Here’s the Income Tax Slabs for the financial year 2012-13, based on the budget presented by the Finance Minister on 16th March 2012.
General
Till 2,00,000 – 0%
2,00,001 ~ 5,00,000 – 10%
5,00,001 ~ 10,00,000 – 20%
Above 10,00,000 – 30%
Senior Citizen (Between 60 & 80 years)
Till 2,50,000 – 0%
2,50,001 ~ 5,00,000 – 10%
5,00,001 ~ 10,00,000 – 20%
Above 10,00,000 – 30%
Very Senior Citizen (Above 80 years)
Till 5,00,000 – 0%
5,00,001 ~ 10,00,000 – 20%
Above 10,00,000 – 30%
Comments
The Finance Minister didn’t mention about a separate tax slab for women. Either it is awaited or we will see that it is unified with the General category. I think the unification of tax slabs for men and women makes greater sense.
The first slab is raised from 1,80,000 to 2,00,000 leading to a maximum tax savings of 2,000 in this slab. People earning income between 8,00,000 and 10,00,000 are the biggest beneficiaries of the new tax slabs as this range of income moves from a 30% slab to 20% slab, resulting in a maximum tax savings of 20,000.
Overall, this is not a great relaxation for the income earning populace at a time when the cost of living has consistently been higher and is not showing any signs of cooling.
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- New Income Tax Slabs
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Showing posts with label Personal Finance. Show all posts
Showing posts with label Personal Finance. Show all posts
Thursday, 29 March 2012
Monday, 6 July 2009
New Income Tax Slabs
In the union budget for financial year 2009-10, the Finance Minister has announced new tax slabs.
General
Till 1,60,000 – 0%
1,60,001 – 3,00,000 – 10%
3,00,001 – 5,00,000 – 20%
Above 5,00,000 – 30%
Women
Till 1,90,000 – 0%
1,90,000 – 3,00,000 – 10%
Remaining tax rates are same as general
Senior Citizen
Till 2,40,000 – 0%
2,40,001 – 3,00,000 – 10%
Remaining tax rates are same as general
As you can see, compared to the last change, there is a 10,000 rupees increase in the first slab across all categories, while the remaining slabs remain unchanged. This would lead to a maximum savings of 1000 rupees for a tax payer whose income falls above Rs. 1,60,000. This may not be a significant saving for many.
However the interesting thing to note is that there is no 10% surcharge for incomes above 10 lakhs. This is a welcome move because I feel progressive taxation is counter productive to an aspiring population. Eventhough these tax sops would make holes in government's revenues, I guess the government is looking to increase the expendable surplus of the populace so as to boost up the economic downturn.
General
Till 1,60,000 – 0%
1,60,001 – 3,00,000 – 10%
3,00,001 – 5,00,000 – 20%
Above 5,00,000 – 30%
Women
Till 1,90,000 – 0%
1,90,000 – 3,00,000 – 10%
Remaining tax rates are same as general
Senior Citizen
Till 2,40,000 – 0%
2,40,001 – 3,00,000 – 10%
Remaining tax rates are same as general
As you can see, compared to the last change, there is a 10,000 rupees increase in the first slab across all categories, while the remaining slabs remain unchanged. This would lead to a maximum savings of 1000 rupees for a tax payer whose income falls above Rs. 1,60,000. This may not be a significant saving for many.
However the interesting thing to note is that there is no 10% surcharge for incomes above 10 lakhs. This is a welcome move because I feel progressive taxation is counter productive to an aspiring population. Eventhough these tax sops would make holes in government's revenues, I guess the government is looking to increase the expendable surplus of the populace so as to boost up the economic downturn.
Monday, 9 March 2009
How does Short Term Capital Gain/Loss work?
I found this interesting snippet circulated through email by ICICIDirect, which describes in simple anecdotes how Short Term Capital Gain/Loss works in India. I am posting it straight away, without any modifications.
1. Mr. Sharma purchased some securities on May 7, 2008 at a total cost of Rs. 100,000. On July 3, 2008, he sold these securities for Rs. 130,000. Here the Short Term Capital Gain, STCG (gain arising from sale of securities which is less than 12 months old) was Rs. 30,000 (a) and STCG tax (15% as per current laws) for this gain calculated to Rs. 4,500.
2. But Mr. Sharma had also purchased securities worth Rs. 90,000 on June 12, 2008 and had sold them at Rs. 40,000 on February 10, 2009. Hence there is a Short Term Capital Loss (loss arising from sale of securities which is less than 12 months old) and equal to Rs. 50,000 (b).
3. Now as per the tax laws, Mr. Sharma’s Short Term Capital Gain (a) is offset by Short Term Capital Loss (b). Hence there is no Short Term Capital Gains tax payable by Mr. Sharma for the financial year 2008-09. Also, he carried forward Rs. 20,000 loss for offsetting any Short Term Capital Gains he makes in the next 8 years.
Thus a person needs to pay STCG tax only for the difference between Short Term Capital Gain and Short Term Capital Loss if the difference is positive; no tax if the difference is zero or negative. Moreover, if the difference is negative, he can even carry forward and offset the loss to gains in the next 8 years, until the loss is completely used off to offset those gains.
Thanks to ICICIDirect.com
1. Mr. Sharma purchased some securities on May 7, 2008 at a total cost of Rs. 100,000. On July 3, 2008, he sold these securities for Rs. 130,000. Here the Short Term Capital Gain, STCG (gain arising from sale of securities which is less than 12 months old) was Rs. 30,000 (a) and STCG tax (15% as per current laws) for this gain calculated to Rs. 4,500.
2. But Mr. Sharma had also purchased securities worth Rs. 90,000 on June 12, 2008 and had sold them at Rs. 40,000 on February 10, 2009. Hence there is a Short Term Capital Loss (loss arising from sale of securities which is less than 12 months old) and equal to Rs. 50,000 (b).
3. Now as per the tax laws, Mr. Sharma’s Short Term Capital Gain (a) is offset by Short Term Capital Loss (b). Hence there is no Short Term Capital Gains tax payable by Mr. Sharma for the financial year 2008-09. Also, he carried forward Rs. 20,000 loss for offsetting any Short Term Capital Gains he makes in the next 8 years.
Thus a person needs to pay STCG tax only for the difference between Short Term Capital Gain and Short Term Capital Loss if the difference is positive; no tax if the difference is zero or negative. Moreover, if the difference is negative, he can even carry forward and offset the loss to gains in the next 8 years, until the loss is completely used off to offset those gains.
Thanks to ICICIDirect.com
Sunday, 15 February 2009
How to best manage your credit card?
Credit cards are very useful and handy if used wisely and if not used wisely, it can give so much of a head ache. So the knack is to use the credit card cleverly.
This article that came in rediff is worth a read as it explains how to best manage your credit card. Have a look.
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This article that came in rediff is worth a read as it explains how to best manage your credit card. Have a look.
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Wednesday, 11 February 2009
Avoid owning multiple savings bank accounts
A large number of people own savings accounts in several banks. Some are inherited from their previous jobs while some are opened to avoid tax deduction at source on fixed deposits. As the minimum average quarterly balance required to maintain these savings accounts increases in private sector banks, owing multiple savings accounts become a costly affair.
An increasing number of banks have hiked the average quarterly balance (AQB) in metros to Rs. 10,000; while most of them have the minimum AQB amount as Rs. 5000 in smaller cities. Thus, a lot of customer’s money is blocked to keep their savings accounts alive. For example, consider the case of a person having 5 savings accounts of AQB Rs. 10,000 each!
Secondly, having too many savings accounts and the need to maintain minimum AQB in each one of them pose the danger of not being able to meet the minimum AQB in one or two accounts, which leads to penalty charges. This is usually a huge amount in private sector banks (ICICI Bank charges Rs. 750 + Service Charge) as a penalty for not maintaining minimum AQB.
But above all, earning a paltry interest rate of 3.5% for your money in savings account, when you can earn a much higher interest of around 10% in Fixed Deposits, would not be a great idea. That is, if you have less number of savings accounts, less would be the money needed for maintaining minimum AQB in those and more would be the money available for Fixed Deposits.
“If you notice that your savings account balance is over Rs 50,000, normally you would think of transferring some money to a fixed deposit. But if there is Rs 20,000 in multiple accounts, the thought many not cross your mind”, says a financial advisor, which is very true. So it’s better to own as less savings accounts as possible.
An increasing number of banks have hiked the average quarterly balance (AQB) in metros to Rs. 10,000; while most of them have the minimum AQB amount as Rs. 5000 in smaller cities. Thus, a lot of customer’s money is blocked to keep their savings accounts alive. For example, consider the case of a person having 5 savings accounts of AQB Rs. 10,000 each!
Secondly, having too many savings accounts and the need to maintain minimum AQB in each one of them pose the danger of not being able to meet the minimum AQB in one or two accounts, which leads to penalty charges. This is usually a huge amount in private sector banks (ICICI Bank charges Rs. 750 + Service Charge) as a penalty for not maintaining minimum AQB.
But above all, earning a paltry interest rate of 3.5% for your money in savings account, when you can earn a much higher interest of around 10% in Fixed Deposits, would not be a great idea. That is, if you have less number of savings accounts, less would be the money needed for maintaining minimum AQB in those and more would be the money available for Fixed Deposits.
“If you notice that your savings account balance is over Rs 50,000, normally you would think of transferring some money to a fixed deposit. But if there is Rs 20,000 in multiple accounts, the thought many not cross your mind”, says a financial advisor, which is very true. So it’s better to own as less savings accounts as possible.
Friday, 6 February 2009
Finacial Control
Even though the plastic money has lot of advantages, credit cards are one of the dreaded financial instruments as far as consumers are concerned, due to the sheer amount of money he/she has to pay in terms of interest for revolving credit and other charges. So, no doubt, this shall be the first of the liabilities a person has to repay.
Considering the ongoing economic down turn, apart from reducing credit card spends, there are a few other things that one may follow to lead a safer ‘financial’ life. This includes maintaining and emergency fund, having a strictly followed budget etc.
This article from rediff explains about various things that you may consider for yourselves to lead a financially safe live in the economic decline. Worth a read!
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Considering the ongoing economic down turn, apart from reducing credit card spends, there are a few other things that one may follow to lead a safer ‘financial’ life. This includes maintaining and emergency fund, having a strictly followed budget etc.
This article from rediff explains about various things that you may consider for yourselves to lead a financially safe live in the economic decline. Worth a read!
Related Articles
- Credit card and effective interest rate
- Interest rate on credit cards to increase to 49%
Tuesday, 3 February 2009
Balance Sheet, Cash Flow Statement and Saving Tax
The balance sheet is one of the key financial statements of a company and is of particular interest to an existing or prospective shareholder of the company. Here’s an article from Rediff, which explains how to read a balance sheet.
Similar to balance sheet, cash flow statement is another key financial statement of a company and is a mandatory part of the company’s financial reports since 1987. It tells an investor how the company’s operations are running, where the money is coming from and how it is spent. This article describes what is a cash flow statement?
Two months from now, the financial year will come to and end and then starts the proceedings for filing tax returns. So, various ways for saving tax should be done in these two months. This ToI article, explains 10 smart ways to lower your tax bill.
Similar to balance sheet, cash flow statement is another key financial statement of a company and is a mandatory part of the company’s financial reports since 1987. It tells an investor how the company’s operations are running, where the money is coming from and how it is spent. This article describes what is a cash flow statement?
Two months from now, the financial year will come to and end and then starts the proceedings for filing tax returns. So, various ways for saving tax should be done in these two months. This ToI article, explains 10 smart ways to lower your tax bill.
Friday, 30 January 2009
No proof required for LTA & Conveyance allowance claims
In a landmark ruling, the Supreme Court has said that employers are not under any statutory obligation to collect supporting evidence and furnish it to tax authorities while assessing Conveyance and Leave Travel Allowance (LTA) of their employees. Currently, claims without supporting bills are taxed.
The verdict came as a result of a plea from companies including L&T and ITI.
Quoting Times of India,
More details here.
The verdict came as a result of a plea from companies including L&T and ITI.
Quoting Times of India,
In its defense, the revenue department had argued that assessee companies were under statutory obligation under Income Tax Act, 1961, and relevant rules, to collect documentary proof to show that their employee(s) had actually utilized the amount paid towards the leave travel concession and conveyance allowance.So, until the tax authorities come up with a circular/amendment to clear this out (which I guess they might), claim all your LTA and Conveyance allowances without showing any bills.
Rejecting the plea, the court in its order said: “The beneficiary of exemption under Section 10(5) (of the Income Tax Act) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s).”
More details here.
Wednesday, 23 July 2008
On filing Tax Returns
Livemint has this great article written by Sunil Dhawan on filing tax returns. It’s worth a read.
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- How to file Income Tax returns online
- How to check whether your employer/financial institution have deposited your TDS?
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Sunday, 6 July 2008
How to file Income Tax returns online
Income Tax Department of India facilitates a tax payer to file his Income Tax returns online through their website. It is an easy process and following are the steps involved according to IT department website,
1. Select appropriate type of Return Form from the website (ITR-1/ITR-2/ITR-3/ITR-4)
2. Download and install Return Preparation Software for the selected Return Form
3. Fill return offline and generate XML file
4. Register and create a user id (PAN) and password at the website
5. Login and click on relevant form on left panel and select "Submit Return"
6. Browse to select XML file and click on "Upload" button
7. On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form
8. Incase the return is digitally signed; on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record
9. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns
Here is the link to IT Department's eFiling website.
Related Articles
- How to check whether your employer/financial institution have deposited your TDS?
1. Select appropriate type of Return Form from the website (ITR-1/ITR-2/ITR-3/ITR-4)
2. Download and install Return Preparation Software for the selected Return Form
3. Fill return offline and generate XML file
4. Register and create a user id (PAN) and password at the website
5. Login and click on relevant form on left panel and select "Submit Return"
6. Browse to select XML file and click on "Upload" button
7. On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form
8. Incase the return is digitally signed; on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record
9. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns
Here is the link to IT Department's eFiling website.
Related Articles
- How to check whether your employer/financial institution have deposited your TDS?
Monday, 30 June 2008
How to check whether your employer/financial institution have deposited your TDS?
Most of the new age companies deduct income tax before giving salary to the employees (Tax Deduction at Source or TDS). TDS is also done by banks and other financial institutions for returns on fixed deposits, short term gains on equities etc. How do you check whether the tax deducted from you through TDS have been paid to the exchequer by your company or the financial institution?
Tax Information Network (TIN) of Income Tax department, Government of India facilitates a PAN holder to view annual tax statement (Form 26AS) online.
It’s very straight forward involving few simple steps
1. You have to register your PAN number online
2. Get it verified by TIN
3. Start checking tax credit online
The verification can be done by either going to the nearest TIN-Facilitation Centre or asking them to visit your address. There is a small fee for the one time authorization. Rs 15 + service tax if the PAN holder visits the TIN-Facilitation Centre in person or Rs. 100 + service tax if the PAN holder opts for the TIN employee to visit him and do the verification.
This is the link to do it.
Tax Information Network (TIN) of Income Tax department, Government of India facilitates a PAN holder to view annual tax statement (Form 26AS) online.
It’s very straight forward involving few simple steps
1. You have to register your PAN number online
2. Get it verified by TIN
3. Start checking tax credit online
The verification can be done by either going to the nearest TIN-Facilitation Centre or asking them to visit your address. There is a small fee for the one time authorization. Rs 15 + service tax if the PAN holder visits the TIN-Facilitation Centre in person or Rs. 100 + service tax if the PAN holder opts for the TIN employee to visit him and do the verification.
This is the link to do it.
Friday, 27 June 2008
Advantages of investing in Real-estate
Investing in real-estate, or more specifically, on a house or flat, is something that interests the salaried class very much. Though the scenario appears bleak due to the recent CRR and Repo rate hike by RBI (which could lead to an increase in home loan rates), buying a real-estate is something that is still worth pondering.Real-estate has certain advantages that other investment options don’t have. Let’s have a look at few of those advantages and see why investing in real-estate is still a better option.
Advantages
1) Property prices, in general, don’t show a downward trend, especially if selected at a location where there is ample scope for development. In such cases, it becomes a safer investment.
2) The rate at which real-estate prices increase sometimes even beat the stock market.
3) Inflation generally doesn’t affect real-estate (house/flat) returns because the costs of construction materials increase every year (with inflation). As a result, the cost of buying a house/flat is always going to increase with time. Hence properties will most probably be available at a higher price tomorrow.
4) Investing in a ready to occupy house/flat could save the money that you spend on a rented house. Till selling the flat, you can live in the flat and save on the rent amount.
5) If you are taking a home loan for buying the house/flat, the EMI could be afforded with 1) the money you otherwise pay as rent and 2) the tax savings (hence increased take home salary) you get on home loans.
Tax Savings
When you take a home loan, there are two ways with which you could save tax.
1) The principal component of the EMI is eligible for a deduction of up to 100,000 under Section 80C of Income Tax Act 1961. This is the same section under which Provident Fund, Insurance Premiums etc. are claimed.
2) The interest component of EMI is exempted up to 150,000.
3) If both husband and wife are working, then both can claim these exemptions for the same property, provided they have taken a joint loan and divide the principal and interest component of EMI among each other.
Tuesday, 24 June 2008
Online share trading websites of India
Ever since the dematerialization of shares happened in India, stock trading has shifted its base to the internet world. It made share trading a lot easier for people and more of them started buying and selling shares through various websites, which provided equity investors with facilities to do online trading. Online trading became so much popular so that today websites not only provide facilities to do share trading but also for Futures and Options trading, Commodities trading, Overseas trading, IPO application, Mutual Funds etc. and more.Here is a non-comprehensive list of websites through which you can do online share trading in India, on BSE and NSE, the leading stock exchanges of India. The websites are neither arranged in any particular order nor are they ranked here. And all of them provide more or less the same set of services. There could be a difference in customer service though!
ICICI Direct
ICICI Direct is owned by ICICI bank. They have one of the highest brokerage fees in India but also have a plethora of stock research information and trading tips available with them.
Sharekhan
Sharekhan is an old hand broker with a lot of experience in Indian stock markets.
Reliance Money
Reliance Money is owned by Anil Dhirubhai Ambani Group.
5paisa
5paisa.com is an IndiaInfoline owned online equity trading portal.
Geojit
Geojit, as a company, is in operation since 1987. As on today, it is the only company in which a government entity (Kerala State Industrial Development Corporation) has a stake.
Indiabulls
Indiabulls is a leading Financial Services and Real Estate company of India. They have over 640 branches across India.
There are other online equity trading brokers as well; like Motilal Oswal, Kotak Securities, Angeltrade, SMC etc. I will update the list with their information in future.
Monday, 23 June 2008
How to increase your take home salary?
When cost of living skyrockets, smart ways to plan one’s pay packet to reduce his tax outgo and maximize his take home salary becomes relevant. Companies also realize the need to have a tax-friendly pay packet to help their employees get the better of their salary.
30 tax-smart ways to plan your pay packet could help you plan your compensation package and get the best out of it. According to the article that came on Rediff,
30 tax-smart ways to plan your pay packet could help you plan your compensation package and get the best out of it. According to the article that came on Rediff,
Saving a rupee in tax means you have a rupee more to save, spend or invest as you wish. So, when negotiating or reviewing your salary package, you should choose perks which are both useful for you and your family, and which are also tax-smart.Have a look at the article.
Tuesday, 17 June 2008
Dealing with sudden wealth
What would you do if you get rich through a windfall? May be through sale of a property or receiving an inheritance or through an insurance settlement or getting lucky in a lottery draw!
This article that came in Times of India goes into the details of such a situation. According to them,
This article that came in Times of India goes into the details of such a situation. According to them,
Most beneficiaries are not prepared for the consequences of sudden wealth. They are often clueless about how to deal with a large amount of money. Studies show that more than 35% of lottery winners declare bankruptcy in 10 years.They key to face such a situation is, invest properly! Have a look at the article.
Saturday, 31 May 2008
Are you game for an early retirement?
Gone are the days on which people want to work till sixty for maintaining their earnings, promotions and stuff. Nowadays, may be due to high pressure jobs and stressful lives, people want to retire from their career and lead a peaceful life as early as possible.This article from Economic Times would make some of you think of retiring early and plan your strategies accordingly. Now, what could be the first step for early retirement?
According to the article,
We spoke to financial experts, and also a few smart people who actually managed to retire early from their active careers, and asked them for tips on how to retire early. Everyone was unanimous about the first step - make sure retirement stays at the top of your priority list.Well, which I feel is not incorrect; but how many of us have retirement planning as our top priority?
Thursday, 28 February 2008
New Tax Slabs
In the union budget for financial year 2008-09, the Finance Minister has announced the new tax slabs.
General
Till 1,50,000 – 0%
1,50,000 – 3,00,000 – 10%
3,00,000 – 5,00,000 – 20%
Above 5,00,000 – 30%
Women
Till 1,80,000 – 0%
1,80,000 – 3,00,000 – 10%
Remaining tax rates are same as general
Senior Citizen
Till 2,25,000 – 0%
2,25,000 – 3,00,000 – 10%
Remaining tax rates are same as general
This would be a welcome relief to crores of tax payers in the country who are caught under inflation woes.
General
Till 1,50,000 – 0%
1,50,000 – 3,00,000 – 10%
3,00,000 – 5,00,000 – 20%
Above 5,00,000 – 30%
Women
Till 1,80,000 – 0%
1,80,000 – 3,00,000 – 10%
Remaining tax rates are same as general
Senior Citizen
Till 2,25,000 – 0%
2,25,000 – 3,00,000 – 10%
Remaining tax rates are same as general
This would be a welcome relief to crores of tax payers in the country who are caught under inflation woes.
Tuesday, 1 January 2008
Why Mutual Funds Entry Load scrapping by SEBI is justified
Starting January 4 2008, mutual fund investors wouldn’t need to pay the existing entry load of 2.25% while investing in a fund directly through the fund house’s website or through its own customer desk. This is applicable to further investments in existing portfolios, schemes and to new schemes launched henceforth; basically, for any new investment made on existing or new mutual fund schemes.
Initially, when mutual funds were sold through brokers, the entry load was used to pay commission to the brokers. When fund houses started selling their funds online and directly through their channels, the role of a broker ceased to exist. Still, the fund houses were charging entry load, which was questionable.
For an amount of Rs. 100000 (one Lakh) invested in a mutual fund, the entry load took Rs. 2250 away from the investment amount. Considering a one time investment of Rs 100000 made on a mutual fund having a yearly return of 30% for an investment period of 15 years, Rs. 2250 alone could get a potential return of Rs. 115168 (more than one Lakh), which the investor stand to lose.
The set motive of mutual funds was to allow small investors with small chunks of money to invest and get the benefit of scale from the stock market. But if you look at the entry load, it’s waived for investments greater than Rs. 5 Crore in most cases, thoroughly favoring large investors, which is contrary to its purpose. The irony is investors who are able to invest more than 5 Crore would normally be companies, who take the benefit of mutual funds, that are primarily meant for small investors. Also, normally companies won’t invest for longer time periods as compared to small investors. Thus, the entry load of a mutual fund was a deterrent factor for small investments.
The process behind this move from SEBI started in August 2007. And now, when it comes to effect on the start of the year, it has become nothing less than a great new year gift to the small investors.
Initially, when mutual funds were sold through brokers, the entry load was used to pay commission to the brokers. When fund houses started selling their funds online and directly through their channels, the role of a broker ceased to exist. Still, the fund houses were charging entry load, which was questionable.
For an amount of Rs. 100000 (one Lakh) invested in a mutual fund, the entry load took Rs. 2250 away from the investment amount. Considering a one time investment of Rs 100000 made on a mutual fund having a yearly return of 30% for an investment period of 15 years, Rs. 2250 alone could get a potential return of Rs. 115168 (more than one Lakh), which the investor stand to lose.
The set motive of mutual funds was to allow small investors with small chunks of money to invest and get the benefit of scale from the stock market. But if you look at the entry load, it’s waived for investments greater than Rs. 5 Crore in most cases, thoroughly favoring large investors, which is contrary to its purpose. The irony is investors who are able to invest more than 5 Crore would normally be companies, who take the benefit of mutual funds, that are primarily meant for small investors. Also, normally companies won’t invest for longer time periods as compared to small investors. Thus, the entry load of a mutual fund was a deterrent factor for small investments.
The process behind this move from SEBI started in August 2007. And now, when it comes to effect on the start of the year, it has become nothing less than a great new year gift to the small investors.
Thursday, 6 December 2007
Income tax may come down in India
Riding on a buoyant economy and making the most out of it with respect to direct taxes, the revenue department may consider reviewing direct tax rates and structures (income tax slabs) in the coming annual budget. This move comes as an aftermath of a 45% growth rate in direct tax revenues due to tax administration improvements, increase in voluntary compliance etc.
A week back the Finance Minister was seen saying that the Rs. 10,000 increase in tax slabs last year didn’t give much of a relaxation to the tax payers of the country. The ministry will also seek inputs from public, tax experts and industry associations on this. Let’s hope that this welcome move shall come into effect and lower the burden of taxation on the working class.
A week back the Finance Minister was seen saying that the Rs. 10,000 increase in tax slabs last year didn’t give much of a relaxation to the tax payers of the country. The ministry will also seek inputs from public, tax experts and industry associations on this. Let’s hope that this welcome move shall come into effect and lower the burden of taxation on the working class.
Tuesday, 4 December 2007
Tax savings options on conveyance allowance
For salaried individuals, the conveyance allowance or transport allowance is exempt from taxation up to Rs. 800 per month while he earns in India. For physically handicapped persons, this limit is Rs. 1600 per month. This exemption is provided without furnishing any bills.
If one has a car and uses that to travel to the workplace, then a vehicle maintenance exemption can be claimed for the petrol/diesel cost and vehicle maintenance expenses incurred. The exemption limit is Rs. 1200 per month if the engine capacity is less than 1600 c.c. and Rs. 1600 per month if the engine capacity is greater than 1600 c.c. If you are keeping a driver, an additional exemption of Rs. 600 per month is also available. Please note that when you claim the vehicle maintenance exemption, the conveyance allowance exemption is not available.
Some companies have different components included in the Cost To Company of their employees through which fuel bills, driver wages etc. can be reimbursed and is considered as an expense, hence exempted from taxation. You may check with the finance department of your company to find out the options available to you regarding this.
If one has a car and uses that to travel to the workplace, then a vehicle maintenance exemption can be claimed for the petrol/diesel cost and vehicle maintenance expenses incurred. The exemption limit is Rs. 1200 per month if the engine capacity is less than 1600 c.c. and Rs. 1600 per month if the engine capacity is greater than 1600 c.c. If you are keeping a driver, an additional exemption of Rs. 600 per month is also available. Please note that when you claim the vehicle maintenance exemption, the conveyance allowance exemption is not available.
Some companies have different components included in the Cost To Company of their employees through which fuel bills, driver wages etc. can be reimbursed and is considered as an expense, hence exempted from taxation. You may check with the finance department of your company to find out the options available to you regarding this.
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