Prajna Capital - An Investment Guide

AVOID BIG GIFTS FROM FRIENDS If you are someone who’s used to friends showering you with expensive gifts, there’s some bad news. Postbudget, any gift – in cash or kind (including immovable property) – worth more than Rs 50,000 will attract tax. So, think twice before accepting such gifts. FACTOR IN PERKS If you’ve are rejoicing the increase in exemption limit across categories, here’s a dampener that could have escaped your attention: abolition of Fringe Benefit Tax ( FBT ). While the employers do not have to pay the tax, the tax burden has shifted to employees in case of certain perquisites, puffing up their taxable income. You would do well to take this into account when you undertake your annual tax-planning exercise. PAY LESS WEALTH TAX If you were paying 1% tax on your wealth exceeding Rs 15 lakh, you can afford to relax. Thanks to the Budget, now this limit stands enhanced to Rs 30 lakh. GOLD’S STILL SAFE The hike in customs duty on gold bars from Rs 100 to Rs 200 per 10 gram mea...

Like most budgets, these years' too had some minor measures that haven't attracted too much attention but are nonetheless interesting. One such measure has been the inclusion of the Senior Citizens Savings Scheme ( SCSS ) into Section 80C. Why is this interesting? Because it offers a significant new tax break to older people who still have an income but are short of options on saving taxes. Let me explain. The SCSS was introduced in 2004 budget. It is a deposit with the government that is serviced through the post office and is available only to those who are older than 60 years, or 55 years for those who have taken a VRS. The deposit fetches interest at the rate of nine per cent, which is a great return for a safe, government-guaranteed investment. Until now, this deposit had no tax-saving angle to it. Money put into it did not get the depositor any kind of a tax break and the interest earned was fully taxable. Mr. Chidambaram has changed this in this budget. Now, investments ...

Consumers have been feeling the heat of rising inflation for the last few months. Though the number seem to have come down marginally to 12.14 per cent (for week ended Sep 26), there seems to be little respite. Such times force the individual to take a relook at their savings strategy and monthly budgets. The basic idea is to do things smartly to save on costs. Of course, there is a rising interest burden as well that makes things worse. In such uncertain times, your investments need to deliver higher returns to break even. For instance, if the inflation is touching 12 per cent, you will have to earn 17-18 per cent pre-tax (for the highest income bracket) so that there is no capital loss. While keeping idle cash in banks may seem like a safe and secure strategy, it can never protect the purchasing power of your money and will lead to wealth erosion. But cash certainly has its uses. It can be used to retire or reduce high-cost loans. Also, make long-term investments in gold and equities...

MARKETING isn’t just an expense; it's an investment. The key is to market smarter and fully utilize your marketing budget. Here are 7 ways to stretch your marketing rupees and increase your bottom-line profits: Use free publicity: It costs you nothing and builds credibility and awareness. So look for opportunities to be involved with community activities. Speak at local organizations: Every organization is looking for speakers for their monthly meetings, so offer to share your knowledge with them. You'll get exposure to groups as an expert and meet lots of new people who might be potential clients. Write articles: Contribute to newsletters, newspapers, industry journals and your own Web site. Sharing information builds name recognition, which helps bring in clients. Create a Web site: Websites are a must. You're missing a great opportunity if your business doesn't have a presence on the web. It’s a very cost-effective way of letting people know about you and your produ...

ACCEPT THE LEARNING CURVE Living within a budget is an educational curve for any new entrepreneur. Trimming your expenses, knowing how long a pay cheque will last, or how much of a cash reserve to keep around are issues which require skilful management. Knowing these techniques takes time. But a start-up can learn to adjust its budget mostly through practical experience, and what was once a shot in the dark would gradually become a more predictable and useful practice. BE PREPARED TO MISS YOUR ESTIMATES Knowing that you are going to miss your estimates doesn’t make an entrepreneur unintelligent or a bad businessperson. Instead, a good businessman must in such cases try to miss them intelligently and start thinking of ways this can be corrected at the earliest. To keep things in line as much as possible, try to adjust from some other area within your overall budget to account for the adjustment. WORK FLEXIBLY As with setting up a budget, sticking also often boils down to a willingnes...

It is better to plan for the long term and buy potential stocks at every fall There have been major corrections in the stock markets all over the world. All major markets have corrected significantly from their peak levels. Major indices in the domestic market - Sensex and Nifty - also saw large corrections over the last couple of months and are currently trading below their 200-day moving averages. The Sensex is at around 16,000 and the Nifty is at around 4,800 levels - more than 20 percent lower than their peak levels. The mid-cap and small-cap stocks are the worst hit in this market correction and this is reflected in the performance of mid-cap and small-cap indices. There are a series of events/factors that resulted in this global meltdown of stock markets . Here are some of the more significant factors that had a negative impact on the domestic markets. US sub-prime issue The meltdown in the markets world over triggered by the US sub-prime news is one. The meltdown worsened thank...

Most people merely earn and spend. But if you want your money to stretch far, learn to make a budget Mid year is the time when people take stock of broken resolutions. Not just those they made on New Year’s Eve but also the promise they made to their financial planner about preparing a household budget. As the finance minister takes the stage in Parliament to present the Union Budget, the financial consultant casts a sidelong glance at his client, prompting an apology and a fresh promise. The exercise is repeated the following year. The economic situation in India has come a long way from the time when the man of the house would hand his wife a fixed sum of money every month which she would spend, and save, in a diligent manner. Unlike before, both partners are earning and spending, not just by cash but cheque and credit card as well. So there are multiple points of inflow and outflow of money in a family. This makes it difficult to keep track of expenses. Where did all the money go? P...

Its Feb 29 (leap year), that time of the year for the Indian government to come out with the union budget, and it did come out. So what are the positives and negatives? How will it affect you? Lets take a look its implications. Taxpayers may gain up to Rs 44,000 per year The adjustment for the income tax slabs has been done in such a way that people in the high income category stand to gain even more. The increase in tax slabs in undoubtedly great news for the salaried. The news gets even better for those in the higher tax brackets. The adjustment for the income tax slabs has been done in such a way that people in the high income category – say above Rs 2.5 lakhs per annum - stand to gain even more. To put this in numbers, a person who had a taxable income of Rs 5 lakhs would have be paying a tax of Rs 1 lakh – before any cess on his income in the income tax slabs that prevailed till now. However, under the new income tax slabs, his tax liability would come down to Rs 55,000 translatin...