Escorts Leading Sectors Fund (D)-New Mutual Fund Offer

Issue Open 03-Jul-2008

Issue Close 01-Aug-2008

Scheme Objective
Escorts Leading Sectors Fund, is an open-ended growth scheme. The investment objective of the scheme is to provide capital appreciation or income distribution by investing in companies from Leading Sectors, depending upon their growth prospects and sustainability of future earnings growth.
Mutual Fund Family	Escorts Asset Management Ltd.
Fund Class	Equity Diversified
Fund Type	Open-Ended
Investment plan	Dividend
Fund Manager	Rajesh Sharma
Entry Load	2.25 %
Exit Load	1.00 %
Comment	Entry Load of 2.25% for applications below Rs 5 crore. For SIP Entry Load - 2.25% per transaction. Exit load of 2% for investments greater than or equal to Rs 5 crore, if redeemed within 6 months from the date of allotment and 1% for investments less than

Credit Card is like a negative Wife

CREDIT cards are a lot like nagging wives — you can’t live with them, you can’t live without them.
From temporary borrowing, transfer of existing debt, facilitating regular purchase, social status and bill payments etc, credit cards seem to be a one-stop solution. The wife of course is a one-stop solution for everything in life.

But the downside is pretty steep too. High interest, threatening agents, bad credit history etc can follow a credit card And since you plan to enter a long term relationship with both — it’s best you choose carefully. But these days it may be a better idea to spend more time choosing your credit card than your wife because while your wife will forgive you if you forget her birthday, you credit card will not be as forgiving if you forget due day.

So let’s see what you need to keep in mind while choosing your credit card:

1. Joining and annual fees
Many credit cards are being offered free for life except a few high-end credit cards. Hence you should ideally go for a card, which has no annual or joining fees. Make sure it’s a lifetime offer and not just for the first year.

2. Balance transfer facility
Many consumers look at credit cards as a short-term debt facility. When a consumer is not able to manage the debt with one credit card, he wishes to transfer the debt on the other card. Balance transfer feature could be very useful in such a case.

3. Interest rates
Beware of this one. When credit card dues are not paid within the given period, banks charge interest on the amount due. If you are taking a credit card to avail a short-term loan, interest rate has to be taken very seriously. Generally these rates vary from 1.33% to 3.15% per month depending on the card type and other features.

4. Credit period
Usually, all banks that provide credit cards extend a free credit period of 21-52 days. This depends upon the type of card and the date of transaction. More the interest free credit period, the more time you have to pay off the due without having to pay the interest.

5. Credit limit
This the is the maximum amount you can spend at a time, using your credit card. This depends on your income, which the bank refers to when issuing you the card. The general outlook is — higher the credit-limit the better! This is not advisable unless you intend to use the credit card limit.

6. Customer service
Few years back, customer service was not a greatly developed concept in banking as well as credit cards. Now customer service is a factor to be taken very seriously when going for a credit card. It’s better to go for a credit card offered by a bank with which you already have an existing good relationship.

7. Reward points and cash-back
All banks are trying to attract customer through schemes like reward points. Especially people who intend to use the credit card fairly regularly should look for good reward point schemes.

8. Shopping perks
A good credit card is acceptable with most merchants in the town and across the country. Having tie-ups with multiple outlets, which offer great discounts, and shopping schemes are an added advantage. This also includes the waiver of surcharge at petrol pumps and utility bill payments.

That’s a long list isn’t it? The smart way to select a credit card is outlining the needs first. Don’t go for features that you will never use. Thankfully the path to selecting the right wife is a whole lot simpler, especially in our country — Just ask your parents to do it for you!

How Credit Card Works

IT’S said that Forewarned is often Forearmed. This aphorism has given birth to a generation of knowledge seekers. Everyone wants to know every detail about everything before they do anything. No wonder websites like Howstuffworks.com have been born and are doing rather well.

While it may not serve any purpose to know how snow leopards mate or how galangal is grown in Thailand, there are a few things that we would do well to learn about. Credit cards is definitely one of them.

Let’s learn some fast facts:

The Basics

• When you apply for a credit card, the bank you apply to carefully screens your application. You cant blame them given that there is always a crook around the corner.

• A credit limit is worked out for you, based on your financial capability and other parameters like income levels, educational qualifications, age etc. The bank that issues you the card is called the ‘issuing bank’.

The Business

From the bank’s point of view, credit cards are good business for two reasons.

• Banks make money through fees from merchant establishment.

• The higher than normal interest rate paid by cardholders for the balance in their card.
• So what are these merchant establishments? These form the heart of the business. Merchant establishments can be hotels, shops, travel agencies or any place where money transactions are made. The banks that enroll merchant establishments are called ‘acquiring banks’.
• The relationship between the bank and the merchant establishments is run via international networks such as Visa and Master card.
• Your credit card is valid in any merchant establishment that accepts your network (ie Master Card or Visa), irrespective of the issuing bank. Most Indian card issuing banks are part of either Master Card network or Visa network, or both. There are others credit card networks like American Express and Diners Club too.
• The merchant establishment finds the credit card a safer and efficient payment mode, and brings more business. The merchant establishment pays a fee to the bank that enrolled it for the service.

The Transaction

• • When you use a card at an establishment to purchase a product or service, your card is swiped on a swipe-machine. The swipe machine is connected to a central computer belonging to the network, which in turn is connected to all issuing banks.

  • The system verifies with your issuing bank whether you have sufficient credit to cover the purchase in a few seconds, and approves or rejects the transaction. As soon as approval comes through, you are asked to sign the charge slip. The merchant then verifies your signature with the one at the back of the card.
  • The charge slip is then forwarded to the acquiring bank, which in turn settles the transaction with the merchant. The issuing bank also proceeds to bill you for payment as per the cardholder agreement. The acquiring bank will settle the transaction with your issuing bank through the network.

  Sounds pretty straightforward? Then you’re wondering why credit cards are such accursed instruments? That happens when you delay payments and get caught in an interest cycle. When you use a credit card you have the option to pay only a part of the total amount spent and carry forward the balance. But in such a case you will have to pay interest on all your purchases without any free credit period.

  You can save yourself only if you are prompt in paying the balance by the due date. Credit card users get a free period of credit before they reimburse the credit card issuing bank. This may vary from 15 days to 40 days depending on the issuing banks.

  So that concludes our session on How Credit Cards Work. If you’re now looking for information on How Snow Leopards Mate then you’re on the wrong site my friend!
  
  Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

How to fund your Hospital Bills

MEDICAL supplies and treatment cost big bucks today.

In an age where lifestyle diseases or conditions like diabetes, heart attacks and cancer are common, it pays to be financially prepared.

We give you the lowdown on two medical policies: the features, the damages and the fine print.

Mediclaim policy

1. In addition to your actual hospitalisation and treatment expenses, this covers pre and post hospitalisation expenses. These include room rent, operation theatre charges, doctors’ fees, tests, medicines, expenses of a home nurse or physio etc, as per the terms of the policy.

2. It covers expenses incurred to cure your ailment.

Critical illness cover

1. Say, you have a attack, you will have to skip work, which means you lose your salary. A critical illness rider would cover this loss of income.

2. The entire sum assured is paid to you as soon as certain ‘pre-specified’ diseases or conditions like heart attacks, cancer, diabetes, stroke, organ transplant, etc, are diagnosed. You don’t have to worry about submitting proof of expenses incurred or to be incurred.

Do I need both policies?

Yes, because both policies benefit different circumstances. Merely having a critical illness policy is not enough as it covers only a few diseases.

What if you suffer from a disease, which is not covered? Here your mediclaim policy will come to the rescue. So, a separate mediclaim policy is a must.

When buying a critical illness policy

Buy it separately or buy a combo deal (a regular life insurance policy with a critical illness cover as an added accessory, also called rider).

It’s like either buying the complete car or buying one, and then fitting it with accessories. However, the combo comes with a few limitations:

1. The cover for a critical illness rider is limited by the basic life cover of the policy. The term of the rider is also the same as that of the basic cover.

2. The rider will be available for only one critical illness. That is, once a disease is diagnosed and the sum assured is paid to you, the rider is not applicable anymore. Besides, the life cover policy is also no longer available.

The last word: a standalone policy is a better option.

The damages: For a 30-year old, a critical illness rider of Rs 5 lakh for a 20-year term, would cost anything between Rs 1,500 and Rs 2,500 per annum.

When buying mediclaim

1. Some mediclaim policies offer both ‘cover + investment’.

But these have certain limitations such as a limited number of hospitalisation days, high costs, provision for only defined benefits and not full reimbursement, etc. A regular mediclaim policy without the investment option works better.

2. If you decide to opt for a plan ‘only cover’ mediclaim policy, a floater policy covering all family members under a single cover, works out cheaper.

But there’s a risk factor: if more than one or two members fall ill within the same policy period, the cover may not be adequate enough to take care of all expenses. Think about this before you opt for a floater policy.

Once you have chosen the right policy for you, read the fine print — especially what is excluded! Know and understand them, first, and avoid hassles later.

The damages: For a person up to the age of 35, the premium per annum for a cover of Rs 3 lakh would be between Rs 3,200 to Rs 3,800. All public sector companies like Oriental Insurance, New India Assurance and National Insurance offer these policies. Among the private sector companies, Bajaj Allianz, Royal Sundaram, ICICI Lombard and Iffco Tokio, offer them.

The fine print: what is not covered

1. Pre-existing illnesses: For instance, if you have had a heart attack before buying the policy, the policy will not cover heart ailments.

2. Dental treatment and surgeries.

3. Cosmetic surgeries for aesthetic purpose.

4. HIV-related conditions.

Disclaimer: While efforts have been made to ensure the accuracy of the information provided in the content, the website or the author shall not be held responsible for any loss caused to any person whatsoever who accesses or uses or is supplied with the content (consisting of articles and Information)

30 tax-smart ways to plan your pay packet

Corporate India is increasingly valuing talent. In a bid to attract the best to their fold, many companies compete with one another in offering high salary with attractive perks. Realising that income tax takes away a substantial chunk of the pay packet, and that individual needs differ, they are open to designing tax-smart salary packages.

Saving a rupee in tax means you have a rupee more to save, spend or invest as you wish. So, when negotiating or reviewing your salary package, you should choose perks which are both useful for you and your family, and which are also tax-smart.

This requires a basic understanding of taxes applicable to various perks. A basic rule to follow is to opt for those where the employer pays FBT (fringe benefit tax), not you. This minimizes the tax payable by both you and your employer — what could be a better win-win than that?

Take, for instance, the case of a chauffeur with a salary of Rs 10,000 per month. If you pay the salary, you will be doing so out of your after-tax take home. This implies that ipso facto, you will be paying a tax of Rs 40,680 (= 33.9 per cent of Rs 120,000). If the employer pays the salary, the FBT works out only at Rs 7,416 ( = 30.9 per cent of 20 per cent of Rs 120,000) only!

Here is a check-list of 30 tax and perk benefits relating to salary that will help you work out a tax-smart salary package.

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don’t pay any tax thereon.

2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house.

3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C.

4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary.

5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would pay FBT. It is @30 per cent on 20 per cent of the value thereby bringing down the effective rate to 6 per cent. Better still, the employee owns the car and the employer pays the cost of petrol and maintenance.

6. Contributions up to Rs 1 lakh (Rs 100,000) per annum to Superannuation Fund of the employee is not taxed either as fringe benefit in the hands of the employer or as perk in the hands of the employee.

7. Contributions to some specified schemes (Company PF, PPF, NSC, life insurance premia, etc.) qualify for a deduction u/s 80C from gross total income with an overall ceiling of Rs 1 lakh. PPF has a ceiling of Rs 70,000 to contributions made to the accounts of self and minor children whereas the contributions to accounts of self, wife and children (major or minor) attract the deductions.

8. Employer’s contribution to Company PF in excess of 12 per cent of employee’s salary is taxable. Employee contributes equal (or more) amount to his PF account. Again, any excess over 27 per cent of salary contributed by the employer to company Provident Fund and Superannuation Fund put together is to be treated as perks.

9. Any death-cum-retirement gratuity received up to Rs 3.5 lakh (Rs 350,000) — subject to certain conditions — is exempt.

10. Leave Travel Allowance given as reimbursement of expenses incurred by the employee and his family for traveling while on leave is exempt, once in two years.

11. Transport allowance for commuting between residence and place of duty is exempt up to Rs 800 per month.

12. Reimbursement, not exceeding Rs 15,000 in a year, for medical treatment from any doctor for himself and his family members is deductible.

3. Under section 80D, deduction up to Rs 15,000 paid as medical insurance premiums on the health of assessee himself, his spouse, parents (dependent or not) and dependent children is allowed. Where an individual has insured a senior citizen (parent or himself) a higher ceiling of Rs 20,000 is available. Additional deduction up to Rs 15,000 on premiums paid for parent/s of the assessee has been made available w.e.f. 1.4.08.

14. Professional tax paid by an employee is deductible u/s 16(iii).

15. ESOP was brought under the purview of FBT by Finance Act 07. The employer has a right to collect the FBT tax paid by him on ESOP from the employee. In that case, it will be treated as tax paid by the employee.

16. In respect of HRA, the least of the following is exempt from tax u/s 10(13A):

• (a) 40 per cent of salary (50 per cent for Mumbai, Kolkata, Delhi and Chennai).
• (b) HRA for the period the house is occupied by the employee.
• (c) The excess of rent paid over 10 per cent of salary.

An employee living in his own house or where he does not pay any rent is not eligible for this exemption. If you are staying in a house belonging to your family members (preferably not your wife), start paying rent to the owner and ask for HRA from the employer.

17. A helper engaged for the performance of the duties of an office or employment of profit is not considered as a perk.

18. If the employer employs a gardener for the building premises belonging to the employer, it would not be treated as a perk. The possibility of it being extrapolated to other servants is logical.

19. Perk value of concessional loan to the employee for purchase of house or motor cars shall be the difference between the interest payable calculated at the rate of interest for similar loans, charged by SBI and the actual interest charged.

20. Loan for medical treatment specified in Rule-3A is exempt, provided it is not reimbursed under any medical insurance scheme. Where it is reimbursed, the perquisite value shall be charged from the date of reimbursement on the amount reimbursed but not repaid against the outstanding loan taken specifically for this purpose.

21. Small loans up to Rs 20,000 in the aggregate are exempt.

22. Expenses on meals provided to the employee during his hours of duty are not treated as perks. FA 08 has declared that expenditure on non-transferable pre-paid electronic meal cards is not a perk.

23. FA 08 has also declared that provision of creche facility for children of the employee and sponsoring of an employee sportsman is not a perk.

24. Employer pays FBT on the value of the gifts. Gifts up to Rs 50,000 received without consideration by an individual from any person are tax-free in the hands of the donee. However, the Department may claim that such gifts are in lieu of salary.

25. Employer pays FBT on the value of the facility of credit cards and expenses for the club.

26. Where a movable asset is transferred by an employer to his employee directly or indirectly, the perquisite value shall be the actual cost to the employer minus the cost of normal wear and tear @10 per cent for each completed year during which such asset was put to use. In the case of motor cars the normal wear and tear would be @20 per cent whereas in the case of computers, data storage and handling devices, digital diaries, printers, etc., it would be @60 per cent. These do not include household appliances (i.e., white goods) like washing machines, microwave ovens, mixers, hot plates, ovens etc.

27. Uniform allowance to meet the expenditure incurred on the purchase or maintenance of uniform for wear during the performance of the duties of an office or employment of profit is exempt.

28. Expenses for soft furnishings (table cloths, curtains, etc.) including maintenance at the residence for those officers entertaining guests at home for official purpose are also exempt.

29. Goods at concessional rates, membership of professional associations, subscriptions for technical and business journals and newspapers are not considered as taxable perks.

30. Payment or reimbursement by the employer towards bills on Telephones and cellular is not a perk.

Caution: If employer is exempt from FBT, employee pays the tax

Fringe Benefit Tax is not applicable to an employer who is an individual, HUF, any fund or trust or institution eligible for exemption u/s 10(23C), or registered u/s 12AA. Rule 3 has been amended so as to include valuation of perquisite in case of benefits provided by such employers to its employees w.e.f. FY 07-08 by Notification SO 1896(E) dt 7.11.07.

10 No-Fail First-Date Conversations

So you finally gathered enough courage to go talk to the cute redhead who caught your eye, but your friends aren’t impressed just yet. You finally develop the backbone to ask her out, and now your friends are impressed.

They ask where you plan to take her out, and, more importantly, what you’re going to talk about on that nerve-racking first date. Your knees begin to tremble uncontrollably, but fear not! Read this list and you will have the girl begging for seconds.

Number 10: Avoid her past

Generally speaking, one should never ask about past lovers on a first date. In fact, this should be avoided until she initiates the topic (if she ever does). She might have been hurt or may still be in love with her ex. You also prefer to start with a clean slate, so becoming chummy with her and comforting her about past mistakes may not be the greatest strategy on the first date.

Number 9: Got any brothers or sisters?

Usually, a safe topic of conversation is asking about siblings (but don’t ask her if she’s got cute sisters). Asking about her parents could backfire if they divorced or separated, especially when she was very young. But sisters and brothers usually trigger good feelings and score points for you, since you’re showing a caring side and an interest in her family life.

Number 8: Traveled anywhere special?

A tricky way to spark a girl’s interest is by asking about her past travel destinations and where she intends on visiting in the future. The upside is that if she mentions a spot she always wanted to visit, lo and behold, here comes the knight in shining armor (that’s you, boy) who offers to make her dreams come true one day by taking her there. This also provides each of you with some insight about the other’s cultural background and openness to new adventures.

Number 7: Drinks, anyone?

A topic of conversation, especially if the date is taking place at a restaurant or bar, is the kind of food and drinks each of you prefers. Not only can you gauge whether or not you share culinary preferences, but the potential topics are endless and provide you with a safe topic of conversation - unless, of course, you are dating someone with an addiction to food or alcohol.

Number 6: Any career plans?

Asking a girl about her past education and whether she intends on returning to school is admittedly a double-edged sword. She might love to go on and on about her numerous academic achievements, but she might break down and admit that her current job has absolutely nothing to do with what she studied. In either case, you are provided with a golden opportunity to reassure and encourage her with an abundance of compliments.

Number 5: How’s your job?

If you are years removed from your college years, then talking about work and career goals just might be a safer topic. Admittedly, you shouldn’t let her go into the mundane details about how fed up she is with her life, which would explain why she’s on her seventh margarita. But generally speaking, people like to brag about work, no matter how routine it is. It also gives you an idea regarding whether or not you are dating a future CEO or a waitress for life (not that there is anything wrong with that, of course).

Number 4: Got any friends?

Ask her about her friends. Even if you do not know them, she will love to tell you about her circle of friends, how much they mean to her and where she met them (and all of the things they did together). Don’t doze off, though, my good man; this is when you get precious details about her. If you ever make it further than the first date, her friends are usually the best source to unearth the skeletons in her closet.

Number 3: Free time frolicking

Does she Rollerblade, collect stamps or dance? How about sports? What kind of music does she like? These are the questions you must ask to determine how much of a bond exists between the two of you. Moreover, you gain some insight to follow-up questions.

Number 2: Weekend’s peakin’

Not only do you get a clearer picture of what life with her will be like after the honeymoon, but you are also sending mixed messages, which is not entirely bad at first. Yes, mind games are childish, but keeping your cards at your chest gives you leverage. She will ask herself: “Does he want to see me on weekends?”

Number 1: Be bold and look ahead

Now, assuming she is having a good time and she is looking at you with that sparkle in her eye… in other words, if her body language is positive, you can look ahead and talk about other things you could do together in the future. Admittedly, you do not want to rush too far ahead and scare her off, but if she’s enjoying herself, chances are she’ll be curious to see what other great adventures you have in store for her.

9 tips to help your baby sleep through the night

Nighttime waking is one of the most common dilemmas for new parents. Here are a few simple tips you may want to try to get a bit more uninterrupted sleep:

1. Keep to a routine. If your baby wakes up late in the morning to help make up for some of his late nights, begin waking him at an earlier time each day to help encourage him to get the sleep he needs at night — when the rest of the household sleeps.

2. Choose a well-lit area for your baby’s naps. This will help encourage shorter naps, which in turn may help your little one sleep better at night.

3. Increase daytime feeds. Feeding your baby more often during the day will allow him to meet his nutritional needs at a time more convenient to you.

4. Feed your baby in a quiet, darkened room occasionally if your baby is easily distracted during the day.

5. If breastfeeding, allow your baby to finish the first breast offered. This will provide him or her with more of your rich hindmilk, which may also help to space out his nighttime feeds.

6. Carry your baby — with the aid of a sling or other baby carrier. This will help to keep your baby relaxed, especially during the early evening hours, encouraging an easy transition to sleep.

7. Keep the evening calm to avoid overstimulation. If a bath is relaxing for your little one, you can bathe him before bed. If it’s too stimulating, bathe him at another time.

8. Feed your baby in a darkened room at night if he or she wakes up hungry. Let him know that night is for sleeping.

9. Avoid nighttime diaper changes if at all possible.

And don’t forget to take care of yourself!

• Rest while your baby rests. This is especially important when you have a high-need baby.

• Take a walk. Sunshine and fresh air are good for both of you. Going out together, with your baby in a sling, baby carrier or stroller can be a great stress reliever.

Is There Any Standard Deduction Available In Case Of Pension Income

Please advise the IT section no. under which standard deduction from the Pension income is applicable & what is the limit.Also advise, whether the standard deduction is applicable for Pension / Annuity received under LIC Superannuation Scheme. Shirish S. Gandhi ,Anand ,Gujarat

Your question has two limbs -one regarding pension received from employer and other pension or annuity received under LIC Superannuation Scheme.

Pension from employer

Pension received from employer is charged to tax as “salary” . However, the standard deduction previously allowed from salary u/s 16(1) was deleted from the I T Act from FY 2005-06 i.eAsst Yr 2006-07. So , there is no provision of standard deduction from salary income (or pension) from 1/4/2005 onwards.

Pension or Annuity Under LIC policy.

Section 80CCC deals with the pension or annuity scheme of LIC or other insurer. The said sub-section 1 of section 80CCC provides for allowance of deduction of amount deposited in such scheme and sub-section 2 of section 80CCC provides for taxation of amount received either as a result of surrender or pension . The said sub section 2 is as under :

(2) Where any amount standing to the credit of the assessee in a fund, referred to in sub-section (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessees account, if any, is received by the assessee or his nominee
(a) on account of the surrender of the annuity plan whether in whole or in part, in any previous year, or
(b) as pension received from the annuity plan,an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year.

In simple words, section 80CCC provides that the pension received from such annuity plan under superannuation scheme of LIC or any other insurer will be taxable. The said amount shall be taxable under the head “income from other sources” being the residual head under the I T Act . There is no express deduction available against such income and the deposit for such scheme was already availed of deduction .

So, there is no deduction available from pension income?

Not exactly. Family pension received by the family members of the deceased employee is charged to tax under section 56 of the I T Act as income from other source. However, under section 57(iia) standard deduction is available to the extent of 33.33 % or RS 15000 whichever is more. The said provision is as under:

(iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or fifteen thousand

Courtesy- www.taxworry.com

Section 80 C , Tax planning and Investments

Learning how to plan your taxes is a major part of choosing an investment strategy. In this article we will look at Section 80C, one of the most important provisions for investors in the tax laws.

What is Section 80C?

The government, in order to encourage savings, gives tax breaks to certain financial products as discussed in Section 80C of the Income Tax Act. These investments are often referred to as 80C investments.

Up to a limit of Rs 1 lakh, the money that you invest in these products is deductible which means that you don’t have to pay income tax on it. Thus if you are in the 30 per cent tax bracket and you invest the maximum allowed you save Rs 30,000 in taxes.

There are a wide range of investments you can make to claim the Section 80C benefit. To keep things simple we will focus on two categories: Small savings schemes and ELSS (equity linked savings schemes). Other 80C products include your provident fund, the repayment of principal on your home loan and your life insurance premium.

Small savings schemes

These include the public provident fund (PPF) and National Savings Certificate (NSC). They offer a return of around 8 to 8.5 per cent which is quite low compared to typical returns in equity products. Furthermore, there is a relatively long lock-in period, 15 years for the PPF and 6 years for the NSC. Their main advantage is that they offer a guaranteed return unlike equity-based products.

Equity linked savings schemes

These are basically mutual funds which are specially created to provide tax benefits. As with regular mutual funds there is no guaranteed return and you can lose money in a period of falling stock prices as has happened in the first half of 2008. However, ELSS usually provides a higher return than small savings schemes and also a lower lock-in period of three years.

Examples of ELSS include Franklin India Taxshield and HDFC Taxsaver. As with regular mutual funds, these schemes pursue a range of investment strategies: For instance, some may focus on large cap stocks while others may focus on small and mid cap stocks. It makes sense to invest in more than one scheme to diversify some of your risk.

Making a choice

How do you decide to allocate your Rs 1 lakh 80C limit? This will depend on your other financial decisions; for example whether you have taken a home loan or purchased life insurance. As to the decision between small savings schemes and ELSS two of the most important factors are your attitude to risk and inflation.

As recent months have shown so clearly, stock markets are a lot riskier than small savings schemes. However, the flip side is that riskier investments like stocks offer a higher rate of return particularly over the long run. From the perspective of a young investor who may not need most of her/his investment money till retirement it probably makes sense to tilt towards riskier assets.

The other important consideration when evaluating returns is to adjust for inflation.

In other words, if your investment generates a return of 8 per cent and inflation is 7 per cent, then your inflation-adjusted return is only one per cent. When inflation moves into double digits you are actually making a negative inflation-adjusted return, as is happening currently. This is a fundamental problem with any investment product that offers a fixed return at a time of high and rising inflation.

By contrast stocks are a better hedge against inflation especially in the long run. Though inflation increases the costs of firms it also allows them to charge a higher price to their customers thereby protecting profits to some extent. This in turn means that stock prices and equity-based products can offer better protection from inflation over a number of years though not necessarily in the short run.

What about the element of timing when it comes to equity schemes? For instance, stocks have clearly taken a pounding in the last six months. However this doesn’t necessarily mean it’s a bad time to invest in stocks; valuations in some companies look quite attractive now and over a three-year horizon you could see decent returns.

From the point of view of the average investor it’s probably best to take timing out of the picture by following a systematic investment plan which means you invest a fixed amount every month.

Small savings schemes and ELSS each have their advantages and disadvantages. Based on your investment strategy and particularly your attitude towards risk you have to choose how much to invest in them as part of your Section 80C investments.

Can You Claim Exemption From Tax By Buying Land & Commercial Property ?

We have recently sold long term property jointly owned by me & wife on 17 April 08 for 35 L worth. Property was held more than 5 years & involved LTCG of 12.2 L. Thereafter we purchased land for 13 L on 20 Jun 08 with my wife as 1st owner & self as joint. We also purchased commercial property worth 20 L owned by my wife only.

Since we invested in other property more amount than LTCG, do we have still pay LTCG tax if we do not build house on land within next 3 years. In case LTCG tax is still applicable, we may have to pay only before 31 July 2009 (filing date for 2008-09) considering selling was done in Apr 08. MOHIT EKBOTE , Mumbai

Your long question has short answer. No exemption of tax on Long Term Capital Gains is available under I T Act if one buys land or commercial property. If you construct the house within three years, then only you can claim exemption u/s 54F , that too if you are not having more than two residential house.

While the return is certainly required to be filed by 31st July 2009 in your case , but important is to remember that both of you have a liability to pay advance tax by 30 September 2008 , failing which you will have to pay interest u/s 234B and 234 C.

Therefore, in my opinion if you are not taking any steps to claim exemption u/s 54F or 54EC for the long term gains, you should pay the tax by 31st September 2008 to save on interest charges.

For more on 54F and 54EC , read following articles

1. How To Make Tax Planning For Long Term Capital Gains?
2. How To Use Capital Gains Account Scheme To Save Tax?
3. How To Minimise Tax On Huge Gains on Property Sale?
4. REC Bonds Issued. Hurry Up!

Courtesy - www.taxworry.com

10 Tips For Slimming Down On A Budget

Is the high cost of food getting you down? Do you think trimming your food budget means an expanding waistline? My weight loss clinic is filled with patients who want to eat healthy, but believe it’s just too expensive. Do you feel the same way?

Food prices continue to rise - everything from produce to pantry items. Plus, with such busy schedules, many of us look for “convenience” when food shopping, which adds up to a lot of extra money.

A few pointers before you even get to the store:

• Avoid shopping on an empty stomach! Go after a meal, or have a snack - to help resist temptation.
• Make a list and stick to it. That helps to avoid impulse buying.
• Shop once a week and pre-plan your meals.
• Use coupons for foods you regularly use.

Here are 10 tips to trim your waistline on a slim budget:

1. Drink tap water. No bottled water, or other low-calorie drinks. Good for your wallet and the environment. If you have concerns about your tap water, get it tested, and add a filter to the tap, or a pitcher if needed.

2. Shop seasonally and locally. If it’s local, and in-season, the shipping costs are largely reduced, with the savings passed on to you.

3. Look for frozen foods (fruits, veggies, poultry, fish) without any added sauces. The same nutritional quality as fresh products.

4. Make your own “single-serving” snacks. Portion control is great, but you don’t need to pay more for it. Buy some snack size, re-sealable plastic bags, and be creative. From cereal, to fruit, to chips, you produce a double duty snack - calorie and cost controlled.

5. Avoid the exotic. Stick with standard colors of fruits and vegetables. Green peppers don’t seem as fancy as yellow or orange, but are a fraction of the cost.

6. Cut up your own produce. The shelves are filled with pre-cut vegetables and fruits. Don’t waste money for this “convenience” - which only saves a minute or two at home.

7. Look for sale items - but read the label first! A variety of foods are in the “sale” sections - and can include fresh meats and poultry, dairy products, and produce. Check the expiration dates - often the markdowns occur with a date that’s closing in to “use by” or “sell by”. it’s a great savings if you can use the food in the right time frame. Think ahead.

8. Buy store brands These are often produced by the “name brand” companies.

9. Be flexible with “in-store” specials. Planning a fish dinner, but chicken breasts are a great buy? Change your menu!

10. Purchase foods in larger bags from your local supermarket, or even the “big box” stores like Sam’s Club and Costco. Go in with a friend or two, to save money and reduce spoilage. You might not need 18 pears, but 6 or 9 would be perfect. The bag of small apples might not look at gorgeous as the giant single fruits priced per pound, but the nutrition content is the same.

One BIG money waster: Driving from store to store for all the “best” bargains. You’ll spend extra gas money, for small savings, and lose the frequent shopper advantages. Pick one major market, and become a mindful shopper there. Plus, when you get a “store card’, you’ll get coupons for frequently purchased foods, and other money-saving perks for your loyalty.

What are some of your money-saving diet tips? We need all the help we can get!!

How banks make you poorer

BANKS today offer a slew of services to the customer, which only seem to increase by the day. However, remember this: there’s no such thing as a free lunch. Let’s take stock of what you pay to avail of services for a typical savings bank account.

1. Non-maintenance of minimum balance
You must maintain a stipulated minimum balance in your account (Rs 1,000 for a nationalised bank, Rs 5000 for a private bank).

If you fail to maintain this average quarterly minimum balance, you attract a bank charge of Rs 750-1,500 respectively. You could also face fines for cash transactions at branches and ATMs.

2. Cheque book charges
Most nationalised banks provide chequebooks free as per your requirement. Many private ones, on the other hand, charge you Rs 50-200 per chequebook, if you use up more than 2-3 per quarter.

3. Account closure charges
Some banks charge Rs 50-200 if the account is closed before six months elapse.

4. Charges for certificates
Unlike most nationalised banks, private banks charge Rs 50-Rs 250 for documents such as balance certificate, interest certificate, address confirmation, signature attestation, photo attestation.

5. Cheque return charges
Nationalised banks fine you Rs 50-Rs 200 in case of cheque return (due to insufficient funds, signature mismatch etc) but private ones charge you Rs 100-Rs 500.

6. Cash transaction at other branches
In case of a cash transaction at a branch other than where your account is opened, 1-3 transactions are free per quarter. Beyond that, be prepared to be charged at the rate of Rs 5 per for every Rs 1000 transacted.

7. ATM charges
If you use the ATM of another back for balance enquiry or cash, you could be charged anything from Rs 10-100 per transaction.

8. Account statement
RBI directs that all banks must send free quarterly statements to their customers. Should you require more statements (in case of loss etc), you may have to pay Rs 50-500 per statement.

9. ATM or Debit Card fees
Most banks offer ATM cards free of cost but some do charge their customers for debit cards. For example, ICICI Bank provides a combo ATM/ Debit card, for which it charges Rs 99 per annum.

Over and above these, there are several other charges, such as outstation clearing charge (Rs 50- 500), pay order/ demand draft charge (based on amount), standing instruction charges, home cash delivery charges, old records retrieval charges, activation of dormant account charge etc.

Note: Visit the bank’s web site or any of the branches, for a copy of these expenses. It is mandatory for every bank to give it to you.

Can Employees claim deduction for donation deducted from salary?

We have received one circular that the amount as donation will be deducted from our salary to pay to recognized charitable trust (which has 80G deduction number allotted by IT Department) for the hospitalization of cancer patient. Accordingly, amount is directly deducted from our salaries and the lump sum amount is paid by the Employer to that charitable trust through cheque. Charitable trust has issued 80G certificate in the name of the Employer and saying that employees can not claim deduction for this donation. My question is that "Can Employees claim deduction for this donation?" & How? Geeta Thakur , Mumbai

Yes, employees can claim deduction u/s 80G provided a certificate from the Employer is received in which employer states the fact that

• It has not claimed the deduction u/s 80G

• The contribution was made out of deduction from salaries of employees.

• The quantum of deduction made from the employee whom the certificate is being issued.

If you get this certificate, keep it in record and claim the 80G deduction. Since no documents required to be attached with the return , the certificate kept in your record will come handy of the income tax department wants to verify such claims.

Courtesy- www.taxworry.com

Mutual Funds Do’s and Don’ts

Life (including investments ) is not about not making mistakes, but to learn from them. A wise person quickly learns from his mistakes - and those of the others too. Given below are 7 do’s and don’ts which we can follow to avoid mistakes commonly made by investors in MFs.

Rule 1 : Don’t look at NAV
I would be repeating this maybe a 100th time - Rs 10 NAV does NOT mean that the fund is cheaper than an existing fund with say Rs 200 NAV. Therefore, never look at NAV when you are making an investment decision.

Rule 2 : Do systematic investment
The market valuations today, despite the recent correction, are still not cheap. Also, there is risk of a possible slowdown in the economy. Therefore, averaging one’s investment by doing SIP is a safer route to investing in equity markets.

Lump-sum investment is advisable only at very low market PE levels, when the risk of markets going down further is low and the probability of appreciation high.

Of course, this does not apply so much to debt funds, where the returns are relatively much more stable.

Rule 3 : Don’t go for Dividend option
If the investment horizon is more than 1 year (which should ideally be the case when one invests in equity funds), Growth option is generally preferable both from the point of view of wealth creation and tax efficiency. For investment period less than 1 year for the short-term needs - and usually invested in debt funds - dividend option would generally be better.

Rule 4 : Don’t have too many or too few funds
Don’t invest in too many or too few funds. While, there is no specific number of funds which you may own, a portfolio of 12-18 funds should in most cases be OK.

Too large a portfolio will mean many similar funds, which could dilute your overall returns. Too small a portfolio will mean that you are not covering the entire breadth of the market, besides exposing yourself to high risk of a concentrated portfolio.

Further, your corpus should be appropriately spread across large-cap/diversified funds, mid-cap funds and sector funds from different fund houses. Large-cap/diversified funds are relatively less risky, mid-cap funds are riskier and sector funds carry highest risk. Therefore, to have a balanced and stable portfolio, maximum money should go to large-cap/diversified funds, some amount to mid-caps and only a small portion should be invested in sector funds.

I have seen many portfolios which are stacked with infrastructure funds (the latest market fancy). Such concentrated portfolios carry very high risk.

Rule 5 : Don’t invest in New Fund Offers
Do not invest in NFOs; unless they have something very different to offer, which the existing funds don’t.

Since there is no portfolio or performance to look it, it is difficult to assess whether the fund would add value to our portfolio or not. Besides, most of the NFOs launched today are the risky sector funds.

Rule 6 : Do your own study before investing
Ads are meant to lure people. Therefore, it will not be prudent to invest just because some advertisements say so.

Further, it would also not be prudent to blindly trust your distributor (especially those who are not professional advisors too). One, they may not be fully equipped to understand your needs and advise accordingly. Two, they may not be selling all the products you may need. Three, they may be guided more by their commissions than your interest.

Hence, always cross-check the advice you receive with multiple sources, before you commit your money.

Rule 7 : Don’t invest too much in global funds
Be very careful when investing in global funds. Global funds would probably be the riskiest amongst the equity funds. Like any equity funds, they face the equity-risk.

Besides this they are also open to currency risk. If the rupee appreciates, you will get less rupees/dollar. Therefore, it is possible that whatever returns you make in dollar terms, may get fully eroded if in the meantime the dollar has depreciated. Given the strength of the Indian economy vis-à-vis the US/Europe etc., the chances of rupee appreciation are high. In fact, had RBI not intervened, dollar might have already depreciated to Rs 35-38.

Therefore, invest only a small percentage of your corpus in good diversified global funds; that too primarily for diversification purposes.

These rules will guide an uninformed investor to invest his money wisely and profit from the potential that the Indian economy offers today.

Benifits of ELSS investments

Taxing times are here again. For most of us, this would mean parking more money in PPF or NSC to earn tepid returns, just to claim the tax break. This year, if you are looking to save tax and earn relatively higher returns, we suggest you take a look at Equity Linked Saving Schemes (ELSS). Coupled with other benefits such as shorter lock-in periods and tax-free dividends, the ELSS is definitely worth a slice of your Section 80C investments. WHY ELSS? ELSS is like any other diversified equity fund but investors can avail tax benefits, provided the investment is locked-in for a period of three years. How do these schemes stack up against other instruments permitted for tax planning? The best performing ELSS scheme gave a three-year return of 64.5 per cent, while the worst performer in the period gave a return of 19.88 per cent. The eight per cent return from PPF and NSC hardly compare. ELSS scores on the liquidity front too, with a lower lock-in of three years compared to the PPF’s 15 years and six years of the NSC. Unlike assured return schemes, ELSS does not guarantee returns, but if you are comfortable with taking a moderate risk for higher returns, ELSS is just the product for you. WHICH ELSS? Outlook Money offers you a shortlist for selecting the ELSS that is ideal for you. While the category as a whole has given impressive returns, we have selected five schemes that are definite candidates in any selection process. To remove period bias from the return, rolling returns were considered to shortlist these schemes. Other factors such as portfolio composition and risk-adjusted return (RAR) were considered to ensure that the risk is lower. Franklin India Taxshield. This scheme, which has given steady returns since its inception, makes the grade on consistency. It is suitable for investors who are not looking for fireworks in their returns and are uncomfortable with volatility. It has a comparatively lower exposure to mid-caps and that explains the lower returns of 34.49 per cent that the fund has generated in the three-year period as compared to its peers. There is a high degree of concentration in the portfolio with the top five holdings constituting a huge 29.76 per cent and the top three sectors constituting almost 50 per cent of the portfolio. This exposes the scheme to the risk of under-performance by these companies/sectors. HDFC Taxsaver. This is a star performer from the HDFC stable. In the one-year and three-year periods, its returns were 33.92 per cent and 51.70 per cent, respectively. The scheme has a large-cap focus with the flexibility to move to other segments. This has helped the scheme generate good returns in most scenarios. It has a new fund manager and it remains to be seen if the fund will continue its past excellence.   Principal Tax Savings Fund. Principal tax saving scheme has rewarded investors with returns of 43.87 per cent, 41.99 per cent and 48.59 per cent, over one, three and five years, respectively.   The fund has consistently outperformed the category average by a wide margin since the portfolio was recast in 2004-05 to have greater exposure to mid- and small-cap stocks. Holding in individual companies do not exceed five per cent and top five companies constitute only 22 per cent of the now diversified portfolio. The smaller size of the fund, at around Rs 176, crore makes for easier implementation of fund management strategies. Prudential ICICI Taxplan. This is the scheme for you if you are comfortable with higher risk for higher returns. With a portfolio that has more than 90 per cent in small- and mid-cap stocks, the fund gave excellent returns in 2004 and 2005 when these sectors outperformed the broader markets. The fund returned 44.95 per cent in the last three years and 51.90 per cent in the last five years. With a one-year return of 25.92 per cent, the scheme has under-performed due to the poor run that the mid- and small-caps have had in the last six months. The corpus of Rs 574 crore makes it one of the larger schemes. Finding avenues in the mid- and small-cap segment to deploy funds may become an issue. SBI Magnum Tax Gain Scheme 93. This scheme finds a place in the best tax savings schemes on the strength of its outstanding performance in the last two years. The scheme turned the corner in 2003, with a shift in focus to mid-cap stocks, and has since outperformed the benchmark as well as peers by a wide margin. It has given returns of 44.55 per cent, and 64.51 per cent in one- and three-year periods. The fund has now reduced mid-caps and increased large-cap stocks in the portfolio though mid-caps continue to have a dominant share. The scheme is suitable for investors comfortable with some volatility in returns. The growth in the corpus, which stood at Rs 1,163 crore in December 2006, makes the fund less nimble, especially when investing in mid- and small-cap stocks, and the change in the management team since last year are triggers that the investor must watch out for. WHEN TO BUY ELSS? Timing entry into these schemes to take advantage of dividend declarations or lower NAVs when markets fall is not a sustainable strategy. Ideally, use systematic investment plans (SIPs) as they work to your advantage in a volatile market and a small investment made periodically is less heavy on the pocket than a lump sum one-time investment. Most SIPs can be started with an initial investment of Rs 5,000 and periodic investment of Rs 500. ELSS provides the booster in returns to your tax planning. The ELSS, with its three-year lock-in, imposes a long-term investing discipline. However, the lock-in also has a flip side. If you make a wrong selection, you do not have an exit option for three years. This is where an existing scheme scores over a new fund offer as it gives you an idea of the efficiency of the fund management in good and bad markets. The road ahead for your tax investments is clear. Evaluate and select a scheme, start an SIP, and have a well-balanced tax-planning portfolio.