MoneyVedam

Interim budget 2019 was presented in Feb'19 and final budget post election was presented on 5 July 2019 by India's first woman Finance Minister and Tamil nadu's very own Smt.Nirmala Sitharaman. This blog attempts to capture the budget updates relevant to personal taxation. Key Highlights from both budgets Some of the key highlights on personal taxation for FY2019-20/AY2020-21 include: PAN & Aadhar are now interchangeable, allowing one to use Aadhar to file her/his income tax returns. Cash withdrawal in excess of Rs.1 crore will attract TDS of 2% (Tax Deduction at Source) ONE NATION ONE CARD - based on RuPAY to be introduced / used across bus travel, tolls, parking & retail across the country. Tax on Total Income For assessees with income in the range of Rs.2.5L to Rs.5L p.a, complete tax rebate is offered u/s 87A. This means zero tax for income upto Rs.5L. However, assessee must file Income Tax returns if income exceeds Rs.2.5L to claim this rebate. Not...

Today nifty mounted 12000+ but what did that do to individual portfolios and wealth? Who's actually winning? This blog examines these questions in the light of domestic savings and shift in investment patterns! Domestic Savings Domestic savings in India comprises of 3 sectors - households, Private & Public sectors. Households make up the largest pie, making 60% of total domestic savings. Most of the household savings are stored in 2 forms - physical assets (home/land/gold) and financial assets (bank deposits, bonds, stocks & mutual funds). India's savings rate as a % of GDP has declined from 36% (2009) to 30% (2019). Between 2009 & 2019, in particular, households savings rate as a proportion of GDP (Gross Domestic Product) declined from 25.2% to 17%. While inflation was high at 9-11% between 2009-13, it was subsequently brought down by RBI's inflation-targeted monetary policy to sub-4% in 2019. This means, real interest rates (nominal rate minus inflation)...

Ever since the IL&FS crisis hit the Indian markets in Sep'18, several things have changed for the NBFCs (Non-Banking Finance Companies), Banks and investors in debt mutual funds. This blog looks at the core problem and resulting implications for retail investors! Background NBFCs are non-deposit taking organizations that are known to reach channels not easily accessible by banks for lending. NBFCs primarily takes loans from banks and instituitional investors such as Mutual Funds & Insurance companies at say 10% and lends it to businesses such as MSMEs, Real estate builders etc at say 14%. They make 4% (14% - 10%) of the entire loan disbursed, provided such loan gets repaid. Similar to banks, unpaid loans get classified as NPAs (Non-Performing Asset). NBFCs must also set aside money from their profits to cater to such NPAs (called Provisioning). The Stats Per RBI, as of Mar'18, total bank deposits in the country stood at Rs.117Tn (Lac crores), with NPAs of Rs.10Tn. In c...

New year is here - while national budget is being prepared with a lot of vigor in the election year to impress voters, we have the responsibility to prepare a budget for our homes. Some of us may wonder if budgeting is of any use at all as most of our income anyway gets spent every month. This may be true in the initial income earning phase, when our incomes are lower but as we progress in our lives and career, annual planning of home budget greatly helps provide a disciplined approach to track our expenses in a structured manner. A Sample home budget Let us help Bharath, age 34, an administrative executive, prepare his annual home budget for 2019. He lives in a rented house with his wife and two children aged 5 & 3. His monthly take home pay is Rs.40,000 and he is a single income earner for his family. Bharath’s primary expense comprises his rent of Rs.10,000 and he spends another Rs.8,000 on food. His utilities and petrol/transport expenses comes to Rs.4,000....