Budget

How Mutual Funds will be taxed now – Budget 2018-19

LTCG-Tax

How Mutual Funds will be taxed now – Budget 2018-19

Equity Mutual Funds

Fund Type Short Term Capital Gain Long Term Capital Gain (> 1 year) Dividend Tax
  • Equity Fund
  • ELSS Fund (tax saving)
  • Hybrid Fund – Balanced (Aggressive or Equity oriented)
  • Arbitrage Fund
15%
  • Gain up-to 1Lac–Zero Tax
    exempted
  • Gain > 1lac – 10% Tax
    without indexation
  • Cost on oldinvestments
    based on 31st Jan 2018 closing price##
10%

## Which means, if you have invested INR 100 on 1st Jan 2016, and if you redeem on 2nd Feb 2018 @ INR 155, LTCG will be calculated based on the price on 31st Jan 2018. Let’s say on 31st Jan 2018, the value was INR 150, in-short you have to calculate LTCG on INR 5 only, provided the total gain exceeds 1lac.

** Dividend Tax; after adding 12% surcharge & 4% cess = 11.65%
** Capital Gain tax calculated(Short term or Long term), will also include surcharge based on your total income and 4% cess.

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Budget Simplified – FY 2018-19

budget 2018-19

Talking to people around on budget this time; most of them are unhappy, as budget has not kept pace with the expectations, like for a salaried (US), no announcements on tax slabs, or tax exemptions 😉.

But for a budget, with elections just around the corner, our dear finance minister has maintained a fine balance on populist measures, economic growth & stability.

Let me highlight, key takeaways from the budget:

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MANAGE YOUR MONEY BETTER

MANAGE YOUR MONEY BETTER

Article published in Mumbai Mirror (Times of India) on 5th Jan 2018. Link: https://mumbaimirror.indiatimes.com

“Spend less, save more” is a great resolution, but how do you actually achieve it? An expert offers advice.

The definition of insanity is doing the same thing over and over again and expecting a different result. Yet, when it comes to finance, that’s exactly what most of us do. If you’re determined to make this the year when things finally start to go your way, all it requires is some sensible shifting — which means, move out of wrong loans, investments, expenses and move into the right ones. Here are a few suggestions on how to achieve this.

Credit card payments

One of the biggest mistakes one makes is to pay off only the minimum amount due towards credit card debt. It’s vital to remember that you’re paying an annual interest rate that’s upward of 36 per cent on the rest of the amount; plus, if you’re doing this regularly, your debt is steadily mounting too. Consider the fact that if you have an account (a deposit) with the same bank, the amount in it will earn no more than around 6.5 per cent annual interest (current rate). Paying out 36 per cent when you’re earning only 6.5 per cent is the quickest way to go bankrupt.

What if you don’t have the money to pay off the debt you’ve accrued on your card? Take a personal loan from your bank to pay it — the annual interest on a personal loan will be around 10 to 12 per cent. You could also take a top-up loan on your existing home loan — the interest rate will be around 8.5 per cent to 10 per cent annually. Use this to repay the entire credit card debt in one-go and promise yourself that you will only use credit cards for revolving credit henceforth.

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Credit Card – do I have the freedom?

Credit Card

I still remember the day, final month of my post-graduation, and we have these credit card chaps standing outside the gate. As would be, I went ahead & applied for the card 😉

My job is three months away, and here I have this plastic card, which gives me the freedom & cash, and within no time, I used up 50% of my limit, without any income in hand. All in the premise that first series of pay, I will knock off the outstanding.

Start of my Job, and again in no time, I guess 6 months, I am running an outstanding of more than 2 lacs and major portion of my salary goes in part-payment, with a fat interest. Each month I commit myself on reducing same, which happens to some extent… but this cycle never stops.

For next four years this cycle continued, where I would have payed these credit card companies, more money in interest than the actual outstanding. Finally, one day I took the courage & took out my scissors, & chopped the card into pieces.

Though after some time, I applied for a credit card again… Not for availing the credit, but towards cash-less payments. I have not paid any interest since then, as I repay my entire outstanding every month now.

Let me now highlight two dangerous points on credit card:

High Interest Payment:

Usually, this is upward of 36% annually or 3% every month on outstanding amount. Say for instance, you have an outstanding of 50k, you have to pay 1500 as interest, for the month.

Best way to explain; if you give money to bank, towards FD, they will offer you 6% to 9% annual interest. But on credit card, they will charge you 36% or higher… it’s a criminal waste of money.

What’s the way out; either delay your purchase & save, or if it’s a must requirement, take a personal loan, which should come around 12% to 16%, based on your salary, ITR & duration of employment.

They block you from pursuing other Goals:

We are earning & saving money for our dreams or future goals, like buying a car, house, kid’s education, retirement, etc. By using credit card, paying part payments, which includes interest cost, you are in-short delaying your savings & future goals.

It’s a known fact; that early saving rewards you with higher returns than late savings… Power of compounding works better for long duration. Read my blog – Link.

If credit card is so bad, what is it good at:

Cash-less working:

Credit card helps you transact, offline & online without cash. You don’t have to bother about withdrawal or deposit of money today. Even your utility bills & household payments can be done thru the cards easily.

Emergency funds:

Credit card comes handy, or acts as a hedge towards any emergency or unplanned requirement of money. You have a preapproved limit and same can be used, whether to transact or even withdraw, when the requirement or emergency strikes.

Finally, it’s all about your discipline on your spending or when to use. People say, they don’t have control when they have card, and end up spending more. My logic is all about having a discipline. If in case you cannot control your urge, use debit card instead.

Happy Savings!!!

What’s Your Budget Personality?

What's your Budget personalities

Our personalities inform how we approach every part of our lives. From the workplace to friendships and even at home, your distinct style is uniquely yours when you interact with the world around you. This goes for budgets, too. Personalities often impact how you spend, save and manage your money, sometimes positively and sometimes impeding your progress.

Do you know your budget personality? Check out these four common types and corresponding tips to jump-start your road to better financial health. You just may recognize yourself!

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