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From the Rat Race to Financial Freedom... A common man's journey
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Happiness Unlimited...How to be happy..always !!
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Dream On...Every setback is a little nudge from HIM to Dream On
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The Autobiography Of A Stock
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A Father's Diary
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Manoj Arora    About Me
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Sunday, April 27, 2014

What is Universal Account Number / Permanent PF Account Number

Get ready employees. Your Universal Account Number will soon be holding your maximum wealth after October 2014...read on..

What is UAN (Universal Account Number)
It is a unique number for an Employee which tracks his or her Employee Provident Fund Account. The Employees' Provident Fund Organisation (EPFO) will provide a permanent or universal account number (UAN) on the pattern of core banking services to its over five crore active subscribers by October 15 this year. UAN would be one account number which would be allotted to a subscriber for various schemes run by EPFO for his entire service period with different employers.

UAN programme
EPFO has engaged C-DAC for preparing a road map for implementing the UAN programme for its subscribers. The Center for Development of Advanced Computing (C-DAC) is the premier research and development organization under the Ministry of Communications & Information Technology for carrying out R&D in IT, Electronics and associated areas.

Impact on Employees
UAN will facilitate subscribers (employees) in avoiding filing of PF transfer claims on changing jobs. Since your PF Account number will not change because you switch jobs, you don't need to get anything transferred. It is expected to provide great relief to those workers in organized sector who frequently change jobs
UAN will be allotted to the present active members by October 15, 2014 and thereafter the coverage of other members will be taken up.

Impact on EPFO Organization
UAN will help reduce the workload of EPFO to a great extent as it receives over 12 lakh claims annually for transfer of PF account on changing of jobs by its subscribers. EPFO has settled over 1.21 crore PF claims this fiscal, including PF withdrawal and transfer, including around 12 lakh PF transfer claims.
Not only that, a large number of subscribers prefer to close their PF and pension account with EPFO and seek withdrawal of their funds rather than applying for transfer of PF account on changing jobs as it has been a time consuming process. This facility would mean more funds for the EPFO, making it an even stronger body.

It is a win-win, as is expected with the onset of technology. 

Tuesday, April 22, 2014

Chisel and Hammer

It was vacation time, and we all decided to explore the relatively unseen part of our surroundings. Not only such adventures broaden our thinking process, but at the same time, it helps kids do their pending project work ;) We went to a "real" village...Happiness is in India's villages, and one of the learning that i got from this visit, truly and immensely contributes to our day to day happiness even today...read on

A village has its own industry. Though many of the products from this industry may appear outdated, cheap and poor quality, a closer look can leave you in awe of the skill these villagers have. Apart from the hand made textiles and clay utensils being prepared, we also saw lot of artificers at work. These are the people who have the skill not only in their hands, but also in their mind. They create such great idols worth worshiping, by hitting and nudging a raw stone for months at a stretch. I mean, the entire process is so beautiful. You look at the raw stone, and you cannot even imagine whether it can be converted to something useful ever. These artificers take up the challenge, and not only they "see" the beauty in this raw stone, they convert into an idol worth a special place in a temple or other places of worship.

Astonished by all this, i could not stop myself asking one of the artificers as to how is he able to even think about what can be made out of this raw stone. My family, including my kids, looked on various beautiful creations of this craftsman before paying attention to listen to him.

He responded promptly "We don't look at the surface of the rock, as all of you typically do. We look "inside", as to what can be made out of it. And then of course, once we have made the decision and selected our rock, we have to go through the hard work of hitting hard and soft, for months together, with a chisel and hammer - till it comes to its desired shape. There is no escaping the hard work at all. But yes, we know the end result even before we have hit the first chisel and hammer stroke."

We all listened. You think, whats new in this. Well, there is a world of knowledge in this. It depends on how you view it. So, here is how i want you to look at it. We are the rock (raw). God is the artificer. Tough situations are the chisel and hammer hits. Now, when you are faced with a tough life situation next time, you know what is happening to you and who is doing it. Feel happy about being shaped up by none other than the Almighty, into something more worthwhile then you were before facing the situation. Face the situation with pride.

It was a real good learning. The day's outing in the village taught us a lot of other good things as well. While we were coming back, our taxi dropped us around 1 km from our home, because some of our society gates were closed for unknown reasons. Since the weather was still pleasant, all of us decided to take a 1 km walk towards our home. 

Kids, as they are, started to run in front of us. Suddenly, i saw a street dog, who felt being challenged by our kids run, starting to run behind my younger daughter. Before i could react, my younger daughter realized that the dog was behind her. I could see that from her facial reaction and a sudden acceleration in her speed. The dog was getting closer to her, and my speed was no match. I was not sure what can be done to prevent any mishap. My daughter ran harder - perhaps her fastest ever, and somehow managed to scrape through our house gate and avoided the dog. The dog also succumbed, and went away after accepting defeat and presenting her with a few trademark barks. By the time we arrived at the house gate, my daughter was still breathing very heavily. I tried to take her in my lap to console her. Actually, i was expecting her to cry and make a scene out of this. But for a change, that did not happen. 

"Are you alright?" i asked.
"Yeah dad" she said while trying to catch up with her breath. "This was just one chisel and hammer hit to prepare me for the school race i have tomorrow. I know i have improved as a runner."

I was astonished. Even i had not thought of this situation this way. One perspective change, if implemented in real life, can add a lot of happiness content.

Read more about who you are and what are your traits as a soul
Chapter 5.2 ~ Understanding the Soul - Happiness Unlimited (the book) - Launching June 2014.


Manoj Arora
You are entitled to happiness unlimited !!

Sunday, April 20, 2014

Withdrawal and Loans from your PPF Account

Public Provident Fund (PPF) is a great wealth building tool for risk-averse investors and should be opened and continued till maturity by one and all. But, can you withdraw from PPF? If yes, when and how much? Can you take a temporary loan? Let us understand.
Why this post?
A lot of freedom seekers seem to be unclear of how much money can be withdrawn from their PPF account in case of emergencies. Hence, i thought of clarifying all of them via this post.

Withdrawal Terms and Conditions
There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period. However, pre mature withdrawals can be made from the end of the sixth financial year from when the PPF commenced. 
The maximum amount that can be withdrawn pre maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.
If the account was opened in 2005-06, and first withdrawal can be made during 2011-12. 
The amount of withdrawal will be the lower of:
a. 50% of the balance as on March 31, 2008 (Financial Year 2007-08) (4th year

preceding the year in which the amount is withdrawn
b. 50% of the balance as on March 31, 2011 (Financial Year 2010-11) (end of the preceding year)
Note: If the PPF account is extended beyond the initial 15 years (it can be done in blocks of 5 years), the amount allowed to be withdrawn is 60% of your balance at the beginning of the extended period)

While withdrawing money is definitely an option, but in case you are not able to satisfy the withdrawal terms and conditions, then you have another option to fall back on. You can also opt for a loan from PPF account.

Facility of Loans

In case of emergency situations before the 7th year, you can take loans from your PPF account. You can take loans between 3rd and 6th year of opening the PPF account.
The maximum loan amount available will be equal to 25% of the balance at the end of the 2nd immediately preceding year.
In our example, if loan is sought in 2010-11, the maximum amount of loan available would be 25% of the balance as on March 31, 2009.

The rate of interest on the loan is usually 2% over and above the rate of interest you receive in the PPF account. This loan has to be repaid within a period of 24 months.
Once you repay a loan, another loan can be taken as long as you are within the 3rd and the 6th year of opening the account.
After 15 years of maturity, full PPF amount can be withdrawn and all is tax free, including the interest amount as well.

Please note that this PPF withdrawal facility should be used judiciously. PPF is meant for long term savings, and utmost care should be exercised while withdrawing money from it. You should withdraw only for emergencies, like a medical emergency. Funds should not be withdrawn for funding purposes, like for buying a car or a house.

The right understanding can save money for you from getting locked in avenues which do not give you enough returns. Money invested well is money earned. All the best.

Related Posts:


Manoj Arora
Freedom can buy you what money cannot !!

Tuesday, April 15, 2014

Do not possess, just love.

There was a beautiful little bird who used to fly proudly across the boundless beautiful blue sky. The wonder stuck gazers on the planet earth used to appreciate the beauty of this creature and its flamboyant rainbow colored feathers. Everyone was awed by its flight and array of colors it used to display while flying, till one day, a rich man decided to "possess" the bird for her little daughter....read on...

Monday, April 14, 2014

Stuck with a wrong life insurance policy? Options for you..

It is not uncommon to get into buying a life insurance policy which we should never have bought. In India, because of the lack of financial education at an early age, we tend to mix insurance with investments. We all have done that mistake at some point of our financial decision making. But, having bought the policy and paid a few premiums, what are the possible options with us? Should we let the policy lapse? Should we surrender? Read on..

Sunday, April 06, 2014

Tax on Savings Account interest Sec 80TTA

Savings Bank Account is the most common account for individuals. When you have money in bank savings account, your money earns interest. What about taxes on this earned interest income? 

What is Section 80TTA?
Many taxpayers are not aware about section 80TTA under Income Tax Act’1961 which was introduced through Finance Act, 2012. This section 80TTA provides a deduction of Rs.10,000 on your income from interest on saving bank accounts.

Who can claim deduction u/s 80TTA?
Deduction u/s 80TTA is applicable to individual taxpayers and HUF only. This benefit is not available to a firm, an association of persons or a body of individuals.

How does it work?
Interest earned on your savings account has always been taxable under the head “Income from Other Sources”. This needs to be declared in your income tax returns. In order to claim deduction, you have to first include interest income in your total income and then claim deduction u/s 80TTA.
For example, if you have received an interest of Rs. 17,000/- from your savings bank account then you have to pay a tax on Rs. 7,000 only i.e. (17,000-10,000) thus Rs. 10,000 can be claimed as a deduction u/s 80TTA. But if total interest income from all your savings accounts is Rs. 9,000 only, then you don’t need to pay income tax at all and the entire amount would be deductible u/s 80TTA.

How is the interest calculated ?
The interest is calculated on the daily balance in your account. Before Apr 2010 the interest was calculated on the lowest amount in the bank account between the 10th of every month and the last business day of the month.In Apr 2010 RBI moved to calculation on daily basis

Is section 80TTA applicable to FD Interest?
No, this deduction is NOT applicable to the interest you received on your Fixed Deposits/time deposit or term deposit.
For example if you make a 365 days FD for an amount of Rs. 50000 at an interest rate of say 8%, your entire interest income of Rs. 4,000 (Rs. 50,000 * 8%) would be subject to tax as per your applicable tax slab. You cannot claim deduction of Rs. 4,000 available u/s 80TTA and you need to pay tax on it. You may also be required to pay TDS on FD interest earned.

Does no “TDS” means “no need to pay Tax”?
Income Tax Act allows certain deposits & accounts on which no tax is required to be deducted at source, irrespective of any limit for the amount of such interest. Hence there is no TDS on your saving account interest. Regarding FDs, banks deduct TDS only if your total interest income is more than Rs10,000.
In any case, you have to pay tax on FD or saving account interest as per your tax slab. And as mentioned above you can claim deduction up to Rs10,000 with respect to your savings account interest. For example, if your bank is deducting 10 pc tax on your FD interest and you fall under the higher slab of say 20 or 30 pc, then you need to pay the balance tax.

Is the deduction per saving bank account or all saving bank accounts together?
The deduction towards interest on ALL saving accounts taken together cannot exceed Rs. 10,000.  This deduction is available on interest income from all savings bank accounts that a taxpayer might have in banks, cooperative societies or post offices.You cannot have multiple deductions for multiple savings bank accounts

Other points
  • Saving bank account should be maintained with a bank or society or post office.
  • The deduction is in addition to deduction of Rs. 1 Lakh of section 80C of the Income Tax Act-1961.
  • Please note that Interest from Saving Bank Account is not exemption but a deduction
  • The interest earned on savings account is exempted from TDS under Section 194 A of Income Tax Act i.e No TDS is deducted on interest from saving account.

The right understanding can save immense taxes for you. Money saved is money earned. Get going.

Related Posts:


Manoj Arora
Freedom can buy you what money cannot !!

Thursday, April 03, 2014

Meet another freedom seeker : Mr. Mukesh Chopra

Last time, we met a General Manager - Plant Operations from Himachal Pradesh, India : Mr. Rishi Diwan who is on the journey towards financial freedom now. The response to that post was overwhelming. You can read more about his journey and experience till now by clicking here.

In continuation with our effort to interlock you with some common men and women who have been seeking financial freedom, today, it is a chance to meet Mr. Mukesh Chopra, an Advisory IT Project Manager from Gurgaon, India.

I have tried to mentor him to build a financial freedom plan of his life. This monthly track-able plan, once executed, has the potential to bring him out of the rat race and allow him to chase the true dreams of his lives. This plan can make him experience "true freedom" in life.

And as we all know "Freedom can buy you what money cannot !!"

So, lets meet Mukesh to know who he is, what his dreams and goals are, why is he chasing financial freedom, and above all, how has been his experience since he has set himself on this journey to financial freedom. So, here we go, lets meet with our next freedom seeker : Mr. Mukesh Chopra.

Mukesh is passionate about spend his time and energy with his loved ones and do things which he truly loves doing.
He wants to secure his retired life, which till today, was an unknown and unsure goal.

Life need not be an either-or. Mukesh has started this journey while being in a corporate job. He has kick started his journey towards financial freedom with a target of Nov 2026 to be free from rat race and start living the life of his dreams.

We will be together monitoring his journey and tuning her portfolio during the course of this journey, so that we stay on track and maximize the returns from his existing investments.

I wish him all the best for his life and wish that he can go on to chase his true dreams and calling in life.

Mukesh is just one among all of you. He is no different, except the fact that he took a step to connect with us, was open to accept advise, and then worked on that advise. He took the first step. He came out of her comfort zone and he will surely be rewarded for the same.

Do you think it is wise to have a financial plan in place for your life, instead of randomly doing investments with no target in mind? 
How much money you need to get financially free? 
How much time you need to accumulate that kind of corpus which can fund you for the rest of your life? 
How can you maximise your returns on your net worth?

If you have any of the above questions pondering in your mind, or you have any genuine financial query, or you have strong dreams on which you are yet to start working, do write to me at help@ratrace2freedom.com and i will be happy to share my experience with you, so that we can work together and plan your future better.

There are no charges, no constraints ... only freedom !!


Manoj Arora
Lead a Financially Free Life !!

Tuesday, April 01, 2014

Play the Happiness Video Game

No No..i am not introducing or launching any new game which talks about happiness. Nor is this a promotion launch for my upcoming book "Happiness Unlimited". This is a happiness video game that we are playing day in and day out. It is just that we are unaware and because of this, we have been losing happiness more often. So, do you know how to win the game of happiness everyday ?