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Why you need to look beyond Form 16 when filing returns (Mint)

For most salaried individuals, filing tax returns every year meant usually waking up anywhere from, depending on our lassitude, a few days to just a few hours before the deadline to find the previous year’s Form 16 buried in our mailboxes, and forwarding the same to the CA to file returns.

If you fall in the above category (there’s no shame in raising your hand to this, I myself was in this category till a few years back), did you know that this may not be enough and you may not be fulfilling your annual tax-filing duties adequately and completely? From what we have seen, this is mostly an awareness issue among the salaried class.

Sadly, the IT department does not differentiate between lack of awareness and lack of intent when it comes to penalizing you for evading taxes. And in today’s online and digital age, there is enough data for the IT department to identify such “mistakes” – your credit card bills, your bank statements, your real-estate purchase/sales, your loans, etc – all of these are easily interconnected with your PAN and Aadhar, as well as other personal data (phone number, for starters).

Also remember, even if there is no tax due, we have an obligation to report through our IT return our entire incomes, through all sources. Therefore, whichever category you fall into, the attached article by Ashwini Kumar Sharma published in Mint is a timely and ready primer to quickly browse through your books and assets to determine whether there are some incomes that you have inadvertently failed to report.

https://www.livemint.com/money/personal-finance/why-you-need-to-look-beyond-form-16-when-filing-tax-returns-1564910930845.html

Some such sources of income which are detailed in the article are – Interest income, capital gains, income from dividends (domestic or foreign), Insurance proceeds, Business income, gifts & inheritances, and income from investments in names of your minor children or spouse. Hence, with the deadline extended, use this additional time fruitfully to have the peace of mind that your IT returns are complete.

Image Credit: Livemint

How close are you to FIRE?

The term FIRE has gained popularity in recent times. For those of you who haven’t heard it before, it stands for – Financially Independent, Retire Early. Many articles are being published on what it means and what one should do to be part of this “elite” community. Speaking to a few millennials made me realize that it definitely has caught that generation’s imagination.

At the core, FIRE is about becoming financially free. I have written about becoming financially free before (here is the link), hence wont go into it again. Suffice it to say that becoming FIRE is not an event or an end-point in itself. In fact, beyond a certain stage in your personal financial life-cycle (having successfully planned for all financial goals and still having money to spare), it is an enabler to a different way of life. Let me explain.

Becoming FIRE is not at all about having a target pot of money and spending all one’s energies saving, investing and managing it. That would defeat the purpose of attaining that status. It is about identifying what one wants to actually do and how much minimum money does one need to move on to actually living one’s life the way one wants to.

Hence importantly its about 2 things –

Stripping and clarifying your finances to a level where one is clear what is a must and what is not, so that it keeps you happy, while not dependent on money.
Being clear about what one wants to do in one’s life. Everyone has their passions, secret desires that one would life to fulfil. Dare I say, every one of us has our own stories about “what I would do if I had enough money”.

The starting point to becoming FIRE is to actually know what one wants to do and where one wants to be financially to achieve that purpose. Everyone’s needs and wants are different and everyone therefore needs a different amount of money to reach FIRE status. One only needs to remember that the purpose at the core should be something that gives you immense happiness, and beyond a point, “there are many things in life that money still can’t buy”.

Also read this nice article by Mrin Agarwal in Mint about some of the checks and safeguards that people in FIRE status also need to have, while living their life.
https://www.livemint.com/money/personal-finance/opinion-financially-independent-can-retire-early-without-feeling-irrelevant-1556722367309.html

Image by Jill Wellington from Pixabay

Have you planned for this – Why everyone around you seems to be getting Cancer

In this weeks Livwise feature, we talk about something different, our health, and some surprising facts about how we may need to plan for it in the future.

Over the last couple of decades, we have visibly seen healthcare services improve. What used to be treated by a GP possibly as a child, it today treated by a specialist. That once popular term “family doctor” is a declining species, as the urban climber visits speciality clinics and super-speciality hospitals for getting “better” care.

Why is this the case? Partly due to the fact that medical care has indeed advanced. In every suburb, while erstwhile clinics and nursing homes still exist, fancy glass-covered hospitals also stand out. We feel (and we could be right) that specialist doctors in these modern hospitals are possibly better equipped to treat us. Also, disposable incomes have increased and we are willing to easily spend a 4 (or sometimes 5) figure sum to get ourselves a “more certain” fix. Lastly, with better education as well as the internet, general awareness of illnesses is far higher. In general, we also love to self-diagnose, and a runny nose which earlier was a symptom of possibly just a simple cold, could today be a pointer to many more complex ailments.

Credit: calliope/Flickr, CC BY 2.0, The Wire

Anyways, with better medical care at our disposal, as well as fundamentally better preventive measures being taken, life expectancy is going up dramatically. What used to be around 54 in 1980 in India is now 69 in 2016 (likely to be above 70 right now). With medical science continuing to improve and general awareness levels on fitness and health exploding, one can expect these numbers to hit late 80s by the time our generation ages (ie. around 2050) and maybe even three-figures by the time the millennials age (around 2075). This means that while our health will improve, we must be prepared financially to live longer and hence the retirement planning assumptions we make become all the more crucial.

All these health care advances would mean that many germ-borne diseases would be controlled or eradicated and better personal practices could help us prevent the incidence of lifestyle diseases such as BP or diabetes. But it might surprise, or even shock you to know that all this increase in life expectancy is also leading to an increase in cancer incidences. It is already happening if you look around, and more people around us seem to getting it. The reason for it is that cancer is a disease that is “internally born”. To quote from the below article, “Cancer is, fundamentally, a disease of wear and tear”. Hence, while we plan to live longer and enjoy our retired lives through smart retirement planning, it is important to also take into account this fact and work that into our plans.

This brilliant article by Sri Krishna in The Wire tells us why we in India should be worried and planning better as a nation for cancer as a disease.

https://thewire.in/health/why-everyone-around-you-seems-to-be-getting-cancer

How secure is your job? Decisions by top few can change fates of many

When one heard recently about the shut-down of Jet Airways, the immediate feeling was one of sadness. How could it happen to the airline that was to some extent a great symbol of Indian globalization, and our own MNC airline brand? And what about the tens of thousands of jobs lost, both directly and indirectly?

When one thinks deeper, the question that comes to mind is – how many of these employees ever thought that something like this could happen to them? Even if a few of them imagined it, did they plan for the consequences?

Over the last few years, quite a few large companies, big behemoths in their time, have ceased to operate. Large industries have significantly pared down their operations eg. Telecom, Construction. There has been significant re-trenching in these industries and people have been caught unawares. Many of them would still be struggling to find jobs commensurate to their experience. Most of them wouldn’t have envisaged this outcome and would have been caught short on the need to up-skill and build new skill-sets.

One important reason why people take jobs in the corporate world is because it brings tremendous job security and allows one to have a far more certain future. But remember, no future is certain unless one plans for all the various scenarios adequately. In today’s times, with uncertainty only increasing, the chances of having a long, 30-year career in the corporate world is something that is definitely not a given.

All the more reason for corporate employees, especially at the middle management and lower levels to be far more planned about their financial futures. Its never too late, however old you are. As Warren Buffett said – “The best time to plant a tree was 20 years ago. The second best time is now”. Also read this timely article by Lisa Pallavi Barbora in Mint on how corporate employees and their futures are completely dependent on their corporate leaders decision making abilities. The job security that one imagines one has is to an extent only a façade. Hence, important to have the right personal financial practices and plan to make sure that such eventualities do not put you in a vulnerable position due to no fault of yours.