Skip to main content

Your guide to tax planning in 2013

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 


The most important rule of tax planning is that it is no different from financial planning. The Section 80C offers a wide range of options and you should choose one that fits into your overall financial plan. Allocate your 1 lakh limit across different Sec 80C options as dictated by your goals, following the same principles of asset allocation that apply to other investments.


The Belapurbased PSU bank employee wants to save for the education and marriage of his two daughters. Since these goals are 15-20 years away, he has been advised to invest in diversified equity funds. So, he has started an SIP of 3,000 in an ELSS fund, thus aligning his tax-saving investment with a long-term financial goal. ELSS funds serve a twin objective in my financial plan.


Are you ready for risk?
ELSS funds invest in stocks and carry the same risk as any other equity fund. Besides, it is best to invest in equity mutual funds in monthly driblets. Investing a large amount at one go may have been a good strategy when the Nifty was floundering at 2,700 levels and a PE of 11-12 in early 2009. But it would be so when the Nifty has crossed 6,000 and is trading a tad above its long-term average PE of 18.


Small investors should not attempt to get on to the ELSS bus now—at least not in a lump-sum mode. If your risk profile allows you to invest in these funds, stagger your investments across 2-3 SIPs between now and 31 March.


The same logic applies to investments in Ulips. Putting a lump sum in equity through a Ulip is risky, especially when you are buying a single premium plans. The good thing is that unlike the ELSS funds, Ulips allow you an alternative asset allocation model. Put your money in the debt option instead of the equity fund in the Ulip and then gradually shift small amounts to the equity option. Most insurance firms allow 10-12 switches free of charge in a year. Similarly, avoid putting large sums into the NPS, especially if you have an aggressive portfolio.


New tax rules for insurance
If you plan to buy an insurance policy to save tax this year, keep in mind the changes in the tax rules relating to life insurance. An insurance plan will be eligible for tax deduction and the income will be tax-free only if it covers the policyholder for 10 times the annual premium.


The clause introduced in Budget 2012 will further bring down the returns from traditional policies. As it is, these policies gave very low returns of around 5-6%. Now, this is likely to fall to roughly 4-5%. This is because a larger life cover would require a bigger sum going into mortality charges every year. Also, the service tax rate has been enhanced.


Small savings more attractive
While the Finance Ministry wants you to stop looking at life insurance purely as a tax-saving instrument, bank representatives and agents continue to push these high-cost, but low-yield, products down the throats of taxpayers. Taxpayers wanting to invest in PPF are struggling because the government has abolished the commission payable to agents for opening new accounts. Ironically, this coincides with the PPF and other small savings schemes becoming attractive after the government made their returns market-linked in November 2011. The interest rates offered by small savings schemes are now pegged to the yield of government bonds.


However, the attractiveness of these options is likely to come down. Bond yields have come down in the past one month and are likely to recede even further on expectations of a rate cut. This could translate into lower rates for small savings schemes, such as the PPF, NSC and the Senior Citizens' Saving Scheme (
SCSS). The 10-year bond yield is at 7.8% and could slip further to 7.77% by December.


The interest rate of small savings schemes is calculated on the basis of the average yield during the year and is announced every year by the government. With the annual average dropping to .25%, the PPF interest rate could be lower at 8.5% in 2013-14. It could fall further in the following years. Though the PPF rate will change every year, the SCSS and NSCs will have a uniform rate till maturity. So, if you plan to invest in the SCSS or NSCs, do so this year to lock in at the high rates.


The SCSS is especially the best option for senior citizens because it combines tax savings with regular income. Till was working, my provident fund contribution and insurance premiums used to take care of my tax planning. So I needed an option that gives regular income as well as tax savings. Now, Although he will get a tax benefit only on 1 lakh, he gains from locking in at a high rate of 9.3%. There is a possibility of the interest rate coming down in April 2013.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

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 in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

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

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. 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
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...

UTI Equity Fund Invest Online

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Equity Fund   Invest Online UTI Equity is a large cap-oriented fund with assets under management worth Rs. 2,269 crore (as on June 30, 2013). The fund was originally launched in May 1992 as UTI Mastergain and is benchmarked against S&P BSE 100. A couple of years back the name of the fund was changed to UTI Equity Fund and many of the smaller funds of UTI were merged into this fund. Performance The fund has outperformed its benchmark as well as the equity diversified category average in the last one-, three- and five-year periods. It has repeated the same in 2013 (as on May 31). Since its inception the fund has delivered an impressive 26 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. Y...

Good time to invest in Infrastructure Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   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 re...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now