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Prenuptial agreement,Financial discussion before marriage, Money and divorce

Should I got for a prenupitial agreement” asked Shweta. “Don’t you love your husband to be? And why suddenly the question“, asked Ryan. “To be on the safe side, you never know! I read in today’s newspaper about Maneka Gandhi ,Union Cabinet Minister for Women and Child Development, wanting prenuptial agreements , a standard legal document in many Western countries ,to be recognized in India. I have built some wealth during my earning years and have some assets. The move could help both spouses especially women get their right.” The other day I heard of an impending marriage breaking because the husband to be was asking for financial details of his working wife-to-be and in another the wife-to-be was asking about property details.

But while the prenuptial agreement or a prenup as it’s commonly known has been quite the buzzword with the Hollywood, does it hold good back here, in India? Should we ignore the prenuptial agreement because it’s a western concept? Is there a need to talk on finances before marriage? What happens to money,assets is there is a divorce? This article discuses it.

What is Prenuptial agreement?

Prenuptial agreement or prenup is a contract between two individuals who are about to get married and commonly includes provisions for division of property, guardianship rights and spousal support in the event of divorce or breakup of marriage. The agreement could also include specific terms for forfeiture of assets as a result of divorce on the grounds of adultery or lay down any conditions between the two adults. 

Are Prenuptial agreement legally valid in India?

A marriage is treated as a religious bond between husband and wife and prenuptial agreements don’t find social acceptance. Only a nikah or a marriage under Islam is a contract but that is under the Muslim Personal Law and has its own rules related to mehr and maintenance. Since marriage in India is not seen as a contract there are legal issues in enforcing it upon a married couple.  The prenuptial agreement is not legally recognized in India. Most couples, mainly those who are rich and influential, enter in to an agreement under the Indian Contracts Act.  The Indian courts take cognisance of a prenuptial agreement if both the parties mutually agree to it and sign it voluntarily, without any undue influence, force or threat. Besides, the agreement should be fair, clearly stating the division of property, personal possessions and financial assets of the parties, and should be certified by a separate lawyer for each.

Why are prenuptial agreement a good idea?

Finances have long been a trouble area in marriage. Our society  is in transition, especially in urban areas divorce rates zoom and break-up parties become popular. Divorce has a huge impact on the finances of those involved. Sadly life goes on and Financial matters often get muddled with the emotional aspects of separation. But you need money to live.

MF Utility : Investing in Mutual Fund Direct Plans online

Investing in Mutual Fund online has become paperless. Association of Mutual Funds of India (AMFI) has rolled out a facility or rather transaction platform ,MF Utilities (MFU),  through which you can invest across multiple fund houses using a common account number, in a paperless way. What is the MF Utility? How does it benefit the Mutual Fund Investor?

What is MF Utility?

MF Utility (MFU) is a shared services initiative by the Association of Mutual Funds in India (Amfi). With MF Utility, you can invest in direct plans of multiple mutual fund schemes across many fund houses using a single transaction. When you register for MF Utility you get a Common Account Number or CAN. The subscription to MF Utility is free. Official website of MFUtility is

How can one invest in Mutual Funds ?

There are many ways through which one can invest in Mutual Funds. You can invest in any mutual fund scheme either

  • Online through online investment facility provided by AMCs or Distributor Platforms such as or 1-in-3 accounts websites such as
  • Offline  through any financial intermediary or directly walking in any branch of the Mutual Fund Company. Financial intermediaries can be a bank, brokerage house or third party distributor or IFAs. IFAs (Individual Financial Advisors) are AMFI certified ARN holders, who can suggest balanced portfolio suitable for risk appetite of every investor.
  • With the advanced technology, new platforms like smart phones and tablets are being used to doing online transactions while on the move.

There are few steps to follow while investing in mutual funds. Whether you decide to invest online or offline, you will require the following documents: Photograph, PAN card, Name and Address proof, Bank Account Details and KYC Compliance.

But platforms like FundsIndia, ScripBox and ICICIDirect allows one to buy Mutual Fund units online also and that too paperless?

Platform or sites such as ICICIDirect, FundsIndia, ScripBox  allows one to buy Mutual Fund Units online. However, when you invest through these platform, you invest in regular plans of MF schemes. Direct plans have lower expense ratio since no distributor commission is paid and this enhances returns.

How does using MF Utility benefit Investor?

Today when an investor invests in a mutual fund, especially direct schemes, he has to apply separately for investment in each scheme. Suppose an investor wishes to invest Rs 2 lakh. Typically, he will be advised to divide the money among a few funds. Now assume that the investor decides to invest R 2 lakh divided in four funds. At present, he has to fill up four forms and provide cheques in the names of each of these schemes. However, ideally, the investor should not have to fill up four forms and the industry should not have to handle 8 documents, one form and one cheque for each scheme.Separate form and separate cheque have to be written for both the investments and form submitted to correct R&T agent(Karvy,CAMS for example, form of Reliance should be submitted to Karvy and Birla should be submitted to CAMS.) The customer should be able to fill up just one form and one cheque and the industry should have to handle only two documents. MF Utility (MFU) avoids all these hassles.

Swachh Bharat Cess

The Government has announced a new cess, Swachh Bharat cess of 0.5%, on all services liable for service tax, effective from November 15, 2015. All services, such as air travel, movie tickets, telephony, eating out and banking will become marginally  expensive due to it. This article talks in detail about Swachh Bharat Cess? What is Cess? How does it differ from Tax? Why is Government imposing Swachh Bharat Cess ?How will Swachh Bharat Tax calculated?

What is Swachh Bharat Cess?

The Swachh Bharat cess will be an additional levy, making the effective service tax rate 14.05% against the current 14%. The 0.5% levy will translate into a tax of 50 paisa only on every Rs 100 worth of taxable services.  Service tax is a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government under the Finance Act, 1994. Our article Basics of Service Tax explains Service Tax in detail.

Why is Government imposing Swachh Bharat Cess ?

Swachh Bharat Cess is a step towards involving each and every citizen in making contribution to Swachh Bharat. Given the impact of cleanliness on public health leading to generation of diseases such as malaria, dengue, diarrhoea, jaundice, cholera etc. the cess will help in improving public health.  Increased allocation for Swachh Bharat Abhiyan can prevent many of these diseases. Expenditure on health adds up to Rs 6,700 crore annually (approximately Rs 60 per capita). New cess will be used exclusively for the Swachh Bharat initiative such as building toilets. By 2019, the government plans to spend Rs. 2 lakh crore to construct nearly 11 crore toilets and cover almost every Indian household.

How will Swachh Bharat Tax calculated?

Cess would be calculated on the abated value or value arrived as per the Service Tax Rules, 2006. Cess will be counted on abetted/compounded amount in cases where rate is not 14%. Cenvat credit is not available on Swachh Bharat cess. All provisions including those related to computation of taxable value, assessment, exemption, payment, penalty applicable to service tax would apply to Swachh Bharat Cess. For restaurants or eating joints having air conditioning facility, the cess would be 0.5% of 40% of the billed amount i.e 0.2%.

The following image shows the service tax on various services before Swachh Bharat cess

Tax on various Services

Tax on various Services

On what services Swachh Bharat cess will be payable?

Swachh Bharat cess will be payable

80C Income Tax Deductions can be claimed in whose name

Can I contribute to my wife’s PPF account and still claim 80C benefit? asked Sanjay, one of our readers.  Yes you can, Under Section 80C of the Income tax Act, an individual is eligible to claim deduction from total income in respect of contributions to any PPF (belonging to self, husband, wife, any child) subject to an overall limit for a Financial Year (FY). People are not sure whether for 80C one can claim investment done in name of parents,wife or husband ,or children, what kind of investment. This article under whose name saving under section 80C of Income Tax can be done and claimed .

Section 80C

Govt. of India in its Income Tax Act, 1961 has provided a provision of saving income tax by investing in some investment products and also expenditures like medical premiums, education loan etc. This is to encourage certain type of savings (mostly long term) and expenditure(Education loan, medical premium) . Chapter VI-A of income tax act is about DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME. It specifies the sections from 80A to 80U under which deductions are  allowed to be deducted from the assessee’s gross total income. Different sections are applicable to different kind of assesses. Our article Understanding Form 16: Chapter VI-A Deductions covers the deductions under Chapter VI-A of Income tax act.  Image shows these deductions in the ITR2 Form.

Deductions like 80C, 80D from Income

Deductions like 80C, 80D

Tax deduction allows you to put some of your income to use in certain specified investments or expenses and deduct the amount from your income, lowering your tax liability.For example, if your gross income is Rs 5 lakh and you invest Rs 1 lakh in an instrument that offers deduction, your total taxable income (income on which tax is due) reduces to Rs 4 lakh. So if your tax liability is, say, 10 percent of your taxable income, after accounting for deduction, you will pay Rs 10,000 less in income-tax. In other words your income gets reduced by this investment amount  and you end up paying no tax on it at all!

Deduction differs from exemption. Exempt means free from an obligation from doing something.  In the case of income tax, exemption gives you the freedom to not pay the tax.  For instance, Leave Travel Allowance(LTA)  is exempted from tax, provided certain conditions are met. Similarly house rent allowance(HRA) is an exemption you get under Section 10(13a) of the Indian Income Tax Act. So, when a particular income is not taxable at all, it’s an exemption. Certain income can be exempted from tax provided certain conditions are met.

The most popular of the deductions is deduction under Section 80C of the Income Tax Act. This benefit is available to everyone, irrespective of their income levels. Thus, if you are in the highest tax bracket of 30%, and you invest the full Rs.1.5 lakh, you save tax of Rs.46,350.Based on the income tax slabs the extent to which tax is lowered by investing full amount,1.5 lakh in 80C is shown in table below.

EPF Partial Withdrawal or Advance

Wish I was between jobs, so that I could withdraw from my provident fund (PF) account to repay my home loan?“, remarked Sujoy. Yes you can partially withdraw from you EPF while in service for repaying the housing loan, Marriage, Treatment,subject to prescribed conditions. This article talks about how one can partially withdraw from EPF, for what purpose, how much can one withdraw and how many years of service one needs to have completed.

For what purposes can one withdraw from the EPF?

Advance or Withdrawals may be availed for the following purposes after putting in at least 5 years of service. The amount that can be withdrawn depends on the purpose, depends on the number of years of service . How many times can one withdraw for the same reason depends on purpose for example one can withdraw for marriage of self, son or daughter, brother or sister 3 times  after one has completed 7 years of service . For marriage purpose one can withdraw 50% of employee share but for treatment one can withdraw upto 6 times of Wages. Wages here mean  Basic + Dearness Allowance  not your Take Home salary. Our article Salary, Net Salary, Gross Salary, Cost to Company: What is the difference takes about basic salary.

  • Marriage / Education
  • Treatment
  • Purchase or construction of Dwelling house
  • Repayment of Housing Loan
  • Purchase of Plot
  • Addition/Alteration of House
  • Repair of House
  • Lockout
  • Withdrawal Prior to Retirement

Note number of years of service is the total number of years you have contributed to EPF. It can be with multiple employers with or without breaks. The amount of withdrawal is not required to be refunded under normal circumstances. If the amount is not utilized, the same should be refunded with penal interest of 2% per annum.

Overview of EPF

Table below gives the rates of contribution of EPF, EPS, EDLI, Admin charges in India.

Scheme Name Employee contribution Employer contribution
Employee provident fund 12% 3.67%
Employees’ Pension scheme 0 8.33%
Employees Deposit linked insurance 0 0.5%
EPF Administrative  charges 0 1.1%
EDLIS Administrative charges 0 0.01%

Should one withdraw from EPF?

EPF is meant for your retirement  So, EPF Partial Withdrawals should be your last resort. In earlier Hindi movies people used to withdraw money from EPF for marriage of daughter . In movie Ferrari ki saawari (2012), where Sharman Joshi wants to apply to EPF who wants to send his son to a cricket coaching camp at Lords, London. Sharman’s boss informs him that the wheels of loans against Provident Fund grind correctly but exceedingly slowly.

What is the process of EPF Withdrawal?

One has to submit Form 31,called as EPF Withdrawal or EPF Advance Form , through the Employer along with documents. A fixed minimum balance in the account will be kept before arriving at the amount of advance admissible subject to the above conditions.  In EPF’s Form 31, you need to provide your personal, PF account, salary and bank account details. Once the claim is processed, you will receive direct credit to your bank account. Do note that only after your Employer verifies your partial withdrawal application the EPF office will process it.

EPF Partial Withdrawal For Marriage 

Disclaimer : This is an information based website, meant for providing assistance to it's readers. We do not hold any responsibility for mis-information or mis-communication.