(This article was first published in The Economic Times.)
As the country celebrates its 68th Republic Day, ET Wealth lists the fundamental rights and duties every investor and taxpayer should not only be aware of, but also act upon whenever necessary.
1. Right to know commission paid
You have the right to know how much your fund distributor or insurance agent earns from the financial products sold to you. A mutual fund distributor’s commission, paid by the fund company, is disclosed in your account statement.
For insurance products, the agent’s commission depends on the premium. Your insurance agent has to furnish this information before selling you a policy. Ulip commissions are displayed in the benefit illustration accompanying the proposal form. Get in touch with Sebi for mutual funds and Irdai for insurance if you are not provided the information.
2. Right to return insurance policy
You don’t have to retain a life insurance policy you don’t want. You have the right to return it within 15 days of receiving policy documents. This Free Look Period applies to all life insurance policies and health insurance policies with a term of 3 years and more. To return a policy, you need to submit an application. Most insurance companies have a form that can be downloaded from their respective websites. Submit it yourself. If an agent has mis-sold a policy to you, there is a risk of him or she deliberately not sending it within the prescribed 15 days.
3. Right to not be harassed by lenders
Even if you have defaulted on a loan, you have the right to be treated with respect by the lender and recovery agents. The lender has to give you a 60-day notice first. You can present your case to authorised officers during this period. The lender cannot harass you during this time and can only call you between 7am and 7pm. If you are harassed, approach the bank. They will have to investigate the matter. You can even file an FIR.
4. Right to not pay for card frauds
You have the right to not pay for unauthorised transactions on your debit or credit card as long as you can prove that the transactions were not carried out by you. Report an unauthorised transaction immediately to the issuing bank. You can also get your card blocked to prevent further misuse. Filing an FIR is an option. Most cards come with a zero liability feature that protects the cardholder from frauds.
5. Right to life insurance claim
An Irdai directive gives you the right to claim the proceeds of a life insurance policy that has completed 3 years. There are no exceptions to this rule. The insurance company has this 3-year window to verify the authenticity of the policyholder, after which the claims have to be settled. This ruling also applies in case a policyholder expires within the first 3 years, but the claim is made after 3 years.
6. Right to get tax refund in 90 days
You have the right to receive your income tax refund within 90 days of filing your tax return. If your refund is delayed beyond this period, you will also receive an interest of 0.5% every month on the refund amount. Since the tax refund is on excess TDS, you are entitled to get it back after you file returns. You will get an interest even if the refund was delayed because your tax return was revised. If you do not receive the refund within 90 days, you can approach the income tax assessing officer in your jurisdiction or raise a request on the tax department’s website.
7. Right to possession of property on time
When you buy property, you also earn the right to its possession within the stipulated time. If the project is delayed, the developer is legally bound to pay you the same interest as the EMI you pay on your home loan. You can also seek a refund of the entire amount paid by you. The builder has to refund the money within 45 days of the request. For any issues concerning delayed possession, you should contact the Real Estate Regulatory Authority of your state. These authorities are required to settle your complaint in 60 days.
8. Right to locker facilities
You don’t have to have a savings account or any other association with a bank to open a locker. It can ask you to only open a fixed deposit that covers 3 years’ rent and charges for using its locker facility. You cannot be asked to invest in any of its products. There should also be a transparent wait list. If a bank asks you to invest in a product, complain to the bank’s grievance cell. If the issue persists, approach the ombudsman or RBI.
9. Right to not pay service charge
If you are dissatisfied with the service provided at a restaurant, you have the right to not pay service charges that are included in your bill. Unlike service tax or VAT, service charge is not a government levy and goes directly into the pockets of the restaurant. This makes it a voluntary payment. If a restaurant forces you to pay a service charge, you should approach the Department of Consumer Affairs and lodge a formal complaint.
10. Right to know fund mandate change
You have the right to be notified about a permanent change in the investment mandate of a mutual fund you have invested in. Investors have the right to exit a scheme without paying exit load before the changes are enforced. This rule applies in case the fundamental attributes of a fund are being changed and the investor would not enjoy the same benefits or investment returns that they had invested for.
The Fundamental Financial Duties
Duty to pay taxes
The income tax that you pay is used by the government to build the nation. As only around 3% of the population files tax returns, it is imperative that you do not evade taxes.
Duty to be truthful
Fill out insurance policy proposal forms honestly. Your cover is based on the information provided. Wrong or incorrect information can result in your claim being rejected.
Duty to pay dues on time
Late payment of credit card dues or loan instalments can derail your finances. Late payment fees are hefty and so is the interest on the due amount.
Duty to not sign a blank form
You are responsible for any paper you sign. Fill out the form you are signing yourself or have it done in your presence. Self attest documents to prevent frauds
Duty to nominate family members
Mention nominees in insurance policies and investment documents. Not having nominees can only lead to family disputes later.