Queries

James Sangwa, Shillong

I am a college graduate. I have some savings but no steady income. I aspire to buy a bike. Should I go for a personal loan, auto loan, money lender, or loan against an insurance policy?

The best way to get your dream bike is to get an auto loan. It will always be cheaper than the other loans you mentioned. The reason for this is two-fold: first, if you take it from a showroom, the rates are negotiated between the manufacturer or showroom owner and the financing company and are likely to be lower; second, because of the competition amongst bike manufacturers, there is a likelihood of the manufacturer subsidising it to some extent. It will also be a much faster and more convenient.

The next good option would be taking it from a bank which again would be a loan at fairly competitive rates. A personal loan would be costly since it does not take any collateral.

Money lenders would be a no-no due to high rates, irregular terms, and maybe hidden charges and conditions. A term insurance plan will not give you any loan against it, and if you have any other type of insurance policy at this age, the next question is—why do you have it? Anyway, loans against an insurance policy would be more expensive overall.

Col. Sanjeev Govila (retd.), CEO, Hum Fauji Initiatives

Janaki Subramaniam, Coimbatore

I am 24 years old and got into my first job. I have goals like buying a car, a house, and saving for retirement. Should I go after my short-term goals first, or can both happen concurrently?

Assuming that buying a car is your short-term goal in the next one-three years and the other two are long-term goals, whether you should invest for all or some of them at the same time will depend on your resources—how much can you invest in bulk or on a regular basis, and whether you are open to taking loans for the car and house, and pay the equated monthly instalments (EMIs).

For short-term goals, occuring in the next three years, you should invest in safe avenues like bank deposits and debt mutual funds as per your comfort level. For long-term goals, investments  could be in avenues that entail some risk, like equity and hybrid products, which combine debt and equity. You have the advantage of age with you, so start early.

Col. Sanjeev Govila (retd.), CEO, Hum Fauji Initiatives

Zeeshan Arora, Mumbai

I earn about Rs 5.5 lakh annually. I have a YouTube channel, and for the last six months, I have been earning, on average, Rs 5,000 per month from tutorial videos. I want to know the tax treatment and statutory requirement for social media income and which income tax return (ITR) form I will need to file my returns.

Income earned from YouTube is liable to income tax under the head profits and gains from business and profession. The same will be included in your gross total income, including salary, and will be liable to income tax as per the applicable slab. One important difference between salary and professional income is that from professional income, you can get deduction for expenses incurred to generate such income. For example, if you purchased devices for recording or took the help of professionals for recording, then the amount paid for such expenses will be allowed as deductions. So, while offering your YouTube income to tax, only the net income will be liable to tax. Hence, you will need to file ITR-3.

Vivek Jalan, Partner, Tax Connect Advisory