Importance of IFSC code and MICR code

The Indian banking system has constantly evolved over the last decade embracing new technological advancements and systems. From being a totally manual working mechanism, the Indian banking sector has become fully computerized with semi rural and rural branches connected to the mainstream by a central network. 

Indian Financial System Code (IFSC) and Magnetic Ink Character Recognition code also known as MICR code are two of the prime examples of technological up gradations in the banking and finance sector in recent times. While IFSC or Indian Financial System Codes are unique for each bank branch useful in branch identification in online financial transactions, MICR codes are important for quick cheque clearance mechanism. 

MICR code is printed in the cheque leaf readable only by the cheque clearance house. This facility allows the clearing house to clear all domestic, outstation and foreign cheques in real time.

Significance of IFSC Code:

All online banking transactions including net banking, online purchases, NEFT and RTGS online payment transfers are all possible due to IFSC codes. Indian financial system code of IFSC as it is commonly known is a set of 11 special characters including numbers and alphabets. 

• The first 4 characters of the code correspond to the bank concerned and are always alphabetic. 
• The last six characters of the code correspond to the exact bank branch and can be numeric or alphabetic or a combination of both. 
• The fifth character from the front is reserved by the regulator Reserve Bank of India and reserved for future use. 
• As of now the fifth character in IFSC code is always 0.

Example of IFSC Code:

Let us consider the IFSC code for Citibank Bank Andheri branch in Mumbai city. 

• The IFSC code for the bank is CITI0000036. 
• First 4 characters are CITI representing the name of the bank which is Citibank India in this case. 
• The last six characters are 000036 which correspond to the Andheri Branch of Citibank India in Mumbai. 
• The fifth character from the front is o and reserved for future use. 

Likewise let us consider the IFSC code for Andhra Bank located in Achanta in the Western Godavari district of Andhra Pradesh. 

• The IFSC code for the bank is ANDB0000001. 
• First 4 characters are ANDB representing Andhra Bank, the name of the bank in this case. 
• The last six characters are 000001 which corresponds to the Achanta city Branch located in the Western Godavari district of Andhra Pradesh. 
• The fifth character like in all IFSC codes is 0.

Significance of MICR Code:

MagneticInk Character Recognition Code better known as MICR code is a 9 character code which is used in cheque clearance leading to faster processing and settlement of funds. MICR codes are printed in each cheque leaf of the bank but are invisible to the naked eye. A special ink is used to print the MICR code which is readable only by the code reader in cheque clearing houses. 

• The special ink makes MICR codes tamper proof and difficult to copy. 
• MICR codes consist of a nine digit numeric code. 
• The first three digits correspond to the city codes which are usually same as the pin code of the city. 
• The next three characters represent the bank code. 
• And the last three are reserved for the concerned bank branch.

Budget 2014: How it will Impact Tax for Middle and Lower Class People in India?

The Union Budget for the year 2014-15 is the first one that our new Finance Minister Mr. Arun Jaitley will unveil in a few days. For the newly formed government, the challenges and expectations are abundant. The BJP-led NDA government needs to do a powerful balancing act between adopting pro-people programs and resorting to tremendous reform push. 

The government led by Mr. Narendra Modi has the huge task to meet the anticipations related to corporate houses, foreign investors and the common man of the country. It is also very important for the government to get rid of problems like high inflation regime and corruption so that the investors’ confidence can be regained. It wouldn’t be wrong to say that the Indian budget 2014 is one of the most anticipated ones in recent times.

The Budget 2014 will surely impact the middle and lower class people in India and it remains to be seen which sectors will see the most number of changes. The Indian tax system is a comprehensive web of formalities, which affects the lower class people in a big way and, therefore, the government needs to concentrate on the DTC (Direct Tax Code) and implement the GST (Goods and Services Tax) system, which will definitely make the Indian tax regime simple, accountable and transparent. The government needs to push through several reforms for making the nation an investment friendly one.

Tax Relief:

Have a look at some of the major points which could be taken up by Mr. Arun Jaitley regarding tax relief for middle class people in India.

1. For individuals, the basic exemption limit of the tax can be raised from Rs 2,00,000 to Rs 3,00,000. For senior citizens, the limits should be raised from Rs 2,50,000 to Rs 3,50,000. This would surely help the finance minister in compensating all the tax payers for the superior level of inflation that has had a negative impact on the economy as a whole. It will also help in increasing the purchasing capacity of the individuals.
2. The deduction limit on income tax under section 80 C can be increased from Rs 1,00,000 to Rs 2,00,000. This will help in stimulating forced investments and savings.
3. The medical insurance premium deduction under section 80D which is at present capped at Rs 15,000 for spouse, self and kids and Rs 20,000 for guardians must also be revised, considering the medical inflation.

In addition to the direct taxes which are borne by the salaried class individuals, the indirect taxes like excise duties, service tax, VAT and sales tax pinch the pockets of the employees as well. A restaurant bill of Rs 1,000 becomes Rs 1,300 and this is why the finance minister needs to offer some tax relief under the indirect tax codes as well.

It would be appropriate to say that only a pragmatic approach can help the government form a union budget that allows sustainable growth to take place in the country. By studying these points about Indian budget 2014, you’ll get a better idea regarding how it will impact the middle and lower class sections of the society.