My father passed away in 2012 without a Will. We are four siblings. Can I, as an NRI and an EU passport holder, inherit part of my father’s land? The inheritance includes agricultural land, house, cash in the bank.
Acquisition or transfer of immovable property by an NRI is governed and regulated under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. As per the immovable property regulations, a person who is residing outside India but is a citizen of India or a person of Indian origin is allowed to acquire immovable property other than agricultural property, plantation or a farm house in India. So you being an NRI along with your resident siblings can inherit the apartment, house, and balances in banks of your father.
However, acquisition of agricultural property by a person who is residing outside India but is a citizen of India or a person of Indian origin is permitted only through an inheritance from a person who had acquired such property in accordance with the provisions of the exchange control regulations in force at the time of acquisition. Hence you can also inherit the agriculture land in addition to the above .
I am an MBA student. I have an education loan with current interest rate of 8.5% to pay my fees of Rs15 lakh. I received financial aid of Rs3.6 lakh last academic year and am expecting another Rs3.6 lakh this year. I have deposited the money in a savings account that gives 3.5%.
The moratorium period is till 6 months after graduation and simple interest is being charged till then, after which compound interest will be levied. Should I pre-pay the education loan or only part of it keeping in mind the tax exemptions. Are the exemptions significant enough to bear the additional interest?
—Name withheld on request
Income-tax allows deduction of repayment of interest on education loan under section 80E of the Income-tax Act. This deduction is available over and above the deduction of section 80C of Rs1.50 lakh. Also, there is no limit to the deduction under section 80E and the complete interest paid during the year is allowed as deduction under the income-tax Act. The period of deduction starts from the year when you start repaying the interest and is available for a total period of 8 years or till the time the interest is fully repaid whichever is earlier.
In your case, the financial aid received is currently in savings bank interest where the interest earned is lower than the interest cost of education loan. So the two options you have are, to either repay the education loan with the financial aid received by you or to reinvest the financial aid received in a higher-yielding asset class. And yes, you do lose the income-tax advantage in case you opt for repayment of education loan but then there is no assurance that you will earn an assured interest of higher than the cost of borrowing of education loan, as for that you need to take some risk in the portfolio. And as you are currently studying, it is prudent that you opt for the partial repayment of your loan.
We took a home loan of Rs10 lakh for 180 months. The EMI was Rs11,022 in August 2016. It was sanctioned for 1 year at 9.9% MCLR. The interest rate this year is 8.35%. When I asked the bank to lower the EMI, I was given the option that if I continue with the current EMIs the interest will get deducted and remaining balance will go to the principal amount. However I am interested in lower EMIs. Which option is better?
You are just starting the second year of housing loan. And the very advantage of MCLR rate comes to your benefit of the rates getting adjusted periodically, in your case once every year. The reduction in interest rate will have a positive impact on your repayment schedule and will help you to repay the housing loan at a faster pace if you keep the same EMI or else if you reduce the EMI then the amount payable as EMI comes down.
Based on your cash flows you need to decide whether you want to continue paying the same EMI, which means the tenure of housing loan comes down. In case your cash flows do not permit you, then reduce the EMI and pay a lower amount and the number of years of repayment remains the same, the balance 14 years.
Surya Bhatia is managing partner of Asset Managers
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