matter of pride, infact. 

We know that the proceedings involve immersing Ganesha in a lake. So, immersing these huge PoP idols  in a lake, lead to the water pollution. This had an adverse impact not only on humans but also on the marine life.

Plaster is non-biodegradable, and insoluble in water. Moreover, the chemical paints used to adorn these plaster idols themselves contain heavy metals like mercury and cadmium, causing water pollution. Also, on immersion, non-biodegradable accessories that originally adorned the idol accumulate in the layers of sand on the beach.

When an idol made of Plaster of Paris is immersed in the water, it changes form to gypsum, thus adding a large amount of material to the water that breaks down very slowly, while adding to the hardness of water, both of which deteriorate the life carrying capacity and quality of the water thereby causing irreversible environmental effects on the coastal ecology or the eco-system of any water body, which in turn causes adverse environmental effects.

An example:
A study in 2001, revealed an alarming increase in presence of heavy metals in the Hussainsagar Lake (Hyderabad) following immersions. The study showed that subsequent to Ganesha-idol immersions, the concentration of these metals Calcium, Magnesium, Iron, Lead  increased perceptibly. The level of arsenic, a noxious trace element, had increased nine-fold in the lake water after the idol immersion, compared to its Bureau of Indian Standards (BIS), Indian Council of Medical Research (ICMR) standards.

The concentration of mercury was found to be alarmingly high in the lake water. It increased by five to six hundred times in the lake water compared to the specifications of desirable limits set by BIS and ICMR standards.

The various paraphernalia immersed along with the idols and its impact is given below:

Sr.No Material contributed by immersion Impact on the aquatic body
1 Plaster of Paris Increases dissolved solids, contribute metals and sludge
2 Decoration material viz. clothes, polish, paint, ornaments cosmetic items etc. Contributes suspended matters, trace metals (Zinc, lead, iron, chromium, arsenic, mercury etc.) metalloids and various organic and inorganic matter, oil & grease etc.
3 Flowers, Garlands, oily substance Increase floating suspended matter organic contamination, oil & grease and various organic and inorganic matter.
4 Bamboo sticks, Beauty articles Big pieces get collected and recycled while small pieces remain floating in water or settled at the river bottom inhabiting river flow.
5 Polythene bags/plastic items Adds to the hazardous material and chokes the aquatic life
6 Eatables, food items etc. Contributes oil and grease, organics to water bodies.

All the figures quoted above and the data has been taken from the report :

Preventive Environemental Management plan for eco-friendly Ganpati festival prepared by Dr. Shyam R Asolekar, Professor & Head Centre for Environmental Science & Engineering Indian Institute of Technology Bombay (IIT-B), 2007.

Eco-friendly Ganesha 

With the awareness growing now, there are about 40% of the population who use clay idols. There are many NGOs that take up making clay ganeshas. Also to pass on the tradition, schools teach the kids how to make them. Many mothers fill the air with fun and festive mood by engaging their kids in the Ganesha making.

How to make a clay Ganesha…

  1. Roll out some clay or dough into a thin, rectangular shape about a cm thick to use for a pedestal for your Ganesha to sit on.
  2. Roll a big ball for the body and place it in the middle of the pedestal.
  3. Roll a small ball for the head and elongate one part of it to make a trunk.
  4. Bend the trunk up a bit and position the head on the body.
  5. Roll two similar shapes (about the size of the head) to create legs, and position these on either side of the body, curving round to overlap at the front.
  6. Roll two cylindrical shapes for the arms and attach these to the back of the body, then curve them around to the front and position them as you like. A raised hand for blessing, or a hand cupping a lotus flower, are both good options.
  7. Roll another two balls of clay, and flatten them to create ears that you attach to the back of the head.
  8. Roll two tiny pieces of clay, or insert toothpicks to create tusks.
  9. Fashion a headdress of your liking to place between Lord Ganesha’s ears. 

It is easy and fun..

The Ganesha Festival is not only a popular festival; it has become a very critical and important economic activity. Many artists, industries, and businesses survive on this mega-event. Ganesha Festival also provides a stage for budding artists to present their art to the public. There are also many events that are organised to promote awareness to use clay Ganesha.

So, let us also revert to the traditional clay Ganesha and immerse it in a bucket of water at home.

Learn about these tax benefits when buying a car

 If you planning to purchase a new vehicle, one of the most exciting things to uncover is if you can get a tax deduction. There’s always a welcome way of saving a few extra rupees to help offset the high price paid for a new vehicle. Not many know that we can avail tax benefits on buying a car. 

Many of us don’t even know that car loans come with tax advantages and miss out on this benefit. However, all car loans do not come with tax benefit. A car loan is a good tool for the self-employed to claim some tax deduction as well as depreciating assert in the balance sheet.

Tax benefits that can be availed by self-employed while buying a Car.
Tax benefits when buying a carHow do you benefit?

Deductions from payable tax through a car loan can be availed only if you are a business man and declare the profit or capital gains earned from your business. Another condition attached to this is that the vehicle has to be purchased in the name of your business. In that case, you get exemption on the interest as well as depreciation of the vehicle.

Under these conditions, you can include the interest paid for your car loan for tax exemption.

Besides this, businessmen can avail deductions on personal loans too under certain conditions, like the loan being taken as a business loan or for capital investment in business.

Loans taken wisely and within our limits would save us from a never ending debt spiral, which many fear. While loans affect your monthly as well as annual finances for other expenditures, the beneficial side of it in the form of tax saving, reduces their overall impact considerably.

Tax benefits that can be availed by employees while buying a Car.

I am not self-employed, I am working for a company, how can I avail the tax benefits? 

Don’t worry. Most of the employers in India design a company policy for car leasing that would give a tax benefit employees. Check with your employer if you can avail car  lease.

Car leasing is becoming popular among employees who are planning to buy their car through bank loan. Company provides option to employees to buy car- any make any model as per employee eligibility accordingly to company car lease policy depending upon employee’s grade. Best thing is that employee needs not to pay any down payment. Employee simply starts paying lease amount on monthly basis. It is becoming a prominent option in compensation structure of high paid employees. This is offered to employee as an option and it is employee wish to choose or not to choose.

Now question is “Car leasing is a good option for employees? Lets understand first, what is this car leasing plan all about?

Employer ties up with a car leasing company which provides cars on lease and design a company policy for car leasing. If an employee who is eligible for car leasing option can express his willingness and mention model and make of car to buy. Leasing company will buy the car for employee and give it to employee for use – both official and personal. Car will be in name of leasing company. Employee will pay monthly lease amount to leasing company which is normally lower than EMI, if employee goes with bank loan option. Car lease period normally range from 3 to 5 years. After lease period is over employee can either choose to buy the car by paying agreed residual price (20% to 45% of car purchase value) depending upon company policy or let the leasing company keep it. Employee can go for another lease or buy a new one.

What are the benefits to employee?

No down payment is required

Employee need not to make any down payment to lease the car. This is a clear cut saving and employee can use this amount anywhere else. Employee can also make a fixed deposit of this down payment amount and can get good interest rate. Employee enjoys his new car from day one without being worrying arrangement for down payment.

Lower monthly lease amount as compared to Bank EMI

Lease amount paid to lease company is always lower than Bank EMI. Lease amount is calculated after reducing projected sale value of car after lease period wherein Bank EMI is on full value of Car.

Employee need not to worry about car maintenance, service and insurance etc

Employee need not to worry about any paper work, car maintenance, regular service, insurance etc. Leasing company take cares of the same and it is including in monthly lease amount payable by employee. There are options available to not to take maintenance option where monthly lease amount will further reduce but employee need to take care of maintenance of vehicle. Lease companies do also provide break down assistance, replacement car in case car service take more than 24 hours, Chauffeurs etc.

It saves a lot of time of employee.

Tax saving on lease amount paid by employee

In case an employee pay Rs 20,000/- per month as car lease and employee falls in 30% tax bracket then employee clearly saves Rs 6,000/- per month on tax (30% of Rs 20,000). Hence it is clear that car leasing is more beneficial to employees who fall under higher tax bracket. Employee who falls in lower tax bracket like 10% will not be that much beneficial.

Wherein if an employee takes bank loan and pay EMI of Rs 20,000/-, then employee will not get any tax benefits as employer will deduct tax on Rs 20,000.

Further, employee can also take fuel expenses and driver salary from company if an employee use the car for official purpose and this will be non taxable money. Hence further tax saving. Commuting from Office to home and vice versa will not be considered as an official travel and fuel expense can not be claimed against the same.

Benefits are more if employee stays with company for longer period

Return on Car lease option is higher if employee stays with company for longer period and do not change the job again and again.

What are the cons for employee in car leasing?

Car is not owned by employee even after lease tenure is over

Even after your car lease tenure is over car do not belongs to you. It is still company’s property. After lease period is over employee can either choose to buy the car by paying agreed residual price (20% to 45% of car sales value) depending upon company policy or let the leasing company keep it. Employee can go for another lease and buy a new one where in case of Bank Loan, Car is owned by person after loan period is over.

Interest rate is higher in leasing as compared to Bank Loan

Interest rate is higher in leasing as compared to Bank Loan. Monthly Leasing amount is lower because it is calculated on car value after reducing projected sale value of car after lease tenure wherein Bank Loan EMI is calculated on 100% car sale value from day one. That’s the reason lease amount is lower wherein lease interest rate is higher.

Example : If Car sale value is Rs 10,00,000 and lease tenure is 5 years and projected sale value of car @ 20% i.e. Rs 2,00,000 at end of 5 years then lease amount will be calculated on Rs 8,00,000 ( Rs 10,00,000- Rs 2,00,000).

Employee still needs to pay some tax

As per tax laws, when you use a company car, the employee has to pay a perquisite tax. For a car which is less than 1.6cc, the perquisite value is .Rs 1,800 per month; while for cars more than 1.6cc, the perquisite value is .Rs 2,400 per month. This means for a car greater than 1.6cc the employee will pay a tax of Rs 741.6 per month.

Employee cannot take tax benefit on conveyance allowance

If an employee chooses for car lease option then conveyance allowance paid to employee automatically becomes taxable. Rs 800 per month conveyance allowance paid to employee to travel between office to work and vice versa is non taxable but becomes taxable if an employee choose car lease option.

Car leasing is costlier deal if you leave the company in between or want to terminate the lease before lease tenure completion

Although, there is option available to employee to terminate the lease in between but It is always costlier affair. If an employee leaves the company then employee is left with following options:

  • Employee need to pay amount asked by leasing company if employee want to buy the car
  • Employee can transfer the lease to some other employee provided some other employee is willing to take that car.
  • Employee leave the car for leasing company

Some companies do also keep penalty charges in case of mid termination of car leasing.

You become second owner if you choose to purchase your leased car

As mentioned earlier that car you choose to lease is in name of the leasing company however you have purchase option after lease period is over but in that case car will be registered in your name again and you will become second owner. For many people, this does not matter but for some it does.

Car leasing can be a good option depending upon in which tax bracket you fall into, what are your plans to be with same company for longer period or do you have money for down payment etc. It can be good deal or bad deal depending upon your case. Hope above information will help you to take your decision. Please write back to me in case you have any query.

Most Inspirational Quotes from A.P.J Abdul Kalam

Most Inspirational Quotes from A.P.J Abdul Kalam

A.P.J Abdul Kalam great man with modesty, simple thinking and great living sets a standing example of innovation in the thought process for decades. Abdul Kalam also served as the 11th President of the Country for five years. APJ had massively contributed his knowledge and observations during the nuclear tests of Pokhran – II that were done in the year 1998. Kalam also penned a popular book, India 2020, where he laid foundation for the vision to see a developed India by the year 2020. His thoughts and words of inspirational quotes are very famous among youngsters who dream of reaching heights in life. The student community of India is heavily motivated with Kalam’s many speeches and interactions. 

“Failure will never overtake me if my definition to succeed is strong enough”. – A.P.J Abdul Kalam 

“Don’t take rest after your first victory because if you fail in second, more lips are waiting to say that your first victory was just luck.” – A.P.J Abdul Kalam 

“All Birds find shelter during a rain. But Eagle avoids rain by flying above the Clouds.” – A.P.J Abdul Kalam

“Man needs difficulties in life because they are necessary to enjoy the success.” – A.P.J Abdul Kalam

“If you want to shine like a sun. First burn like a sun.” – A.P.J Abdul Kalam  

“It is very easy to defeat someone, but it is very hard to win someone” – A.P.J Abdul Kalam 

“All of us do not have equal talent. But , all of us have an equal opportunity to develop our talents.” – A.P.J Abdul Kalam 

“Be more dedicated to making solid achievements than in running after swift but synthetic happiness.” -A.P.J Abdul Kalam 

“Thinking should become your capital asset, no matter whatever ups and downs you come across in your life.”  – A.P.J Abdul Kalam 

“Without your involvement you can’t succeed. With your involvement you can’t fail. ” – A.P.J Abdul Kalam

Learn about switching home loan costs!

Learn about switching home loan costs!

Over the last few quarters, the RBI has lowered the repo rate by 0.5 per cent, which has been followed by rate cuts by banks and lenders. This has resulted in lower home loan rates. In fact, the falling interest rate cycle has just begun. Indraneel has a home loan of Rs 55 lakhs that he took at an interest of 11.00 per cent. The tenure of his loan is 25 years. Five years down the line, he wants tswitching home loan costso refinance his home loan for the remaining tenure at an interest of 11.50 per cent to take advantage of the falling interest rate cycle. Will this be a wise decision?  The new rate is applicable for new borrowers and not existing ones. Should he opt for a balance transfer to another lender?

Many existing borrowers are looking to switch their home loan to another lender in order to take advantage of the new rate and lower their EMIs. When done properly, refinancing can be very beneficial.

 However, before Indraneel goes any further, he must carry out a thorough cost benefit analysis. It is important to time the loan refinancing in a way that saving on interest payable is maximized.

Indraneel is likely to find switching lucrative as only five years of his loan tenure are over, which means a large portion of his principal is outstanding, as his EMI is mostly made up of the interest component. With time, the interest component comes down and principal component goes up. 

There is no prepayment charge on floating rate loans, but some fixed rate loans may have it. 

Indraneel must check if his lender will levy the same if he were to prepay and switch lenders. The loan processing charge of the new lender is the second part of the cost that should also be considered. A high processing fee may make the new loan quite expensive. Indraneel must also consider the hassles of repeated paper work that goes into transferring the home loan from one bank to another.

Therefore, instead of making the switch decision by purely considering the interest rate differential, Indraneel must make sure that he factors in all these costs when computing the potential savings. Needless to say, refinancing is a profitable move only when the potential savings in the long run are significant.

Cost of switching  : 

Pre-payment charges (if any) + Processing fee + Legal charges (if any) + Yearly home insurance (if the lender says its must) + Other hidden charges ( SMS charges +

Provisional Statement charges + Pre-payment charges + Change of tenure charges + Change of EMI charges )

Benefit of switching using LoanYantra.com :

Helps in minimizing the cost of switching and makes this process smooth.  Your 1-day of your work with LoanYantra.com can save your 3-years of your salary.  Use the balance transfer calculator to check what you can save.