MoneyVedam

When it comes to inflation, it is natural to apply it to prices of goods & services. Avid investors would be concerned as to whether their returns from investment(s) beat inflation. But the most forgotten yet important issue is whether tax exemptions and tax slabs have kept pace with inflation. In other words have the tax slabs been inflation indexed? Let us examine where inflation has taken taxes to! Nominal vs Real money value Prior to delving into the subject lets get 2 terms clear. A nominal value is the face value of money - a nominal value of Rs.100 in 2005 is Rs.100 and in 2014 is Rs.100 as well. However real value of money is one that is adjusted for inflation (based on cost inflation index). So, Rs.100 in 2005 is not Rs.100 in 2014, but its real value has dropped to Rs.48.53 in 2014 due to inflation. In other words, if you had paid Rs.100 for a good in 2005, you would have to pay nearly twice that amount, Rs.195 for the same good in 2014 (based on cost inflation index)...

In most aspects of life, black is considered a beauty and is welcome - karuvizhi (black eyes), kaarkundhal (black hair), kaarmegam (dark clouds that brings rain), karungal (black stone that keeps insides of temples cool) and the darkness of outer space! However, when it comes to financial matters, regardless of its short-burst attractiveness, black only gives a headache!! The real estate case of black money.. Most common people engage in black transaction only in real estate deals either because of a desire to evade tax or by simply following a (tax evasive) real estate system in the country where black money is demanded (during a buy) and/or pushed (during a sell). Lets take an example to see how involving black money as part of a transaction is harmful to one's financial well-being. An investor buys a plot of land in 2004 and sells it in 2014. The middle column - "buy(b), sell(b)" represents the case where by the investor buys in black and sells in black (all-blac...