In the last financial year which ended in March, 2011 – there was a clause to save income tax on additional Rs. 20,000 via. Infrastructure bonds(benefits under section 80CCF of the Income Tax Act 1961). For all those who invested in the bonds and are waiting to their physical copy of the bonds you can download and take a printout of the same from Beetal Financial. There is a drop down – select the bond details from one of the two : IFCI Infrastructure Bond Series – II, RURAL ELECTRIFICATION CORPORATION – INFRASTRUCTURE BONDS.

Provide your PAN number details and you will be taken to details page. You can download the PDF(copy of Infrastructure bonds) and take a printout.

Come July 1^st, 2011 and Provident Fund account details would be available online as per the Employees Provident Fund Organization (EPFO).  This would be of immense help to all the PF subscribers in India. Tracking of Provident fund is very difficult at this moment because of the manual slips and too runs 1 year backlog.

EPFO plans to replace PF account number with unique identification number, a move which will help in speedy transfer of subscriber’s funds in case of a job change and allow them to track their accounts online.

The replacement of PF account number with the UID number will be done after inter-connecting all regional and sub offices of the EPFO by March, 2012.

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Direct Tax Code

Direct Tax Code is the next big thing which is discussed among all the tax payers. Income Tax Act , 1961 which is being used at the present will soon be replaced by the Direct Tax Code(DTC), this has already been cleared by cabinet and will soon be presented in parliament for clearance and complete implementation.

Since, Direct Tax Code is soon going to be the in-thing, so most of us have a query on how and what are the proposed changes this is going to bring. Well it is supposed to bring in a lot of changes in the presently followed tax determination system, please find few of them as given below:

• The first and the foremost change we can point out is the change in the tax slab. In the present structure the exemption limit is Rs. 160000 which has been raised to Rs. 200000. The exemption limit for senior citizen has been raised to Rs. 250000 as against Rs. 240000 in the present structure.
• In the tax earlier slab income above Rs. 500000 were charged at a rate of 30% and now this limit has increased to Rs. 1000000.
• The tax rate for Indian company is 33.90% and that of foreign company is 42.33% but under DTC the tax rate for both will be flat 30%.
• Companies in the present structure does not pay any wealth tax but DTC has proposed a change and introduced wealth tax on non-productive assets on the excess amount of Rs.1crore at a flat rate of 20% without any surcharge.
• There have been a few minor changes in the components which are used to derive the salary of a person.
• The medical reimbursement from the employer is exempt up to Rs. 15000 which been increased to Rs. 50000 in the DTC.
• Leave travel concession available in the present structure has been done away with in the DTC.
• The employees will get exemption on retirement benefit. The exemption limit in case of gratuity has been raised to Rs. 1000000.
• The DTC continues with no tax for long term gain on equity shares and units of equity linked scheme but there is a change in taxation of short term gain (more than 12 months).
• Earlier short term gain was taxed at a rate of 15% but under DTC short term gain will first be allowed a deduction of 50% and the balance will be taxable at a rate of 5%, 10%, and 15%on the basis of assesses income.
• The holding period (36 months) in case of other assets which were now calculated from the date of purchase to the date of sale will now be calculated under DTC from the end of the financial year post acquisition.
• In the house property head the income a new concept is to be introduced. Presently house property income is taxed on the deemed rent basis but under DTC it will now be taxed on rent actually received or receivable basis.
• Property incomes are subject to 30% deduction on account of repairs and renewals but DTC proposes to introduce a 20% rate.

More or less this is going to benefit all the taxpayers, so cheer up for the DTC to come in place.

REC Long Term Infrastructure Bonds (under section 80CCF of Income tax Act, 1961)

Highlights

AVAILABLE OPTIONS FOR INVESTMENT IN INFRASTRUCTURE BONDS

For Application Form click here

For copy of Information Memorandum click here

Application Forms can be deposited with all branches of UBI, IDBI & designated branches of HDFC & Canara Bank (click here for list of designated branches)

IDFC Long Term Infrastructure Bonds – Tranche 2.

Salient Features of the Issue :

Tax Benefit :

Benefits as per Tax slabs:

Specific terms of the Bond series:

The IFCI(Industrial Financial Corporation of India Ltd.) bonds are issued with section 80CCF benefits which means that they will get you a tax benefit of reducing your taxable income over and above the Rs. 100,000 under Section 80C with a cap of Rs.20, 000. So, lot of people are looking forward to investing in the same.

The issue has been rated “BWR AA” by “BRICKWORK RATINGS INDIA PVT LIMITED” which means that they are rated as instruments with high credit quality.

I opted for IFCI Infrastructure bond – 31^st December, 2010 was the first deadline for this, I managed to submit all my documents and apply this in the nick of time. But for other who seemed to have missed out – there’s another chance, last date for IFCI Infrastructure bonds is extended till 12^th January, 2011.

Things I looked before saving:

If you fall under 30% income tax slab – then if you invest 20,000 – you save directly 6,000 as income tax – For other slabs calculate accordingly

10% – 2,000

20% – 4,000

30% – 6,000

Add to this cumulative interest this fund is providing – With the Buy back option after 5 years – they are providing 8.25% as the interest rate.

So, Sum total will be 29,728 after 5 years.

So, total benefit will be (6,000(income tax) + 9,728(Interest)) ~ 15,728

Refer link for complete details: http://www.ifciltd.com/IFCIBonds/InfrastructureBonds/CurrentIssue/tabid/218/Default.aspx

In order to enhance compliance with Know Your Customer (KYC) norms under the Prevention of Money Laundering Act, 2002 (PMLA) and to mitigate the risks associated with acceptance of third party payment instruments (cheques, demand drafts, pay orders etc.), Association of Mutual Funds in India (AMFI) has issued best practice guidelines on ‘Risk mitigation process against third party cheques in mutual fund subscriptions’.

Accordingly, with effect from November 15, 2010, SBI Mutual Fund will not accept applications for subscriptions submitted along with Third Party Payment instruments.

A. Third-Party Payment by definition:

a)      When payment is made through instruments issued from an account other than that of the beneficiary investor mentioned in the application form.

b)      In case payments from a joint bank account, the first holder of the mutual fund folio has to be one of the joint holders of the bank account from which payment is made. If this criterion is fulfilled, then this is not construed to be a third party payment.

c)      In case payments through Netbanking, the bank account debited towards subscription, should match with the registered bank account as per records. If this criterion is fulfilled, then this is not construed to be a third party payment.

However, the Third-Party guidelines as mentioned above will not be applicable in the following exceptional cases:

• Payment by Parents/Grand-Parents/related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding Rs. 50,000/- (each regular purchase or per SIP installment).
• Payment by employer on behalf of employee under Systematic Investment Plan (SIP) facility through payroll deductions.
• Custodian on behalf of an FII or a Client.

For all the above exceptional cases, both the investor and the person making the payment should be KYC compliant and also submit “Third Party Payment Declaration Form” duly completed in all respects.

Please note that the above guidelines will apply to all Systematic Investment Plans (SIPs) registered on or after November 15, 2010. SIPs registered before November 15, 2010 will not be affected.

Instructions / Guidelines for Third Party Payments:

a)      An investor at the time of his purchase must provide the details of his pay-in bank account (i.e. account from which a subscription payment is made).

b)      If the subscription is settled with pre-funded instruments such as Pay Order, Demand Draft, Banker’s cheque, etc., a Certificate from the Issuing banker must accompany the purchase application, stating the Account holder’s name and the Bank Account number from which the amount has been debited for issue of the instrument.

c)      A pre-funded instrument issued by the bank against cash shall not be accepted for investments of Rs.50,000/- or more. This also should be accompanied by a certificate from the banker mentioning name, address and PAN (if available) of the person who has requested for the said instrument.

d)     If payment is made by RTGS, NEFT, ECS, Bank transfer, etc., an acknowledged copy of the instruction to the bank stating the bank account number from which the amount has been debited, must accompany the purchase application.

B. Registration of Multiple Bank Accounts:

• SBIMF has provided a facility to investors whereby they can register multiple bank accounts in a folio.
• Investors can register upto 5 bank accounts (in case of an Individual / HUF) and 10 bank accounts (in case of Non-Individual)
• Documents required to be submitted along with the registration form:

a)      Cancelled cheque leaf with investor’s name pre-printed

b)      Bank statement / Bank passbook with account number, account holders’ name and address

• It is advisable that investors submit the change of bank details request / multiple bank accounts registration request if they so desire,  at least 10 days prior to the date of dividend / redemption payment, if any.

The above mentioned forms (i.e. Third Party Declaration Form & Multiple Bank Registration Form) are available at the nearest Investor Service Centre (ISC) of SBI Mutual Fund OR can also be downloaded from our website www.sbimf.com.

For any clarifications, please call us on our Toll Free Number 1800 425 5425 or write to us at customer.delight@sbimf.com.

1. Plan your trades. Trade your plan.
2. Keep records of your trading results.
3. Keep a positive attitude, no matter how much you lose.
4. Don’t take the market home.
5. Forget your College degree and trust your instincts.
6. Successful traders buy into bad news and sell into good news.
7. Successful traders are not afraid to buy high and sell low.
8. Continually strive for patience, perseverance, determination, and rational action.
9.  Limit your losses – use stops!
10. Never cancel a stop loss order after you have placed it!
11. Place the stop at the time you make your trade.
12. Never get into the market because you are anxious because of waiting.
13. Avoid getting in or out of the market too often.
14. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
15. Always discipline yourself by following a pre-determined set of rules.
16. Remember that a bear market will give back in one month what a bull market has taken three months to build.
17. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
18. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
19. Split your profits right down the middle and never risk more than 50% of them again in the market.
20. The key to successful trading is knowing yourself and your stress point.
21. The difference between winners and losers isn’t so much native ability as it is discipline exercised in avoiding mistakes.
22. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
23. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
24. Accept failure as a step towards victory.
25. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker!

Public Provident Funds: The PPF scheme offers assured returns and tax benefits under Section 80C of the IT Act. Minimum investments of Rs 500 and a maximum of Rs 70,000 annually are entitled to tax benefits under Section 80C. The lock-in period is 15 years with withdrawals allowed only after the 5^th year.

Rate of Interest: 8 percent p.a.; tax-free

Employee Provident Fund (EPF): An employee contributes a certain percentage of his/her salary which is matched by the employer. The minimum rate of contribution is 12 percent of basic salary which has to be matched by an equal contribution from the employer. The EPF investments are also entitled to tax benefits under Section 80C.

Rate of Interest: 8.5 percent p.a.

National Savings Certificate (NSC): The NSC scheme offers assured returns of 8 percent compounded half yearly. The minimum investment is Rs 00 annually and there is no maximum limit. There is a lock-in period of 6 years. Investments up to Rs 1 lakh are entitled to tax benefits under Section 80C.

Rate of Interest: 8 percent compounded half yearly.
Interest Income is taxable upon maturity.
Lock-in period: 6 years

Fixed deposits with scheduled banks: Fixed deposits with a tenure of 5 years opened with a scheduled bank is entitled to tax benefits. An FD for a minimum amount of Rs 100 up to a maximum amount of Rs 1 lakh is entitled for tax benefits under Section 80C.

Rate of Interest: Variable (Currently around
Interest income is taxable
Lock-in period: 5 years

Following are the steps in tax planning which would aid a person in making prudent tax plans to reduce their income tax liability and ensure a better tomorrow by making compulsory savings by investing in various tar saving schemes. These steps in tax planning are:

• Compute the gross total income
• Calculate tax payable on gross taxable income for a financial year
• Check the impact of investment in various tax planning instruments on the liability