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.

Rise in NRI remittances to India

Despite economic recession, Indians working abroad had sent a record $40 billion as remittances to India in just 9 months of calendar year 2008. As the last quarter is a festival period, the total remittances for the year may even exceed $50 billion. This would be way ahead of World Bank’s prediction of $30 billion for India in 2008.

In 2007, with $27 billion as remittances, India was placed as the number one recipient of inward remittances globally by World Bank, with China in close second ($25.7 billion). And the story would be no different this year as well.

Inward remittances (unlike FII) are considered ‘sticky’ as this money is sent to India primarily for savings and family spending, and hence would remain in the economy. Thus it plays a major part in boosting the economy, in particular, during the ongoing recession. Hence, as a policy measure, government is also promoting NRI remittances through higher interest rates on NRI deposits. This could offset the FII outflow to some extent and thus could reduce the dependence of the economy on FII money.

Even though the recession is progressing, remittances had not/may not fall due to the following reasons.

1. The fear of job loss forces people to save more, especially in the safer Indian financial markets
2. Rise in rupee dollar exchange rate would fetch more rupee than ever when transferred to India
3. Rise in interest rates of FCNR and NRE deposits

More details here.

Related Articles
- Online money transfer to India for NRIs

Online money transfer to India for NRIs

With the advent of SWIFT and other international inter-bank money transfer networks, the importance of other retail value transfer systems such as Western Union etc. have probably come down. As with the case of any internet based systems, online money transfer systems also offer convenience, speed, traceability etc. to its customers. Also, it allows remittances to be done within the comforts of home.

Following is a non-comprehensive list of varoius Indian banks offering online money transfer to India.

AxisRemit – This is a service offered by Axis Bank.

Money2India – This service is offered by ICICI Bank.

QuickRemit – This service is offered by HDFC Bank.

Citi Online Remit - This service is offered by Citi Bank.

Remit2India - This service is offered by Times Money

Most of these banks charge a nominal service fee and allow money to be transferred to any bank in India, not just the bank doing the transfer.

Related Articles
- What is a Core Banking System?

Educational Loans

The global economic recession and subsequent job loses allow for a good time (I’m not sure I should be saying as curtly, but it depends on how you look at it) to advance on one’s career by upgrading their educational skills by joining a good institution for higher studies. In such a situation, the expenses are well met through student loans; if you don’t have enough savings.

Private student loans are handy for the knowledge seeker in the sense, they generally have no collateral requirements, have an interest rate that’s fairly manageable and may need to be paid back once the applicant secures an employment (or may be six months from the time of course completion, as the case may be) once he/she has completed his/her studies.

College loans have always been a helping hand for the aspirers of knowledge. Most of the times, the availability of the loan depends very much on the institution in which one has secured an admission. It also allows students to not depend on their parent’s worth for pursuing higher education.

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,

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.

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).”

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.

More details here.

India’s Per Capita Income grew by 12.7% in 2007-2008

According to Central Statistical Organization (CSO), the per capita income of India has increased to Rs. 33,283 in 2007-08; a healthy growth of 12.7%. The per capita income has been growing above 10% since 2003-04, rising almost 60%.

This is the result of the impressive economic growth rate recorded by India during this time period and is supposedly the indication of an overall improvement in the living standards of people.

I’m not sure how representative a figure this is, in a country that has 4 out of the top 10 richest people in the world, a fair amount of income inequality and a third of the population still living below the poverty line.

More details here.

Inflation rates of India (2008)

This post tracks inflation rates of India for the year 2008. Before that, a few facts about inflation rate calculation in India.

- Inflation in India is based on Wholesale Price Index
- A set of 435 commodities are used for the WPI based inflation calculation
- The base year for WPI calculation is 1993-94
- WPI is available at the end of every week (generally Saturday), for a period of 1 year ended that day
- It has a time lag of 2 weeks (WPI for the year ended two weeks back will be available this week)

Inflation Graph


Inflation Rates (for 12 months ended on given date)

- 2008 Dec 27 - 5.91% (via)
- 2008 Dec 20 - 6.38% (via)
- 2008 Dec 13 - 6.61% (via)
- 2008 Dec 6 - 6.84% (via)
- 2008 Nov 29 - 8.0% (via)
- 2008 Nov 22 - 8.40% (via)
- 2008 Nov 15 - 8.56% (via)
- 2008 Nov 8 - 8.90% (via)
- 2008 Nov 1 - 8.98% (via)
- 2008 Oct 25 - 10.72% (via)
- 2008 Oct 18 - 10.68% (via)
- 2008 Oct 11 - 11.35% (via)
- 2008 Oct 4 - 11.44% (via)
- 2008 Sep 27 - 11.98% (via)
- 2008 Sep 20 - 11.99% (via)
- 2008 Sep 13 - 12.23% (via)
- 2008 Sep 6 - 12.09% (via)
- 2008 Aug 30 - 12.1% (via)
- 2008 Aug 23 - 12.34% (via)
- 2008 Aug 16 - 12.40% (via)
- 2008 Aug 09 - 12.63% (via)
- 2008 Aug 02 - 12.44% (via)
- 2008 Jul 26 - 12.01% (via)
- 2008 Jul 19 - 11.98% (via)
- 2008 Jul 12 - 11.89% (via)
- 2008 Jul 05 - 11.91% (via)
- 2008 Jun 28 - 11.89% (via)
- 2008 Jun 21 - 11.63% (via)
- 2008 Jun 14 - 11.42% (via)
- 2008 Jun 07 - 11.05% (via)
- 2008 May 31 - 8.75% (via)
- 2008 May 24 – 8.24% (via)
- 2008 May 17 – 8.1% (via)
- 2008 May 10 – 7.82% (via)
- 2008 May 03 – 7.83% (via)
- 2008 Apr 26 – 7.61% (via)
- 2008 Apr 19 – 7.57% (via)
- 2008 Apr 12 – 7.33% (via)
- 2008 Apr 05 – 7.14% (via)
- 2008 Mar 29 - 7.41% (via)
- 2008 Mar 22 - 7.0% (via)
- 2008 Mar 15 - 6.68% (via)
- 2008 Mar 08 - 5.92% (via)
- 2008 Mar 01 - 5.11% (via)
- 2008 Feb 23 - 5.02% (via)
- 2008 Feb 16 - 4.89% (via)
- 2008 Feb 09 - 4.35% (via)
- 2008 Feb 02 - 4.07% (via)
- 2008 Jan 26 - 4.11% (via)
- 2008 Jan 19 - 3.93 (via)
- 2008 Jan 12 - 3.83% (via)
- 2008 Jan 05 - 3.79% (via)

Addendum
Reuters maintain this graph on WPI, India.

Related Articles
- Inflation rates of India (2009)
- How is WPI inflation rate calculated in India?
- Commodities and their weight-ages in WPI calculation of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

Originally posted on Tuesday, June 24, 2008