Thursday, April 28, 2011
Did you know your investment in the Public Provident Fund (PPF) will fetch you a return of 8% only if you deposit the money before the 6th of every month? In case of cheque payments, ensure your cheque gets cleared by this date. Hold on for a second. Why are we boring you with tax-saving tips in April, after all, you have the luxury of another seven to nine months for tax planning? Well, if you want to make every penny count, capitalise on your PPF investment or avoid buying last-minute expensive insurance, start investing now. You have to follow a systematic approach to tax planning if you want to make gains from these investments than merely save on taxes. "The best thing for an investor to follow is to invest in tax-saving instruments from April itself. The salaries shrink in the months of January and February. Investing the balance funds for savings taxes will tighten cash flows," says Suresh Sadagopan, a certified financial planner, Ladder 7 Financial Advisories. ALIGN PLANNING WITH GOALS Investors should link their tax saving with their investment objective. "For instance, they should not buy an insurance policy to save tax. But if they need insurance, then they should definitely consider that as it will also save tax," says Pankaj Mathpal, CFP & MD, Optima Money Managers .
USE THE BEST PPF & NSC COMBO
The most attractive feature of PPF is a tax-free return of 8%, which is compounded on an annual basis. For example, if you invest Rs 10,000 every year for 15 years your corpus adds up to Rs 2.93 lakh at maturity. This entire sum is tax-free in the investors' hands as per Section 80C of the Income Tax Act. Apart from a post office, a PPF account can also be opened in State Bank of India ( SBI )) and its associates and other select nationalised banks.
The minimum and the maximum amount are capped at Rs 500 and Rs 70,000 respectively. The rate of interest for an NSC is 8% (compounded half-yearly). If you invest Rs 1,000, the amount grows to Rs 1,601 in six years. You can opt for a judicious mix of NSC and PPF so as to benefit from the interest rate movements in either direction.
There is no choice when it comes to buying a house in the city. Rising real estate prices have pushed couples to apply for joint home loans. But even if you are not looking to own a house in the city, you can invest in a house in some other city and gain from tax-saving on joint loans. Just taking a join loan (co-borrower in banker's parlance) won't make you eligible for tax breaks. Both of you can avail tax benefits on the home loan only if both of you are the coowners of the property. You have to consider the repayment capacity of each spouse while deciding the share of the loan. So, a couple can be equal owners but if their share of the loan is in the ratio of 60:40 or 70:30, the tax benefits would be shared in that proportion. Ideally, an individual in the higher tax bracket should opt for a higher ratio of the loan to save on more taxes. "You have to get a break-up of share of the loan on a stamp paper at the beginning itself," says Vaibhav Sankla, executive direct, Adroit. Co-borrowers should enter into a simple agreement with the spouse on Rs 100 stamp paper. This agreement should basically contain the share of the ownership along with that of the home loan availed of by the couple. You need two copies of the certificate from the housing finance company (HFC) and each of you can submit copies of the certificates along with a copy of the agreement signed between the two of you.
GO FOR JOINT HOME OWNERSHIPWhile PPF and ELSS are two good choices when it comes to saving tax, the former has poor liquidity and investment in the latter involves higher risk. "Investors should understand the product, and set their goals first and invest in available tax-saving instruments based on their risk appetite," Mathpal adds. If the new DTC (Direct Taxes Code) is implemented, as proposed, then ELSS will no more be eligible for deduction under Section 80C. Those investing through SIP should mention the end date March 2012 in their application form. Do not extend the ELSS beyond March 2012 unless there is some changes in DTC. Also, opt for the growth option in ELSS.
ELSS COMES WITH A RISK FACTOR"The net return earned from NSC becomes less attractive for individuals who fall in the high tax bracket. If an individual falls in the 30% tax bracket, he earns only 5.6% return as against 8%. Even as we are inching towards 0% inflation, retail inflation is still at around 9-10%." says Sadagopan.
The interest rate is revised at regular intervals on PPF, whereas an individual can lock in his money at a single rate for six years in an NSC. For example, in a falling interest-rate scenario, you may end up pocketing a better rate on PPF than an NSC. However, if the interest rates were to move upward, NSC would be a more rewarding. However, do remember that interest earned from NSC is taxable even though there is no TDS.HIGH SALARIED SHOULD AVOID NSC
The maximum tax deduction available for a single borrower is Rs 1.5 lakh. This deduction would apply to each borrower, hence the total possible deduction adds to Rs 3 lakh. Each borrower has to provide a copy of the borrower certificate to claim his or her respective tax relief. However, there are no clear guidelines on this matter. So, it is possible for either of the borrower to miss out on the tax rebate. In such cases, they can claim it as a refund while filing tax returns. The idea is not to treat tax savings in isolation. It should be in line with you financial goals. Buy a PPF only if you have some goal to be fulfilled after 15 years. Buy a house only of you want to stay in it or invest in real estate and look at insurance only for protecting your family.
Source :- Economics Times
Tuesday, April 26, 2011
The Reserve Bank of India today slapped penalties worth Rs 1.95 crore on 19 commercial banks, including the State Bank of India, HDFC Bank, ICICI Bank and Citibank, for failing to comply with its instructions on selling derivative products. The banking regulator said the penalties were imposed for failure to carry out due diligence with regard to suitability of the products that the banks had offered to their customers. It did not give any details about the derivative instruments that the banks had sold. The banks were also pulled up for selling derivative products to users who did not have risk management policies. Others were pulled up for failing to verify the adequacy of the underlying asset and eligible limits under the past performance route. A derivative is a contract whose payoff depends on the behaviour of some benchmark, which is known as the “underlying”. The underlying is typically a tradable asset, for example, a stock or commodity. The most common derivatives are futures, options, and swaps. The most common derivatives have a market value and are traded on exchanges. The highest penalty of Rs 15 lakh each was imposed on six banks — Axis Bank, Barclays Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank Ltd and Yes Bank. Eight other banks were slapped with penalties of Rs 10 lakh each. These were BNP Paribas, Citibank NA, Credit Agriocole CIB, Development Credit Bank Ltd, ING Vysya Bank, the Royal Bank of Scotland, Standard Chartered Bank and the State Bank of India. Four others — DBS Bank, Deutsche Bank AG, Hongkong and Shanghai Banking Corporation Ltd and JP Morgan Chase Bank NA — were asked to pay a penalty of Rs 5 lakh each. The RBI said in a press release issued today it had sent out showcause notices to these banks earlier. After examining the banks’ replies to the notices and hearing oral submissions from officials, the regulator found that the violations were established and the penalties were, therefore, imposed. The RBI is empowered to regulate interest rate derivatives, foreign currency derivatives and credit derivatives. Under interest rate derivatives, the RBI allows three types of derivatives — interest rate swap, forward rate agreement and interest rate futures. Under foreign currency derivatives, it permits foreign currency forward, currency swap and currency options. The RBI has laid down some broad principles for derivatives. Scheduled commercial banks are designated as market-makers for derivatives under strict supervision. Market-makers may undertake any derivative structured product (that is a combination of permitted cash and generic derivative instruments) as long as it is a combination of two or more of the generic instruments permitted by the RBI. The market-makers should be in a position to mark-to-market or demonstrate valuation of these constituent products based on observable market prices. Source: telegraphindia.com
Monday, April 25, 2011
Bristling with possibilities, summer vacation rings in salvation for many a kid. There's ice-cream and swimming, friends and games, but mostly it's the Annual Trip to Anywhere that ratchets up their fun quotient. It's a salivating prospect even for work-worn parents, but tedious planning can smother the perkiest of thoughts. It's also not easy to sneak out vacation funds when you are being hammered by inflation and harried by high fares. And then there are a zillion puny, pesky questions: where do we go this time?Kashmir or Kuala Lumpur, the basic hills or cycling tours? How do we book the flight and hotels? Through an online travel agency (OTA) or directly through the airline/hotel? How much will the phone calls cost abroad? Should we carry cash or cards? And what if we lose our passports? If these posers have driven you to dithering between staying at home and submitting to wanderlust, stop. Pick up this issue of ET Wealth , and by the time you are through with it, you would have made up your mind. You'll go. For the simple reason that we'll tell you how to pack the most savings while travelling, the cheapest ways to book your trip, where you can go and how to cover yourself against unseemly exigencies. We start with the 10 Hows: Best ways to save on a vacation. 1 How to book the cheapest flights Early vs last-minute booking: Should you be the proverbial early bird or wait till the last week to book your flight? Though many a business traveller will extol on the virtues of last-minute booking, and Air-India is brandishing a dishy bait-up to 15% off for tickets booked between five days and last hour before departure on some domestic routes from 1 May-most industry experts vouch for advance booking. "You should always book up to 30 days prior to departure because the prices keep rising as you approach the date," says Dhruv Shringi, CEO, Yatra.com. He's right. So, while a Delhi-Mumbai GoAir flight will cost you Rs 5,628 for 25 April, the same will cost you Rs 3,733 if you book it for 21 May. OTA vs airline website: Aggregator sites usually work out the cheapest compared with an airline website or a tour operator if you are planning a foreign jaunt involving a single or multiple flights. However, this difference is marginal for domestic flights (see table). Besides, the OTA will offer a cash-back facility in case of a cancellation, which airlines usually don't. So opt for the aggregator if you plan a trip to Singapore, but you can go directly to the airline if you're travelling to Srinagar.
Combo deal vs individual flight: The combination flight-cum-hotel deals or holiday packages (multiple destinations and flights) offered by OTAs or tour agents are much cheaper than individual flight bookings, be it for domestic or foreign tours. "For instance, the return flight ticket from Delhi to Leh would be for Rs 16,000-20,000, but a combined package for 7 nights is for Rs 23,000, which includes accommodation, sightseeing, meals and tour guide," says Deep Kalra, CEO, Makemytrip.com. Definitely recommended.
Early morning vs mid-day: "A late morning or an afternoon flight is usually less expensive than an early morning or a late night one," says Karan Anand, head, relationships, Cox & Kings. For instance, a GoAir flight on 25 April will cost you Rs 5,628 if you choose to pick a 1.50 pm flight, while it will shoot up to Rs 7,908 for a 6.35 am slot. This is because most people prefer to save the day for work or leisure instead of travelling. Co-branded cards/loyalty programmes: Travel rewards are the crunchy carrots offered by several co-branded credit cards. Don't cringe to use them. You not only earn discounts if you book through a particular airline, but can use up the flier miles crammed up on your cards for upgrades, baggage allowance and other travel benefits. For instance, the ICICI Bank-Kingfisher Airline co-branded card offers 5 reward points for `100 spent on booking through Kingfisher, accident insurance and concierge services. Opt for train/bus: If you really want to stack up a good saving and don't face a time crunch, don't travel by air. For domestic travel, overnight trains or buses can be the best option as they save the day for sightseeing and are much cheaper.
2 Ways to reduce your staying costs OTA vs hotel: "If you're booking a flight, go to an OTA, but for hotel bookings, just call up the hotel," says Archana Khosla, a Gurgaon-based housewife and a frequent traveller. "They often have holiday packages or other discounts, which the site seldom mentions," she adds. She's right. Unless you are opting for a combo (flight+hotel) deal, calling up the hotel is the best way to round up good rebates or special offers. In fact, if you have booked in advance, you can check up a couple of days before reaching and ask for any last-minute specials or room upgrades. If you're travelling with kids, go for hotels that allow free stays for them. Budget/bed & breakfast hotels/government tourist accommodation: An easy way to save a spiffy packet is to opt for budget hotel chains, in India or abroad. While sites like Travelguru.com throw up a lot of budget options in India, Bedandbreakfast.com will give you deals across the world. You can also select from popular budget chains in India like Ginger Hotels or Lemon Tree Hotels, which offer all amenities at discounted rates. So, a 2-night, 3-day summer package currently offered by Ginger Hotels across their 24 locations starts from Rs 3,499 (till 30 September), while that from Lemon Tree is Rs 12,999. Mhow-based Kirat and Nirbhay have a unique way to select their hotels. "As we mostly travel by road, we go through the hotels that fit into our budget and opt for the one we like. Since we use it only to dump our luggage and spend most time on sightseeing, it works for us," says Kirat, who recently completed a road trip from Pune to Kanyakumari in `47,000, which included accommodation, food and sightseeing. They also go for government tourist resorts, which have all the basic amenities, but cost much less. Home swaps/apartment rentals: Though not popular in India, home swap is a viable option abroad, with sites like HomeExchange.com to help you. Renting an apartment instead of picking a hotel can not only save money on accommodation, but also on food and laundry, because these are equipped with kitchenettes and washing machines.
3 Cut down on your meal bills Start by choosing hotels that offer free breakfast and dinners. For lunch, pick local, neighbourhood eateries, which will be cheaper than the hotel restaurant. If overseas, it will also offer you the chance to savour authentic street food. However, make sure you don't eat in tourist areas, where the prices will be higher. "And if you don't trust the hygiene, pick up cold cuts and readymade food from the supermarket and fill up your mini-bar. I never eat in fancy restaurants when I'm travelling abroad," says Kolkata-based Madhusree Sen, 43. A simple option is to pick up snacks or bread and cheese/jam from the local bakery and make your own meals in the hotel room. If you're travelling with kids, buy water and milk from the 24x7 eateries or supermarket and stock up the mini-bar because these are very expensive items. You can also carry ready-to-eat meals from home and heat them up by dipping them in hot water. Savvy travellers also carry their own water bottles, simply refilling them from time to time.
Another option is to buy multiple passes as most popular tourist destinations combine various attractions through these. So, if you are in Singapore, remember to buy a 1-day, 2-day or a 3-day city pass, which will entitle you to save up to Rs 1,796, Rs 1,688 or Rs 1,185, respectively. This will pile up savings and your time, but will offer the convenience of transfer from hotels and discounts on shopping. Finally, remember not to splurge on souvenirs, especially from tourist areas. They will not only be pricey, but mostly, you will not have enough space to display all of them at home.If you have put together your own itinerary, it will take a bit of planning and research to skimp on sightseeing costs. To begin with, conduct an online research for tourist hotspots, amusement parks and other attractions. Most of these would have listed discounts or will offer coupons. By buying these, you not only cut costs, but also avoid long queues at the site. You can try for these discounts by tapping the hotel desk or tourist office in the city too.
Save while sightseeingIf you've opted for the bundled package from an aggregator site, you have nothing to worry; you would have got a discounted deal. "The reason to include it in the packages is not just to make it cost-effective, but also to cut out the hassle of figuring out sightseeing and then arranging for transportation separately," says Kalra of Makemytrip.com. Remember, however, that these packages don't usually include site/monument fees.
5 Combine mobility with frugality Commuting is another area you can safely scrounge on. To begin with, choose a hotel that is centrally located and close to various tourist hotspots. A sprightly walk doesn't just cut on the high cab costs but also allows you to explore the markets and area like nothing else. "A good recourse is public transport like metro and buses rather than taxis, which can be very expensive," says Vikas Bajaj, 41, joint managing director, Bajaj Motors Ltd, who not only travels frequently on business, but also indulges in family vacations. If, however, the tourist sites are not close to the metro or bus stops, taking a taxi for the day can be a cheaper option because you end up seeing much more. Within India, a taxi would certainly be a better pick compared with a bus, unless you choose a tourister. If you are keen to save on money, not your breath, then hiring bicycles or bikes can be a good option on a foreign jaunt. Investing in a good map and GPS system can also dip costs effectively because you can comb the area at your own will and visit the hotspots that you want to.
6 How to chat in the cheapest way It's a dilemma that plagues virtually every foreign traveller-how should I communicate with people back home or with those in the visiting country? The easiest option seems to be to carry your existing mobile after activating international roaming. It would also be the most expensive way to call. Alternatively, you could pick an international SIM for your phone, which can be used across various countries. The charges will be much less compared with the roaming fee, but you will have to ensure that your phone network is compatible with that of the destination country. The calling card is an even cheaper and enticing option. A prepaid card, it allows you to call from any mobile, landline or payphone abroad by dialling a specified number. However, it usually offers outbound services, not incoming ones, which is a drawback over the international SIM card. There are also hidden fees and charges, which usually add to the total fare. You can also avail of the VoIP facility, which is very cheap, but requires a computer and the Internet and could face restrictions in some countries. Another cost-effective option is to pick the local SIM in the country you visit and pay the local rates.
7 Skimp on cash transactions How do you plan to spend while travelling abroad? Through traveller's cheques, cash, credit/debit cards or travel cards? Not many people use the first option, the second is a must-carry, the third is an expensive option, and the last is a good choice. The best option? Carry a combination of cash and cards. In case of the former, exchange currency before you leave as you are more likely to find a better rate in India than abroad. As for the cards, do take the credit card, but use it sparingly because all transactions and ATM withdrawals will be charged. "There is a 3-4% mark-up on exchange rate on cross-currency conversions if you make transactions in the foreign currency using a rupee card," says Navtej Singh, head, direct payment services, HDFC Bank. Also, take major cards such as Visa, MasterCard or American Express because in case of theft, it is easier to contact and replace these cards because of their larger networks. It is also advisable to call up the credit card company before you leave the country to find about the usage fee, the services you can avail of and their global contact numbers. Due to the high charges of the credit cards, prepaid travel cards are the preferred modes for cash transactions. With almost all leading banks-Axis Bank, ICICI Bank , Citibank, HDFC Bank , among others-offering such cards, picking one is easy. "A travel card is recommended over other options as it is easy to use, is secure, offers fixed exchange rates, and there is no forex conversion mark-up as in credit/ debit cards," says Sandeep Bhalla, business head, credit payment products, Citibank India. Besides, most cards are available in several major currencies, come with an insurance cover to protect against misuse, and have global toll-free helplines
8 Make the most of off-season discounts
A great saving trick, and one employed by many tourists, is to travel off-season. Brimming over with juicy benefits, it's the ideal way to strike money off your vacation bill. You save on airline, hotel and tourist attraction costs and get better treatment to boot. And no, you don't suffer the vagaries of weather provided you time your trip at the end of the peak season or the beginning of off season.
9 Beware of travel scams For every desirable deal, there's a damning scam waiting to sponge your hard-earned money. So before you drool and lap up the dishy deal offered by the travel agent, check. If you've booked an economy class flight and he's offering you a business class in exchange closer to the departure date, suspicion would be in order. Delhi-based Bajinder Singh, 61, and Anita, 57, should know. For an April trip from Delhi to Los Angeles, they booked their economy class tickets four months ago through a well-known travel operator. The return tickets cost about Rs 50,000 per person and they merely got a receipt from the agent. About two weeks before the due date, they checked with him, only to have him push business class tickets at them. Sceptical, they cross-checked and realised that the wily operator had cancelled their tickets, selling them for almost Rs 1 lakh per person, and was banking on a last-minute cancellation to issue them fresh tickets. They managed to force him into giving legitimate tickets and safely travelled to America a week ago. Beware of rates that seem too good to be true. If the fare is Rs 2,000 for a Singapore flight, check for hidden fees and charges. If the operator insists on advance payment without giving you a written contract, be sure there's a trap. Also, take copies of receipts, itinerary and the company's cancellation and refund policies.
10 Gain more through research
There are three basic ways to cut on travel spending: research, research, research. It's a penny-pinching tactic that holds up all the nine points mentioned above. In the Internet you have an accessory that can help you crunch your vacation bill, if only you inject labour into your research. Check for the best deals on airlines, hotels, off-season cuts, sightseeing rebates, cheapest calling cards or travel cards. Call up companies. Talk to agents. Haggle for heavier discounts.
Source:- Economics Times
Monday, April 18, 2011
The Bruhat Bangalore Mahanagara Palike (BBMP) is accepting property tax payments online. The civic body has resolved the technical glitches attached to the software and updated the online application form facilitating the payment of solid waste cess too. Citizens can visit the Palikeâ€™s official website (http://www.bbmp.gov.in/) and pay property tax by following the instructions given there. BBMP deputy commissioner (revenue) Mr NS Ramakanth said online payment of property tax for 2011-12 has evoked good response, within a couple of days of the facilityâ€™s activation. â€œAbout 4,000 members have paid property tax in the last two days. In all, about 15,000 property owners have paid the tax this year. This includes manual payments too,â€ he added.
Friday, April 8, 2011
CHENNAI: Sify chairman and managing director Raju Vegesna has taken an expensive but a priceless catch. Vegesna shelled out $145,100 (Rs 64 lakh) to beat more than 100 bidders in an International Cricket Council (ICC) auction on Wednesday night to win the the historic ball, which M S Dhoni smashed for a six to lift the World Cup. Vegesna dedicated the 'victory ball' to his team at Sify. "It is dedicated to the passion, confidence, teamwork and execution which India showed in this match," he said. The World Cup ball is just the latest acquisition in the memorabilia collector's locker. Vegesna owns a boxing glove of legendary boxer Muhammad Ali, and the ball used in 49ers' Super Championship win in American Football. The serial entrepreneur also boasts of guitars belonging to Eric Clapton, Rolling Stones and ex-Beatle Paul McCartney. "These are unique but cricket has a special place in my heart," he says. For a person who started life in a small village in coastal Andhra Pradesh and is today a serial entrepreneur of great repute in the Silicon Valley, Vegesna has come a long way. The annual sales conference of Sify was held in Bangalore on the April 2. After the conference, arrangements were made for the 500-strong Sify team to watch the match live on a big screen with Vegesna. Once the match was over, Vegesna threw a party for the employees which continued till the wee hours. On the star of the final, Vegesna is effusive in his praise: "Dhoni is my hero. He led from the front and ended the match with a fantastic six which I am sure people will remember for a long time. He showed great leadership." He flew down from the US, where he is based to Chennai, which houses the headquarters of Sify Technologies , for the conference held at a city hotel. "I saw the passion among the people of this country. This match was a symbol of excellence for us. There was a doubt in every mind whether India can do it. Confidence and teamwork saw us through," said Vegesna. "It's also a reflection of how India is competing in the world market and trying to become a global player. We all realise it's the same human qualities we saw in this win that will make this dream possible."
Source:- Economics Times
Wednesday, April 6, 2011
NEW DELHI: Registration of property transactions has witnessed a steep decline in the capital after the state government made it mandatory to produce a building sanction plan and structural safety certificate as a prerequisite to any form of registry. In nearly all districts, the sub registrar offices have seen the number of registrations come down sharply. Some offices are witnessing registration of just 7 to 8 each day against the previous average of 100. The Delhi government's revenue department on March 30 issued an order banning registration of transactions of all structures not supported by sanctioned building plans or where sanctioned plans show major structural deviations. The government particularly looked at the cases where structural deviations were non-compoundable in nature. "Now the vendor and vendee are also required to furnish a certificate of structural safety issued by the competent authority ," stated the order. The decision was taken after a review showed unchecked growth of unsafe and unauthorized construction . The Lieutenant Governor of Delhi, Tejendra Khanna, in a review meeting held in January , emphasized the need for a special task force to crack down on land sharks and unauthorized construction. The issue of introducing stringent measures to focus on structural safety was also discussed . The March 30 order of the state came as a follow-up action to the meeting. Since the order came into the force, the offices of the sub registrar's , which witnessed frenzied activity earlier, have seen little business as most applicants still come without the requisite documents. In southwest district, nearly 80 to 90 property transactions were registered every day before the new norms were implemented . In comparison, only seven registrations took place at the officer on Monday. The number was 10 on Tuesday . In east Delhi too the situation is same. While earlier over 100 registrations took place, the number has now come down to 10 now. According to sources, the problem lies in the fact that most properties that have sanction plans lack structural safety certificates as this was never asked for earlier. But now faced with this directive they are caught in a dilemma . Ramesh Kant, a resident of Paschim Vihar, explains it. "My father built the house we live in. It is over 30 years old. Now we want to sell the house. But a visit to the registrar's office has put us in a dilemma as they want a structural safety certificate. We have all other documents, including a sanction plan. Now who would give us a structural safety certificate for a 30 year old construction ? I want to sell it to a builder who would be demolishing it to rebuild on the land and I feel spending money on reinforcing the house to get a structural safety certificate may not be of much use," said Kant. Others like him feel the intent is good but its execution didn't take into account the ground reality and the practical problems. The revenue department has written to the MCD , asking it to empanel more architects and engineers. Senior officials in the department said they had expected the registrations to come down after the directive. But with Delhi falling in seismic zone IV, the government can't ignore the structural safety anymore, said an official.
Source:- Economics times