Akruti Agarwal - Page 8 - WCafe Financial Services Pvt Ltd

How to Invest through your Mobile Phone in a Mutual Fund?

Interbank Mobile Payments Service (IMPS) Facility: IMPS is a platform provided by National Payments Corporation of India (NPCI). IMPS allows existing unitholders to use mobile technology/instruments as a channel for accessing their bank accounts and initiating interbank fund transaction in a with convenience and in a secured manner. It allows investing 24*7 via mobile phone.

How does it work?

Unitholder needs to register for Mobile Banking with his Bank
The bank issues a unique MMID (Mobile Money Identifier) which is a combination of his bank account and bank code and also issues an M-PIN, a secret password.
Unitholder can now perform a transaction using a mobile banking application or SMS / USSD facility as provided by his Bank. For example: If unitholder wants to invest Rs. 10,000 in a mutual fund scheme using the mobile application, he needs to follow the following steps - In the mobile application; provide the
- MMID of the scheme
- His Mutual Fund Folio No.
Amount to Invest/transfer
MPIN issued by the bank remitting bank validates the details and debits the account of the Unitholder. It passes on the information to the beneficiary party (AMC in this case) via NPCI.
AMC shall, after validating the details, credit the folio/scheme account with the appropriate units and shall also provide an SMS/email confirmation to the Unitholder informing of the allotment

Wealth Cafe Actionable: Unitholder should ensure that the Mobile number registered with Bank for IMPS facility is the same as mobile number registered with Mutual Fund for the folio.

How to Invest in Mutual Fund guide - 06/27/2019

What you need to start and how to be KYC compliant.

Once you have decided your goals and arrived at the amount you want to invest or you have your savings in place and you just want to get investing. You will need help to understand the following things to start your mutual fund investment journey.

We have discussed what is a mutual fund and different types of mutual funds.

Here, we are going to discuss how you can actually get investing and the very basics of doing that.

This guide is going to cover the very basic questions that our trainees have asked us about starting their first Mutual Fund investment.

Things you need before you start your mutual fund investments

To start investing in a fund scheme you need

a PAN,
bank account and
be KYC (know your client) compliant.

The bank account should be in the name of the investor with the Magnetic Ink Character Recognition (MICR) and Indian Financial System Code (IFSC) details. These details are mentioned on every cheque leaf and it is common for an agent or distributor to seek a canceled bank cheque leaf.

How to get your KYC ?

The need for KYC is to comply with the market regulator SEBI in accordance with the Prevention of Money laundering Act, 2002 ('PMLA'), which undergo changes from time to time.

The KYC process is investor friendly and is uniform across various SEBI regulated intermediaries in the securities market such as Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes, and others. This way, a single KYC eliminates duplication of the KYC process across these intermediaries and makes investing more investor-friendly.

Documents required to be submitted along with KYC application

Recent passport size photograph
Proof of identities such as a copy of PAN card or UID (Aadhaar) or passport or voter ID or driving license
Proof of address passport or driving license or ration card or registered lease/sale agreement of residence or latest bank A/C statement or passbook or latest telephone bill (only landline) or latest electricity bill or latest gas bill, which are not older than three months.

You will need to submit copies of all these documents by self-attesting them along with originals for verification. In case the original of any document is not produced for verification, then the copies should be properly attested by entities authorized for attesting the documents.

How to check your KYC status?

Given that KYC is a common process across various investment platforms. If you have submitted your documents earlier for opening a D-mat or any other investment, it may be possible that you are already KYC compliant. You can check your existing status and the application status on the following portals:

National Stock Exchange
CAMS Investor Services Private Limited
KARVY KRA
CDSL Ventures Limited
Mutual Fund Companies - you can also process your KYC with the mutual fund company. However, you have to make an investment in the mutual fund. They will not process your KYC without any investment.

Wealth Cafe Actionable - Where you are a first-time investor, it is advisable to process your KYC along with your mutual fund application. It will reduce the time that goes into the same.

How to Invest in Mutual Fund guide - 06/27/2019

How to practically invest in a mutual fund?

Mutual Fund Application form

Each mutual fund scheme has a form that investors need to fill. If you start investing in the systematic investment plan (SIP), you need to fill in two forms: one to open an account with the mutual fund and the other to specify your SIP details such as frequency, monthly installment amount, and date on which the SIP sum is to be invested.

Different ways in which you can invest in Mutual Funds

Like the many mutual fund schemes to choose from, there are several ways in which one can invest in them. One can invest online or offline or in direct as well as regular plans.

Direct Plan: Since January 1, 2013, all mutual fund houses have rolled out a new plan under all of their existing fund schemes-the Direct Plan. These plans are targeted at investors who do not make their mutual fund investments through distributors and hence have a lower expense ratio compared to existing fund schemes of the AMC. This means that you, as an investor, will get an opportunity to earn a slightly higher return from your mutual fund despite it having the same portfolio. The direct plans will not charge distribution expenses or commission, resulting in these plans having lower annual charges and eventually, a different (higher) NAV compared to the regular plans. You can easily get the information about the respective mutual fund on their direct website.
Mutual Fund Utility -The MFU (Mutual Fund Utilities) is a shared platform used by all the AMCs in India. Now, the MFU has made it easier for all the mutual fund investors to manage and track their personal investments on the shared MFU platform. This can be done using the CAN (Common Account Number) service, wherein an investor needs to self-register on the MFU platform and will then be able to use their platform for tracking their own fund’s performance.
CAMS KRA -myCAMS is a web-based application developed by CAMS for investors to enable them to create a single login user id through CAMS website or through Mobile App Version and enable them to transact across all participating Mutual Funds who have authorized CAMS
Through intermediaries: There is a wide variety of intermediaries available. These include most banks, distribution companies having a national or regional presence, some stockbrokers (including online brokers) and a large number of individuals and small financial advisory companies. All intermediaries have to be registered with the Association of Mutual Fund in India (AMFI), which also maintains a searchable online directory at www.amfiindia.com. The website also lists intermediaries who have been suspended for malpractice to protect investors from going back to them. The intermediary normally brings the required mutual fund application form, helps you fill the forms, submit the forms and other documents to the Mutual Fund office and sometimes even brings in the Account Statement. But, all these services come to you for a fee. Typically, agents charge a flat fee for these services.
Through IFAs: IFAs are independent Financial Advisors, who are individuals who act as agents to facilitate a mutual fund investment. They help you fill the application form and also submit the same with the AMC.
Directly with the AMC: You can invest in a mutual fund scheme by investing directly through the AMC. The first time you invest in any Mutual Fund, you may have to go to the AMC's office to make your investment (because of submitting your KYC document). Subsequently, future investments in different fund schemes of the same AMC can be made online (provided this facility is offered by the AMC) or offline, using the folio number in your name. Some AMCs may extend the facility of sending an agent to help you fill the application form, collect the cheque and send the acknowledgment.
Through Online Portals: There are several third-party online portals, from where you can invest in various mutual fund schemes across AMCs. Most of the portals have tie-ups with banks to facilitate easy fund transfer at the time of investing. These portals charge an initial fee to set up an account and facilitate future smooth online access to invest and redeem your investments.
Through your bank: Banks are also intermediaries who distribute fund schemes of different AMCs. You can invest directly at your bank branch into fund schemes that you wish to invest in.
Through Demat and Online Trading Account: If you have a demat account, you can buy and sell mutual funds schemes through this account.

Different Ways in which you can make the payment for your Mutual Funds

Cheque - You can draw a cheque in the name of the Mutual Fund AMC along with the exact scheme name and deposit with the mutual fund application form with the mutual fund company office or other agents/intermediaries - depending upon the option you are selecting to invest your money in.

Electronic Money Transfer
The traditional way to transfer money from one bank account to another is to write a cheque and then deposit it. The advent of technology has ensured that one need not go through such a tedious process anymore. Over the years, the RBI has introduced several steps that have resulted in the paperless transfer of funds through electronic funds transfer (EFT). There are several other acronyms that one comes across, especially when transferring funds online or through electronic clearances such as RTGS, NEFT, IMPS, and ECS. Each of these plays an important role in ensuring your investments are timely and you do not lose time when investing. Each of these options plays a role in the way your investments are treated in a mutual fund.

Electronic Clearing Service (ECS): ECS is an electronic mode of payment or receipt for transactions that are repetitive and periodic in nature. For this reason, ECS is most preferred and useful when investing through SIP. Essentially, ECS facilitates the bulk transfer of money from one bank account to many bank accounts or vice versa. Primarily, there are two variants of ECS-ECS Credit and ECS Debit. ECS Credit is used by an institution for affording credit to a large number of beneficiaries having accounts with bank branches at various locations within the jurisdiction of an ECS Centre by raising a single debit to the bank account of the user institution.

ECS Credit enables payment of amounts towards distribution of dividend, interest, salary, pension, etc., of the user institution.ECS Debit is used by an institution for raising debits to a large number of accounts maintained with bank branches at various locations within the jurisdiction of an ECS Centre for single credit to the bank account of the user institution. ECS Debit is useful for payment of mutual fund SIPs because these are periodic or repetitive in nature and payable to the user institution by a large number of investors.

National Electronic Fund Transfer (NEFT): This is a nationwide payment system facilitating one-to-one funds transfer. Under this scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Individuals who do not have a bank account (walk-in customers) can also deposit cash (up to R50,000) at the NEFT-enabled branches with instructions to transfer funds using NEFT. At present, NEFT operates in hourly batches - there are twelve settlements from 8 AM to 7 PM on weekdays and six settlements from 8 AM to 1 PM on working Saturdays.

Electronic Funds Transfer (EFT): This is a paperless method by which money is transferred from one bank account to another bank account without the cheque or currency notes. The transaction is done at bank ATM or using Credit Card or Debit card. In the RBI-EFT system, you need to authorize the bank to transfer money from your bank account to other bank accounts that are called a beneficiary account. Funds transfers using this service can be made from any branch of a bank to any other branch of any bank, both inter-city and intra-city. RBI remains intermediary between the sender's bank called as remitting bank and the receiving bank and affects the transfer of funds. Using this method, funds are credited into the receiver's account either on the same day or within a maximum period of four days, depending upon the time at which the EFT instructions are given and the city in which the beneficiary account is located. Usually, the transactions done in the first half of the day will get first priority of transfer than the transaction done in the second half.

Real Time Gross Settlement (RTGS): The real-time gross settlement is an instantaneous funds-transfer system, wherein the money is transferred in real time. With this system, you can transfer money to other bank accounts within two hours. In this system, there is a limit that you have to transfer money only above Rs2 lakh and for money below Rs 2 lakh transactions, banks are instructed to offer the NEFT facility to their customers. This is because; RTGS is mainly used for high-value clearing. The RTGS facility is available only up to 4:30 PM on weekdays and up to 2:00 PM on working Saturdays.

Wealth Cafe Actionable - There are many options and ways to invest in a mutual fund. If you have the expertise to select a scheme by yourself then go for a direct option or CAMS KRA to invest directly in the scheme. Where you going through an intermediary to invest in a Mutual Fund, you must always understand their basis of selecting a particular scheme for you and review the same at your end before finalizing the option they have selected for you.

How to Invest in Mutual Fund guide - 06/27/2019

e1f8a0b9fba09014ad5e3f45bd7387bf_adult-banking-blur-1288483-e1542281609390-3000-c-90

Insurance is not Investment

When you Invest your money, you part with your money today to get something in return tomorrow. whereas when you get insurance for something, you expect to get financially covered in case an unforeseen event for which insurance is taken occurs.

Thus, term insurance is a pure insurance product, it is not for your living but in case you die, you get the money. According to us, Term Insurance is the cheapest and best way to insure your life.

However, many people feel otherwise and believe that they want to put money into insurance only when they are guaranteed that they shall get something in return either alive or dead. In this bargain, you are just investing (with insurance as an add-on) but not getting adequate insurance for yourself.

We have already discussed, how a Term Insurance must replace you Financially and how to compute the amount of your sum assured in the article - how compute your sum assured.

In spite of this many people believe otherwise and want to get returns for their insurance.

Let us understand the same with an example

If you spend INR 5000 for your insurance needs each month.

Case 1 - Where you buy a Life insurance product in which you get an amount on maturity where you do not die like a basic money back policy or an endowment plan.

Particulars	Amount

Premium Per Month	5,000
Premium Per Annum	60,000

Number of years covered under the policy	30

Total Premium Paid	18,00,000

Sum Assured under this Policy	70,00,000

Amount received on maturity if the person survives	55,30,890

The Rate of Return, in this case, is 6.5%

Case 2 - When you buy a Term Insurance and invest the balance amount in a mutual fund.

Particulars	Amount

Term Insurance Premium per month	850
Term Insurance Premium per annum	10,200

SIP premium amount	4,150
Mutual Funds Investment per annum	49,800

No of years covered under insurance and investment	30

Total Investment Amount	14,94,000

Sum assured under this policy	10,00,000

Amount received if you survive
Term Insurance	-
Mutual Funds Investment	3,46,16,398

The Rate of Return, in this case, is 15%

Comparisons between the 2 cases are as under:

Wealth Cafe actionable - This article is to give you an idea of how important and cheap term insurance is. Buying endowment plans for your insurance needs could be expensive. However, getting an endowment plan for a low-risk investment option could be considered by you for your investment needs. It is important to know the exact return % you are getting from these investments and then, take a decision.

To learn more - you can check our course - NM 102: Build a Safety Net. Use code SAVE20 for 20% off.

Insurance / Investments - 06/25/2019

Changes in the ITR form for FY 2018-19 (AY 2019-20)

There are many changes which are notified by the CBDT in this year's income tax returns. There are changes for all those who have Income from salary, House property, Capital Gains or company owners. Government is trying to collect more data to increase transparency on how information is disclosed in the income-tax returns.

We have highlighted some major changes here for reference.

Reporting of salary income on a gross basis:

The new ITR forms have changed the mechanism of reporting of salary income. Up to Assessment Year 2018-19, an individual was required to report salary amount excluding all exempt and non-exempt allowances, perquisites and profit in lieu of salary. These items were reported separately in the same schedule and had no impact on the calculation of net salary income.

The new ITR forms have changed this reporting mechanism, which is now in sync with the columns of Form 16 (TDS Certificate issued by the employer). Now, from Assessment Year 2019-20, an individual has to mention his gross salary and the number of exempt allowances, perquisites and profit in lieu of salary shall be deducted or added to arrive at the taxable figure of salary income. Further, the new ITR forms seek separate reporting of all deductions allowable under Section 16, namely:

a) Standard Deduction

b) Entertainment allowance

c) Professional tax

Investment in unlisted companies:

Where a company issues shares at a price which is less than its FMV and the difference between the FMV and issue price exceeds Rs. 50,000 then the difference is charged to tax in the hands of the shareholders under the head income from other sources.

In order to keep a check on the issue of shares by a closely held companies and investment made therein by shareholders, a new table has been inserted in new ITR forms to seek the following details in respect of unlisted equity shares held at any time during the previous year by an assessee:

a) Name of the company

b) PAN of the company

c) No. and cost of acquisition of shares held at the beginning of the year

d) No. of shares, face value, issue price (or purchase price) and date of purchase of shares acquired during the year

e) No. and sale consideration of shares transferred during the year

f) No. and cost of acquisition of shares held at the end of the previous year.

Buyer’s information is required in case of transfer of immovable property:

If assessee reports a capital gain, from the transfer of immovable property, in income-tax return, it would be mandatory for him to furnish the following information about the buyer:

a) Name of buyer

b) PAN of buyer

c) Percentage share

d) Amount

e) Address of property

f) Pin code

It is mandatory for the assessee to furnish the PAN of the buyer in ITR form if tax has been deduced under section 194-IA or PAN is quoted by the buyer in the registration documents.

PAN is otherwise a mandatory document to buy or sell an immovable property if the stamp duty value or the sales consideration exceeds Rs. 10 lakhs.

Classification of house property :

While providing details of your house property in ITR-1, you are required to specify whether the house is – ‘Self Occupied’, ‘Let-out’ or ‘Deemed Let-out.’ In the previous year’s ITR-1, there was no such option of ‘Deemed Let-out‘ in ITR-1. Also, while filing ITR, if there are any rent arrears that are received by you in FY 2018-19 then you have to report them property wise as received.ITR-1 & ITR-2 has introduced an additional row ‘Arrears/Unrealized Rent’ received during the year less 30%

ITR 1 and ITR 4 ask for nature of residuary income:

Up to Assessment Year 2018-19, taxpayers were required to disclose the aggregate amount of income taxable under the head of other sources. However, from Assessment Year 2019-20, it is mandatory for an assessee to specify the nature of income taxable under the head income from other sources and the deductions claimed in respect of family pension in accordance with Section 57. Such extra disclosures have been asked by the Dept. to check that the ineligible persons are not using the ITR 1 and ITR 4 for filing of return.

There is a notification by the Income-tax authorities based on which taxpayers will be required to disclose a break-up of capital gains earned from shares each script-wise. However, the form has not been notified until today and hence, we have not discussed the same here. We will write a separate post on the same.

Wealth Cafe Actionable - These changes have surely increased the back end work and data that will be required to file Income-tax Returns going forward. Do not take these changes lightly and keep yourself updated irrespective of whether you are filing the return by yourself or from a consultant.

Tax - 06/15/2019

How is interest computed on your credit cards dues?

Finance charges or interest charges are the credit card interest rate. It is the rate charged by credit card issuers on the borrowed amount. However, the interest charges are applicable only to those cardholders who don’t pay their outstanding in full.

For instance, if your credit card bill amount for a previous billing cycle is Rs.10,000 and you wish you make a partial payment, either minimum amount due (MAD) or even lesser than that, then the bank will levy finance charges as per its policy.

Hence, even where you make the minimum amount due on your credit card - interest will be charged to you as you have not paid back the full amount.

The good thing about using credit cards is that if you clear the entire outstanding on the card before the due date, you won’t be charged any interest. But if you’re someone who wishes to clear the dues at your own pace, you must know how much interest your bank charges, how it’s calculated and all other related information.

How Are Credit Card Interest Rates Calculated?

Credit card interest rate is calculated as the Annual Percentage Rate (APR) of charge. It is the interest rate for the whole year rather than a monthly rate. However, while calculating the interest rate for monthly dues, the monthly percentage rate (MPR) will be applied to the transactions. The APR and MPR vary from one bank to another and one card to another. While applying for a credit card, it’s important to know how much APR is being charged on a particular card.

What is Interest-Free Period of a credit card?

It is called the grace period, during which the balances on credit card do not attract finance charges provided the credit card holder repays the entire outstanding amount in full with the monthly credit card bill. The grace period varies with every credit card and usually is between 20 to 60 days. It is also called the interest free period.

For example, the Credit Card you hold has an interest-free credit period of 50 days. So, a credit card holder whose billing date falls on 15th of the month can spend on her/his credit card from 15th January to 14th February, and her/his bill will be generated on 15th February. Her/his payment due date will be 3rd March. Therefore a purchase made on 24th January will have a credit period of 40 days, while a purchase made on 10th February will have a credit period of 24 days.

Additional Charges other than the Finance Charges

Late Payment Charges - If the MAD is not paid up to the due date, the late payment charges are levied. Late Payment charges are generally a fixed amount for the range of outstanding amount. It could vary from INR 500 to INR 1000 (depending on the credit card you hold).
Over Limit Charges - If the total outstanding amount in a particular month exceeds the credit limit of the card, over limit charges can be a % of the overdrawn amount or a fixed fee (depending on the credit card you hold.)

When will interest be charged on your credit cards?

As mentioned earlier, if you pay the total amount due (TAD) on your credit card before the due date, the interest charges will not be applied. Let’s see the cases when the interest will be levied on your credit card transactions.

Case 1 - When you don’t pay the outstanding amount by the due date - You have to pay interest for the days the amount is outstanding and no payment has been made by you.

Case 2 - When you take a cash advance (cash withdrawal using a credit card) - If you withdraw cash using your credit card, you are availing the cash advance facility, hence, the withdrawn amount will attract finance charges from the date of withdrawal till the amount is paid back in full. There is no credit period/grace period for cash withdrawal. Interest on such cash withdrawal could be levied at anything between 2%-4% a month.

Case 3 - When you pay less than the Minimum Amount Due (MAD) on your credit card - If you wish to pay an amount that is less than your minimum amount due on your credit card, the entire outstanding amount will attract finance charges along with all the new transactions, till the previous outstanding amount is cleared in full. Additional late payment charges are levied.

Case 4 - When you carry forward any outstanding balance from the previous period to the next cycle - If you haven’t cleared your previous month’s outstanding in full, the bank will carry forward the remaining amount to the next billing cycle. In such cases, based on the repayment amount, either MAD or less than MAD, the interest rate will be charged on the outstanding as well as on all the new transactions, till the previous dues are cleared completely.

It is very important to know that interest on credit cards is charged from the date of the purchase till the date of payment and not from the due date of the credit card.
Interest is charged on whatever amount is pending after the due date - whether it is as small as INR 50 - hence, you must pay your credit card debt always in full.
You will get a credit period of 40-45 days for every purchase but if you do not make full payment, interest will be levied from the date of purchase.
Payment made is first adjusted towards interest, penalty and other charges and then it is adjusted towards the principal amount.

We have tabulated below an example of how interest is computed on your credit cards.

Calculation of Interest & other charges on a Credit Card (@wealth Café working)

Period	Transaction	Amount (Rs.)	Amount (Rs.)
January	Purchase made on 10 January 2019	5,000

	Total amount due on a statement dated 15 January 2019		5,000
	Minimum amount due on a statement dated 15 January 2019 (MAD is typically 5% of the TAD)		250

	Payment due date – 3 February 2019 (no payment was made)		-

February	Purchase made on 7 February 2019	2,000
	Purchase made on 10 February 2019	5,000

	On the next statement dated 15 February 2019, interest charges will be levied as follows
	Interest on Rs.5000 for 35 days (from 10th January to 15th February)	201
	Interest on Rs.1,000 for 9 days (from 7th February to 15th February)	21
	Interest on Rs.500 for 6 days (from 10th February to 15th February)	35
	Penalty Charges for the default in the month of January (not paying Minimum amount due)	500

	Total Amount due on a statement dated 15 February 2019		12,757
	Minimum Amount due on a statement dated 15 February 2019		638

	Payment due date - 3 March 2019 (partial payment was made)		5,000
	*this payment will not be mapped against the purchases of Jan directly but will first be adjusted against interest

March	Purchases made on 25 February 2019	2,000
	Purchases made on 5 March 2019	3,000

	On the next statement dated 15 March 2019, interest charges will be as follows
	Interest on 7757 for 28 days (from 15 February to 15 March)	250
	Interest on Rs. 2000 for 18 days (from 25 February to 15 March)	41
	Interest on Rs 1000 for 10 days (from 5 March to 15 March)	35

	Total Amount due on a statement dated 15 March 2019		13,082
	Minimum Amount due on a statement dated 15 March 2019		654

	Payment due date - 3 April 2019 (full payment was made)		13,082

Hence, the best way to deal with a credit card is to always pay your credit card dues on time. If you are stuck in a credit card debt, please understand the annual interest rate that you are paying on your CC.

Credit cards can be very beneficial when there is an immediate liquidity crunch and you have to pay your bills. The reward points are also good with your credit cards. However, the interest and penalty cycle is very vicious. So pay your dues on time, set reminders and make the most of your credit cards.

Wealth Cafe Actionable - Where you are stuck in a credit card debt and are unable to get out of it, take a personal loan which is way cheaper (interest rate is around 11% on your personal loan). Where you know you will repay in a month or 2, you can opt for a balance transfer from the existing credit card to a new credit card. It is important to know that such balance transfer also levies interest rates but they give a grace period of 30 - 60 days. Also, both these options will levy processing charges, hence do your calculations of what is the best way to get out of debt and work on it.

You must first clear your credit card debt. No return on any investment will be able to match the interest expense of a credit card. Hence, it is more important to pay off your debt first.

Making Money - 06/11/2019

Income-tax Rates FY 2020-21 (AY 2021-22)

Before knowing the tax rates, it is very important to understand the terms Financial year (FY) and Assessment Year (AY).

The below-mentioned tax rates/ slab is on the income earned for the period 1 April 2020 to 31 March 2021. FY stands for the ‘financial year’ which is from 1 April 2020 to 31 March 2021. AY stands for Assessment year which 2021-22.

For individuals, the due date to file the income tax return for the income earned from 1 April 2020 to 31 March 2021 is 31 July 2021. However, this year due to COVID 19 economic relaxations, the due date is pushed to 30 November 2021

Income tax Rates

Income Tax Rate & Slab for Individuals & HUF:
1. Individual (Resident or Resident but not Ordinarily Resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year & for HUF:

Taxable income	Tax Rate (Existing Scheme)	Tax Rate (New Scheme)
Up to Rs. 2,50,000	Nil	Nil
Rs. 2,50,001 to Rs. 5,00,000	5%	5%
Rs. 5,00,001 to Rs. 7,50,000	20%	10%
Rs. 7,50,001 to Rs. 10,00,000	20%	15%
Rs. 10,00,001 to Rs. 12,50,000	30%	20%
Rs. 12,50,001 to Rs. 15,00,000	30%	25%
Above Rs. 15,00,000	30%	30%

Resident or Resident but not Ordinarily Resident senior citizen, i.e., every individual, being a resident or Resident but not Ordinarily Resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:

Taxable income	Tax Rate (Existing Scheme)	Tax Rate (New Scheme)
Up to Rs. 2,50,000	Nil	Nil
Rs. 2,50,001 to Rs. 3,00,000	Nil	5%
Rs. 3,00,001 to Rs. 5,00,000	5%	5%
Rs. 5,00,001 to Rs. 7,50,000	20%	10%
Rs. 7,50,001 to Rs. 10,00,000	20%	15%
Rs. 10,00,001 to Rs. 12,50,000	30%	20%
Rs. 12,50,001 to Rs. 15,00,000	30%	25%
Above Rs. 15,00,000	30%	30%

Resident or Resident but not Ordinarily Resident super senior citizen, i.e., every individual, being a resident or Resident but not Ordinarily Resident in India, who is of the age of 80 years or more at any time during the previous year:

Taxable income	Tax Rate (Existing Scheme)	Tax Rate (New Scheme)
Up to Rs. 2,50,000	Nil	Nil
Rs. 2,50,001 to Rs. 5,00,000	Nil	5%
Rs. 5,00,001 to Rs. 7,50,000	20%	10%
Rs. 7,50,001 to Rs. 10,00,000	20%	15%
Rs. 10,00,001 to Rs. 12,50,000	30%	20%
Rs. 12,50,001 to Rs. 15,00,000	30%	25%
Above Rs. 15,00,000	30%	30%

Surcharge:
a) 10% of Income tax where total income exceeds Rs.50 lakh
b) 15% of Income tax where total income exceeds Rs.1 crore
c) 25% of Income tax where total income exceeds Rs.2 crore
d) 37% of Income tax where total income exceeds Rs.5 crore
Note:Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).
Education cess:4% of income tax plus surcharge
Note: A resident or Resident but not Ordinarily Resident individual is entitled to rebate under section 87A if his total income does not exceed Rs. 5, 00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less. rebate under section 87A is available in both schemes I.e. existing scheme as well as new scheme.

Income Tax Rates for AOP/BOI/Any other Artificial Juridical Person:

Taxable income	Tax Rate
Up to Rs. 2,50,000	Nil
Rs. 2,50,001 to Rs. 5,00,000	5%
Rs. 5,00,001 to Rs. 10,00,000	20%
Above Rs. 10,00,000	30%

Surcharge:
a) 10% of Income tax where total income exceeds Rs.50 lakh
b) 15% of Income tax where total income exceeds Rs.1 crore
c) 25% of Income tax where total income exceeds Rs.2 crore
d) 37% of Income tax where total income exceeds Rs.5 crore

Note: Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).

Education cess: 4% of tax plus surcharge

Tax Rate for Partnership Firm:

A partnership firm (including LLP) is taxable at 30%.

Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore

Education cess: 4% of Income tax plus surcharge

Income Tax Slab Rate for Local Authority:

A local authority is Income taxable at 30%.

Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore

Education cess: 4% of tax plus surcharge

Tax Slab Rate for Domestic Company:

A domestic company is taxable at 30%. However, the tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year.

Particulars	Tax Rate(%)
If turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year 2018-19	25%
If the company opted section 115BA (Note 1)	25%
If the company opted for section 115BAA (Note 2)	22%
If the company opted for section 115BAB (Note 3)	15%
Any other domestic company	30%

Note 1: Section 115BA - A domestic company which is registered on or after March 1, 2016 and engaged in the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it and also It is not claiming any deduction u/s 10AA, 32AC, 32AD, 33AB, 33ABA, 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB), 35AC, 35AD, 35CCC, 35CCD, section 80H to 80TT (Other than 80JJAA) or additional depreciation, can opt section 115BA on or before the due date of return by filing Form 10-IB online. Company cannot claim any brought forwarded losses (if such loss is related to the deductions specified in above point).

Note 2: Section 115BAA - Total income of a company is taxable at the rate of 22% (from A.Y 2020-21), if the following conditions are satisfied:
- Company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA).
- Company is not claiming any brought forwarded losses (if such loss is related to the deductions specified in above point).
- Provisions of MAT is not applicable on such company after exercising of option. company cannot claim the MAT credit (if any available at the time of exercising of section 115BAA).

Note 3: Section 115BAB - Total income of a company is taxable at the rate of 15% (from A.Y 2020-21), if the following conditions are satisfied:

- Company (not covered in section 115BA and 115BAA) is registered on or after October 1, 2019 and commenced manufacturing on or before 31st March, 2023.
- Company is not formed by splitting up or reconstruction of a business already in existence.
- Company does not use any machinery or plant previously used for any purpose.
- Company does not use any building previously used as a hotel or a convention center, as the case may be.
- Company is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it. Business of manufacture or production shall not includes business of -

Development of computer software;
Mining ;
Conversion of marble blocks or similar items into slabs;
Bottling of gas into cylinder;
Printing of books or production of cinematographic film; or
Any other notified by Central Govt.

- Company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA and 80M).

- Company is not claiming any brought forwarded losses (if such loss is related to the deductions specified in above point).

- Provisions of MAT is not applicable on such company after exercising of option. company cannot claim the MAT credit (if any available at the time of exercising of section 115BAA).

Surcharge:
a) 7% of Income tax where total income exceeds Rs.1 crore
b) 12% of Income tax where total income exceeds Rs.10 crore
c) 10% of income tax where domestic company opted for section 115BAA and 115BAB

Education cess: 4% of Income tax plus surcharge.

Tax Rates for Foreign Company:

A foreign company is taxable at 40%

Surcharge:
a) 2% of Income tax where total income exceeds Rs. 1 crore
b) 5% of Income tax where total income exceeds Rs. 10 crore

Education cess: 4% of Income tax plus surcharge.

Taxable income	Tax Rate (Existing Scheme)	Tax Rate (New Scheme)
Up to Rs. 10,000	10%	-
Rs. 10,001 to Rs. 20,000	20%	22%
Above Rs. 20,000	30%	-

Income Tax Slab for Co-operative Society:

Surcharge:

a) 12% of Income tax where total income exceeds Rs. 1 crore
b) In case of Concessional scheme, surcharge rate is 10%

Education cess: 4% of Income tax plus surcharge.

Disclaimer: - The articles are for information purposes only. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. You must consult a financial advisor who understands your specific circumstances and situation before taking an investment decision.

Alternative Assets / Income Tax / Insurance / Investments / Salary / Tax - 06/03/2019

How to negotiate like a boss?

As a freelancer or a business owner or someone applying for a job or even buying vegetables, we all have to deal with negotiating the fees/ rates/ salary with strangers. Being raised as a humble middle-class kid, I wasn’t too comfortable asking for money from other people at first. But when you have to pay the bills and own your responsibility to fulfill your dreams, this is the no. 1 trait everyone must learn in order to get success.

After negotiating a salary with 3 employers when I started my private practice 7 years back it wasn’t easy for me to go out and scout for work. After doing some small certification assignments for one year, I was presented with an opportunity with an MNC company for some work across their different plants. At that time I was desperate for work and was ready to get the assignment for peanuts. But I held myself high and discussed synergies I could bring to my client and successfully got the assignment for about INR 700,000. The confidence I got from that assignment helps me today as well, to send out proposals to my client. Here are the steps I personally used to quote the fees and negotiate like a boss:

Research your potential client
Know your worth/ cost
Leave a room for discussion/ negotiation
Be flexible
Know your bottom price

Research your potential client

When you get a request for proposal, ask details from your potential client about their requirement. Know your clients, their backgrounds, the specifications of the job, their budgets, the timelines for deliverables, the quality standards required for the project. I know you may not guess all these variables at first and you get better with practice. Some companies ask quotes from multiple vendors. The final decision to choose among various quotes is not always the lowest fee, they do a trade-off between best quality services with the lowest fees. Your job is to identify the qualities they appreciate is covered in your proposal and they will be willing to pay a higher price for the quality.

Know your worth/ cost

Now that you know the specifications from your clients, estimate the time cost/ material costs you will need to incur in order to deliver your product/ service to your potential client. For example, when I give a fee proposal to a client and I know that the assignment is hard pressed for the deadline and the time available to complete the assignment is very limited, I factor the additional hours I will have to spend beyond the usual business hour to finish my deliverable on the due date. I will give exclusivity as quality to my client for the period of the assignment. Many clients would love to pay a higher price if they know you work exclusively for their assignment.

Leave a room for negotiation

While communicating your price, if you sound rigid to your client and give a fees quote – take it or leave it, this will not give a good experience to your potential client and they may not even consider you for any future engagements. Hence, always leave some room for negotiation and quote a price a little higher than you would be okay to work with. When your client asks you to lower your fees or give you counter fees, you know you have the room to accommodate their wishes and not press your quality of work. Be very confident when telling your fees to your clients and don’t ever forget to add the points why your services score an edge on quality.

Think Long-term

While discussing the fees, always remember your potential clients will be your potential marketers. One assignment can be a gateway of your recurring assignments with the Company or future potential referrals from the Company. Be willing to accommodate if they have any special requests. Think long term client relationships than short term wins.

Know your bottom price

While you know your price and give a higher quote, sometimes a client will come back and ask for more than 50% reduction in your proposed fees. That’s when it is best for you to know your bottom price beyond which it is okay for you to leave the assignment. This will help you to identify the kind of clients you would want to work with. It is always good to say NO to a client if they don’t value your services and the price. This will help you create a brand for your business and also find the clients who would love your services and the value you provide to them. NEVER BE DESPERATE.

WC Actionable: I would like to give you one BONUS step while negotiating is TO BE CONFIDENT in your communications. If you are confident in yourself, the client will gauge that you can deliver the value that you are promising. Confidence is the differentiator that will get you the price that you wanted to charge and not the price your client wants to pay. Hope the above points help you in adding value to you and your potential clients. Would love to hear about your experiences.

PS - This is a guest post by CA Sonia Dawar, who is a fe-money-ist and is a practicing chartered accountant with over 8 years of experience. Negotiation and discussing fees is a part of her everyday assignment. She has taken charge of her money for herself, her family and her business. Looking forward to more insightful posts from her.

Making Money - 05/28/2019

Why you should avoid investing all your money in a FIXED DEPOSIT?

First job – first income – first savings – first investment is always a fixed deposit. The moment there is any lump sum savings in our bank account, we make a fixed deposit.

Recurring deposits are also a type of fixed deposits where a fixed amount is invested monthly in the deposit account.

Most either invested in a fixed deposit or a recurring deposit once in our lifetime. Fixed Deposit is the stepping stone to our investment journey.

Fixed Deposit is a low risk – low return investment product.

Return: A fixed deposit currently gives a return of 7%-7.5% before tax and after taking into an account the tax rate of 30% on the income from fixed deposit. It would be anything between 5.75% - 6%. Hence, the return from a fixed deposit is not a lot.

Risk: Investors assume that Fixed Deposit is the safest investment option and nothing can go wrong with them. It is important to note that a small amount of risk is always associated with every investment. The RBI ensures a balance of Rs. 1 lakh per account holder in case of default by any scheduled bank. Anything more than that in any bank is not insured and hence, is at risk, if the bank was to shut down. So, if you have a deposit of 5 lakh rupees with a scheduled bank and it was to go bust, RBI will only pay you back 1 lakh rupees. Also, it is important to know that the banks are governed by RBI and the big banks will not just shut down tomorrow, there is a relative risk which we all bear when we take a fixed deposit.

Co-operative Banks: Co-operative banks are not scheduled banks. They generally give a return of 1% or 2% more than the other private/public banks making a fixed deposit with these banks a very lucrative investment option. However, a higher return means higher risk. Co-operative banks are notoriously known for shutting down without any prior notice and the government may not come to rescue these banks. So, the amount of risk that you take for 1% extra return is not justifiable and it is not a MEASURE RISK and hence, you should try and avoid the same.

Why do you invest?

You can own what you cannot own today
You can own more than what you want to own today but cannot.

Basically, your investments should beat inflation. Because with time, things keep getting more expensive at the rate of inflation, so your money today has to grow at a rate higher than the inflation rate for you to be able to afford what you cannot afford today.

The current rate of inflation is 5% - 5.5% and hence, your investments must fetch you more than this to help you get whatever that you want to own.

Are your fixed deposits giving you a return higher than the inflation rate?

We have tabulated below to explain how your money grows in a fixed deposit versus in a mutual fund. This growth in money is compared to the price of movie tickets and how the same has grown expensive over a period of time.

In this table, you can see the difference in the price of a movie ticket, 10 years ago and today. The same is compared to the growth in your fixed deposit investment @current rate of 6%.

Whereas, if you invest in mutual funds, your money would grow @15% and after 10 years, you will have 4 times the value and in 20 years, 10 times the value you get from a fixed deposit.

You should just not invest your money, but you should invest it right to get more than what you can today.

If you can 10 years from today exactly what you can today, what is the point of investing. This is what fixed deposit does to your money. It does not make it work hard enough for you to be able to enjoy life. By investing in a fixed deposit, you will only be able to own what you have today, tomorrow, not really a lot more.

Wealth Cafe Actionable - Invest in fixed deposit when you are closer to your goal and cannot afford to take a risk. You can also invest for your emergency fund in a fixed deposit as the returns are similar to a liquid fund but fixed deposits are safer. The only problem with fixed deposits is that they are illiquid and you have to bear a penalty for premature withdrawal of a fixed deposit.

Image Credit: Wooden Earth

Alternative Assets / Investments - 05/09/2019

How to take that early retirement and achieve financial freedom?

Gone are those days when people were retiring at the age of 60-65 after working for 40 years in the same company. Today we want to work on our own terms. We want to travel, explore, have our own business or not. Most of us are not looking for stability but for growth and excitement. This is considered as a lack of loyalty by a few of the baby boomers, but, we millennials believe in making the most of the opportunities and get maximum returns. We are looking for ways in which we can connect with various people, share our resources and become bigger - faster.

We are able to achieve all of this as we are able to gain from the changes in the business environment, fair trade, and opportunities through social media. Exchange of ideas and opportunities are just a message away. We don’t even have to type long emails explaining what we do, just a tweet will do it for us.

Hence, most of us don’t want to be a part of a boring monotonous 9 to 5 job but explore more options and work on them. In spite of all of this, we too desire to have financial stability and freedom financially to be able to get what we want to do.

Through this article and working, you will find a path for retirement:

The total amount you need to retire/financially free
Monthly investments that you will have to make to achieve the retirement amount.
Investment options are available to achieve the same.

Regular goal based investing gives you the choice to do what you want to do with life, rather than continue to do what you should do.

How to compute the amount you need for retiring at an age of your choice?

We have attached an excel in this article with the pre-set formula which will help you to compute the amount of your choice. Please note the following points before going ahead:

Be able to compute your amount, you will have to edit the columns, which are highlighted in ‘blue’.
The explanation to each number is written in wealth cafe notes
There could be some specific requirements which are peculiar to you, you can email us about the same
this table is a general example of computing your way to financial freedom.

Before doing that, we have described the working of the table to help you understand this better.

Table 1 – How much would you need to spend after you retire based on your expenses today.

Table 2 – What is the total corpus (amount) you need to retire.

Table 3 – How much you should start saving today in order to achieve your amount in Table 2.

Ways to Invest to achieve your retirement corpus.

The monthly contribution amount that you have computed from table 3 can be invested in the following ways.

Employee Provident Fund/ Public Provident Fund – Monthly contributions to EPF from your salary (where you are employed), and PPF (where you are not employed) should be made for your early retirement goal. EPF/PPF are long term debt investments which give a tax-free; risk-free return of 12% on average after considering the tax benefit. These investments are made to the government of India and are considered as one of the best debt products. All these factors give makes them a good and safe option for retirement investing.
Equity Mutual Funds – Equity Mutual funds are HR-HR (High Risk – High Return) rated financial products. The only way to beat the high risk associated with these investments is to stay invested for a long period of time (i.e. above 10 years). Given that retirement is a long term goal (20 years and above), equity investments is a good option with good returns. Where you are investing in equity – which is an HR - HR product, it is important to know that there is a risk which can be triggered when you reach closer to your retirement. To manage this risk, it is important that you should transfer funds from your equity investments to safer debt investment options, a few years before you reach your goal.

For example: when you are 4 years away from your retirement, there is a possibility of a change in the market and hence, you must transfer your funds from the equity funds to debt funds. This will avoid any major last minute changes in your retirement fund. It is important to take some expert advice at that point to know how much, when and where you should transfer your funds at that time.

Investing to be financially free is the most important personal goal and only discipline and regular investing will help you achieve the same.

You must review your investments, requirements and the entire working in the excel sheet at least annually so that if there are any changes in your investments

Wealth Café advice – Primarily, you should keep your contribution towards EPF and PPF for your retirement as they are tax-free, risk-free. They are designed to be a retirement investment and hence, are tax-free and have a long term lock-in period. When these contributions are not enough, then you can look at equity mutual fund as an option for your retirement.

Investments - 04/26/2019

GET STARTED

Attend a Workshop

Quick Financial Review

Schedule a workshop at your office

ABOUT US

About Us

Join Us

WCafe Financial Services Pvt Ltd (formerly known as Wealth Cafe Financial Services Pvt Ltd) is a AMFI registered ARN holder with ARN-78274.

WCafe Financial Services Pvt Ltd (formerly known as Wealth Cafe Financial Services Pvt Ltd) is a SEBI registered Authorised Person (sub broker) of Sharekhan Limited with NSE Regn AP2069583763 and BSE Regn AP01074801170742.

Terms & Conditions | Privacy Policy

Things you need before you start your mutual fund investments

How to get your KYC ?

The need for KYC is to comply with the market regulator SEBI in accordance with the Prevention of Money laundering Act, 2002 ('PMLA'), which undergo changes from time to time.

How to check your KYC status?

Mutual Fund Application form

Different ways in which you can invest in Mutual Funds

Different Ways in which you can make the payment for your Mutual Funds

Let us understand the same with an example

Case 1 - Where you buy a Life insurance product in which you get an amount on maturity where you do not die like a basic money back policy or an endowment plan.

The Rate of Return, in this case, is 6.5%

Case 2 - When you buy a Term Insurance and invest the balance amount in a mutual fund.

The Rate of Return, in this case, is 15%

Comparisons between the 2 cases are as under:

Get your weekly dose of Money Masala from us.

Reporting of salary income on a gross basis:

Investment in unlisted companies:

Buyer’s information is required in case of transfer of immovable property:

Classification of house property :

ITR 1 and ITR 4 ask for nature of residuary income:

How Are Credit Card Interest Rates Calculated?

What is Interest-Free Period of a credit card?

Additional Charges other than the Finance Charges

When will interest be charged on your credit cards?

We have tabulated below an example of how interest is computed on your credit cards.

Research your potential client

Know your worth/ cost

Leave a room for negotiation

Think Long-term

Know your bottom price

Fixed Deposit is a low risk – low return investment product.

Why do you invest?

Are your fixed deposits giving you a return higher than the inflation rate?

Search

Recent Posts

Tags

GET STARTED

FOLLOW US

ABOUT US