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Tuesday, July 29, 2014

Budget 2014 and Home Loans

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Budget 2014 and Home Loans



UNION BUDGET came as a pleasant surprise for many who, will now be able to avail of a deduction of `2 lakh on interest repayment under Section 24 of the Income Tax Act, instead of the earlier limit of `1.5 lakh.

The enhancement of the Section 80C limit is another positive for home loan borrowers, who will be able to use the increased limit-from `1 lakh to `1.5 lakh--to get deduction on principal repayment. Such borrowers earlier paid huge EMIs but were unable to take advantage of the deduction on principal repayment as their Section 80C limit would be used up by a number of other instruments: insurance premium, PPF, ELSS, and so on. The increase in these two deduction limits by `50,000 each will act as an incentive for home buyers." The exact benefit that borrowers avail of will depend on their tax bracket. According to calculations from EY, the total tax saving for home loan borrowers due to these two changes, if their gross total in come ranges from `9-15 lakh, will be from `20,600-30,900 (see table).

Couples can enhance their benefit by buying the house in joint names, taking the loan jointly , and making the down payment contribution and EMI repayments jointly

REITS TO BECOME A REALITY Another benefit for retail inves tors was the granting of pass through status to REITs. This is the single most consequential reform wit nessed by the real estate sector in recent times. In October 2013, Sebi had issued draft norms for the introduction of REITs. Since then they had remained stuck due to the lack of pass-through status. In this Budget, the finance minister has assured that REITs will not be doubly taxed. REITs allow investors with only a small amount of money to invest in real estate. Investing in REITs is less risky than in under construction properties,.


IMPROVEMENT IN FUND FLOW

The economic slowdown has led to severe fund crunch within the realty sector, leading to stalled projects and delays in possession. The Budget has tried to facilitate the flow of funds to the sector. An important measure was the easing of FDI norms. The minimum built-up requirement for FDI in the real estate sector was reduced from 50,000 sq m to 20,000 sq m. "This lowering of the threshold size of development may encourage FDI investment in smaller inner city developments.


The lowering of the threshold level of FDI from $10 million to $5 million may also lead to more investments.

Finally , REITs are set to emerge as an important new source of funding. These will provide access to developers to a major source of funding and also offer them an avenue to exit from their investments in commercial offices.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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Invest Mutual Funds Online

Invest Any Mutual Fund Online

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Download Mutual Any Fund Application Forms

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Errors to avoid when Filing Returns 2014

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Errors to avoid when filing returns

With July 31 just around the corner, everyone must be busy with their income tax returns. Filing returns has become convenient since it can now be done electronically. But the flip side to this is that taxpayers often wait till the last day to complete the process. Due to this often there could be mistakes in the returns, which can lead to problems later.

Many of these common mistakes are simple, human errors. Paying attention to these things can make returns filing a smoother and error free process. Here are some of the common mistakes taxpayers make and the consequences of the same.

Choosing an incorrect form

This is the first step to filing tax returns. And taxpayers need to be careful about the form they choose. There are five forms to choose from, depending on the source( s) of income. If you make a mistake in choosing the right form, the entire exercise of filling returns will need to be redone. Here's what each Income Tax Return ( ITR) stands for: ITR 1: For those who earn an income from salary, pension, other sources - interest income on savings bank account and fixed deposit and from one house property ITR 2: For individuals or Hindu Undivided Families ( HUF) that earn an income from all the sources given in ITR 1, more than one house property, capital gains, other sources, and foreign assets ITR 3: For individuals or HUF who fulfils the criteria in ITR 2 and are also a partner in a firm, but do not carry on a proprietary business or profession ITR4: For individuals having income from business or profession ITR4S: For individuals having income from presumptive business

Providing incorrect personal details

Every year a large number of returns are rejected because of incorrect personal details. The ITR form needs both residential and e- mail address. One should ensure that a valid and functional e- mail address (that is regularly used), is provided in the ITR form. If you are staying in arental accommodation or hostel, avoid mentioning that address on the form. Instead, mention your permanent address, where a communication from Income Tax ( I- T) Department can be received/ attended to.

The Permanent Account Number ( PAN) is often written wrongly in ITR. Missing even one number or alphabet of your PAN will lead to your ITR form not being processed. Besides, you could be levied with a fine of 10,000 for an incorrect PAN entry, as per I- T rules.

Similarly, you should be be careful about Tax Deduction Account Number ( TAN) of your employer. You can find this number in your Form 16.

If you are expecting a refund, you need to mention your bank savings account number and the nine digit MICR number correctly. Or, your refund may get delayed unnecessarily.

This is another common mistake taxpayers make regularly.

Failure to include certain income

There are certain incomes which are left out erroneously as many taxpayers dont know that the same should be mentioned at the time of filing taxes. For instance, income from other sources or interest income and so on.

Income from other sources:

Long- term capital gains and dividends from equity mutual funds and listed securities are not taxable if held for more than one year.

That is, the long- term capital gains tax on equity and related instruments is zero. But such capital gains form a part of your income from other sources and you need to give details about these in the tax returns form. Short- term capital instruments is taxed at flat 15 per cent. At the same time, short- term capital gains from debt funds is taxed at slab and long- term gains from debt funds will be taxed at 10 per cent without indexation or 20 per cent with indexation, whichever is lower. However, this year's Annual Budget has changed this rule and these will be taxed differently for investments made in the current financial year.

Not considering more than one Form 16: If you've changed jobs in the middle of a financial year, ensure that you collect your Form 16 from the previous employer as well. Many make the mistake of reporting only the current employer's income in their returns. Since one has availed tax benefits from both employers, you still owe some additional tax liability at the time of filing tax returns.

Missing TDS details: Since all banks deduct tax at source ( TDS) for the interest income accrued on your fixed deposit accounts, it doesn't mean you don't assess your tax liability and mention it in your returns form.

In reality, banks only deduct 10 per cent tax on interest income, whereas you may be in the higher tax slab of 20 per cent or 30 per cent. So if you don't give information about interest income in the returns form, there is a chance that you may receive a notice from the tax department. The portal will take into account Form 16A details you've added and compute the data.

The same is the case for interest Bangalore office. This Make sure you sign the ITR- V form only in blue ink. If signed in black ink, it But there are some conditions revision is allowed only if the omission was unintentional. There is also a time line. You can revise I- T returns before the expiry of a year from the end of the assessment year or before the completion of assessment of returns, whichever is earlier. So, the returns of assessment year 2010- 11 can be revised till March 31, 2012, or before the completion of the assessment.

That's why it is suggested that assessees take a few moments out a little in advance to take a careful look at what is required in the ITR form, read the instructions and then file returns. This can prevent a lot of these errors.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Good time to invest in Infrastructure Funds

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Good time to invest in infrastructure

The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good returns.

The infra sector broadly includes real estate, steel and cement companies. The kind of plans the government has will definitely help such companies,.

The higher demand for roads, airports, power and ports, essential for the economy to grow from the current levels of five to six per cent yearly to eight to nine per cent, and recent regulations that allow banks to raise long- term funds through bonds to lend to infra companies, are some reasons that are positive for the sector.

While the sector was languishing for a long time, today it is an avenue for long- term capital appreciation. Engineering and construction sectors will become buoyant.

However, for meaningful returns, investors must have a long- term investment horizon. While Gupta says it should be a minimum of three years, Kumar says it should be even longer, at 10- 15 years. One should look at the payment cycles and cash flows for infrastructure companies, he says. For retail investors, is there a case for investing in pure infra mutual funds or will diversified equity funds be enough? The one- year return for equity infra funds is 57.27 per cent; for equity large- cap funds, it is 35.53 per cent.

Take the examples of HDFC Infrastructure Fund, which has assets under management ( AUM) of 996 crore, and HDFC Equity Fund, the largest equity diversified fund, with an AUM of 12,886 crore.

According to data, 19 companies are common to both portfolios. HDFC Infra has given better returns up to a one- year period. Over more than a year, HDFC Equity has given better returns. For instance, HDFC Infra has given 29.77 per cent over three months, 61.4 per cent over six months, 74.92 per cent over one year, 8.17 per cent over three years and 10.27 per cent over a five- year period.

HDFC Equity has given 22.4 per cent over three months, 40.55 per cent over six months, 57.23 per cent over a year, 14.64 per cent over three years and 18.45 over a five- year period.

Similarly, UTI Infrastructure Fund, the largest infra fund, with an AUM of 1,522.5 crore, has 10 companies in common with HDFC Equity. Kumar says there is no pressing reason for getting into pure infra funds.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now
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