2015 Keep Your Financial Always on Check

I recently learnt a very important lesson in goal-setting and habit-forming from a medical doctor. A persistent bad back has me visiting the orthopedics more than I like. They all say the same thing—regular exercise is your panacea. Not marathon running but just a simple, regular workout. I find that I begin well enough, but two months later regress into inaction. Travel, the big destroyer of routines, is the usual excuse for not finding the 30-40 minutes to do what is needed. Then this one guy sits me down and tells me: just do these three exercises. Do them twice a day. Don’t skip. Don’t do more if you have no time. Don’t do three sets of 10 each if you don’t have time. Do each just once. But do them. I hear him. And start. That’s it. The goal became smaller. Much more manageable, and one that did not require a full 30-40 minute time slot in the morning. I find that when one set is done, there is always space to do one more. And when three exercises are done there is always the space to do 10 more. The doctor did two things that worked. One, he set a small enough goal that he knew is manageable. And if I say I can’t do even that, I’m not serious about getting better and can look for another doctor. Two, he set a habit-forming default. So the day there is pressure on time, it takes less than 10 minutes to get through the routine. On days when there is time, I can take the full 30-40 minute module. I’ve always been fascinated by the synchronicity between finance and health. We mean to get both in order but keep putting off the actual doing. The benefits of getting a grip for both are in the distant future—and the human being is not very good at delaying gratification. If it is the everyday habit that is the tough part of health, it is the toughness of the problem that makes us put off translating the thought into action in finance. In fact, Daniel Kahneman in his book, Thinking, Fast and Slow, presents research on how the human brain, when faced with a tough decision, takes the easier way out of either not deciding at all or getting distracted with irrelevant details that are familiar. For example: when faced with a decision on long-term investing, rather than sift through the 5,000 products out there, we will use some crutch to make a quick decision. This could be reading about a particular product in the media. Or seeing an advertisement for another product. Or simply getting influenced by the nice manner of the sales person selling a third product. For those as challenged in finance as I am in health, here is the two baby step approach to financial health. One, make goals that are doable. For instance, do not try and solve the problem of retirement planning at one go (unless you are working with a financial planner). Start by identifying how much you are able to save each month after you’ve met all your basic expenses. Write down two numbers. The first is the minimum you can save and the second is the maximum you can do. The first number will be the amount left over after all the discretionary spends on holidays, entertainment, eating out has been made. The second number is the potential of saving that you have if you cut out harshly everything other than the most basic spends. Our goal is a halfway house between these two extremes. Write that down. This is your savings target each month. Two, know what to do with this money every month. This is the key habit-forming step. You will not allow it to accumulate into one mass in your savings account to be invested at one shot at the end of the year, but will take a decision to find an instrument to soak up this money each month. If this decision is taking time and effort, do one of two things. Open a two-in-one account and sweep the money into a fixed deposit (FD) each month or keep moving the money into a short-term debt fund each month. If you can’t choose the fund, stay with the sweep-into-FD strategy, but do not leave it in the savings deposit. The two-step way inculcates the regular saving habit and allows you to see your own saving potential when you look at the FD balance or the debt fund corpus after six months. On the bigger question of money advice for 2015. The advice remains consistent—there is no change in what I recommend as product choices. Gold is no more than 10% of your portfolio. The core of your money box is in zero-risk products such as provident fund, Public Provident Fund and FDs. The rest of your investments are in equity-linked products, ideally mutual funds. You have an emergency fund that covers six months of your living costs. You have a pure term life insurance policy. And, you have a medical insurance policy. (from ONE Browser)

NITI AAYOG WIll REPLACE PLANNING COMMISSION...PM WILL BE CHAIR PERSON

The 65-year-old Planning Commission was today replaced by a new body, NITI Aayog or National Institution for Transforming India, which will serve as a policy think-tank for the central as well as state governments and have Prime Minister Narendra Modi as its Chairperson. The NITI Aayog will have a governing council comprising all state Chief Ministers and Lieutenant Governors and will work towards fostering a ‘co-operative federalism’ for providing a “national agenda” to the Centre and States. The body will have a CEO and a Vice Chairperson, to be appointed by the Prime Minister, in addition to some full-time members and two part-time members, while four union ministers would serve as ex-officio members. The Planning Commission, known as a socialist era institution, instead had a Deputy Chairperson. Besides, there would be specific regional councils, while experts and specialists from various fields would be there as “special invitees nominated by the Prime Minister”. NITI Aayog will serve as a ‘Think Tank’ of the Government as “a directional and policy dynamo” and would provide the governments at the Centre and in states with strategic and technical advice on key policy matters including economic issues of national and international importance, an official statement said. NITI Aayog follows Prime Minister Narendra Modi’s announcement in his Independence Day speech in August 2014 that there is a need for replacing the Planning Commission by a new body keeping in view the changed economic scenario. The government has set up the new body through a Cabinet Resolution, wherein it has invoked words of leaders like Mahatma Gandhi, B.R Ambedkar, Swami Vivekanand and Deen Dayal Upadhyaya. While the two part-time members would be from leading universities and research organisations, the number of full time members has not been specified as yet. As per the Resolution, the NITI Aayog will provide a ‘national agenda’ for the Prime Minister and Chief Ministers to foster cooperative federalism while recognising that “strong states make a strong nation”. It will also interact with other national and international Think Tanks, as also with educational and policy research institutions. (from ONE Browser)

Happy New Year

At the end of a very fruitful year, I write in to connect with you and express my gratitude in your support to my endeavors.

I take this opportunity to wish you and your family compliments of the festive and holiday season. I wish that peace, love and prosperity follows you always and forever!

Seasons Greetings and Best Wishes for the New Year 2015!

Gold Loses the Shine in 2015.. What next in 2015 ?

The new year may see a further decline in gold prices as metal loses inflation-hedge appeal Gold is considered a physical store of wealth, as it gives an opportunity to investors to diversify the investment portfolio and acts as an inflation and currency hedge. Let’s assess how it fared in 2014 and what’s  in store. Year in review Spot gold prices started 2014 around the $1,200/oz mark, then headed higher towards $1,400 in mid-March. Russia’s military intervention in Ukraine, rising gold investor index and physical demand from China in the first quarter led the rally towards $1,400. After briefly touching $1,390 in mid-March, prices started to decline and, then, corrected downward towards $1,250 in June. From there on, prices started to rally again, touching $1,350 in mid-July. However, they lost steam from July onwards and corrected to the extent of $1,130 in the first half of November. A combination of factors contributed to this — consistent growth in the US economy, strength in the dollar index, waning demand and geo-political tensions. Declining inflationary trends on the back of falling crude dragged gold prices further. Outlook for 2015 Since oil prices have fallen to unsustainably low levels, the main cause of concern across the globe now is deflation. ECB is battling to revive the economy and the worry is whether cheap oil would send the euro zone into outright deflation. Japan is already printing money to prop its economy. However, the US economy is on a mend as the third quarter GDP growth came in at 5%, the strongest in 11 years. The US Fed has already tightened its monetary stance and the US economy is likely to be on track to raising interest rates sometime in 2015. The price trajectory would be dependent on the diverging policies of central banks across the globe. Investment demand with SPDR gold holdings is waning and is at a six-year low. While falling crude bodes well for the global economy, a falling inflationary scenario, reduces gold’s appeal as an inflation hedge. The growth in the US economy, falling inflation hedge appeal and strength in the dollar index at large will be the major factor for gold prices to head lower in 2015. For 2015, the upside potential for spot gold prices (CMP: $1175/oz) can be $1,340/oz while the downside can be seen at $1,090/oz. In the Indian markets, MCX gold futures (CMP: R26,602/10 gm) can move higher towards R30,000/10 gm while lower side can be seen at R24,400/10 gm. What should retail investors do? One should put 10-12% of the corpus in gold. The advice to retail investors would be to buy on every dip, taking into consideration the risk appetite, along with the complex set of factors revolving around the metal. Physical gold is worth holding because it’s a universal finite currency. On the other hand, it involves a number of costs. The advice would be to wisely allocate money in this commodity as over-exposure might hamper the overall return of the portfolio. By Naveen Mathur The writer is associate director, Commodities & Currencies, Angel Broking (from ONE Browser)

Risk and Volatility

Is risk synonymous with volatility? When an investor wants to understand risk, must he look at volatility?

The term risk has different meanings for different people.

Ask an investor what comes to mind when talking about risk management, he will state that he does not wish to lose his money, or will want to know as to how much the return can potentially drop by.

Throw the same query to a finance professional and he will tell you that standard deviation is the measure of risk. So what he is saying is that risk is not defined as the likelihood of loss, but as volatility, which is determined using statistical measures of variance such as standard deviation and beta.

(Standard deviation is a measure of absolute volatility that shows how much an investment’s return varies from its average return over time. Beta is a measure of relative volatility that indicates the price variance of an investment compared to the market as a whole. The higher the standard deviation or beta, the higher the risk.)

So while professionals often use volatility as a proxy for risk, it does not measure what an investor intuitively perceives as risk.

It is more helpful to think of volatility as sudden price movements. Volatility encompasses the changes in the price of a security, a portfolio, or a market segment both on the upside and down. So it’s possible to have an investment with a lot of volatility that is moving one way: up (not always down).

Even more important, volatility refers to price fluctuations in a security, portfolio, or market segment during a fairly short time period—a day, a few weeks, a month, even a year. Such fluctuations are inevitable and come with the territory. If you are in for the long haul, volatility is not a problem and can even be your friend, enabling you to buy more of a security when it’s at a low ebb.

The most intuitive definition of risk, by contrast, is the chance that you will lose your principal investment and won’t be able to meet your financial goals and obligations. Or that you will have to recalibrate your goals because your investment kitty comes up short.

Having said that, it is easy to see how the two terms have become conflated. If you have a short-term horizon and you’re in a volatile investment like stocks, it could be downright risky for you. That’s because there is a real risk that you could have to sell out and realise a loss when your investment is at a low ebb.

The same investment with a long-term horizon throws up a completely different scenario. The very same stocks may not be all that risky if you bought them at bargain rates when compared to their intrinsic value and intend holding on to them for many years. However, you will have to contend with volatility which comes with the territory.

In 2008, the global crisis drove securities prices to especially low levels actually making them less risky investments. Indeed, Seth Klarman, one of the world’s most respected value investors, believes that risk is not inherent in an investment, it is always relative to the price paid. So in the midst of volatility and extreme uncertainty of 2008, the risk of investing in equity actually dropped.

Reactions to volatility are very often emotional. Investors buy and sell on reaction, or rather overreaction, to news and speculation without any significant consideration to long-term returns. Recall the sell-off of not just 2008 but even 2011 when volatility went through the roof. Now look at where the market is today. The volatility did not really affect the long-term returns of an investor who assesses risk in terms of long-term failure to meet a pre-determined outcome. Those who ignored the volatility and stayed are better off because of it.

Given this backdrop, defining risk as volatility runs counter to common sense. Do not assess risk and construct your portfolio based on the volatility of the ride. Investment risk is the possibility of suffering losses and its potential magnitude. Another indication of investment risk is the maximum drawdown from a previous high – peak to trough.

So how can investors focus on risk while putting volatility in its place? Come to terms with the fact that volatility is inevitable and if you have a long enough time horizon, you will be able to harness it for your own benefit. Secondly, invest in equity mutual funds via a systematic investment plan, or SIP, to ensure that you are entering the stock market in a variety of environments, whether its feels good or not. Finally, diversifying your portfolio among different asset classes and investment styles can also go a long way toward muting the volatility of an investment that’s volatile on a stand-alone basis.

These moves will make your portfolio less volatile and easier to live with.

Are you NRI ? Keep This Point In Mind Before Making Any Investment In India

Real estate is the only sector that always snares the attention of non residents. With the deterioration of rupee value, India became as a conspicuous investment destination for NRI’s. Whether the realty market is hot or cool, NRI’s like to invest in India as the Indian realty market provides lucrative investment opportunities to non residents who want to invest in India. In addition, Indian Government is also coming up with new schemes to lure investors’ interest.

Nonetheless, the rules and regulations are a little bit complicated. The reason behind this is only to ensure genuine flow of money and to evade illegal transaction. Here are the few things that NRI’s ought to keep in mind before investing in Indian real estate market.

Confirm whether you come under NRI Category: The foremost thing that every Non-resident investor should do is to affirm whether he/she categorizes as a Non Resident Indian or not. Taking into account the residential status, the Indian Income Tax Act classified individuals in to two categories Residents and Non-Residents. Further, residents classified into ROR (Ordinary Residents) and Non Ordinarily-Resident (RNOR).

As per the Foreign Exchange Management Act (FEMA), a person of Indian origin will be considered as NRI, if the person He/she stays in India for a period of less than 182 days amid the preceding year (April to March) or stayed in abroad for more than 182 days for education, employment, business and other purposes.

Even if the individual is a foreign citizen, the person can also be treated on par with NRIs by considering as a person of Indian origin if he/she has an Indian passport or any of your family members like spouse, grandparents, and parents were Indian citizens.  The residents of Bangladesh and Pakistan are not qualified to be as NRIs.

Review the market situation: Due to the recession and economic down turn, many Indians working in abroad become anxious about their job security and financial stability. Do thorough research on financial situation and property rates to invest in India-home country. Consider exchange rates and tax associated with investment. The Indian realty market is performing great from last few decades, even in sluggish conditions also one can invest in India for better returns. Due to the sudden growth of the population, in Indian cities outskirt localities are also emerging as best performing areas.

Investment Destination: Once reviewed the market condition decide the investment destination where to invest by doing research online. Better to choose a property close to relatives and friends homes as this will make certain that a sale deed can be registered effortlessly. Furthermore, they will look over the property in the absence.

Home loans: Now a day, NRI can obtain a home loan for any type of property whether it is ready to move, under construction, property development on owned plot and renovations to existing property. To avail home loan Educational background plays a major role as only graduates can apply for Home loan. When choosing the bank consider maximum mount range. Some banks also allow equated monthly installments. Document requirements differ from bank to bank. Choose the bank which offers less interest rate.

Choose which bank Account to Repay: To attract the customers, many banks and financial institutions offers alluring offers and interest rates. To repay the loan amount choosing the type of account is important. For NRI’s there are three accounts, namely NRE, NRO and FCNR.

NRE (Non Residential External): In this account, funds in foreign currency are transformed into Indian Rupees. The exchange rate in the time of transaction will be used for conversion. The principal amount can be transferred easily to a foreign account.

NRO (Non Resident Ordinary): This type of account allows NRI to transfer Indian earnings and to deposit foreign funds. The interest income earned on the principal is subject to an income tax deduction in India. Tax deducted at source @ 30 percent with education cess and applicable surcharge. Funds in this account can’t be deported abroad.

FCNR (Foreign Currency Non-Repatriable): This FCNR account is a fixed deposit account in foreign currency and not a saving account.
Tax implications for both NRI and Indian Residents are very similar.

Points to Note: NRI can make an investment in any type of property except agricultural land without any limitations, but there are a few drawbacks. Any type of investment made by a non-resident in India is led by FEMA.  To secure the deal, NRI should consider the following factors.

- Property name ought to be clear without any issue and ensure that the owner has a right to sell the property.
- Ensure that there is no pending electricity and water bills, better to obtain no due certificate from the seller while purchasing.
- Make sure that the purchase agreement is filled with foreign particulars.
- NRI shouldn’t hold a property with another resident (Indian or foreign)
- NRI only can sell the property after completion of three year lock in period from the date of procurement.
- Returns obtained from investment cannot be repatriated to India as dividends.

Buying a residential property in the home-land is a dream for many NRI’s. Keep in mind and consider all the points for safe investment.

TDS and Its various aspects on NRE,NRO,HUF , Individual, Corporate,Firms

FAQ ON TDS

Introduction: Tax Deducted at Source (TDS) is the first way of collection of any taxes. Under Income tax also TDS is the very important tax collection method. TDS under income tax varies based on the nature of transaction and payment by different sections, such as section.194A, 194B, 194C, 194I etc. Out of different TDS sections, section 195 is the very important section which covers the TDS on Non resident payments. Under globalisation scenario the business boundaries are not restricted with one country; it spread over all over the world. Accordingly tax laws are also differing. In our country the TDS on Non resident under section 195 is the unique section to identify the tax rates and deductions on our business transaction with non resident day to day basis. In this article I would like to discuss about the Frequently Asked Questions (FAQ) on TDS on Non resident payments under section 195 of Income tax act.

Q.1 What is the meaning of Non resident?
Ans : To decide the residential status of person under income tax, we need to check the basic and additional conditions and other criteria prescribed under section.6 of the Income tax act, 1961. Only Non resident covered under this section, Resident but not ordinary resident ( RNOR) not covered this section.

Q.2 Who is the Payer under section.195?
Ans: Under section.195 all the payers are covered irrespective of their status like Individual, HUF, and Firm & Corporate etc. So all the payers are responsible to deduct TDS under this section if they are making payment to non resident as per prescribed conditions.
Q.3 Who is the payee under section 195?
Ans: Under this section all the payees are covered whether Individual or Corporate or any other status. So making payment to non resident, not being company or to a foreign company covered under payee if they meet the non resident status under section.6 of the Income tax act.

Q.4 Which payments & expenses are covered under sec.195?
Ans:  As per this section any interest (not being interest referred to in section 194LB or section 194LC or section 194LD) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries”).
So following payment not required TDS deduction under this section
a. Interest referred under sections.195LB/LC/LD
b. Salary payment
c.  Dividend payment u/s.115-O
Above payments are exclude under this section from TDS deduction and all other payments are covered under this section. But payment against import is not comes under purview of TDS.

Q.5 What about the Salary & Dividend payment to Non resident?
Ans: Section.195 specifically excludes Salary and dividend payment, Salary payment to non resident covered u/s.192 not under section.195.  Dividend not taxable in the hands of recipient since the dividend distribution tax paid by the declaring company.

Q.6 When to deduct the TDS?
Ans: TDS has to be deducted at the time of credit or payment whichever is earlier. Crediting which means even crediting in suspense account or any other name called considered as deemed to be credited, accordingly the TDS will apply.
Q.7 What is the threshold limit for deduction of TDS?
Ans: Under this section, there is no threshold limit is prescribed, TDS need to be deducted the entire amount without any threshold limit.

Q.8. What is the TDS rate as per section.195?
Ans: Relevant rate in force as per chapter XVIIB.  Incase payee not having valid PAN, then TDS rate  as per rate prescribed chapter XVIIB or 20% whichever is higher will apply. While calculating TDS rates we need to consider the provisions under Double Taxation Avoidance Agreement (DTAA) for the relevant country if any. In case payee fulfilling all the conditions as prescribed in the DTAA then rates as per DTAA will apply. Generally rates under DTAA will be lower than normal TDS rates.
Q.9 What will be the exchange rate for TDS on non resident?
Ans: Exchange rate of Reserve Bank of India ( RBI) on the day which TDS required to be deducted has to be considered.

Q. 10 What is DTAA?
Ans: Double Taxation Avoidance Agreement (DTAA) is the agreement between two countries with an objective to avoid taxation on same income in both countries. Presently India has the comprehensive DTAAs with more than 80 countries.

Q.11 What is the conditions & procedure to avail DTAA benefit by NR?
Ans: The Non Resident Deductee has to submit the following documents with deductor to avail the TDS rates as per DTAA
a.      Tax Residency Certificate (TRC)
b.      PAN card copy
c.       Self  declaration
d.     Passport copy & Visa copy (if any)
The above documents need to submit with deductor annual basis every year.
Q.12 What is Tax residency certificate and how & where to get that?
Ans: Tax Residency certificate (TRC) is the certificate duly verified and issued by the Government of the country of which NR claims to be a resident for the purpose of tax.  The TRC certificate can be obtained from the Government or Tax authorities of the particular country of NR.

Q.13  What are the details should contains in TRC?
Ans: A TRC should contain the following details
a.      Name of the assessee
b.      Status of the assessee (Individual, Firm, Company Etc.)
c.       Nationality
d.     Country
e.      Assessee Tax Identification or Unique Identification number of the relevant Country
f.        Residential status for the purpose of tax
g.      Validity Period of the certificate
h.      Address of the applicant

Q. 14 What is the procedure to deduct the TDS u/s.195?
Ans: Remitter as per section.195(6) & rule 37BB need to obtain the form 15CB from a Chartered Accountant while remitting the payment to non resident and need to file the form 15CA ( undertaking by remitter)  in online in the income tax website through their PAN login. After online preparation of form 15CA need to take print out and sign and submit along with form 15CB to their banker/AD to remit the payment. For every remittance, remitter need to above procedure to remit the payment.

Q.15 What details are required to obtain form 15CB certificate from a CA?
Ans: The following details need to be produced with CA for getting form 15 CB
Ø  Agreement and Invoices;
Ø  Payment details
Ø  Correspondences
Ø  Technical Advice – prove bonafides
Ø  Proof of services being rendered in case of Group Company transactions
Ø  E-mails etc regarding pricing in case of Group Company transactions
Ø  Remitting bank details
Ø  Rate of conversion of foreign currency

Q.16  Whether Non resident eligible for getting Nil deduction certificate?
Ans: Yes.  As per section.195 (3) & Rule 29B, a non resident can make the application to income tax department if he fulfils the following conditions
a.      Assessee has been regularly assessed to tax and has filed all returns of income due as on date of filling of application
b.      Not in default in respect of any tax, interest, penalty or any other sum
c.       Not subject to penalty u/s.271(1)(iii)
d.     Carrying on business in India continuously for at least 5 years and the value of the fixed assets in India exceeds Rs.50 Lakhs

Q.17  What is the validity of the certificate issued for Nil deduction?
Ans: Nil deduction certificate issued under section.195 (3) shall remain in force till the expiry of the certificate or cancel by the A. O whichever is earlier.

Q.18 Whether reimbursement of actual expenses covered u/s.195?
Ans: Since there is no income element in the reimbursement of expenses actually incurred by a non resident or foreign company not covered u/s.195. However the nature of transactions and payments depends upon the situation because different contradictory citations are available to justify for both the applicability and non applicability.

Q.19 What is the status of TDS deducted if after deduction the contract or work is cancelled?
Ans: There is cases that after making advance payment to Non resident or making partial payment to non resident the contract or work is cancelled by both parties. Such as case if any TDS deduction made while making payments, the same can be claimed from the department CIRCULAR NO. 7/2007 DATED 23-10-2007

Q.20 What will be the consequences of non complying of section.195?
Ans: following will be the consequences for non compliance of section 195
a. Disallowance of the particular expenses u/s.40a(i) if the TDS not at all deducted
b. If the TDS is deducted but not paid within time lime then interest @ 1.50 per month or part of the month from the date of deduction to date of deposit (Sec.201 (1A)
c. If the TDS deducted and not paid – Penalty equivalent to the TDS amount  Sec.221
d. TDS deducted short – Penalty equivalent to difference between actual deductible and deducted amount Sec.271C .

How To Hold Your Mutual Fund Investment In Demat Form

http://economictimes.indiatimes.com/mf/analysis/how-mutual-fund-investors-can-hold-their-units-in-demat-form/articleshow/45503429.cms

TOP TEN MID CAP STOCKS WHO HAS GIVEN MORE THAN DOUBLE RETURN IN 2014

Top ten midcap stocks which more than doubled investors’ wealth in 2014 http://economictimes.indiatimes.com/markets/stocks/news/top-ten-midcap-stocks-which-more-than-doubled-investors-wealth-in-2014/articleshow/45637874.cms

Comparision Of Fixed Deposit Rates