Monday, 23 January 2017

Thursday, 19 January 2017

MOST IMP--5 things, One must consider before making fresh Section 80C investment for FY 2016-17


      Courtesy : Economic Times


The fag end of the financial year is when we scurry around and grapple with bewildering alphanumeric combinations like Section 80C and 80DD. If your tax-saving efforts are last minute the chances of locking funds in an unsuitable investment are quite high. 
Tax-saving investment should never be made on an ad-hoc basis or for an ill-conceived goal. But with the accounts department of your organisation knocking on your door to submit proofs of actual investments, many people try to   make tax saving investments at the last minute. 
Here is how you can do last-minute tax planning to not only reduce your tax liability, but also save towards the goals you have set at different life stages. 
While choosing the right tax-saver, base your decision on these five important things, among others: *How much deduction from gross total income can you avail *The amount of fresh tax-saving investments you need to make *Kind of tax-saving instrument you should invest in *Tenure of the investment *Taxability of income from the investment 
Once you have got a fix on these, equally important is to choose a tax-saving instrument which can be linked to a specific goal .How much deduction can you avail
Section 80C allows deduction from gross total income (before arriving at taxable income) of up to Rs 1.5 lakh per annum on one or more eligible investments and specified expenses. The eligible investments include life insurance, Equity Linked Savings Schemes (ELSS) mutual funds, Public Provident Fund (PPF), National Savings Certificate (NSC), etc., while expenses and outflows can include tuition fees, principal repayment of home loan, among others.Section 80C allows deduction from gross total income (before arriving at taxable income) of up to Rs 1.5 lakh per annum on one or more eligible investments and specified expenses. The eligible investments include life insurance, Equity Linked Savings Schemes (ELSS) mutual funds, Public Provident Fund (PPF), National Savings Certificate (NSC), etc., while expenses and outflows can include tuition fees, principal repayment of home loan, among others.If you have exhausted your annual limit Sec 80C limit of Rs 1.5 lakh, you can also look at National Pension System (NPS) to save towards retirement and, in the process, save additional tax. 
From 2015-16 onwards, an additional (additional to Section 80C) deduction of up to Rs 50,000 under Section 80CCD (1b) for investment in NPS is also possible. For someone in the highest 30 per cent income tax bracket, it's an additional annual saving of about Rs 15,000. 
Further, the premium paid towards a health insurance plan for self and family members qualifies for tax benefit under Section 80D for Rs 25,000 and Rs 30,000 for those above 60. If one has a home loan, interest payments made towards its repayment can also be claimed under Section 24 of the Income Tax Act. The other deductions include donations under Section 80G, interest payments under Section 80E for education loan, etc. 
Fresh investments you need to make
Before you start looking for the right tax saver, run this simple exercise to evaluate whether you actually need to make any fresh investments for this financial year (2016-17).

Non-Section 80C deductions: First, look at all non-Section 80C deductions like the interest paid on home loan, health plans, educational loan.
Section 80C outflows: Then consider Section 80C-related  expenses like children's tuition fees, principal repayment on home loan, pure term life insurance plans premiums.
Existing Section 80C commitments: Consider all the existing Section 80C commitments to invest/to pay premium such as in Employees' Provident Fund (EPF) and endowment life insurance, respectively

The exercise above gives you a total of existing commitments under Section 80C, 80D and other deductions. Now, from your gross total income, reduce the amount to arrive at the taxable income.

If your net income after doing the above calculation is still above the tax exemption limit of Rs 2.5 lakh then you need to look at further tax saving. To reduce taxable income further and provided the limit of section 80C isn't yet exhausted, look for the right Section 80C investments.Before you start looking for the right tax saver, run this simple exercise to evaluate whether you actually need to make any fresh investments for this financial year (2016-17). 
Non-Section 80C deductions: First, look at all non-Section 80C deductions like the interest paid on home loan, health plans, educational loan. Section 80C outflows: Then consider Section 80C-related  expenses like children's tuition fees, principal repayment on home loan, pure term life insurance plans premiums. Existing Section 80C commitments: Consider all the existing Section 80C commitments to invest/to pay premium such as in Employees' Provident Fund (EPF) and endowment life insurance, respectively 
The exercise above gives you a total of existing commitments under Section 80C, 80D and other deductions. Now, from your gross total income, reduce the amount to arrive at the taxable income. 
If your net income after doing the above calculation is still above the tax exemption limit of Rs 2.5 lakh then you need to look at further tax saving. To reduce taxable income further and provided the limit of section 80C isn't yet exhausted, look for the right Section 80C investments.Kind of tax-saving instrument
Within the basket of Section 80C investments, there are two options to choose from: Investments offering "Fixed and assured returns" and those offering "market-linked returns".

The former primarily includes debt assets, including notified bank deposits with a minimum period of five years, endowment life insurance plans, PPF, NSC, Senior Citizens Savings Scheme (SCSC), etc. The returns are fixed for the entire duration and and generally in line with the rates prevalent in the economy and very close to inflation figure. They suit conservative investors whose aim is to preserve capital rather than create wealth.

The 'market-linked returns' category is primarily the equity-asset class. Here, one can choose from ELSS of mutual funds and Unit-Linked Insurance Plan (ULIP), pension plans and the NPS. The returns are not assured but linked to the performance of the underlying assets such as equity or debt.  They have the potential to generate higher inflation adjusted return in the long run to the extent they are based on the equity asset class.
Tenure
All the above tax-saving instruments, by nature, are medium to long term products: From a three-year lock-in that comes with ELSS to a 15-year lock-in of PPF. Some like life insurance require annual payments to be made for a longer duration.

Taxability of income
Another important factor to consider is the post-tax return of the tax-saving investment. For instance, most fixed and assured returns products such as NSC provide you with Section 80C benefits, but the returns, currently 8 per cent (five-year) annually, are taxable. This makes the effective post-tax return equal to 5.52 per cent for the highest taxpayers. Considering the annual inflation of six per cent, the real return is almost zero!

Of all the tax-saving tools, only PPF, EPF, ELSS and insurance plans enjoy the EEE status, i.e., the growth is tax-exempt during the three stages of investing, growth and withdrawal.

Making the right choice
First, identify your medium and long term goals. A market-linked equity-backed tax-saving instrument is good for long term goals as equities need time to perform. And, before considering a taxable investment, see the tax rate that applies to you and consider the post-tax return. A low post-tax return after adjusting for inflation will not help you in achieving your goals in the long run. Inflation erodes the purchasing power of money, especially  Within the basket of Section 80C investments, there are two options to choose from: Investments offering "Fixed and assured returns" and those offering "market-linked returns". 
The former primarily includes debt assets, including notified bank deposits with a minimum period of five years, endowment life insurance plans, PPF, NSC, Senior Citizens Savings Scheme (SCSC), etc. The returns are fixed for the entire duration and and generally in line with the rates prevalent in the economy and very close to inflation figure. They suit conservative investors whose aim is to preserve capital rather than create wealth. 
The 'market-linked returns' category is primarily the equity-asset class. Here, one can choose from ELSS of mutual funds and Unit-Linked Insurance Plan (ULIP), pension plans and the NPS. The returns are not assured but linked to the performance of the underlying assets such as equity or debt.  They have the potential to generate higher inflation adjusted return in the long run to the extent they are based on the equity asset class. Tenure All the above tax-saving instruments, by nature, are medium to long term products: From a three-year lock-in that comes with ELSS to a 15-year lock-in of PPF. Some like life insurance require annual payments to be made for a longer duration. 
Taxability of income Another important factor to consider is the post-tax return of the tax-saving investment. For instance, most fixed and assured returns products such as NSC provide you with Section 80C benefits, but the returns, currently 8 per cent (five-year) annually, are taxable. This makes the effective post-tax return equal to 5.52 per cent for the highest taxpayers. Considering the annual inflation of six per cent, the real return is almost zero! 
Of all the tax-saving tools, only PPF, EPF, ELSS and insurance plans enjoy the EEE status, i.e., the growth is tax-exempt during the three stages of investing, growth and withdrawal. 
Making the right choice First, identify your medium and long term goals. A market-linked equity-backed tax-saving instrument is good for long term goals as equities need time to perform. And, before considering a taxable investment, see the tax rate that applies to you and consider the post-tax return. A low post-tax return after adjusting for inflation will not help you in achieving your goals in the long run. Inflation erodes the purchasing power of money, especially   over long term.

Conclusion
Tax planning should ideally begin at the start of every financial year. Remember, the risks of planning tax-saving in a hurry later are manifold. There is, for instance, a high probability of picking up an unsuitable product. Also, there isn't any one instrument that can help you save tax and at the same time also provide safe, assured and highest return. Your final choice should ideally be based on a gamut of factors rather than solely being driven by returns from the financial product.
Conclusion Tax planning should ideally begin at the start of every financial year. Remember, the risks of planning tax-saving in a hurry later are manifold. There is, for instance, a high probability of picking up an unsuitable product. Also, there isn't any one instrument that can help you save tax and at the same time also provide safe, assured and highest return. Your final choice should ideally be based on a gamut of factors rather than solely being driven by returns from the financial product.

Wednesday, 18 January 2017

NOW I AM GIVING YOU AGAIN TO COMPARE TO E- LAND APPAREL

When s p apparels ltd (tamil nadhu) company fixed ipo price rs 258 to rs 268 per equity share, think about korean company value in the days to come. no need to worry for e-land, will fly high in the days to come.s p apparels ltd, manufacturers and exporters of knitted garments for children, has fixed a price band of rs 258-268 per equity share for its proposed initial public offer (ipo) that seeks to raise around rs 215 crore. "the company has fixed the price band from rs 258 to rs 268 per equity share consisting of a fresh issue of equity shares aggregating up to rs 215 crore and an offer for sale of up to 9,00,000 equity shares by new york life investment management india fund (fvci) ii llc, the selling shareholder," s p apparels chairman and managing director p sundararajan told reporters here. the offer opens on august 2 and closes on august 4. the tiruppur-based company currently operates through 21 manufacturing facilities in tamil nadu. for fiscal year 2016, the company exported approximately 35.98 million pieces of knitted garments for infants and children directly to international customers, including tesco and primark. the ipo is managed by motilal oswal investment advisors private limited and centrum capital limited. the equity shares offered through the ipo are proposed to be listed on bse and nse.South Korean fashion conglomerate E-Land Group has shortlisted five preliminary candidates that bid at least 1 trillion won ($859 million) for apparel brand Teenie Weenie%u2019s operations in China. The group said on Tuesday that 10 bidders participated in the auction and its sale%u2019s adviser China International Capital Corporation (CICC) picked five preliminary contenders including Chinese fashion companies and financial investors that proposed more than 1 trillion won for Teenie Weenie%u2019s trademark, business rights, design and sales organization in China. The deal excluded the brand%u2019s operations in Korea, Hong Kong and Taiwan. E-Land will give the shortlisted bidders a month to conduct due diligence and name the final bidder early next month. The group aims to sign a final contract in July and complete the sale process within September. The Chinese operation of Teenie Weenie, one of the best-selling brands in China, raked in 446.2 billion won in sales last year through its 1,200 stores across the country. Its net profit came to 90.3 billion won last year and average operating profit margin reached 34 percent. E-Land expects that the potential sale of Teenie Weenie would significantly improve the group%u2019s overall financial health. Encouraged by Teenie Weenie bid%u2019s result, the group is also set to speed up the process of selling its retail chain Kim%u2019s Club, an initial public offering (IPO) of E-Land Retail and pre-IPO of its Chinese entity.

Tuesday, 17 January 2017

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