Tax Planning & Help

ESOPs are taxed only when sold

Posted by : MMB Messenger

The liability will be calculated on the basis of capital gains accrued.

PF withdrawal, what is the best option

Posted by : Guest

I`ve worked for a private organisation for around 3 years. I`ve left the organisation and joined another organisation. During my tenure in my previous organisation I`ve contributed to EPF. My current organisation doesn`t participate in EPF so I won`t be able to transfer my PF account to new ogranisation. As I haven`t spent 5 years in previous organisation if I withdraw the amount it will be taxable. I am ready to continue the PF and I don`t want to withdraw the money and make it taxable. What are the other options available for me.

1. Can I keep my money in the PF account of my previous organisation? if so would the money in the account earn interest?

2. Can I tranfer the EPF amount to a PPF account, by doing so would the amount be not taxable?

3. If there any other options available please provide

Thanks,
Kumar.

PF withdrawal, what is the best option

Posted by : Guest

I`ve worked for a private organisation for around 3 years. I`ve left the organisation and joined another organisation. During my tenure in my previous organisation I`ve contributed to EPF. My current organisation doesn`t participate in EPF so I won`t be able to transfer my PF account to new ogranisation. As I haven`t spent 5 years in previous organisation if I withdraw the amount it will be taxable. What are the other options available for me.

1. Can I keep my money in the PF account of my previous organisation? if so would the money in the account earn interest?

2. Can I tranfer the EPF amount to a PPF account, by doing so would the amount be not taxable?

3. If there any other options available please provide

Thanks,
Kumar.

Tax Saving ?

Posted by : chchch

Madam, I agree with you that it will be wise to book long term FDs in high interest rate regime. There are some products even in natinalised banks to take advantage of the high interest rate regime. PNB offers a product called Flexi RD, wherein one can initially, say, open the account for say a min. deposit of Rs.100/- to be deposited every month for say 120 months (this is only an illustration). Monthly instalments can be upto 10 times the min. deposit, thus one can deposit Rs.100/- in a particular month or in multiples thereof upto 10 times i.e. Rs.1000/-. Even if the deposit rates go down, the rate of interest applicable will be as on the date of opening the deposit. A more similar product is available in IOB, wherein in the first year one deposits say Rs.100/- per month for 12 month, in the second year Rs.200/- per month and so on thereby increasing the instalments by Rs.100/- every year, UPTO 10 years.

Tax Saving ?

Posted by : ashalanshu

Dear Radhika_nandlal, My take on Interest Rate -

Almost every indian Investor/saver have deposits in Banks. Over the last 18-24 months, the banks r offering higher rates on deposits (test case u r thinking to join this @ 11% FD).

Add 2.25-2.5% administrative cost & profit margin for banks on these deposit rates. The effective lending rate works out to around 12-13% but wait there is another twist in the tale named as CRR (Cash reserve ratio). For every 100 Rs. accepted by bank as deposit, it `ll have to keep 7.5 Rs. (after recent reduction of 1.5%) mandatorilly with RBI & it `ll be non income earning.

So from the 100 Rs. deposited by u, the bank `ll be able to lend only 92.5 Rs. & before the CRR cur the same figure was 91 Rs. only. So the effective lending rate comes around 14-15%. Now add at least 1-2% NPAs (non performing assets), the same lending rate `ll move on to on more higher level around 15.5-16%.

Now change ur shoes from depositor to borrower, R u ready to borrow at such higher rates to purchase -
1. That Plasma Panel
2. That High speed Mobike for ur son
3. That Grand new sedan costing 10+L
4. That sweet little (lavish) home costing anywhere from 20L to some crores depending upon in which place of india u r.
5. That drean swiss vacation
.......
......

The list goes on & on, but one thing is certain u `ll certainly cutback some of the above mentioned purchases or delay the same.

Now imagine u r not a domestic borrower but a corporate borrower. To increase ur capacities or starting a new factory or any other business requirement, after taking loans at such higher rates, how `ll u earn profits when the sale of ur products (CAR, Bike, Consumer goods, Homes....) is going down.

Sooner or later, the interest rate `ll go down, how much
I DON`T KNOW, by when, again I DON`T KNOW.

I know only one thing, for a healthy growth, low interest rates r essential.

Thanks

Ashal

Tax Saving ?

Posted by : chchch

Madam, I agree with you that it will be wise to book long term FDs in high interest rate regime. There are some products even in natinalised banks to take advantage of the high interest rate regime. PNB offers a product called Flexi RD, wherein one can initially, say, open the account for say a min. deposit of Rs.100/- to be deposited every month for say 120 months (this is only an illustration). Monthly instalments can be upto 10 times the min. deposit, thus one can deposit Rs.100/- in a particular month or in multiples thereof upto 10 times i.e. Rs.1000/-. Even if the deposit rates go down, the rate of interest applicable will be as on the date of opening the deposit. A more similar product is available in IOB, wherein in the first year one deposits say Rs.100/- per month for 12 month, in the second year Rs.200/- per month and so on thereby increasing the instalments by Rs.100/- every year, UPTO 10 years.

Tax Saving ?

Posted by : chchch

Madam, I agree with you that it will be wise to book long term FDs in high interest rate regime. There are some products even in natinalised banks to take advantage of the high interest rate regime. PNB offers a product called Flexi RD, wherein one can initially, say, open the account for say a min. deposit of Rs.100/- to be deposited every month for say 120 months (this is only an illustration). Monthly instalments can be upto 10 times the min. deposit, thus one can deposit Rs.100/- in a particular month or in multiples thereof upto 10 times i.e. Rs.1000/-. Even if the deposit rates go down, the rate of interest applicable will be as on the date of opening the deposit. A more similar product is available in IOB, wherein in the first year one deposits say Rs.100/- per month for 12 month, in the second year Rs.200/- per month and so on thereby increasing the instalments by Rs.100/- every year, UPTO 10 years.

Make real estate deals more transparent

Posted by : MMB Messenger

The Government should tighten norms for the real estate sector to protect the interests of the investors.

Tax Saving ?

Posted by : radhika_nandlal

Ashal,

Yes sooner or later bank interest will go down. The best thing to book long term FDs coz interest may go down just as swiftly as it went up.

Make real estate deals more transparent

Posted by : MMB Messenger

The Government should tighten norms for the real estate sector to protect the interests of the investors.

Tax Saving ?

Posted by : ashalanshu

Dear Radhika_nandlal, My take on Interest Rate -

Almost every indian Investor/saver have deposits in Banks. Over the last 18-24 months, the banks r offering higher rates on deposits (test case u r thinking to join this @ 11% FD).

Add 2.25-2.5% administrative cost & profit margin for banks on these deposit rates. The effective lending rate works out to around 12-13% but wait there is another twist in the tale named as CRR (Cash reserve ratio). For every 100 Rs. accepted by bank as deposit, it `ll have to keep 7.5 Rs. (after recent reduction of 1.5%) mandatorilly with RBI & it `ll be non income earning.

So from the 100 Rs. deposited by u, the bank `ll be able to lend only 92.5 Rs. & before the CRR cur the same figure was 91 Rs. only. So the effective lending rate comes around 14-15%. Now add at least 1-2% NPAs (non performing assets), the same lending rate `ll move on to on more higher level around 15.5-16%.

Now change ur shoes from depositor to borrower, R u ready to borrow at such higher rates to purchase -
1. That Plasma Panel
2. That High speed Mobike for ur son
3. That Grand new sedan costing 10+L
4. That sweet little (lavish) home costing anywhere from 20L to some crores depending upon in which place of india u r.
5. That drean swiss vacation
.......
......

The list goes on & on, but one thing is certain u `ll certainly cutback some of the above mentioned purchases or delay the same.

Now imagine u r not a domestic borrower but a corporate borrower. To increase ur capacities or starting a new factory or any other business requirement, after taking loans at such higher rates, how `ll u earn profits when the sale of ur products (CAR, Bike, Consumer goods, Homes....) is going down.

Sooner or later, the interest rate `ll go down, how much
I DON`T KNOW, by when, again I DON`T KNOW.

I know only one thing, for a healthy growth, low interest rates r essential.

Thanks

Ashal

Tax Saving ?

Posted by : radhika_nandlal

Ashal,

I realized i am no good in finance. If i remember one thing i forget the next and my parents know nothign but FDs... so its no use.. most brahmins are like that...

I have so many policies, ICICI MILLINOARE BONDS, etc etc.. the houses i sold off coz i knew if i sell this i get this and its a multiple but in these insurance policies and millionare bonds i have to calculate inflation to see the worth and i dont know how to consider inflation when arriving at networth.

BTW ystday finance minister said IIP numbers may not be correct.. i was aghast.. i though IIP numbers are released by the govt? Wonder who releases the IIP numbers.. so they have no hand in the release of such data? What a disconnect between growth and IIP numbers.

When u plan do u take inflation also into account.

Going forward do u see interest rates hardening or softening?