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2012 may be the year of consolidation, providing long-term investors an opportunity to enter the stock market

Gaining in the equity market to a great extent depends on the time of entry. For example investors who would have invested in 1996, 2003 and 2009 would have made huge returns on their investments over the next few years, while the ones who would have invested in 2007 or 2011 would have mostly lost their money.

That is why as an investor one always wants to know when to enter the market.

The benchmark Sensex has fallen 24% since its last high in November 2010. From the peak valuation of 24.1, the price-to-earnings multiple of Sensex has come down to 16.7 at present. This is lower than the 13-year average of 18.5.

Based on this one still can't conclude if the markets have bottomed out or have further scope to fall in the year ahead since at the last bottom the Sensex valuation had dipped to 10.4 and 11.6 levels.

One thing is sure that the market is most likely to find its bottom sometime in 2012, which will offer a lucrative entry point to investors. However, no one really knows when or at what level. As they say, it is almost impossible to catch the lowest point and any one waiting to invest at the bottom-most point is most likely to miss it. Hence, as a prudent investment strategy, one can consider investing in staggered manner in 2012, as waiting for the bottom may not be possible. Here are certain factors which favour this argument.

Market Cycle & Valuation

The stock market data since 1990 suggest that the Indian market typically follows a four-year cycle. Four years of bull phases is followed by four years of consolidation. After the crash in 1992, the market took around 4 years to consolidate, before it started to move in the upward direction in 1996. Within next four years, by 2000, the Sensex had doubled.

In 2000, the market suffered another crash, commonly known as the dotcom bubble burst. Post this, the market consolidated for four years, from 2000-2004, when the next bull phase took off. The Sensex more than quadrupled in the next four years to touch 21000 level in January 2008. Stagnation followed thereafter followed by the crash below 8500, which gave an excellent opportunity for long-term investors.

The four years of consolidation will complete in 2012. The question now arises, is 2012 a good year for retail investors who are planning to invest with a time horizon of three to five years. Over the past 25 years, the market has given returns at an average CAGR of 14%.

The valuation at which the Sensex is trading right now is not very expensive. It is trading at a price to earning multiple of 16.7, which is quite cheap. For the past 13 years, the historical average price to earning multiple has been 18.5 and the Sensex has traded at the highest price to earning multiple of 29. And 2012, there are high chances of market reaching the bottom, before it enters another bull phase.

Hence, it is a classic opportunity for investors, who are looking at investing for a horizon of three to five years, to enter the stock market.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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New Changes in Insurance Domain

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Posted: 17 Apr 2012 06:28 AM PDT

Policy holders can hope to benefit from a number of changes expected in 2012

Unlike your investment plans, you don't have to look for predictions or make alterations to your insurance covers in the New Year. Most of the fundamentals remain the same: you must have a life cover (preferably term cover) if you have financial dependents; you also must have a health cover for yourself and your family. Sure, there are many other covers you can add to your protection plan: accident cover, critical illness cover and so on.

However, you may have to watch out for regulatory changes that could impact your decisions. Like 2011, even the New Year is likely to be eventful for insurance customers.

The year promises to ring in many developments and record the impact of several regulatory changes in 2011. Here is a small list of what you can expect in 2012:

LIFE INSURANCE

Wider Access In The Offing

It's the key regulatory change the industry is talking about, with the draft guidelines released just a few weeks ago. Banks are likely to be allowed to tie up with multiple insurers. This will give the customer more choice.

The proposed regulations will allow banks to join hands with more than one insurer, but it is subject to the area-wise segmentation laid out in the draft guidelines.

While the final regulations could take a very different shape, the fact remains that the flexibility to banks will certainly improve, resulting in more choices for the customers.

Pension Ulips Set For A Comeback

The revised guidelines on pension Ulips have come into effect from December 31. While products are yet to be filed under the new regime, life insurers seem to be fine with the new rules. Agents were pushing pension Ulips aggressively before September 2010. In 2011 though, very few companies launched these products under the new regime. Now, however, insurance-seekers keen on buying pension Ulips can look forward to the revival of such products this year.

Online On A Roll

The trend of selling term polices online took root in 2010 and branched out to many more companies in 2011. The unique selling point of these products is that they are much cheaper than their offline counterparts. We expect that internet sales as a channel will gain further momentum and will help increase the protection penetration as well as branching into health and savings products being introduced through that channel. Also, with Irda bringing out guidelines to regulate web aggregators customers can hope for better services.

Policies To Go Demat

In 2011, Irda gave a go-ahead to converting physical policies into the electronic form. By April 2012, this initiative could take concrete shape for life insurance policies. The key benefit, of course, will be convenience — both in terms of maintaining the documents and making changes when required. Also, the policyholders will not have to furnish details every time they buy a policy.

DTC Impact

For years, many a life policy has been sold on the basis of its tax saving ability — premium paid of up to . 1 lakh is allowed as deduction under Section 80C of the Income Tax Act. Come April 2012, however, things could change with the proposed implementation of the Direct Tax Code (DTC). Here, life and health insurance premium, along with children's tuition fees, are clubbed together, and the combined tax benefits amount to a maximum of . 50,000. This apart, you will not be eligible for the deduction if the annual life premium exceeds 5% of the sum assured in any year. While this spells bad news for insurance cum-investment policies, those opting for pure protection term covers need not worry. Besides being the cheapest life policies, most, subject to your age and health, are also likely to adhere to premium-to-SA ratio.

HEALTH INSURANCE

Portability To Take Off

The much-awaited health insurance portability became effective from October 1, last year, but by all accounts, it has been a slow starter so far. However, insurers expect it to pick up speed between January and March, when salaried individuals are on a tax-saver-instrument buying spree. The framework could also spawn newer varieties of products and services. With increasing awareness on health insurance portability, more proposals on portability can be expected in the year 2012, value-added services will be launched in terms of second medical opinion, vaccinations, and discounts on health care facilities like on diagnostics and preventive health care facilities, like gyms.

Distribution To Spread Wings

After the Ulip charge ceilings that were placed in September 2010, many agents saw their business dwindle and eventually dropped out. The year 2012 could see the fructification of the agent-mentoring model that the Irda has mooted. The initiatives around creation of a senior, mentoring agents framework, new bancassurance norms and regulatory push towards shifting focus from metros to semi-urban and rural areas will widen access to products.

Expansion In Coverage

The list of health insurers offering OPD products that extend coverage to maternity expenses and dental treatment could grow longer this year, with Irda itself backing it. The Irda chief has asked insurance companies to target a larger healthcare cover, over and above hospitalisation policies, by creating such OPD products. With the entry of more international players, we expect cost-effective OPD — comprehensive health insurance policies in 2012. At present, most basic health policies kick in only if the insured is hospitalised for at least 24 hours or is undergoing treatment through day-care procedures.

MOTOR INSURANCE

Innovative Products On Their Way

Ever since detarrification of prices came into the picture in 2008, insurers have been promising add-ons to what was, until then, a standard product. While some headway has been made, customers are yet to see substantial innovation in motor policies. In 2012, though, you could finally get access to more options. Add on products like Road Side Assistance would be introduced for a wider coverage and better customer service experience. Such assistance services would help consumers through a traumatic experience in case of an accident or breakdown.

Rewards For Model Behaviour On Cards

Again, a long-pending promise that is yet to come good, the practice of linking to premiums to factors other than the standard ones pertaining to the vehicle is quite prevalent abroad. The year 2012 could be the year it's introduced in India, too, given that many insurers have been collecting the data required to enable this mechanism. There will be use of more factors for pricing, particularly details of the insured such as age, marital status, driving record etc will be introduced in pricing of motor insurance. This would lead to better risk-based pricing. Thus, consumers with better driving habits and vehicle maintenance can expect relatively better premium pricing than others.

Aegon Religare New plan for higher studies - Aegon Religare Educare Plan

AEGON Religare Life Insur ance is rolling out Aegon Religare Educare Plan.

The cost of higher education is increasing almost everyday. To ensure that the parents of tomorrow are well-equipped to meet the needs and aspirations of their children, it is important to plan to save in a disciplined manner from today.

Also, higher education costs are not a one-time thing, but a recurring payment, which is why we have designed the new plan with lump sum pay outs over four years.

The Aegon Religare Educare Plan comes with a number of additional benefits, including providing guaranteed payouts during Pinaki Paul the last four years of the pol icy, and offers two benefits to choose from -the first option offers a sum assured and accrued bonus on death and guaranteed payouts during the last four policy years and the second option offers the sum assured and accrued bonus on the death of the policyholder, guaranteed payouts during the last four years of the policy and 10 per cent of the sum assured every year, till the end of the premium payment term.

On maturity of the policy, it provides 20 per cent of the sum assured, which is the last instalment of the guaranteed payout, along with the accrued bonus. It also offers a high discount on sum assured of Rs 5,00,000 and above and an optional additional cover through an ADDD rider (accident, death, disability and dismemberment).

The truly unique part of this plan is the annual lump sum pay out geared to meet the annual expenses of higher education.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

DSP BlackRock Mutual Fund

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Posted: 17 Apr 2012 03:40 AM PDT

DSP BlackRock Investment Managers Pvt. Ltd. is the investment manager to DSP BlackRock Mutual Fund. It can be said that at DSP BlackRock Investment Managers Pvt. Ltd has some seasoned investment professionals who deploy an array of analytical tools, to successfully and consistently add value to client portfolios. DSP BlackRock Mutual Fund has an enviable track record and investors have amply benefited over the years.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

DSP BlackRock Mutual Fund FMP Series

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Posted: 17 Apr 2012 02:19 AM PDT

DSP BlackRock Mutual Fund has announced the new fund offer (NFO) of DSP BlackRock FMP-Series 46-3M. The scheme will be open for subscription on April 18, 2012.

The scheme will mature on July 18, 2012.

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Gifts to relatives will not attract tax

Best Performing Mutual Funds

Largecap Funds:

DSP BlackRock Top 100 Fund
ICICI Prudential Focused Blue Chip Fund
Birla Sun Life Front Line Equity Fund

Large and Midcap Funds

ICICI Prudential Dynamic Plan
HDFC Top 200 Fund
UTI Dividend Yield Fund

Mid and SmallCap Funds

Reliance Equity Opportunities Fund
DSP BlackRock Small & Midcap Fund
Sundaram Select Midcap
IDFC Premier Equity Fund

Small and MicroCap Funds

DSP BlackRock MicroCap Fund

Sector Funds

Reliance Banking Fund
Reliance Banking Fund

Gold Mutual Funds

Relaince Gold Savings Fund
ICICI Prudential Regular Gold Savings Fund
HDFC Gold Fund

Posted: 17 Apr 2012 12:57 AM PDT

Gifts are always special to the recipient and it would be extra-special if there is no tax payable on these. The taxman believes so, too. In the provision introduced in Section 56 of the Income Tax Act, if any sum of money is received gratis by an individual or Hindu Undivided Family (HUF) during any year, it shall not be taxable if from a relative. The law has already defined the term 'relative' and HUF.

However a case that came up before the Income Tax Tribunal shows that some clarifications were still needed.

Background

The law also exempts gifts during special occasions like marriage of an individual or under a will or by way of inheritance and even in contemplation of death of the payer. Money received as grants or loans from educational institutions/universities, charitable trusts or similar institutions is also exempt.

The term relative has been defined in the law to include spouse of the individual, brother or sister of the individual, brother or sister of the spouse of the individual, brother or sister of either of the parents of the individual, any lineal ascendants or descendents of the individual, any lineal ascendants or descendents of the spouse of the individual, and spouses of all of the persons mentioned above.

However, a plain reading of the above definition seems to convey it has overlooked reference to relatives for the purpose of an HUF. Also, an HUF has not been included as a relative for the individual.

In the case of HUFs, the concept of relatives may not make sense, since the joint family consists of all family members. But the exclusion of this term in the provision could mean the exemption is available for the gifts received by the HUF from any person related to the karta or any other family member. Alternatively, it could mean that since an HUF cannot have relatives, any/all gifts received would be taxable.

Issue posed

This question came up before the Income Tax Tribunal in a recent case. The tax payer had accepted a gift of ~ 60 lakh from his fathers HUF. During the assessment, the tax officer held the gift to be taxable, as an HUF was not covered in the definition of relative under Section 56. At the first appellate level, the authority confirmed the tax officers view and stated that if the legislative intent was to exempt the amount received from an HUF, this would have been specified in the definition of relatives.

During the proceedings, the tax payer said the amount received from the fathers HUF was as good as money received from relatives, as the father and all other members comprising the HUF were relatives within the meaning of the definition given in section 56(2). It was also contended that the term individual would include a group of individuals and, hence, an HUF should be covered under the term individual. And, that an HUF was aconglomeration of relatives as defined above and should be interpreted in a way to avoid any absurdity. Relying on an earlier Supreme Court decision, the tax payer contended that in case of any ambiguity in the language of any provision, it must be interpreted in a manner that benefits the taxpayer.

The tribunal order clarifies that an HUF is a person within the meaning of the term as defined in the Act and is, thus, distinctively assessable. The term HUF is not defined anywhere under the law, but is well defined under Hindu law and is widely acceptable and recognised. The HUF constitutes all persons lineally descended from a common ancestor and includes their mothers, wives or widows and unmarried daughters. All these people fall within the definition of relatives as provided in the relevant provision of the Act.

It was further stated that HUF is a group of relatives and with this view in mind, the question that needed clarity was whether only the gift given by the individual relative from an HUF would be exempt or even a gift collectively given by the group of relatives from the HUF would be exempt.

Illustration

To better comprehend this, the Tribunal used a simple illustration. In case an employee retires, and in token of their affection and affinity for him, the secretary of the staff club on behalf of the members presents the retiring employee with a gift. Could this gift presented by the secretary on behalf of the staff club be termed a gift from the secretary alone and not from all the members of the club? Using the same example, the Tribunal stated the gift presented by the secretary represents the gift given by him on behalf of all the members; it is the collective gift from all the members and not the secretary in his individual capacity.

The Tribunal, further held that, on a plain reading of the relevant provision, along with the explanation provided therein, coupled with an understanding of the intention of the legislature from the provision, a gift received from a relative, irrespective of whether this is from an individual relative or agroup of relatives, is exempt from tax. A group of relatives definitely falls within the meaning of relatives as given under the relevant provision.

Nowhere has the provision expressly defined that the word relative represents a singular person, and many a time, singular can mean more than one. The term Hindu Undivided Family, though sounding singular in its form and assessed to tax for income tax purposes, is at the end made up of a group of relatives.

So, the Tribunal held that the term relative as explained in the relevant provision of the Act includes relatives and as the tax payer received the gift from an HUF, which is a group of relatives, the gift received by the tax payer should be interpreted to mean the gift was received from relatives. And, therefore, would not taxable.

According to the Income Tax Act, relatives are on a par with Hindu Undivided Family leading to such exemptions

|HUF not included in the definition of relatives for gift provisions under Income Tax law |

HUF is also not defined in the Income Tax Act but the meaning as per the Hindu law is well accepted and recognised |

HUF should be looked at as a group of relatives |

Gift received from HUF is similar to gift received from the group of relatives |

The term relative used in the Act should be interpreted to include more than 1 relative

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

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Student travel insurance

Posted: 16 Apr 2012 11:51 PM PDT

There are travel covers designed specifically for 16 to 35-year-olds Generally, there are sub-limits for certain features on these insurance policies

TRAVEL insurance is important because it takes care of emergencies or adverse conditions that could come up in the future while you are travelling. Travel insurance provides coverage for medical emergencies and other losses that might occur from the time a person leaves his/her country to the time the traveller returns back home.

Student travel insurance: These plans are specifically designed for students in age group from 16 to 35 years going abroad to study.

Typically, student travel insurance covers accidents, medical expenses, emergency evacuation, checked baggage loss, loss of passport, personal liability, study interruption due to medical reasons, compassionate visit, bail bond, cancer screening and mammography examinations.

The covers offered differ from the regular travel insurance because they are tailor-made to meet the needs of students and also cover university requirements.

Keeping in mind the fact that the student is away from home, some additional benefits are included, such as sponsor protection, two way compassionate visits or study interruption coverage.

Generally, a student policy can be issued for a maximum period of one year at a stretch, and can be extended for an additional two years, subject to a new 'good health, no claim' declaration by the student every year. Assuming the course duration is five years, the policy can be extended up to the time of course completion, subject to additional 'good health, no claim' declaration and standard travel underwriting guidelines.

Some universities such as those in the US, Australia or Schengen countries have a mandatory requirement of an insurance policy at the time of applying for the course. Even if the university or country does not insist on insurance, it is advisable to buy a cover from India, since the medical costs and healthcare expenses are much higher in the developed countries.

Although, students can buy a similar policy from their universities, there is a significant cost difference between purchasing a policy from India for similar coverage and one that the university offers under its plan.

The student must also ensure that the policy coverage is comparable with the minimum health insurance requirements stipulated by the university.

Filing a claim: The process of registering a claim is very much the same as in India.

In the event of any medical or non-medical emergency, the student needs to register the claim at helpline numbers for availing any assistance and claim registration. Insurers offer both reimbursement and cashless services, in case of medical claims. However, to avail cashless benefits, students must carry his/her student identity proof and copy of the policy.

Generally, there are sub-limits for certain features on these insurance policies.

Supposing a student has taken a policy with sum insured of $25,000 and he/she avails a two-way compassionate trip, these would be treated as two claims triggered in the policy, one against medical expenses benefit and the other against the compassionate visit benefit.

Costs: Premium depends on the country chosen because the policy is priced keeping in mind the healthcare costs in the visiting country. Travel insurance premium for the US-bound students is most expensive.

For example, a one-year student travel policy from Tata AIG, for a student travelling to the US for university education with coverage of $50,000, the premium is Rs 20,199, while a policy with same features and same sum assured for student travelling to other countries will cost Rs 8,419.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Tax complaints? First option for redressal is ombudsman

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Posted: 16 Apr 2012 11:16 PM PDT

AS PER the Oxford English Dictionary, an "ombudsman" is a government official whose job is to examine and report on complaints made by ordinary people about the government or public authorities. In India, the income tax (I-T) authorities have also introduced the concept of an ombudsman with the objective of enabling resolution of complaints relating to public grievances against the I-T department and to facilitate the satisfaction or settlement of such complaints.

Who is an ombudsman: An ombudsman is an individual who is appointed by the Union government. The person previously has worked for Indian government. The ombudsman is independent of the juris ombudsman is independent of the diction of the I-T department.

In addition, the Union government is required to specify the territorial jurisdiction of each ombudsman.

At present, there are 12 locations, including New Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad, where ombudsman offices have been set up. However, the government can approve additional ornament can approve additional locations and appoint an ombudsman for each such location.

When can the ombudsman be approached? Some of the issues for which a complaint can be made to the ombudsman are listed below: Delays in issue of I-T refunds.

No credit of taxes paid, including tax deducted at source (TDS).

Impolite behaviour of tax officials.

Delay in allotment of permanent account number (PAN) card.

Delay in disposal of interest waiver or rectification of applications to name a few. Lack of transparency in identifying cases for scrutiny and non-communica tion of reasons for the same.

Any other administrative matter that could fall under the ambit of the ombudsman.

It is, however, important to note that before you approach an ombudsman, you are required to write a letter to an I-T authority, who is a senior to the person against whom the compliant has been made.

In addition, only if such an authority has rejected the complaint or the complainant does not receive any reply within one month, or, is not satisfied with the reply given to him by such an authority, then, he could approach the ombudsman. The complaint to the ombudsman has to be made within one year from the date the aforementioned period of one month expires. The ombudsman can't address any issues that are being looked into, like an appeal or writ, by any I-T authority or court.

How to file a complaint: In case you have a grievance with the I-T department, you need to file a written/online complaint with the ombudsman, which is duly signed by the individual or his authorised representative. Such com should provide details of the complainant's name, address and PAN card in addition to the name of the office and official against whom the complaint is made, facts and supporting documents and the relief sought from the ombudsman.

Resolution of complaints: The ombudsman considers the com plaints and facilitates the process of settlement.

For cases where no resolution is passed in a month's time of receiving the written complaint, the ombudsman would issue directives to the I-T authorities, which would be a speaking order. If deemed appropriate, a monetary compensation could be ordered by the ombudsman, which cannot exceed Rs 1,000. The decision of the ombudsman is binding on the I-T department and the complainant, subject to other conditions.

It is the duty of the ombudsman to protect the interests of an individual taxpayer's rights. He is also required to identify issues for which the compliance burden has to be broadened. The ombudsman also looks into issues that create problems for taxpayers and report the same to the authority in charge to improve processes.

Taxpayers, therefore, have an avenue for redressal of their grievances and they may make the most of the facility as required.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Factors not looked at while calculating yield on tax saving bonds

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Posted: 16 Apr 2012 10:27 PM PDT

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One obvious factor is the yield doesn't take into account the taxes that you will end up paying on interest received. Other factor is that this formula doesn't take into account any transaction costs that you incur.

I have another post lined up next week which looks at the limitations of the way these yields are being calculated in which I will cover some things that are not part of the way the yields are calculated by the issuer.

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Bharti AXA Life Future Invest

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 16 Apr 2012 09:03 PM PDT

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A recent launch by Bharti Axa Life Insurance, Future Invest seeks to club the features of an endowment plan with a market-linked product. Thus, while the policyholder is entitled to the fund value at the end of the policy term, in the event of his/her unfortunate death, the nominee shall receive either the sum assured or the fund value whichever is higher under Option A.

Alternatively, the nominee is entitled to receive both the sum assured plus the fund value subject to policyholder paying a higher mortality charge under Option B.

Unique Feature

For one, Future Invest has no premium allocation charge. Thus, the entire amount of premium paid gets invested in the scheme. Also, premiums are to be paid for just half of the policy term, ie, while the policy term is 10 years, the investor is required to pay annual premiums for the first five years only. The scheme also provides for a settlement period wherein the investor can continue to stay invested in the plan for a maximum period of 5 years after the end of the policy term, to reap market gains.

For Customers

Future Invest is a new launch and it is thus advisable for investors to understand its features as well as charges before taking the plunge. Following is a brief summary of the scheme…

Future Invest offers an attractive sum assured equal to 10 times the annual premium if the policyholder's age is less than 45 and 7 times thereafter. Thus, for annual premium of 1 lakh, the sum assured is 10 lakh or 7 lakh

For those opting for Option B as the death benefit for the nominee, the mortality is charged on sum assured. This is higher than the mortality charges applicable otherwise on the difference between the sum assured and fund value.

Option B also entitles the investor to an additional accident death benefit equal to the base sum assured. However, this again is at the cost of 1 per 1,000 sum assured per annum.

Future Invest definitely scores on features such as no premium allocation charge and the option to receive both the sum assured and fund value as death benefit. It is, however, a let down as far as policy administration charge of 0.5% per month, on annual premium, is concerned. However, as this charge is capped at 6,000 per annum, high net worth investors (HNI) can consider the scheme as a viable investment option.

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New Pension Scheme ( NPS )

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 16 Apr 2012 07:48 PM PDT

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New Pension Scheme (NPS) is a pension scheme launched by Government of India (in effect from 1st April, 2009) and is a defined contribution based pension scheme. NPS differs from the existing pension scheme in the sense that existing pension fund of Government of India offers assured benefits while NPS has defined contribution structure where an individual can decide where his contributed money will be invested. NPS is intended to resemble a 401k plan offered for US employees but not in totality. NPS will follow EET (Exempt Exempt Taxable) structure similar to its global peer but the withdrawal amount after the age of 60 cannot remain invested nor can be withdrawn fully. Another important difference being premature withdrawal is subject to few life changing situations. Let's explore other aspects of this scheme.

Product Structure

The scheme is available in two forms:
1. Tier-I account - Premature withdrawal not allowed
2. Tier-II account - Premature withdrawal allowed

Features

Until now the pension schemes were available to Government employees and employees of big firms who have provident fund facility. With NPS common man gets an entry to the system. The other important features of the schemes are:

1. Low Cost - Annual Fees of .00009% (90 paisa for Rs 10,000) for fund management
2. You can choose from six different funds for investment
3. Withdrawing from one fund and investing in another will not have any tax implication
4. No upper limit on Investment
5. Minimum limit of investment is 6,000 per year
6. Tax benefit over and above the current limit of 1L under sec 80C
7. All citizens between 18 and 55 years can invest in NPS

Taxation

Under the newly introduced Section 80CCD (2), up to 10% of an employee's basic salary put in the New Pension Scheme is tax deductible. If you fall in the 30% tax bracket, the NPS investment under Section 80CCD (2) will reduce your tax liability by almost 15000. Now onwards, NPS will be more beneficial from the tax angle. From the next financial year, contributions by employers to the NPS accounts of their employees can be deducted as a business expense which was not allowed till now. As such contributions will not be part of the Rs. 1 lakh tax deduction limit under Section 80C, your employer's contribution on your behalf will be a tax free benefit for you.

Fund withdrawal

Premature exits before 60 years
� You will have to invest 80% of accumulated wealth to purchase a life annuity from registered life insurer
� The remaining 20% is liable for withdrawal as lump sum

Exits after 60 years
� You will have to invest at least 40% of pension wealth to purchase an annuity

No exits till 70 years
� Beneficiary account will be closed and the accumulated amount will be transferred in lump sum

In case of death of the scheme holder nominee will receive the whole amount as lump sum.

NPS scheme on its own vs. the one offered by the employer

If the employer is offering NPS he will be making an equal contribution in the scheme from his side. The structure will be of Tier-1 type where premature withdrawal will not be allowed. You will be liable for additional tax benefit on the employer's contribution.

Additional to above structure individual can also choose a voluntary tier-II account having premature withdrawal facility. Government and employers will make no contribution into this account. The accumulated wealth in this account can be withdrawn anytime without stating any reason.

Benefits to investors

1. Additional tax saving - Both employers and employees will get tax exemption on their contribution
2. Low cost of fund management - The fund management cost is very low, which will enhance the returns
3. Higher return potential as compared to old plans - As it's a defined contribution plan, investors can choose from the 6 funds available for investment for better returns. Rebalancing of accumulated amount is free of cost so you can always invest in the best fund.

The Drawbacks

1. Tier 1 option doesn't give much flexibility - It's a rigid structure. A little flexibility with respect to premature withdrawal would have made it more lucrative.
2. Annuity rates post maturity is not fixed - There is no floor rate decided so you cannot be sure of the returns until maturity.
3. Fund management costs might increase in future - Depending on the pension liability and costs involved this rate might shift northward.
4. Only six fund managers makes it a risky proposition - If we take into account the working population of India this number seems to be pretty risky. As the number of subscribers increase hopefully government will increase this number.

How does employee and employer benefit?

The scheme will benefit both employees and employers a like when they participate. Employees get tax deduction on their contribution and from next financial year employers will be in a position to show their contribution as business expense generating additional tax benefits for the firm

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