Basics of EPF

Basics of Employee Provident Fund: EPF, EPS, EDLIS More »

Savings Bank Account is the most common account for individuals

Saving Bank Account:Do you know how interest is calculated and more More »

Income Tax : Basics and How to

In this world, nothing can be said to be certain, except death and taxes –Benjamin Franklin More »

Ways to invest in Gold

Different ways to invest in gold and pros and cons of each of the way More »

Investing : Approaches, Plan, Psychology

Early investing is very much like growing a tree…if you can take good care of it at the start, it will take care of itself later More »


What is Gratuity?

After 5 years of working in the company an employee becomes eligible for Gratuity. This article explains what is Gratuity? How many years of service is considered to be eligible for Gratuity? How is Gratuity amount calculated? What is tax and Tax exemption on Gratuity? Difference between Gratuity and Pension.

What is Gratuity?

Gratuity is a lump sum payment made by employer  to the employee based on the duration of his  total service when the employee leaves the job .  The reason for leaving the job can be either by resignation, death, retirement or termination, etc. The amount you get as gratuity depends on the number of years you have served and the last drawn monthly salary. Roughly, you get half a month’s Basic and Dearness Allowance(DA) for every completed year of service.

Gratuity and the Law

Gratuity comes under the Payment of Gratuity Act. Most establishments including Charitable institutes, hospitals, educational institutes employing 10 or more workers are covered by the Act.Even employees not covered under the Payment of Gratuity Act are entitled to gratuity. The document (pdf) related to act is at

How many years of service is considered to be eligible for Gratuity?

Gratuity is payable only if an employee has been with the employer for five years or more. But this rule is waived if an employee dies or is disabled. In such cases, even if the tenure is less than 5 years gratuity is paid to the nominees or to the employee. After 5 years of service if you serve more than six months in the last year of employment, it is considered as a full year of service for calculation of gratuity amount. As per the judgement of the Supreme Court an employee is eligible for gratuity if he has completed 4 years of continuous service and 240 days continuous working in 5th year. (Ref lawyersclubIndia ). Since the gratuity is a statutory service condition,the Act provides for the punishment of the employer who fails to pay it to an employee.

  • To calculate number of years of employment, employee’s date of joining and date of leaving is considered and date of resignation is not taken into consideration.
  • Probation period is included while calculating eligibility for gratuity.
  • If you have worked for MNC and join the parent company as permanent employee in foreign location, you will no longer be employee of company registered in India and hence if you have completed 5 years in India office you will be eligible for gratuity.
  • If the company changes its name but management remains the same , there is no resignation from one company and joining of new company then years in both the companies will be counted.

When will the employee not get Gratuity even after completing minimum 5 years of service?

What are Mobile Wallets or Digital Wallets

Use Paytm wallet and get 5% additional discount on“, said my Colleague. “I use Ola wallet while booking Ola cabs and get discount on my taxi fare“, said another one, “No need to carry cash or use credit card. Fill it and use it”. “Google Wallet, ApplePay are also something similar right.” said another one.  What is Paytm wallet, Ola wallet,Google Wallet, Apple Pay? How do they differ? Is it same as AirTel Money, Vodophone M-Pesa?

What is Digital Wallet?

digital wallet or E-Wallet refers to an electronic device that allows an individual to make e online (technically e commerce or electronic commerce) transactions. It  serves as a place to hold some of your money online. You make payments using the money stored in your wallet instead of using a credit card, debit card or net banking, which means your card/bank account doesn’t need to be accessed. Of course, adding money to the wallet still requires you to use one of those methods.They can also be used to store loyalty card information and digital coupons. Digital wallets can be used in conjunction with mobile payment systems that allow customers to pay for purchases with their smart phones.  When Digital wallet is used with mobile it’s called Mobile Wallet.  It is a Virtual Wallet which is like prepaid account of the mobile phone.

There are different kinds of wallets some liked to a e-commerce site like Flipkart or Ola which can be used to make purchases from that site only. Some like MobiWik and Paytm or MobiKwik can be used to make purchases at other websites also. Some like Airtel money can be used to Pay Bills and Recharge, shop or transfer money to bank accounts of your friends and family. This is discussed in detail later.

Methods of payment

Methods of payment

What is the advantage of Digital Wallets or Mobile Wallets?

Electronic and in-app wallets have emerged as another payment option.

Safety: Every time you hand over your credit or debit card  or use netbanking to pay, your identity is visible. And when you make a purchase, as electronic wallet is used to process your payment your actual credit card numbers or bank details are never shared  with merchants. Mobile wallets use a security layer that can be in the form of passwords, biometrics or voice recognition.  If the wallet  is compromised then the amount of harm that’s possible  is limited  as your bank account isn’t touched.

Ease of Use : With RBI all transactions make all transactions secured by a second verification code or one-time-password,the process of paying online using your credit or debit card becomes extremely cumbersome.  As Apple Pay says  Paying in stores or within apps has never been easier. Gone are the days of searching for your wallet. The wasted moments finding the right card. Now payments happen with a single touch

Discount and Loyalty : As mobile wallets use a software that can also store various discount information, offers by merchants and loyalty points, thus eliminating the need to remember which card to use in order to get the maximum benefit from a particular purchase.  E-commerce firms prefer to settle refunds to customers via wallets.   Wallets will largely be used for encouraging loyalty points and to reduce cost of transactions by e-commerce companies.”Digital wallets can also be used to provide discounts. Wallets might help solve the problem of COD(Cash on Delivery) for the e-commerce market. But as COD is largely being used by consumers who are wary of paying in advance will the lure of discount ad ease of use tempt them away is to be seen. Since the concept of a mobile wallet is still pretty new in India, companies are offering deals, discounts and free top-ups – for example, In Oct 2014, Ola launched its wallet with an offer to double the money you stored in it, and Paytm, MobiKwik have regular discounts on products, offered as credit added to your wallet( that can be used to shop some more ) Some of the offers provided by MobiKwik (on Feb 20 2015)

Offers and Mobile Wallets

Offers and Mobile Wallets

Kinds of Digital Wallets

According to the Reserve Bank of India (RBI), there are three kinds of wallets: closed, semi-closed and open.

A closed wallet is issued by a company to a consumer for buying goods and services exclusively from that company. You cannot do cash withdrawal or redemption.With closed wallets, companies don’t need an RBI approval to launch such accounts.   Companies such as, and offer closed wallets. Mostly these function as an account where money gets credited in case of a refund due to cancellation or return of a product or service.  For example in  closed wallet of Ola cabs  the money that you put into the service can only be used to pay for those taxis. It will never expire, though, and since Ola controls the wallet, it can give you loyalty rewards and discounts with ease.

A semi-closed wallet can be used to buy goods and services, including financial services, at clearly identified merchant locations or establishments, which have a specific contract with the issuer to accept the payment instruments. Semi-closed wallets also do not permit cash withdrawal or redemption by the holder. MobiKwik, PayU and Paytm offer semi-closed wallets. For example Citrus Cash app can be used not only at multiplexes such as PVR and Inox but also to recharge direct-to-home services such as Sun Direct. In India as per RBI  Semi-closed Prepaid payment instruments which permit only payment of utility bills/ essential services up to a limit of Rs 10,000 can be issued without any KYC being undertaken by the issuer. 

Open wallets can be used for purchase of goods and services, including financial services such as funds transfer at merchant locations or point of sale terminals that accept cards, and also cash withdrawal at automated teller machines or business correspondents. These kinds of wallets can only be issued by banks. An example of open wallet is M-pesa by Vodafone India Ltd in partnership with ICICI Bank Ltd. (Note Vodafone also offers M-pesa as a semi-closed wallet).  As per RBI the maximum value in open wallet  shall not exceed Rs 50,000.

Interested readers can go through RBI  Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India

Are open digital wallets like Payment Banks?

No . Payment banks are meant for simple banking transactions. These institutions are neither allowed to lend or accept term deposits nor can customers keep more than Rs 1 lakh in such accounts. Such payment banks can issue debit cards and offer services like remittances and utility bill payments. They can also distribute simple financial products like mutual funds and insurance. Individuals can use the payment bank account to make daily or monthly cash transactions either through debit cards or through mobiles. This can also help guard against debit card fraud since one can keep a smaller balance in accounts.

As per World Bank estimates, only 35% of the Indian population has accounts with financial institutions. To service the remaining population, the RBI came out with two new banking categories called small finance banks and payment banks.

Which companies provide Digital Wallets or Mobile Wallets?

In India the major companies providing mobile wallet services are telecom service providers such as Vodafone’s M-pesa, Bharti Airtel Ltd’s Airtel Money, Aircel’s Mobile Money and Tata Teleservices Ltd’s mRupee. MobiKwik, PayU and Paytm offer semi-closed wallets

What kind of technologies are used in Mobile Wallet?

Mobile wallets uses a range of enabling technologies  Mobile internet( 2G, 3G or Wi-Fi), SMS (short messaging or texting service), NFC (near-field communication), QR (quick response) codes, Bluetooth and even biometrics.

  • NFC is a set of standards for smartphones and similar devices to establish a short-range high frequency wireless communication that enables exchange of data between devices over about a 10cm distance. In Jan 2015 ICICI Bank came out with debit card using NFC technology allowing one to make quick contact less payments.
  • QR codes are barcodes that can store large amounts of information and can be read using apps on smartphones and dedicated QR reading devices.
  • Biometrics, however, are only available in some phones like Apple Inc.’s iPhone.

Infographic 7 ways to pay using your phone  shows the various technologies used in mobile wallets in US. An excerpt is shown below

Technologies used in Mobile Wallet

Technologies used in Mobile Wallet

History of Digital wallets

The digital wallet was first popularized by e-commerce giant PayPal in the early 2000s as a way to securely pay for goods online using a credit card. PayPal lets users link their bank accounts, debit cards and credit cards directly to one online account. When shopping online, users can then choose to pay directly from their digital account or digital wallet. Once the iPhone came about and mobile commerce began to take hold, Apple extended this model to iTunes, and Google followed with Google Play, both providing a software solution for repeat online purchase via the mobile device. In Oct 2014 Apple incorporated its mobile wallet solution directly into its operating system, and simultaneously incorporated a SIM-independent  secure memory chip, an NFC radio, and a fingerprint reader.

Is Digital Wallet or Mobile Wallet  the Future?

All countries are trying to move away from using relatively expensive and inefficient paper money and metal coins for making payments. In 2015 Annual Letter, the Bill & Melinda Gates Foundation said that one of their  big bets is how mobile banking will help transform the lives of the poor.

Related Articles:

A smartphone digital wallet will help you pay for stuff, but it will also store your concert tickets, bus and subway passes and gift cards. Retailers will reward your loyalty by offering instant freebies, discounts and coupons. Your digital wallet might even unlock the doors to your house. Mobile wallets are still evolving in terms of their usage, but they will be the next big thing in monetary transactions is to be seen. Have you used any Digital Wallet? How has been your experience? Do you think Digital wallets are future?

Cricket World Cup 2015

49 Games 44 Days 14 teams 1 billion anticipated viewers , Cricket Biggest Spectacle, Cricket World Cup 2015  will be from Feb 14 – Mar 29 . An overview of the ICC World Cup 2015, prize money of ICC World Cup 2015 and of from 2007 to 2015, Schedule of World Cup, Cricket World Cup Winners, Leading Run getters, Bowlers,Wicket keepers etc.

Format of the ICC Cricket World Cup

14 teams will take part in the initial stages, divided into two groups of seven; the seven teams play each other once before the top four teams from each group qualify for the quarter-finals. This ensures that each team gets to play a minimum of six matches even if they exit in the group stage.

Group A : Australia, New Zealand, England and Sri Lanka, Bangladesh, Afghanistan and Scotland.

Group B : South Africa, India and Pakistan,West Indies, United Arab Emirates,Zimbabwe and Ireland .

Official site of ICC World Cup 

ICC Cricket World Cup Prize Money

Prize money for ICC World Cup 2015 is given below (Ref Times of India)

Prize money of Cricket World Cup 2015

Prize money of Cricket World Cup 2015

What is ULIP or Unit Linked Insurance Plan

ULIPS are back.  Between 2005 -2008 Ulips were the most sold financial product.  Stock market Crash of 2008 led to complaints of  ULIPS.  In recent times, a number of insurance companies, HDFC Life, Bajaj Allianz have launched online which are cheaper. n fact, some of the Ulips introduced in recent months are cheaper than the direct plans of mutual funds. This article talks about what is ULIP? How it works? How it compares to Mutual Funds, Traditional Insurance Plans, What are charges associated with ULIPs.

What is ULIP?

A Unit Linked Insurance Plan ( ULIP), is a financial product that combines investment as well as insurance.  In an ULIP the premium amount, after deduction of charges, is invested into funds of your choice. The fund could be equity based, debt based etc. The performance of the fund will depend on the market.  You can switch between the funds. The features of ULIP are similar to those of mutual funds except that ULIPs are investment products with insurance benefits. Since Ulips are insurance plans, the gains and maturity proceeds are tax-free under Section 10(10d).  If the life cover is not 10 times the annual premium, you won’t get any tax deduction and the corpus will also be taxable on maturity. The deduction under Sec 80C is capped at Rs 1.5 lakh

How does ULIP work?

When you buy a ULIP you pay the premium just like for an insurance policy. Unlike the insurance policy the premium is not just for insurance but also for investment. After deducting some charges (some in beginning, some during the policy term) and for insurance ,the amount left gets invested into mutual fund of your choice. ULIPS have different funds with different risk-return profile. One may have allocation of 80-20 to equity and debt , some other can have 50-50 and some can have 20-80. You can switch between the funds (max 4 free switches in most of the cases , there after some nominal fees)

For example you buy a ULIP for annual premium of Rs 30,000 for 20 years.  The plan will give him a cover of Rs 3 lakh (10 times the annual premium). After charges are deducted, say Rs 5,000, the amount left (Rs 25,000) is invested in a fund. Suppose the  fund  has NAV of Rs 10. So you will get  2500 units(25,000/10) of the fund. If fund NAV increases value of your fund also increases. So If after an year, the NAV is Rs 11, then your fund value will Rs 27,500(2500 units x Rs 11). This amount is lower than Rs 30,000 which was invested. If NAV has fallen, then the fund value would be lesser.

What are charges associated with ULIP?

Basic Charges associated with ULIP are:

Buying the house: Right time to buy,what should one consider before buying

 Nikhil’s Bhaiya’s father is not a good father. My son said after we watched the Ad of SBI Insurance Great Dad. (We were on youtube to see video of how to convert binary number to decimal. when we came across the Video) “He didn’t let him buy the house..Don’t you remember” said my son . I was taken by surprise (shock actually) and I remembered how an year earlier Mr Gupta (our neighbour Nikhil’s father) had come to our house as he had disagreement with Nikhil.

Nikhil was a smart guy with engineering degree under his belt and was working in IT company. As he was now well settled in job he wanted to take a loan to buy the house just like his other friends. Mr Gupta was against the idea. “At 26-27 when you are undecided about your future why do you want to take a big liability like home loan ? And too just because your friends are doing it..Talk of peer pressure” Next day Gupta family came to our house(a neutral territory Mrs Gupta said and this time she was not supporting her husband) for a discussion between Nikhil and his father . The discussion is given below and after that my respect for Mr Gupta went up It made me realise that being a father means not only providing for the basic needs of Roti Kapda Makaan Education but also guiding them. Quoting Danille Steele from the book Daddy .

It’s a responsibility you can never shirk, never forget, never avoid. You can’t take a day off from being a father. You can’t drop out, or change your mind, or decide not to be there. For the next eighteen years, if not longer, that baby would be your responsibility solely. 

The Video that we saw, it pulls the heart strings.

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.