FLAME Newsletter - January 30, 2013


QUOTE OF THE WEEK:

“Tax laws in India are becoming more and more complex. India is a factory of income tax disputes. More than 50% of tax cases world over are from India” — TP Ostwal, Partner, TP Ostwal & Associates

YOUR FINANCE DEMYSTIFIED:

Tax provisions for investment in mutual funds

Our investment decisions are guided not only by the benefits which a particular financial product offers, but also by the current tax provisions that the instrument is subject to. Like any other financial product, there are tax implications of investing in mutual fund schemes too. Various types of mutual fund schemes are subject to different tax provisions. The tenure of investment is also an important factor when deciding upon one’s tax liability. Therefore, we must have a proper understanding of the relevant tax provisions, to help us plan our investments in a better manner.

There are various types of MF schemes available in the market. You can invest in any MF scheme depending upon your risk profile and financial profile. However, we often get confused about tax liability of our MF investments—which we receive… Read more

Which one to choose: Growth or dividend option?

What is mutual fund benchmark & its importance

While investing in mutual funds or any other financial products, we seek opinion from our relatives or friends and then invest. Hardly do we understand the importance of making informed decisions. Most of us do not understand the significance of using a benchmark for the purpose of effective comparison. Capital market regulator SEBI (Securities and Exchange Board of India) has made it mandatory for fund houses to declare a benchmark index… Read more

10 commandments on mutual fund investing

What does your MF account statement include?

When we receive our mutual fund account statement, most of us hardly understand anything about the statement. We just briefly go through it and keep it aside on our table or store it in one of our folders. Some of us check if our names are mentioned clearly on the account statement. This is the maximum which we do while reading the statement. The MF statement includes terms like NAV (net asset value), load, folio number, etc. We hardly bother to verify these details.

Basically a MF account statement offers all transaction details carried out within a defined time period. The statement is also available online and indicates account changes whenever there is a redemption, additional investment or dividend declaration. Let’s understand some of the important details in the MF statement, which we need to check regularly… Read more

Set-off of capital losses on financial investments

DID YOU KNOW?

Credit score below 700 is dangerous for you

A credit score is a 3 digit number that shows numeric summery of your credit health. Such score is derived by credit bureaus by analyzing your credit history. The score usually ranges from 300 to 900 points and the higher score suggests more chance of getting approval of your loans. A score above 700 usually suggests good credit management… Read more

TERM OF THE WEEK

Indexation benefit

The gain on sale of mutual fund schemes at a price higher than the cost price is known as capital gain. A gain for funds held for less than 12 months is called short-term capital gain, while  gain on funds  held for 12 months or more is called long-term capital gain. There are different rates for taxation of these gains and an extra benefit on the long-term capital gain. The extra benefit comes in the form of indexation, whereby the cost of the investment is raised to account for inflation for the period the investment is held. This is done by using a cost inflation index number released by the tax authorities every year.

IN THE NEWS THIS WEEK

RBI cuts repo rate by 0.25%; loans may become cheaper

RBI eases foreign investment norms in debt markets

SEBI issues guidelines for separate debt segment on bourses     

IRDA introduces framework for monitoring frauds

Buy insurance online for easy claim settlement

Gap between market potential & insurance penetration is huge

Income funds’ AUM doubles, average maturity at 3 year high     

MFs offload equity worth Rs. 27bn in December 2012

MFs net inflow stood at Rs. 409bn in December 2012: SEBI

ABOUT FLAME

FLAME (Financial Literacy Agenda for Mass Empowerment) is an IIFL initiative to promote financial literacy amongst the masses in order to make them an integral part of India’s spectacular growth story.

In an era of accelerating GDP and rising per capita growth, financial literacy has become more critical than ever before such that we all reap the tangible benefits of the nation’s economic prosperity. Financial inclusion has been quite high on the governmental agenda, given its emphasis on widening the Banking & Financial services network across the country. IIFL’s FLAME initiative stands committed to complement this effort by helping common people gain financial growth and security though better awareness and education on the variety of financial products while avoiding the lure of and loss from unrealistic claims made by unscrupulous agents and ponzi schemes.

Our objective is to light a FLAME, as the name suggests, which will set ablaze a chain of FLAMEs across the country. The new-found light of knowledge will undoubtedly dispel the dark clouds of financial illiteracy and ensure the bright sunshine of financial growth and prosperity.

This portal is but one of the various IIFL initiatives that would be part of FLAME.



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