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CHANGES IN CPFA EXAM - EFFECTIVE FROM JULY 16TH 2012

CHAPTER 4 PPF PUBLIC PROVIDENT FUND The maximum amount that can be deposited in a financial year in this account has been revised to Rs.1, 00,000/The interest rate notified by the Central Govt for the subscriptions made to the account on or after 1 April 2012 has been revised to 8.8% p.a. National Saving Certificates Maturity period for NSC (VIII issue) with effective from 1 December 2011 is five years Interest on this cumulative scheme is 8.6% p.a., compounded half yearly, which works out to be 8.78% p.a. The Central Government has introduced the National Savings Certificate IX, 2011 which are effective from 1 December 2011. NSC-IX has a ten year term with tax benefits under section 80C of Income Tax Act, 1961. Minimum investment is Rs.500/- without any maximum limit. Interest on this cumulative scheme is 8.9% p.a., compounded half yearly, which works out to 9.10% p.a. The certificates are available in denominations of Rs. 100, 500, 1000, 5000, and 10000 and such other denominations as may be notified by the Central Government from time to time. Kisan Vikas Patra This scheme has been withdrawn w.e.f. 1 December 2011 but still the candidates should be aware of features of previous issues of KVP as given in the book Post Office Monthly Income Scheme (POMIS) This scheme has a term of 5 years (reduced from 6 w.e.f. 1 December 2011). Interest rate is 8.5% p.a. payable monthly with no bonus on maturity (the bonus of 5% payable on maturity stands withdrawn from 1 December 2011). Bonus amount applicable for accounts opened before 1 December 2011 is forfeited when you close the account early.

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www.modelexam.in offers Online Practice Mock Test for NISM, NCFM, BCFM, CPFA Exams Post Office Time Deposits (POTD)

CHAPTER 6 INSURANCE PLANNING Free look period: A time of 15 days is given after purchase of an insurance policy to go through the terms of the policy and return/ cancel it in case the policy holder finds that the terms do not suit his/ her needs. In such cases the premium is repaid to the policy holder. This facility provides a mechanism to cancel the policy where the purchase was due to wrong guidance/ misselling from insurance agents. Pension Plans offered by Life Insurance Companies All pension products shall have assured benefit that is applicable on death, on surrender and on vesting, which is disclosed at the time of sale. The assured benefit shall mean at least one of the guarantees: 1. Providing a minimum return (non-zero positive return) on all the premiums paid during the term of the policy or; 2. Providing a guaranteed maturity benefit (in absolute amounts) or a guaranteed surrender benefit or a guaranteed death benefit 3. The pension products offered may have a life insurance cover throughout the deferment period or may offer riders. The sum of all the rider premiums attached to the pension product shall not exceed 15% of the premium paid for the pension policy. Such rider premiums will be separately accounted for and will not be included for calculating the assured benefit, as above. On the date of vesting or surrender, the policy holder shall have the following options: 1. To commute to the extent as allowed under the Income Tax Act; or 2. To utilize the entire proceeds to purchase a single premium deferred pension product; or 3. To extend the deferment period in the same policy, where the policy holder is below the age of 55 years On death of the policyholder, the nominee shall be entitled to withdraw the entire proceeds of the policy or utilise the entire / part proceeds to purchase an annuity. The illustrations to be used for these pension plans have to comply with the sales literature guidelines issued by the Life Insurance Council. The interest rates permitted to be utilized for projecting the pension amounts have to be 4% p.a. and 8% p.a. only. Study Notes for NCFM CMDM, NISM DOCE, NISM MFD at www.modelexam.in

www.modelexam.in offers Online Practice Mock Test for NISM, NCFM, BCFM, CPFA Exams All pension products in the market would have to follow these guidelines w.e.f. January 2012. The above is applicable for Unit Linked Products as well. Health Medi-claim policy and Critical illness policy IRDA has introduced portability of health insurance policies with effect from 1 Oct 2011 whereby the policy holder can switch from one insurer to another insurer or from one plan to another plan of the same insurer, provided the previous policy has been maintained without any break. A policy holder who wants to port his/ her policy to another insurance company shall apply to such insurance company at least 45 days before the premium renewal date of his / her existing policy. When the new insurance company receives complete details of the policy holder, it has the right to accept or reject the proposal or even accept the proposal with suitable modifications. The insurance premiums shall be applicable to the sum insured under the previous policy and also to an enhanced sum insured, if requested by the insured, to the extent of the cumulative bonus acquired from the previous insurer under the previous policies CHAPTER 7 RETIREMENT PLANNING New Pension Scheme The New Pension Scheme has been renamed as National Pension Scheme. Tier I is compulsory for the categories mentioned earlier and the minimum contribution is Rs. 6,000 p.a. Tier II is voluntary and the minimum contribution Rs. 1,000 p.a. An active Tier I account is essential for opening a Tier II accounts. CHAPTER 8 - TAXATION Tax Rates for Assessment Year 2012-13 have been modified as below for Individuals (other than women and senior citizens who are resident in India) / Hindu Undivided Family/AOP: Association of persons/ BOI: Body of Individuals

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All other things remaining same for Resident Very Senior Citizen

Education Cess of 2% and Higher and Secondary Education Cess of 1% is applicable on the tax calculated in all the cases mentioned above. Audit The following persons are required to get their accounts compulsorily audited by a chartered accountant and obtain the Tax audit report in the prescribed form before the due date of filing the tax returns: i. A person carrying on business, if the total sales, turnover or gross receipt in business for the accounting year or years relevant to the assessment year exceed or exceeds Rs. 60 lakh. This limit has been increased to Rs. 100 lakh from PY 2012-13. ii. A person carrying on profession, if his gross receipts in profession for an accounting year or years relevant to any of the assessment year exceeds Rs. 15 lakh. Study Notes for NCFM CMDM, NISM DOCE, NISM MFD at www.modelexam.in

www.modelexam.in offers Online Practice Mock Test for NISM, NCFM, BCFM, CPFA Exams Section 80CCF has been added with the following details SECTION 80CCF Persons Covered Eligible Amount DEDUCTION IN RESPECT OF SUBSCRIPTION TO LONG TERM INFRASTRUCTURE BONDS Individual /HUF. Amount invested in notified bonds upto Rs. 20,000 p.a.

80CCF will not be available from PY 2012-13. Rs 5,000 will be available for preventive health care for Senior Citizens under Sec 80D In Section 80DD - Extent of Deduction shall be (a) Rs. 50,000/- in case of normal disability or (b) Rs. 100,000/- in case of severe disability _____________________________________________________________________________

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