Tuesday, July 10, 2012

Prajna Capital

Prajna Capital

Tax deducted at source

Posted: 10 Jul 2012 01:40 AM PDT

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Find out about the different sources of income that invite TDS and how you can reduce your tax outgo


The tax deducted at source, or TDS, is applicable on earnings from various financial instruments. Here's a guide to help you know when TDS is applicable.

When is tax deducted at source?

There is no uniform rate for TDS. It can range from 1% for sale proceeds from selling a house, to 30% for winnings from a horse race. Here's a look at how much TDS is cut from your earnings.

Salary

At the beginning of the financial year, or when you join a new organisation, your employer will ask you to fill an investment declaration form. This will include the maximum tax deductions allowed under Sections 80C, 80D and other tax-saving instruments. If, despite all these deductions, your salary is above the exemption limit, TDS will be cut from it every month.

Lottery winnings

Money won in a lottery, puzzle competition or a horse race is subject to the high est TDS rate of 30%. The TDS is applicable even on non-cash winnings.

Bank accounts

If the interest you have earned from your bank FD is above 10,000, you will receive it after the bank deducts tax. This ex emption limit also applies to interest earned from a bank savings account.

Property

Whether it is rental income or the money that you get after selling a house, you will receive the final amount only after tax is deducted. However, you can avail of exemptions in both cases.

Superannuation fund and debentures

If you withdraw money from a superannuation fund, it is added to the income and if your income is above the taxable limit, TDS will be applicable. In the case of debentures, interest income up to 2,500 is exempt from tax deduction.

Gold and silver

The finance minister recently announced that from July onwards, cash used to buy gold and silver jewellery worth more than 5 lakh will have to pay taxes upfront.

How to save on TDS

No TDS is applicable on the interest earned from a recurring deposit. However, once you receive the maturity amount, it will be added to your income and you will have to pay tax on it. If your income is below the taxable limit, but the interest earned from your deposits is above 10,000, you can submit form 15 G/H to the bank at the beginning of the financial year to not cut TDS.

What to watch out for

When you file your return, calculate the total income and the tax bracket you fall under, to determine the balance tax to be paid. If your income is taxable, you will have to pay the differential tax. Don't think you can avoid paying taxes by not declaring your permanent account number. All the taxes that are cut on your behalf by a bank, an individual or an organisation are listed in Form 26 AS, which is also called the annual tax statement.

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Download Mutual Fund Application Forms from all AMCs

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Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

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Pramerica Dynamic Fund

Posted: 09 Jul 2012 11:32 PM PDT

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Pramerica Dynamic is an asset allocation fund. This fund can be fully invested into equities or substantially into fixed income, depending on the market scenario. The fund uses the DART model, which drives its asset allocation. This model hasn't worked out well, which could be because of the qualitative inputs that are a part of it

-------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

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Infrastructure Bond Application Forms Download Applications

Portable Provident Fund Account may come Soon

Posted: 09 Jul 2012 09:19 PM PDT

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Organised private sector workers may soon be able to maintain their retirement savings while changing jobs because the Employees' Provident Fund Organisation is close to finalising a plan to provide portable account numbers.


The EPFO has dumped its earlier plan of providing a separate unique number to each of its 48 million subscribers. It will instead allow the subscribers to tag the provident fund accounts with their existing permanent account number, unique identification number or national population register number.


A high-powered committee, headed by the Central Provident Fund Commissioner RC Mishra and comprising senior officials from the Unique Identification Authority of India and the ministries of information technology and labour, is in the process of shortlisting a consultant to implement the initiative. "The broad contours of the proposal have been finalised by the committee. We are hopeful that all required infrastructure would be in place within the next few months and the project can be implemented by the beginning of the new fiscal," said an official who did not wish to be named.

 
The portable number will not just help employees retain their accounts when they change jobs but also serve as the reference number for claiming pension and other related benefits. The EPFO wants to give employees an option of choosing between three existing unique numbers so that no subscriber gets left out. "There may be many that have just one of the three. By giving a choice, we will ensure that all our subscribers get covered. Gradually, we may move to just one number," the official said.

 
Once a consultant is appointed, the EPFO will follow its advice for business process re-engineering to redesign the workflow within the organisation. "All existing PF numbers will have to be replaced by the portable number. Employers will be able to do it on their own online. We will develop a software for that," the official said. The EPFO plans to implement the initiative straightaway by using the best software. The project will cost the government about . 200 crore, an amount that the EPFO says is a pittance compared with the savings that it will lead to.


"More than 80% of our workload would come down as we do not have to spend time towards claim settlement. We could channelise this time towards other work and make the office more efficient," the official said.


The EPFO hopes that cases of premature withdrawal will recede once the portable number is implemented. In a pilot study conducted at its Karnal office, it found that over 30.2% subscribers withdrew their PF within a year of joining service while 54.3% did so by the end of the second year. This happens because employees find withdrawal of PF money an easier option than getting their accounts transferred once they change jobs. All this is going to change soon.


The organisation processes more than six million claims every year. It manages over . 3,00,000 crore of employees' deposits and receives incremental deposits ranging between . 25,000 crore and . 30,000 crore every year.

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Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Mutual Fund Application Forms Download Any Applications
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Infrastructure Bond Application Forms Download Applications

Take calculated risk while investing in Equity

Posted: 09 Jul 2012 07:52 PM PDT

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For those who invest in the stock market "risk" is a familiar word. If there is too much risk involved why does investment happen in the first place? A seasoned investor will know how to convert this risk to a reward, as the risk becomes a calculated risk and whatever is calculated can be mitigated, too.

Now the question is, are these rules sacred and available only to a privileged few? Of course not. This article attempts to decode some of these rules. Let's first understand what exactly equity risk is and as a next step learn the rules to mitigate it.

What is equity risk?

In finance, risk is defined as the volatility of returns but usually investor associates risk with depreciation of value of their portfolio. To understand it better, lets take an example.

You own an equity portfolio and when market crashes your portfolio depreciates more than the index in percentage terms and in times of a bull market, it appreciates more than the index, then your equity risk is higher.

Similarly, if the fall or rise of portfolio value is lesser as compared to index your equity risk is lower. Equity risk is basically a combination of three other types of risk namely market risk, industry or sector risk and company risk. Market risk comes into picture because of uncertainty of economic growth, interest rate, inflation etc.

Industry risk is the result of uncertainty of growth of a particular sector in economy and company risk arises because of uncertainty of its growth prospect.

How to mitigate Risk ?

So now we are aware that once we buy an equity portfolio or a single stock we are exposed to equity risk. We might lose a whole lot of money if we don't mitigate equity risk as its a resultant of various factors which we as individuals cannot control.

In a situation where we are not at the driving seat, to keep our self safe at least we can hold our seat tight. So, let's discuss It is common sense that all the sectors of the economy cannot collapse at the same instant. In bad times there are stocks which can shield you better if you invest keeping equity risk in mind.

Rather than putting all your money into a particular sector, balance your investment portfolio by investing into defensives (food, medicine, public utility) and cyclical stocks (auto, real estate, cement, sugar, commodity, etc). Even if the market crashes, this part of portfolio will protect the overall value of your investment.

Invest in mutual funds

Diversify your portfolio not only in terms of sectors but also in terms of investment options. To mitigate equity risk you should diversify your portfolio by investing in other equity asset classes like mutual fund and index funds.

Invest from long term perspective

Don't get swayed by short term reaction of the market as its a known fact that if you invest in equities from a long term perspective you rarely lose. If you have researched well and are confident about the health of the economy, just stick to your investment decision.

Take exposure in foreign equity

If you have knowledge and resources diversify your equity portfolio by investing in foreign equity as it will mitigate your risk when the local economy is not in good shape.

Keep safe distance from penny stocks

Equity exposure is risky in itself and one should not make the situation worse by investing in penny stocks. If you take exposure in these no mitigation steps can save your bank account.

All said and done, one final word - do not invest under the assumption that it is possible to bring this risk to zero as that's an impossible task. In trying to achieve this you will do more harm than good to your portfolio. The steps suggested above will help you in minimising the risk if you stick to them religiously

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Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds        Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds     Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds    Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds             Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds              Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Gold Mutual Funds             Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Mutual Fund Application Forms Download Any Applications
Buy Mutual Funds Online Invest Online
Infrastructure Bond Application Forms Download Applications

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