Prajna Capital

A Tax Efficient way to sell Shares
SIP for Each of Life Financial Goals
Your Gold can earn Interest Now

Posted: 09 Jun 2015 07:43 AM PDT

From July 1, retail investors can offer stocks through exchanges for delisting, buyback and open offers

Offering shares to a company that is going to de- list or offering a buyback has always been cumbersome for small investors. The firm sends a letter to your address, giving details and price of the offer, asks you to fill a form, sign it and then send it back by post. The company, then, submits the application to the broker and makes a claim.

If an investor has been holding shares for decades, there's always fear of signature mismatch, misplacement of forms, and then there's capital gains tax as these are not routed through the exchanges, called off- market transactions.

To do away with the archaic system and make these transactions more profitable for investors, the Securities and Exchange Board of India ( Sebi) has introduced a new mechanism. The stock markets regulator recently issued a circular that companies making public announcements for de- listing, buybacks and open offers, July 1 after will have the option to route their purchases via stock exchanges. The traditional process, too, will continue and it will be up to the firm's discretion to choose between the two.

If a company goes for stock exchange option, the process will entirely be paperless and more tax efficient.

It will be just like buying and selling stocks using the existing trading account during the market hours. This process also significantly reduces the time taken for such offers.

The trades shall be carried out in the manner similar to settlement of trades in the secondary market process including providing an option for direct payout to the shareholders. This would include settlement of trades of physical shares as well. Excess shares, if any, would be returned to the seller brokers by clearing corporation.

The biggest benefit, however, of this new mechanism is lower tax outgo for long- term investors. Once the company starts adopting this route, investors who have stayed with the firm for a year won't need to pay any long- term capital gains (LTCG) tax. Income- tax rules say that the person who pays securities transaction tax doesn't need to pay LTCG.

Currently, when an investor tenders shares in de- listing, buybacks, or open offers that are at pre- determined price, he ends up paying LTCG tax, which works out to 10 per cent or 20 per cent with indexation benefit ( whichever is lower). For example, if a person is making profit of ₹ 1 lakh by offering shares while a company is de- listing, he would need to pay up to ₹ 10,000 as tax. The short- term capital gains would still apply, wherein the gains are added to the income and taxed according to the slab.

According to experts, the only drawback is a lack of clarity whether the payment will be made to the shareholder through the broker or directly via cheque or bank transfers. Routing through brokers can cause delays of funds reaching the client

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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Leave a missed Call on 94 8300 8300

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Download Mutual Any Fund Application Forms

SIP for Each of Life Financial Goals

Posted: 09 Jun 2015 05:07 AM PDT

ACCORDING TO FINANCIAL PLANNERS, ONE NEEDS TO KEEP SEPARATE FINANCIAL GOALS TO ADDRESS DIFFERENT FINANCIAL NEEDS AT VARIOUS STAGES OF LIFE.

Systematic Investment Plans (SIPs) are one of the best financial innovations for investors with regular income. It inculcates in an investor a disciplined approach to investing, helps in rupee-cost averaging, assists one to take advantage of compounding if the SIP is run for a long period of time and the liberty to invest even small amounts of money.

Some of the main tenets of Life Stage Planning are to start investing early, invest regularly and in a disciplined manner. Along with these, it's also necessary to save in a smart way. Of late SIPs have emerged to be one of the smartest ways for retail investors to invest and create wealth. For a long time most of the people within the salaried class, who are generally the risk-averse types, kept their money in fixed deposits, that barely created wealth for them since by its very nature FDs hardly beat the rate of inflation. Along with the popularity of SIPs, the advancement of technology in the banking and financial services space has also made it easier for salaried people to invest regularly through the SIP route. At present, some of the fund houses even offer the option to start investing through the SIP route using the online channel and without any paperwork.

When SIPs were launched in India, most fund houses pushed this method of investing in equity funds. So most people who are new to investing or are starting to invest, believe that SIPs are possible only for equity schemes. However, the reality is that SIP is possible in almost all types of mutual fund schemes equity, debt, money market and liquid funds, gold ETFs etc.

According to financial planners, to address the financial needs at every stage of life, one needs to address those needs separately. Depending on the choice and needs of an individual, these stages could include getting married, buying a house, children's education (primary, secondary and higher levels), vacations, children's marriage, retirement of the self and emergency funds. For each stage of the life, one can set up an SIP in an appropriate type of mutual fund scheme and make his money work better for reaching these goals.

Here the basic rule of setting up an SIP is to look at the time left to reach the respective goal. If the time left to reach a particular goal is say a few months to a few years, that is about 2-3 years, this is classified as a short term goal. Paying children's school fees, insurance premium, short vacations etc. could be categorised into such short term goals. For such goals starting an SIP in a debt fund or a liquid fund is the ideal way to go.

For goals which are say between four year to six years or so, such goals could be categorised as medium term goals. For example one is planning a foreign vacation after five years from now. Or one's child is set to go for higher studies in about four years from now. For these goals one could set up an SIP in a balanced fund.

The third category is the long term goals. These goals are say more than seven years in future.

Such goals could include building a retirement corpus, children's marriage etc. The thumb rule for meeting a long term financial goal is to set up an SIP in an equity scheme. However, financial advisors and planners in India suggest that for children's marriage, in addition to starting an SIP in an equity scheme, one should also start an SIP in a Gold exchange traded fund. This second SIP is to meet the Indian custom in which gold plays an important role in all marriages.

According to financial planners, individuals and corporates can also use SIPs in debt and liquid funds to save on taxes. For this, however, a proper planning is required, keeping in mind the tax structure relating to debt funds. There are some words of caution here. Before starting an SIP, one should have a financial risk profile in place, financial advisors say. An investor should not go blindly with any SIP. Also there should be proper assessment of the investor's need for starting an SIP and suitability of the scheme in which the SIP is to be started.

Also before starting an SIP, it is necessary that one should know how much fund is needed for a particular goal in life. Keeping that in mind, one should decide on a realistic level of returns and then decide how much money he should invest in each SIP

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

Leave a missed Call on 94 8300 8300

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

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

Your Gold can earn Interest Now

Posted: 09 Jun 2015 04:00 AM PDT

Gold can earn interest

The new gold monetisation scheme could unlock its value

With an estimated holding of around 20,000 tonnes, Indian households are one of the largest hoarders of gold on earth. But this gargantuan wealth is just lying idle without earning any return. This year's budget has proposed a way to unlock its potential by introducing gold monetisation schemes.

One option is a sovereign gold bond, which is an alternative to physical gold. The next option is a Gold Deposit Scheme. Under this, depositors will earn interest on their metal accounts. The scheme is also open to jewellers who can take loans against their metal accounts. This will replace the existing gold deposit and loan schemes offered by SBI. The gold deposit scheme was a non-starter because the interest rates offered was very low. The investor got 0.75% per year for a period of 3 years and 1% if he kept the gold for 4-5 years. Besides, investors suffered on account of making charges and purity issues.

Though the details of the new scheme are not yet out, industry players are hopeful that the terms and conditions will be attractive for depositors. The government may come out with a better scheme this time because it might have learnt a lesson from the failure of the earlier scheme.

How will these schemes impact the domestic and international gold markets? New schemes, if successful, will help to take the hidden Indian gold to the open and help to recycle it. By increasing the availability of domestic gold, the new scheme should bring down our gold imports. Since India is one of the largest gold importers, any significant fall in Indian imports can bring down the international gold prices.