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FIIs pull out Rs 7,600 cr from debt market
Spice Digital, IRCTC tie up for e-ticketing
Tax Advice |
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BIZ TALK
personal finance
How to become a smart investor
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FIIs pull out Rs 7,600 cr from debt market
New Delhi, June 9 Market experts attributed the huge outflow from the debt market to depreciating Indian currency against the US dollar. The rupee, on Friday, closed below the key 57-mark against US dollar for the first time in a year sliding by 22 paise to 57.06. The rupee lost nearly 1 per cent during the week. FIIs have been aggressive buyers of bonds since the beginning of 2013 on account of higher yields offered by the government and corporate debt with a net investment of Rs 16,372 crore ($ 3.2 billion) so far this year. Besides, steps taken by the government to ease FII investment rules by doing away with sub-limits and reducing the withholding tax on debt investments have also helped the segment. Overseas investors net investments had reached two-year high level during 2012, attracting net inflow of around Rs 35,000 crore in the Indian debt market. Interestingly, FIIs were net buyers in the equity markets with an investment of Rs 118 crore (about $ 21 million) during the week. With this, the total foreign investment in the country's equity market has reached Rs 83,322 crore ($ 15.4 billion) so far this year. As on June 7, the number of registered FIIs in the country stood at 1,754 and the total number of sub-accounts at 6,411 during the same period.
— PTI Re to remain under pressure: Expert
Mumbai: After crossing the 57 mark against the US dollar last week, the domestic currency is likely to remain under pressure in the near-term on the back of rising concerns over the current account deficit. "Rupee will remain under pressure in the near-term as the fundamentals are weak due to high current account deficit and trade deficit," head of treasury of IDBI Bank N S Venkatesh said.
— PTI |
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Spice Digital, IRCTC tie up for e-ticketing
New Delhi, June 9 With this initiative, Spice Digital not only makes its debut in offline travel and tourism space, but also does so with a pan-India footprint. Saket Agarwal, Global CEO Services, Spice Digital, said, “The Spice group is known for being the game changers and the initiators for many firsts in the field of telecom and VAS. Keeping with this tradition, Spice is now at the threshold of being the largest travel and tour aggregator in the retail space and has initiated the first milestone with the launch of the IRCTC e-ticketing services. We have also launched ‘Spice Safar’, a brand dedicated to this venture.” Amit Nigam, vice-president, M-commerce, Spice Digital, said, “Spice Safar has been launched with an objective of taking care of travel-related needs of the general public. The first offering from the brand is Railway e-ticket booking, post which hotels, taxis and other modes of travel would be integrated through neighbourhood retail outlets”. ‘Spice Safar’ will be connected to the Railways in real time basis via the IRCTC. The retail agents can log on the Spice Safar propriety platform and search trains, check fares and book tickets online through this interface. |
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Tax Advice Q. I have been serving as lecturer in Govt Senior Secondary School, Khuian Saredar, Fazilka. I have been getting medical allowance Rs 500, mobile allowance Rs 500, BHRA (Border area allowance) (5% of basic pay) in lieu of free accommodation and rural allowance of 6% of basic pay. Are all these allowances taxable or non-taxable? — Subhash Chhabra A. (a) Fixed medical allowance will not be exempt from tax. However, in case you can prove that the amount spent by you for medical expenses incurred for self and family is more than Rs 15,000 per year, it may be possible for you to claim that the amount being in the nature of medical reimbursement and being less than Rs 15,000 per year should be exempt from tax. (b) Fixed mobile allowance will be taxable. (c) The border area allowance will also be taxable as you are not living in the areas which are specifically covered for the purposes grant of exemption as specified in Rule 2BB(1) of the Income Tax Rule 1962 (The Rule). (d) Rural allowance will also be taxable as no exemption is provided in the Act in respect of such an allowance. Trust for minor
Q. I have come to know that ‘Trust’ can be made for minors. In the case income is not clubbed with parents, such Trust is supported by various courts of India, including the Supreme Court. Please clarify. — Ramesh Marwah A. A person can form an irrevocable trust for the benefit of the minor children. In such case, no clubbing will arise in respect of the income of trust. The trust so formed can be taxed at the maximum marginal rate in case the shares of the beneficiaries are indeterminate or unknown. In case the shares of beneficiaries are determinable and the total income of any beneficiary (excluding his share from such trust) exceeds the maximum amount which is not chargeable to tax under the Finance Act of the relevant year, tax shall be charged on the total income of the trust at maximum marginal rate. PPF Account
Q. Kindly clarify: (a) What is the maximum limit of contribution to the PPF A/c - as individual tax payer along with a minor child? (b) When the minor child attains majority and gets a PAN card also, how much contribution (maximum) can be done in both the A/cs? (c) What will be the rebate in Income-tax (in both cases)? — Tax Payer A. (a) The maximum limit of contribution to PPF account is Rs. 1,00,000. You can open an account on your own behalf or on behalf of a minor. You can thus open only one PPF account. The applicable limit is Rs 1,00,000 only for either of the accounts. The limit of Rs 1,00,000 is applicable to anyone of the accounts so opened. (b) The minor on attaining majority will be operating his own account. The limit applicable in his case will be same i.e. Rs. 1,00,000. (c) The amount deductible under Section 80C of the Income-tax Act 1961 (The Act) in respect of the deposit made in PPF account is Rs 1,00,000, being the maximum limit prescribed under section 80C of the Act. |
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BIZ TALK
Q: Do you think the incident of Amway CEO arrest will affect Indian and international business operations? A: The unfortunate incident in Kerala has surely impacted the direct selling industry. International direct selling companies will definitely be cautious before investing in India in the near future. Q: How is the PCMC Act affecting the direct selling industry in India? A: The Prize Chits & Money Circulation Scheme (Banning) Act of 1978 was enacted to weed out prize chit, money chain and other financial fraud. The PCMC Act is inapplicable to the direct selling industry as we are a trade and commerce activity and this business model differs both in form and function. To elaborate, direct selling is an alternate channel of distribution and means of the marketing of consumer products/services directly to the consumers generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations, usually through explanation or demonstration of the products by a direct seller. Q: Why is the lack of clarity in regulations for the direct selling industry? A: The PCMC Act was framed way back in 1978 at that time requirements of the markets were different and there was a need to have an Act which could act as a deterrent towards chit fund/ponzi scheme and other schemes promoting money circulation and earning of quick and easy money. Direct selling structure differs from prize chits scheme both in form and function. Price chits and money circulation are a major concern because of the ambiguities and gap of understanding of the circumstances in which it was formulated. The direct selling industry has been steadily growing on the yearly basis of 20 per cent despite the problems it has faced in many states. Q: What steps are you taking for prohibiting fraudulent activities? A: Fraudulent companies are affecting the operations of direct selling companies because there is a lack of definitional and operational clarity. Fraudulent companies are enrolment based whereas the direct selling industry offers business opportunity for sales of products and services. To prohibit the fraudulent activities, the IDSA has been advocating with various Central ministries and state governments, organising various knowledge forums to create awareness and educate about the different aspects of genuine direct selling business with highlight on the differences between fraudulent financial pyramid schemes and direct selling companies. Q: What separates direct selling from ponzi schemes? A: Direct selling is different from ponzi schemes that it provides business opportunity to an individual wherein he is incentivised only on the basis of the sales made for different products and services. Direct selling can be differentiated from ponzi schemes as it is not an offer of employment. It is not an investment scheme. It does not envisage promoting or conducting any scheme for the making of quick or easy money and it is not a pyramid scheme as people in the network are never incentivised for recruitment. |
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personal finance
Hanging work patterns, high-stressed jobs, junk food, smoking and alcohol, little or no exercise are leading a large number of Indians rapidly towards the so-called lifestyle diseases. In recent years with progress in clinical examination methods, statistics have shown an upward trend in life-threatening diseases. In 2005, the economic loss due to rise in lifestyle diseases as a result of unhealthy workplaces was accounted for $8.7 billion and the same has been projected to rise to $54 billion by 2015.
Healthcare expenses have been recording the highest inflation for the past many years, severely impacting the ability of the consumers to bear these costs out of their regular incomes. The increase in the heathcare cost is not only on account of hospitalisation expenses. The costs of medicines in case of cancer clearly highlights the fact that one should not merely depend on the traditional hospitalisation cover but should also consider critical illness cover. As many of us already have mediclaim/health insurance policy of our own or through our employer, we tend to ignore the critical illness cover thinking that it is just a one more health policy of the same kind. Therefore, it becomes essential for one to understand the differences between a health insurance policy and critical illness insurance policy. Traditional health policies pay for hospitalisation and in some cases the domiciliary expenses. However, the critical illness can cause greater financial burden than the medical expenses incurred for the treatment. These diseases can also lead to loss of "full or partial", "temporary or total" employability hence change in lifestyle. The loss incurred could be far more than what the insurance covers. A regular medical reimbursement policy covers any illness, disease or injury as long as within the purview of policy. It reimburses the hospitalisation expenses for any illness, disease or injury. Policy continues even after claim is made, until renewal. There is an initial waiting period of 30 days (ie any sickness or illness contracted during first 30 days from the commencement of the policy is excluded). A standalone critical illness is a benefit policy. It covers a pre-defined/pre-specified condition of illness only (defined as critical illness in the policy). As a benefit, it pays a lumpsum amount on the basis of diagnosis (benefit plan). This policy ceases once benefit has been paid (a few offer the choice of remaining insured for other illnesses). There is an initial waiting period of 90 days (exclude any critical ailments detected during first 90 days). One can buy a critical illness as a standalone insurance policy or can opt for health insurance policy with critical illness rider. Most of the insurance companies in India are providing critical illness insurance as an addition to life insurance/health insurance policy with the payment of additional premium. This enables them to add value to their existing insurance policy. Critical illness insurance policy is designed specifically to cater to the needs of the high costs of treatments of lifestyle diseases like heart attack, coronary artery bypass surgery, stroke, cancer, kidney failure, paralysis, etc. Critical illness cover is offered with the intention of providing financial protection to individuals following the diagnosis of an illness deemed critical. The finances received could be used to:
Findings
According to the World Health Organisation, cardiovascular diseases will be the largest cause of death and disability in India by 2020. Its Global Burden of Disease study estimates 52% of cardiovascular diseases deaths occur below the age of 70 in India compared to 23% in established market economies, which adversely affects the working population in the country. The author is Head - Strategic Planning, HR & Marketing, HDFC ERGO General Insurance. The views expressed in this article are his own |
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How to become a smart investor
In the morning while going to office, I met one of my school friends in a train after five years who was a computer engineer and had just got his first job. After recollecting and cherishing the memories of our school days, he asked, "Tell me one thing, how to make money, earn highest possible returns on investments with minimum risk? In short, I want to become a smart investor". I told him that he could not get everything in one basket. You should consider these factors for becoming smart investor. Safety
First thing an investor considers before making any investment is the safety of the investment instrument. Safety is nothing but the risk in the investment. The risk can be the loss of principal amount invested or risk of negative returns. As you know the thumb rule, higher the risk, higher will be the returns and vice-versa. Risk taking capability differs from person-to-person and investment time horizon. Some people are conservative while some are very aggressive with their investments. For short-term goals, you cannot afford to take high amount of risk, by investing in equity mutual fund. Maturity
Maturity is nothing but the holding period of the investment i.e. how long do you wish to stay invested in any instrument. You must first decide the time horizon of your investment and then select the investment instrument. If you have time horizon of say 2 to 3 years, then you should invest only in debt instruments like income funds, bank fixed deposit or conservative MIP fund only. Similarly, if you have medium-term time horizon of around 5 to 7 years, then you can invest some portion in equity (70% - 80%) and balance in debt (30% - 20%). For long-term investment (10 years or more), you can consider investing 80% to 90% in equity mutual fund and balance in debt fund and /or gold fund. Asset allocation and selection
You should never go overboard on any asset class and never put all your eggs in one basket. You must always diversify your portfolio by investing in various asset classes in different proportions. You cannot bet on a single asset class. Your asset allocation should be rebalanced periodically and reviewing the same. You should not have exposure to gold more than 10% - 15% of your portfolio. Real estate can be a part of investment only for wealth creation and should not be considered as a goal-based investment. Systematic Investment Plan (SIP) in mutual fund is one of the best ways of investing in equity. You should avoid investing in direct equity (shares) since it requires in-depth research of the company, sector and the market. For investing in debt, you can choose income funds, fixed maturity plans or Public Provident Fund (PPF). You can invest in gold by buying e-Gold, gold fund or Exchange-Traded Funds
(ETFs). Returns
Returns are the most important factor of any investment because the reason you are investing is to earn. All investments are a risk and return game! Recalling the thumb rule, higher the risk, higher the returns. You cannot expect high returns from low-risk investment instrument. For example, you cannot expect a bank fixed deposit to give you double-digit returns. So for earning high returns, you need to bear the risk attached to the instrument. Taxability
After considering risk, return and tenor of the investment instrument, you must also consider the taxability of the investment instrument. Taxability of the instrument is tax on dividend or the interest paid, capital gains and deduction on initial investment. So, in case you want to invest in a debt investment, you should consider debt mutual funds - income fund or fixed mutual plans, instead of fixed deposit, since you get indexation benefit for holding debt fund more than one year whereas in fixed deposit, the interest is taxable (added to your income and is taxed as per your tax-slab rate). The capital gains on equity mutual funds are tax free if you hold it for more than one year, also the dividends paid on equity mutual funds are tax-free. That's it, I reached my station and I had to get down. My friend was very happy after learning how and where to invest and said, "I hope, when we meet next time, I will proudly say, now I am a SMART investor!" You should always keep in mind these factors before making any investment. The author is a research analyst,
Apna Paisa.com. The views expressed in this article are his own |
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Hanging work patterns, high-stressed jobs, junk food, smoking and alcohol, little or no exercise are leading a large number of Indians rapidly towards the so-called lifestyle diseases. In recent years with progress in clinical examination methods, statistics have shown an upward trend in life-threatening diseases. In 2005, the economic loss due to rise in lifestyle diseases as a result of unhealthy workplaces was accounted for $8.7 billion and the same has been projected to rise to $54 billion by 2015.
The direct selling industry was rocked by the arrest of Amway India CEO in Kerala which was criticised by industry bodies. They lay stress on the need for clear regulations for the industry. The direct selling industry in India with members like Amway, Herbalife, Tupperware, Oriflame has a turnover of over Rs 6,000 crore with 50 lakh distributors, 70 per cent of whom are women. While talking to
Sanjeev Sharma, Chavi Hemanth, secretary general, Indian Direct Selling Association (IDSA), talks about the regulatory problems and the impact of the incident.