MoneyVedam

This budget brings in key changes to equity investors & senior citizens. Salient points are presented below for quick reference. Only when the budget is blessed by both houses of the parliament, the effective date(s) of these changes will become firm. An across the board change in direct tax is revision of Education cess as "Education & Health Cess" from 3% to 4%. Investors Re-introduction of long term capital gains (LTCG) tax on equity shares and equity/equity-oriented mutual funds @ 10%. It covers Arbitrage funds, Balanced funds & Tax-saving ELSS funds as well. For shares, long term capital gains in excess of Rs.1 Lac from Jan 31, 2018 would be taxed at 10% Dividends on equity funds to be taxed at 10% as distribution tax - they are no longer free! 54EC capital gains tax savings scheme is now restricted only to capital gains from land & building. The lock-in period is also extended from 3 to 5 years. If you made a long term capital gain in debt mutual...

The most popular product that is sold on the premise of tax breaks in this country is insurance. Arbitrage funds probably comes next, especially in the wake of demonetization. As these funds are gaining momentum, let us examine what it offers! Definition Arbitrage Funds (AF) is a type of mutual fund that leverages the price differential in the cash and derivatives market to generate returns. The returns are dependent on the volatility of the asset. In simpler terms, this fund mimics a stock trader with his position covered. It buys stocks in the equity market and simultaneously sells it in the derivatives market. The price differential between equity market & derivatives market is used to generate returns for the fund. Performance Arbitrage Funds perform very well in bull markets, when volatility is high and money market yields are low - present times. And they do not perform in stagnant/bear markets and when money market yields are high (2010-2013). Although the performan...

Most of you may have completed linking your PAN with Aadhar on the Income Tax portal by July 31st, 2017. Some of you may still be in the process of linking Aadhar with your various bank accounts by December 31st, 2017. There are a couple of more "Aadhar linkings" that you may have to complete with respect to financial market accounts as well. Linking Aadhar with Mutual Funds As per the recent amendments to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, all mutual fund account holders are required to link their folios with Aadhaar numbers by 31st December 2017, failing which the said account/folio will cease to be operational. A simple way to accomplish this is by linking at the registrars and transfer agents (RTA) of mutual funds like CAMS, Karvy, Franklin Templeton Investments, and Sundaram BNP Paribas. You may also get your Mutual Fund Distributor - MFD's help to complete the same. https://www.karvymfs.com/karvy/Aadhaarlinking_indivi...

As nifty touched its all time high on Nov 3, 2017 at 10452, one would wonder if all's well with the Indian economy - only its not. In a year when supposedly more than 15 lac people have lost their jobs per CMIE (Center for Monitoring Indian Economy Pvt Ltd) and the economy is at its all time low of 5.7%, the stock market's behaviour is curious! Reasons behind Nifty's rise This month, nifty doubled its market cap to $2.2 Tn from $1 Tn Nov'14. It has provided a 53% return since the time NDA came to power in May'14 and a 30% return since Jan'17. All while the earnings growth and return on equity have declined continuously. Add to this the worsening bank NPA situation to Rs.8 Tn in bad debts, the stock market rise doesn't quite add up!? A widely believed reason behind nifty's rise is falling returns from realty & gold is chasing domestic investors into the stock market. Some observers also believe that AMFI's (Association of Mutual Funds in In...

For over 5 years, economists and analysts have issued numerous warnings on the plaguing bad loans problem in the Indian Banking sector. Although the bad loan problem cropped up as early as 2011, the first bold measure against this banking ill was undertook by former RBI governor Dr.Raghuram Rajan in December 2015. Since then the fight against the bad loans has only become stronger. Bank Jargon NPA : Non Performing Assets - Loans given out by banks for which interest/principal is not paid by the borrower (loan default) Provisioning : Setting aside money to cover for losses arising from loan defaults -  typically this money comes from the bank's profit (SARFAESI) Act - a recovery method that gives the bank the right to recover its dues by seizing the borrower's assets. Asset Reconstruction Companies - a recovery method that allows banks to sell the defaulted loans at a discount to an ARC company, which then tries to recover as much as possible from the borrower. The loan...

Its raining discounts for online shoppers and cab riders as e-comm biz is wooing the indian shopper with big discounts. However, the scene on the startup street is glum especially after the recent fallout of snapdeal sale to flipkart and its subsequent layoff of 1000 employees out of the present 1200 (it was 9000 last summer). This contrast prompted some questions about startup funding and its economic value add to the nation. Funds - whopping $21bn (Rs.1.36 Lac crores) & counting.. Startup funding statistics ( http://trak.in/india-startup-funding-investment-2015/ ) reveals that India has received a total of $16bn from 2014-16 and additional $5bn just in Q1'2017. The top four supposedly unicorns - Flipkart, Snapdeal, Ola & PayTm have received about half of all this funding ($10.4bn). But none of these companies are making profit yet, infact they are so heavily loss-making, that without burning $20-50mn a month, they may not even be in business. This monthly "cash-b...

On Jun 9, 2017, the Supreme court in its ruling on IT section 139AA, upheld that all PAN card holders must link their Aadhar with their PAN (Permanent Account Number) for filing of income tax returns from July 1, 2017. And even non-IT assessees who have PAN & Aadhar as of July 1, 2017 must link the two on the IT portal. In another related notification, the government has mandated that all bank accounts in the country need to be linked to Aadhar by Dec 31, 2017, failing which the respective accounts will be frozen. Let us look into the details and impact of these announcements. PAN & its use PAN (Permanent Account Number) is a 10-digit unique ID issued by the income tax department, however a person may have multiple PANs. It is primarily used to file income tax returns and required for most financial transactions such as deposits & withdrawals exceeding Rs.50k, purchase of all assets such as car, bike, home, jewellery, mutual funds, demat accounts, bonds etc. Residents o...