ATM Usage Goes Free

From 1 April 2009, you will be able to withdraw cash free of cost from any bank’s ATM. Balance enquiry at all ATMs have been made free already.
The Reserve Bank of India (RBI) had found that ATMs were mostly being used for cash withdrawals and balance enquiry, even though they offer more services. Earlier, charges varied bank to bank and were also based on the ATM network used. The customer was not aware of the charges that could be levied for using another bank’s ATM, and this discouraged him from using the ATMs of the other banks.
The RBI has, however, allowed banks to decide the service charges for cash withdrawn using a credit card and cash withdrawals from ATMs located abroad. In a draft proposal in February, the RBI had proposed that ATM transactions be free of cost, and had sought public comments in this regard. Based on the feedback a framework of service charges will be implemented by all banks

PRE EXISTING DISEASES INSURANCE POLICY

I am suffering from mild haemophilia. Does any insurance policy cover pre-existing diseases?
Pre-existing diseases are not covered by any insurer immediately at the commencement of the first policy because it means that there is a 100 per cent chance of the insured making a claim and is against the basic principle of insurance, which provides covers for uncertain eventualities. You can still take a medical cover, but it will exclude expenses incurred on the treatment of any pre-existing disease. Some insurers, however, cover diseases which exist at the time of taking the first policy provided the policy is continuously renewed for a specified number of years. This period varies from insurer to insurer and is generally between two and five years. Such policies are obviously slightly more expensive than normal medical covers.

PROFESSIONAL IDEMNITY POLICY

Are there professional indemnity policies for doctors?
Yes, there are professional indemnity insurance covers for doctors which primarily cover losses or liability arising out of professional negligence or, more particularly, a genuine error of judgement, for instance, error in diagnosing a patient. The policy covers all sums which the insured professional becomes legally liable to pay as damages to the third party on account of any error or omission on his part while rendering professional service. The legal expenses incurred in defence of the civil cases (criminal cases are excluded), with the prior consent of the insurance company, are also payable, subject to the overall limit of indemnity selected. The policy excludes wilful or deliberate acts of negligence. Financial setbacks due to loss of goodwill as a fallout of such cases and other similar acts specified by the insurer are also excluded from the policy.

KEYMAN INSURNACE

I am a partner in a security equipment exporting firm. We have been recommended to procure a Keyman’s insurance policy. Can you explain the policy and also who can buy it?
In insurance parlance, a person who is a major contributor to the growth of an organisation and whose absence may affect the continuity of the business is a Keyman. Keyman Insurance policy is mostly a pure term life cover to protect the organisation from adverse financial consequences arising due to death of the key person and ensure continuity of the business. If keyman leaves the company either the policy can be surrendered or assigned absolutely to the keyman. Your firm can also take such policy on your life.

LIC A GOVERNMENT ENTERPRISE

Is LIC a government enterprise and that our money is backed by a government guarantee?
Majority of the capital of Life Insurance Corporation has been subscribed by the government, and the Corporation makes an actuarial surplus of 5 per cent available to the government every year.
The Section 37 of the Life Insurance Corporation Act 1956 reads: The sums assured by all policies issued by the corporation including any bonuses declared in respect thereof... shall be guaranteed as to payment in cash by the Central Government. Therefore, LIC policies enjoy a sovereign guarantee to the extent of covering the basic sum assured and the guaranteed returns. The bonuses are guaranteed only once they are declared.

HRA

I have taken a home loan and am paying Rs 20,000 EMI. My wife jointly owns the house with me. We are living in that house. How should I declare my HRA to get maximum tax benefit?
You can claim the benefit against the house rent allowance (HRA) only if you are actually paying the house rent. Since you are living in the owned accommodation, you cannot claim the benefit of HRA. Your co-owning the house with your wife does not make any difference to the tax status. In your case, HRA is fully taxable.

TAX

I recently changed my job. As per the terms of employment, I had to pay my employers about Rs 2 lakh towards notice pay. This amount was reimbursed by my new employers. While making the payment they deducted the tax at source. If I am paying the tax on this amount, am I eligible for deduction on the payment made to my previous employers?
In terms of the Section 17(2) of the Income Tax Act, 1961, any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the employee is treated as perquisite and, hence, taxed as salary income. Your present employer is under obligation to deduct tax on this payment.
On the other hand, you will not get any deduction on the payment made as it was made to meet your contractual obligation with the former employer.