NPS Tier 2 Account would work exactly as Low cost mutual fund

To make the New Pension System (NPS) more attractive, PFRDA (Pension Fund Regulatory and Development Authority) has introduced the concept of Tier-2 account. This is to provide for withdrawals to meet financial contingencies.

Opening the Tier-1 account is compulsory for everyone opting for NPS. However, the Tier-2 account is optional for the investors, as it is a voluntary savings account from which the investor can withdraw money, any time and any number of times.

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NRI (Non Resident Indians) Investment: Query Corner and FAQ's

Who is a Non-Resident Indian (NRI)?

An Indian citizen or a foreign citizen of Indian origin who stays abroad for employment/carrying on business or vocation or under circumstances indicating an intention for an uncertain duration of stay abroad is a NON-RESIDENT INDIAN (NRI). (Those who stay abroad on business visit, medical treatment, study or such other purposes which do not indicate an intention to stay there for an indefinite period will not be considered as NRIs).

Who is a Person of Indian Origin (PIO)?

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New ULIP norms would reduce Surrender Charges drastically on ULIP in initial years

Holders of unit-linked policies(ULIP) will in future get more of their money back if for any reason they are forced to surrender their policy within a couple of years.

New norms by the Insurance Regulatory & Development Authority (IRDA) now provide very strong incentive to insurers to ensure that policies do not lapse.

On 25th may 2010, the regulator unveiled new regulations on unit-linked insurance plans, capping the surrender charge on policies that are returned after a year at 15%.

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PFRDA to come up with new Guideline to prevent misuse of NPS Swavlamban

In order to propagate New Pension System (NPS) among workers in the unorganized sector, the government, in the Union Budget announced that it will contribute Rs1,000 per year for the next three years for every investment between Rs1,000 and Rs12,000 made by the unorganized sector employees. 

But the scheme called “Swavalamban”, has left the pension regulator body, Pension Fund Regulatory and Development Authority (PFRDA), apprehensive with ways to ensure that the product is not misused and soon will be coming up guidelines regarding this.

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Central Government Employees medical scheme

Government introduce a new Medical Scheme for Central Government Employees and Pensioners as in the name of Central Government Employees and Pensioners Health Insurance Scheme (CGEPHIS). In all over India, pensioners are getting meager amount of Rs.100 as Medical Allowance (except CGHS beneficiaries). It is estimated that approximately 17 lakh serving employees and 7 lakh pensioners shall be offered this Scheme and Government plan to enroll all serving employees and pensioners on compulsory / optional basis.

Some key points regarding the scheme:-

CENTRAL GOVERNMENT EMPLOYEES AND PENSIONERS HEALTH INSURANCE SCHEME (CGEPHIS)

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Passive income avenues to boost your savings and lifestyle

Its a matter of thought that out of two persons working in the same office, one achieves and lives as much luxurious life as the other one is not able to. Probably the first person is utilising his salary smartly in order to generate some passive sources of income, thus leading to a highly contented life. Generation of passive income can help in creating financial freedom and flexibility through the creation of alternative sources of income, therefore, complementing one's salary income.

Here in this article we will be discussing some tips on how to generate passive income, and this may increase one’s wealth and consumption capabilities too.

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NBFC: Features Amendments in Infrastructure Finance companies

RBI has, on 11 February 2010, amended the Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 [NBFC Directions] to introduce a 4th category of Non Banking Financial Company [NBFC] viz. “Infrastructure Finance Company” [IFC]. This is in addition to the existing 3 categories of NBFCs viz. Asset Finance Company (AFC), Loan Company (LC) and Investment Company (IC).

Salient features of the amendments to the NBFC Directions are as under: 

Meaning of IFC: 

IFC has been defined to mean a NBFC which deploys at least 75% of its total assets in “infrastructure loans”. 

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Indian market Snapshot for May 2010

3G auctions to aid biggest India deficit cut in 19 years

Finance Minister Pranab Mukherjee said India’s auction of wireless air waves may pay for its biggest budget-deficit reduction in 19 years, as the government expects to earn at least 600 billion rupees ($13.3 billion) from the sale. Earnings from the auction may be “over and above” the budget estimates for the current year. Companies such as Vodafone and Bharti Airtel may pay 250 billion rupees more than the government earlier estimated for the right to provide high-speed mobile services. Higher revenue will help Mukherjee slash the budget shortfall to 5.5 percent of gross domestic product in the current financial year.

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Calculation of Retirement benefit for Govt employees

Provident Fund (PF), Pension Fund and gratuity are components of retirement benefit schemes. The Employees' Provident Fund and Miscellaneous

Provisions Act provides for compulsory contributory fund for the future of an employee after his retirement or for his dependents in case of his untimely death.

Every factory engaged in any industry specified in Schedule I in which 20 or more persons are employed, every establishment employing 20 or more persons or class of such establishments which the Central Government may notify, any other establishment so notified by the Central Government even if employing less than 20 persons is covered.

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Mukesh and Anil Ambani Come togeather: Good news for markets as well as India

It was a fight between two eminent business honchos. In a major development on the sibling rivalry between Mukesh and Anil Ambani - they decided to bury their differences and create a harmonious environment of co-operation and collaboration between their groups.

As stated by Anil Ambani, all existing non-compete agreements between the two groups executed in January 2006 have been cancelled. This harmony followed only after the Supreme Court declined to give any relief to younger brother in the gas dispute. As per the Supreme Court order, RIL (Mukesh) and RNRL (Anil) will expeditiously negotiate gas supply arrangement and hope to conclude negotiations very soon.

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Alternative Investment options in India For HNI's(High Networth Individuals)

Private Equity

Private equity funds typically make investments in companies not listed on public stock exchanges. They offer high return opportunities due to their access to dynamic, privately held companies and their ability to create value in them. We help you choose exceptional private equity funds with high growth potential.

Real Estate

Real Estate has long been considered the most tangible source of wealth accumulation. With land growing increasingly scarce in India, the value of real estate holdings is expected to grow. Apart from a few bubbles such as the mid-90’s, this has largely been true. We help you choose the best option in real estate via real estate funds or physical real estate based on your needs.

Gold

Gold is regarded as one of the best hedging tools

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How Mangalore Air India Crash will increase Travel cost now

The Mangalore air crash is set to take a toll on the insurance bill of at least three airlines - Air India, Kingfisher and IndiGo - whose insurance covers are coming up for renewal in the next couple of months.

Other airlines such as Jet Airways, however, may remain unaffected, for now, as their insurance is not due for renewal in the near future.

Air India, which this year preferred a consortium of private sector players led by Reliance General, had in fact started feeling the heat even before the crash took place on Saturday.

Last week, the insurance companies, citing an earlier incident, slapped an additional premium demand of $3.25 million (Rs 15 crore) on the airline. Air India, which has always insured with public sector players led by New India Assurance, had purchased a $8.59-billion (Rs 40,000 crore) cover, for which it had paid $24.3 million (Rs 113 crore at present exchange rates) as premium.

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NPS: Now Haryana and Karnataka Govt to Contribute additional Rs 1000 for their residents

Investments in the new pension scheme (NPS) is proving to be doubly profitable for unorganised sector workers.

Following the central government, states are coming to the fore to contribute Rs 1,000 a year to NPS accounts. Haryana and Karnataka have already started contributing, and  according to sources some more states are planning to join these two. This will lead to the total government contribution per account to Rs 2,000 a year.

The Pension Fund Regulatory Development Authority (PFRDA) is on the verge of finalising all modalities of the scheme, and about 1million NPS subscribers in the unorganised sector will be benefitted by this scheme. Even the Non-government organisations and self-help groups have also come forward to join the scheme. But, PFRDA is quite selective in including people in this scheme. Several other groups are also interested in implementing this scheme.

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Complete Story of 3G Spectrum India

India’s auction for 3G GSM Service licence ended on 21st May with bids for pan-India licence touching as high as Rs 16,751 crore which ensures the Government of India a revenue of Rs 67,719 crore.

India happens to be most lucrative market for telecom due to high population and low teledensity. In last 2 years we have seen hyper competition due to entry of 4-5 new telecom operator dragging the tariff plans to as less as half a paisa per second.

Recently all the telecom stocks have taken a beat due to low margins as well as market was sceptical that the telecom companies earnings would take a beating due to paying of license fees for 3 G spectrum as well as investment in creating the infrastructureand backbone for the same.

The 3G auction had commenced on 9 April, 2010.There were nine bidders in the fray for the slots of 3G spectrum on the block. The government auctioned three slots in 17 telecom service areas and four slots in the remaining five states of Punjab, Bihar, Orissa, Jammu and Kashmir and Himachal Pradesh.

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Summary of BSNL Pay revision

Excellent news for BSNL employees as there has been revision recently.

Please find the summary as under

1. Basic Pay in the pre-revised scale +68.8 IDA and fitment 30% on ( Pay plus IDA(68.8%) rounded off to next Rs. 10
Bunching increments: For every two stages of pay, fixed at the same stage. Benefit of one increment will be given.

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DA hiked by 8% for Punjab Government Employees

Great News for all working forpunjab government. The dearness allowance paid to government employees in the state has been hiked from 27 to 35 per cent on the pattern of central government employees.

Announced by the Punjab Finance Minister Manpreet Singh Badal said the hike which takes effect from January first this year would put an additional burden of Rs 713.89 crore on the state government in the current fiscal.

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All about Life Insurance Annuity Plans

Retirement is a delicate time. You dont need to bother about making money, yet you want to have enough for a comfortable life ahead. In the absence of a pension, or an insufficient pension, your need is a financial instrument that gives you the income you seek. Month after month. Year after year. And for the rest of your life.

Annuity is a scheme in which after  paying a Lumpsum amount the person gets guaranteed fixed monthly / quarterly / half yearly /yearly throughout the life. They have very important role as it is being used by most of the organization for paying Pensions.

These structured financial instruments are called annuities. But they are still a work-in-progress, both with those who need it and those who offer it. In the absence of an organised pension framework for non-government employees, the retirement planning is scattered across many investment options, rather than being consolidated, which would make buying annuities a natural progression.

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How to get Capital Gain Tax exemption when you sell your House

At times a person due to family requirements or due to re-location, intends to acquire a new residential house by investing the sale proceeds of his existing house property. Now the question arises is whether the capital gain arising from the sale of the earlier house taxable or can one claim tax exemption?

Who can claim the exemption 

In case of an individual or a Hindu Undivided Family (HUF), the capital gains arising from transfer of a long-term capital asset — buildings or lands appurtenant thereto and a residential house — could be claimed as exempt under the provisions of the Act if such capital gains are invested in acquiring another residential house (new residential house).

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Know About Taxes and Tax Calculators

It is the time of filing your IT returns. The main difficulties many people will have is to find the exact amount how much they have to pay the tax. If you are working for a company and no other income, then it is easy that your employer will be deducting your tax through TDS and pay to the govt. You just need to file the IT returns after getting the Form 16 from your employer. But, if you have extra income other than salaries, then it is your responsibility to show that income and pay the tax. In that case, you have to work out and find the tax amount. It needs awareness on various sections and deductions. Some of you have accountant who will take care of calculating the tax liability. If you want to pay yourself, then online tax calculators will be more helpful in finding the tax amount.

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Advantages of Investing in Mutual Fund rather than Directly in Shares

If you haven't embraced the idea of multiplicity, you must. A vary portfolio is one that creates a "miscellaneous" mix of different kinds of stocks in non-similar industries, such that you make your best effort to balance your risk of overall loss of value of your portfolio.

Put more simply, you need to have many different stocks so that you're not putting all of your eggs in the proverbial "basket." This manages your risk, and is something that requires vigilance over the changing environment for each specific stock as well as the market overall. Diversification is an ongoing exercise that requires frequent adjustments by trading away and buying new stocks to maintain this risk balance.

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Filing your Income tax return is now very easy with Saral 2

The Central Board of Direct Taxes (CBDT) has introduced a new income tax Form - Saral-II, that aims at making the process of filing tax returns easier for individual taxpayers. The form is to be used to file the income tax returns for the financial year 2009-10(and the assessment year being 2010-11 ).

The Saral-II is a two-page form, mentioned by the Finance Minister in his budget speech for 2010-11. This form will enable individuals to enter relevant details in a simple format in only two pages. The form can also be downloaded from the Income Tax Department's website.

ITR-1 has been renamed Saral - II with E-filing available along the lines of last year ITR-1. New addition to the format of ITR-1 is that an assessee can show 'Income from House Property's. The house property income can be from one property only, and for more than one ITR-2 will be used.

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Start Retirement Planning Early- Retire Smart

Retirement or pension planning becomes an integral part of investment portfolio for ones who are in service. One should start planning for retirement funds as early as possible. Increase in average lifespan, financial commitments, competition, nuclear families etc make it even more important to plan carefully so that one can become totally independent in the later years. Even planning for retirement is a comprehensive process to determine how much money one may need after retirement.

Some people feel that retirement planning is important after the mid years when a person crosses a certain age, say 40 years. In fact, pension planning at later stages becomes difficult as there won't be much time to build and grow a good corpus to sustain a good retired life and eventually such people end up investing in risky investment instruments.

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Understanding the Mutual Fund- FAq's

What is a Mutual Fund?

A Mutual Fund is a trust that pools together the savings of a number of investors who share a common financial goal. All such investors buy units in a fund that best suit their needs - be it growth in capital, regular returns or safety of capital. The Fund Manager then invests this pool of money in securities, ranging from shares to debentures to money market instruments or a mixture of Equity and Debt, depending on the objective of the scheme.

How is the income earned from mutual fund investments distributed?

The income earned by the investments of the scheme, net of recurring expenses, subject to a maximum ceiling of 2.5% in equity schemes and 2.25% in debt schemes, is shared by way of dividends or capital gains by the unitholders of the scheme proportionately. These recurring expenses include asset management fees not exceeding 1.25%, it also is due to other expenses such as Trustee Fees, Registrar Fees and Marketing expenses etc.

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Central Government Employees NPS gives 14.82% average returns

Central government employees who joined as a part of the contributory New Pension Scheme (NPS) have earned a weighted average return of 14.82 per cent during 2008-09, the first year when three fund managers managed a corpus of around Rs 2,000 crore.

This has outperformed any another form of Investment like PF etc. Its a Win Win situation for both Govt as well as Employees.

This is in contrast to the annual 8 per cent returns between January 2004 and March 2008 when the government had not transferred the money to the three fund managers – SBI Pension Fund, UTI Retirement Solutions and LIC Pension Fund.

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Investment in SIP: Simplest and Smartest wealth Creation tool

The Systematic Investment Plan (SIP) is a simple and time honored investment strategy for accumulation of wealth in a disciplined manner over long term period. The plan aims at a better future for its investors as an SIP investor gets good rate of returns compared to a one time investor.

What is Systematic Investment Plan

A specific amount should be invested for a continuous period at regular intervals under this plan.

SIP (Systematic Investment Plan) is exactly like a recurring deposit.Its a form of investment in which a fixed sum regularly invested in a mutual fund.

SIP allows the investor to buy units on a given date every month. The amount has to be decideor only subject to minimum threshold of the mutual fund scheme.

While the investor's investment remains the same, more number of units can be bought in a declining market and less number of units in a rising market.

The investor automatically participates in the market swings once the option for SIP is made.

Whatever be the market scenario, SIP's in long run always give positive returns and that to much higher than fixed investment returns.

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NPS gives 12 % average returns! last year (first year of its operation)

The New Pension Scheme (NPS) for for all citizens of india introduced in May 2009, has generated an average return of 12% in the first year of its operations, outperforming most other long-term saving schemes such as the Employees’ Provident Fund and term deposits.The year-old scheme for All Citizens of India has a corpus of just Rs 10 crore with 6,000 subscribers as compared with the Employees Provident Fund (EPF) which

has over 4.5 crore subscribers with a corpus of over Rs 2,62,000 crore as on March 2009.

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Discrepancy in CIBIL Report:: How it effects you::How to get information of your CIBIL record

The formation of Credit Information Bureau of India (CIBIL) made bankers a happier lot. With CIBIL, credit history of borrowers is easily accessible to them and they can also take informed lending decisions now. Today, while CIBIL has managed to cover all major banks, certain hiccups have left borrowers in a tight spot.

In certain cases, due to improper functioning of banks, people land up in trouble. Like in this case a person was approached by a sales executive of a multinational bank with a credit card offer. He already had two credit cards and was not interested in another one. On hearing interesting features including cash back and discounts on shopping, he applied for the credit card.

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Various Investment options in India

Here are some of the investment options available in India for everyone of us.

1. Savings Bank Account

Use only for short-term (less than 30 days) surpluses

The first banking product used by people, it offers low interest (4%-5% p.a.), making them only marginally better than safe deposit lockers.

2. Money Market Funds (also known as liquid funds)

It offers better returns than savings account without compromising on the terms of liquidity

These liquid funds are a specialized form of mutual funds invested in extremely short-term fixed income instruments. Unlike most mutual funds, they are primarily oriented towards protecting the capital and then later maximising the returns.

Money market funds usually yield better returns than savings accounts, but lower than bank fixed deposits. With the flexibility to issue cheques from a money market fund account now available, this option can be explored before putting one's money in a savings account.

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SEBI IRDA War- Whats in it for investors?

Of late, ULIP or the Unit Linked Insurance Plans, have caught the eyeballs of investors in the insurance arena. It all started when SEBI, the stock market regulator, passed an order prohibiting 14 insurance companies from selling units of ULIP to investors. IRDA immediately came to the rescue to the insurance players asking them to continue their operations in spite of the SEBI order.

Lots of discussion has also taken place regarding its jurisdiction and multiple regulators. Also the issue is a little different when it comes to the investors. It should hardly matter to an investor who regulates an industry or certain products as long as there is regulation and it keeps the interest of the investor paramount.

The battle here is not between two regulators, say SEBI and IRDA, two industries, insurance and mutual funds or for that matter between two products viz.ULIPs and mutual funds. It is between transparency and opacity, it is between low cost and high cost. It is about being fair to the consumer.

Now the question arises that while choosing any investment product, what should an investor look for? As mentioned earlier, one should keep an eye on costs and in order to know the costs, transparency is a must.

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IRDA goes on to Clean Up ULIP Malpractices

The article mainly focuses on the SEBI-IRDA tussle, that may lead to a much improved product if more issues are addressed. And, for almost six months, the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) have been involved in a tussle to control unit-linked insurance plans (ULIPS). Insurance regulator IRDA and capital market watchdog Sebi has reemphasised that insurers should offer assured life insurance cover with ULIPs.

However, as its initial steps, the market regulator fired the first salvo last June, when it removed entry load on all mutual fund schemes (effective from August 1). And the high cost of Ulips immediately came into focus in lest that distributors would peddle only these because of higher commissions.

INITIAL STEPS?

* Declaration of commissions being paid to distributors

* Top-ups, pension plans to have risk cover; partial withdrawals only after five

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New Direct Tax Code may retain Few EEE Elements

The proposed Direct Taxes Code (DTC) is likely to retain the exempt-exempt-exempt (EEE) regime for taxation of individual savings. The finance ministry, which is giving final touches to the revised DTC draft, reckons that a shift to the exempt-exempt-tax (EET) regime, as proposed in the original draft of the code, may not pass muster.

In the current EEE regime, savings are exempt from tax in all the three stages: contribution, accretion and withdrawal. The EET method, which is considered to be the best global practice for taxation of savings, allows exemption at the first two stages, but provides for a tax on withdrawals at the personal marginal rate.

Government sources said that the via-media option of exempting withdrawals up to a certain threshold and taxing higher amounts could make things complex and invite charges of discrimination. “We would be left with no option

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New Direct Tax code to be impemented in 2011- Fully Decoded

This article focuses on the impact of the forthcoming budget and the New Direct Tax code with respect to the individuals. The proposed Direct Tax Code is a combination of major tax relief and removal of most tax-exempted benefits. It is expected to usher in a new tax regime of transparency and greater compliance, and is proposed to be implemented from the year 2011. Also the forth coming budget can be expected to bring about some of the changes for a smoother transition.

The Union Finance Minister Pranab Mukherjee conveyed a message to all taxpayers when he introduced the draft Direct Tax Code (Tax Code) that archaic rules have to be replaced  with new ones. The Tax Code, now open to  public debate, will be introduced

as a Bill in Parliament’s winter session. If passed, it will become the new Income Tax Act, replacing the existing four decade old IT Act of 1961. The new IT Act will come into force from April 1, 2011.

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Insurance companies play safe in IRDA and SEBI tussle

Insurance companies have decided to play safe to avoid any confrontation with market regulator Sebi, which is locked in a turf war against insurance watchdog IRDA.

They have decided not to use terms such as net asset value (NAV) or assets under management (AUM) that equate their unit-linked plans (ULIPs) with mutual fund schemes. NAV refers to the market value of the assets of the scheme minus its liabilities, AUM is the market value of assets that an investment company manages on behalf of investors.

The move by insurers follows a decision by Sebi to ban 14 life insurance companies from raising funds through unit-linked insurance policies (ULIPs) which invest

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SEBI Vs IRDA tussle would make ULIP better

Unit-linked insurance plans (Ulips) have never quite managed to win over the true blue-blooded financial advisors. No wonder, theseSEBI-IRDA ULIP Row, Advisors are firmly on the side of SEBI in its tug-of-war with the insurance regulator (IRDA) to reign in Ulips. According to them, the outcome of the tussle - most likely a long-drawn affair - may actually make Ulips a better product, as, in their current avatar, Ulips fall short on cost-effectiveness , transparency and flexibility. SEBI has already benefitted customers of mutual fund by abolishing entry load last year.

 Ulips are insurance plans with disparate investment options and have captured the buyers’ imagination in the last few years.

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