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- Tax structure for investments in gold ETF
- Get double benefit on year-end investment
- Mutual Fund buying - Cost Effective Versus Convenient
| Tax structure for investments in gold ETF Posted: 20 Nov 2012 03:59 AM PST Call 0 94 8300 8300 (India) The tax system for gold ETFs is similar to that of non-equity mutual funds like debt funds. So, if you hold gold ETFs for more than a year, you pay a long-term capital gains tax of 10 per cent without indexation or 20 per cent with indexation, whichever is lower, on the profits made.
Gold ETFs held for less than a year attract short-term capital gains tax. Meaning the profits are added to your annual income and taxed according to the bracket your income falls in. Moreover, gold ETFs do not attract wealth tax. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
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| Get double benefit on year-end investment Posted: 19 Nov 2012 11:38 PM PST Call 0 94 8300 8300 (India) THE end of the financial year is associated with pressure on investors to complete their various investments. In the middle of such a situation, there is one benefit available for mutual fund investors whereby they can get the gains of two years even while they are investing only for a single year. This is possible because investors can get the benefit of a term called double indexation. The end of the financial year is the most suitable time when this can be utilised. Here is a close look at the entire issue and how the benefit can be obtained. Indexation: When an investor holds an asset such as an equity share or a mutual fund for 12 months or more, it is classified as a long-term asset. For assets where long term capital gains tax is not zero, indexation benefit is available. For equity investments like shares and equity-oriented mutual fu-nds, there is zero rate of tax when the investments are held for more than 12 months. So the question of taking the benefit of indexation does not arise. However this is necessary in case of a debt investment and there is a specific procedure that is followed. Instead of just looking at the sale price of the investment and then comparing it with the cost price, a different way is adopted to calculate capital gains or loss on the transaction. In order to give the benefit of inflation effect to the investor, the cost of the investment is raised by a figure, which is announced in the form of an index figure each year. This index figure is known as the cost inflation index (CII) and it is announced each year by the tax authorities. Manner of calculation: To calculate indexation, index numbers of the financial year of the sale of the asset and the year of the purchase of the asset are considered for the purpose of increasing the cost. The year here refers to a financial year, so it covers a period from April to March. For example, if an asset is bought for Rs 40,000 in 2006-07 and sold in 2009-10, then for the purpose of calculating capital gains, the cost of the asset will be 40,000 X 632 (CII of the year of sale)/519 (CII of the year of purchase) = 48,709. In this case, if the asset is sold for Rs 50,000 then the gain is not Rs 10,000, but Rs 1,291. Double benefit: In February and March, there is a double benefit that an individual can take with respect to their debt mutual fund investments. These funds will have the benefit of indexation when the holding is for more than 12 months. The idea is to look for investments for 13-14 months. Funds also provide a lot of options in the form of fixed maturity plans that are launched in February-March and mature in April-May of the next year. This represents the benefit for the entire investment. When it comes to the purpose of calculation of the gains, there is actually a double-year benefit in the form of indexation that is available to investors. This happens because the purchase is in the financial year 2010-11 while the sale will be in the financial year 201213 because it is after April of the next year. This will lead to a position where it is likely that the entire amount of earnings of the individual will become tax-free because the indexation gain will most probably be more than the returns generated during this period. Even when the returns are high and there is a small rise in the index number, the gains are also very marginal, which ultimately bring down the tax impact for the individual. In case there is a loss, it will become a good way to ensure that the income earned remains tax free in nature plus some other income can be set off against the loss from this investment.
Happy Investing!!
We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them
OR
You can write back to us at PrajnaCapital [at] Gmail [dot] Com
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Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs
Download Mutual Fund Application Forms
Best Performing Mutual Funds
Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
| Mutual Fund buying - Cost Effective Versus Convenient Posted: 19 Nov 2012 08:34 PM PST Call 0 94 8300 8300 (India) Besides investing in mutual funds through an independent financial advisor or distributor, the likes of Kumar can invest directly via asset management companies (AMCs), banks and online portals (such as Fund Supermart, iFast Financial). There is yet another option that was launched almost a year before —mutual fund trading platforms —offered by both the Bombay Stock Exchange and the National Stock Exchange. Popularly known as the mutual fund service system or MFSS, it allows you to invest in mutual funds through brokers. Here, an important requirement is a demat account. On the other hand, approaching an AMC directly will imply spending a few hours in travelling and waiting at the fund house's office. Cost If you are transacting through the stock exchange trading platform, you need to pay a transaction charge of about 0.5 per cent and an annual maintenance charge of `500-700 for the demat account. You do not need to pay an advisory fee, such as in case of distributors and banks. A fee of one-two per cent of investment amount or a flat one of `150200, is typically charged by distributors and banks. When you approach an AMC directly, you do not pay anything over and above the amount you invest. Redemption If you want to withdraw from a scheme, the settlement is done on a T+3 basis (transaction day plus three days) on all investment platforms for equity schemes. It means you receive the proceeds three days after redeeming the fund units. If you apply for redemption before 3 pm on a particular day, you will get the same day's net asset value (NAV) at the market closing time. If applied after 3 pm, the next day's closing NAV will be applicable. Systematic investment plan (SIP) While investing through MFSS, you may not be able to invest in SIP. Only a few fund houses, such as Reliance Mutual Fund, offer the SIP option over the exchange platform. Also, you may not have the option of many schemes on this platform, as AMCs have listed only a few equity schemes on MFSS. We will soon enter the second phase of MFSS and SIP will be made available, other channels of investment can get you a whole host of schemes and SIP to choose from. Taxation Mutual fund investments attract the Securities and Transaction Tax (STT) of 0.25 per cent. It is applicable irrespective of the channel you choose to invest through. But the manner of levying the tax varies with your choice of intermediary. Say, you invest `1lakh in a mutual fund scheme and the investment doubles in a year. If invested via a non-exchange channel, STT (500) will be levied on redemption. But over MFSS, STT is divided into two parts of 0.125 per cent and levied both on investing and redeeming. The total STT payable, here, will be `375 (125 on the investment amount and `250 on the redemption amount). Loan against mutual funds A key advantage of investing in funds via exchange platform is that you hold the units in demat form. For pledging demat units, you need to present the pledge slip, which your broker will give you, and it will go to the lender. The lender, too, assured as the depository holding the units, can act as a guarantor for the fund transaction. However, when you invest through other channels to pledge the units, you first need to register these with the fund house. The fund house will hand over the transaction receipt that is to be given to the lender. The process can be time-consuming and cumbersome. And, it will get magnified if you hold units with different fund houses. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
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