Most women I speak to don’t struggle with numbers.
They struggle with the feelings behind them.

Guilt when they spend.
Shame when they don’t save “enough.”
Fear of getting it wrong.

And a quiet voice that says: I should already know how to do this.

Here’s the truth:
We don’t grow up learning how to build wealth with confidence.
We inherit money stories from our families, our cultures, our past relationships, many of which were rooted in survival, not freedom.

And if you’ve been through a divorce? That story gets even messier.
You’re suddenly the sole decision-maker.
The provider.
The planner.

And often… the one who’s still healing from financial trauma that no one else sees.

But here’s the good news:
Your money story can change.

–  You can learn how to make decisions from clarity, not fear.
– You can build savings, invest, and plan for your future, even if you’re starting over.
– You can trust yourself with money again.

And it doesn’t have to be overwhelming. It just has to be intentional.

You don’t have to get it perfect. You just have to get it started.

And if you need help taking those first steps, if you’re ready to rewrite the way money feels in your life, I’m here to walk through it with you.

Because your next chapter is with money?
It gets to feel strong. Calm. And yours.

Investments in Infrastructure bonds are no longer eligible for tax deduction from AY 13-14 onwards.

The tax season is “in” and so are various tax saving products in market. For those who have already consumed the max 1 lakh limit, there is a scope of additional saving through the 80 CCF route. Any investment in infrastructure bonds upto a maximum of 20,000 would be deductible from your income.

What are infrastructure bonds?

Infrastructure bonds are issued by the government in order to raise funds for develop the infrastructure across the country through projects like land, air transport, highway and railway projects, power generation etc. Infrastructure bonds help in channelizing the retail investor’s savings into infrastructure sector directly and aim to boost the flow of funds into the sector.

These bonds are issued by various organizations such as (i) Industrial Finance Corporation of India; (ii) Life Insurance Corporation of India; (iii) Infrastructure Development Finance Company Limited; and or a Non-Banking Finance Company classified as an infrastructure finance company.

Why should I invest?

Given the high interest rate scenario (Nov 11), investors could lock-in these rates and enjoy it for a long period of time. Besides, there is obvious tax advantage:

Tax Slab	Savings
30%	Rs 6180
20%	Rs 4120
10%	Rs 2060

 

Why should I not invest?

These bonds are typically, long term in nature with tenure ranging from 10 to 15 years. Although, you will have a buy back option after 5 years, your investment gets locked in for a minimum of these many years.
Additionally, you get tax benefit only on your investment; interest income earned on the same would be taxable.

Features

Interest Rate	Based on prevailing interest rate
Frequency of Interest Payment	1.Annual 2.Cumulative
Tenure	10-15 Years from the Deemed Date of Allotment
Buy back Option	Typically after 5 years from the Deemed Date of Allotment
Interest Income	Taxable
Min Investment & Face Value	Typically Rs 5000 per bond, will differ based on company.
Investment in Multiples of	Typically Rs 5000 per bond, will differ based on company.
Tax Benefit	Avail the additional Rs 20,000 deduction under section 80CCF of the Income-tax Act (apart from the Rs 1 lakh deduction under section 80C)
TDS	No TDS shall be deducted on the interest received if the bonds are kept in demat form. There will be TDS for bonds if they are kept in physical form when interest rate exceeds Rs. 2,500 p.a.
Capital gains Tax	A listed Bond is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer.
Nature of the Bond	Based on Credit Rating.
Issuance & Trading	Bonds shall be issued both in dematerialized form and physical form. However, trading allowed only in dematerialized mode after the expiry of lock-in period of 5 years

It is always a good idea to look for the credit rating of the bond before making the investment.

For those who are getting ready for the tax season, it’s a wonderful avenue to get started while contributing to the development of the nation.

Note: Readers are not authorized to copy or reproduce this article. Please write to sure.response@finatwork.com for further clarifications.

At a first glance, both of them seem to be doing the same thing. Alas it was that simple!

Mutual Fund world already offers so many options to investors, adding another dimension takes the complexity to the next level. As an investor you can choose one of three options – Growth, Dividend Payout, Divident Reinvestment.

For the sake of simplicity, we are not considering Divided Payout option in this article.

Coming back to the title, biggest difference between the two is the way taxes are levied on them. You pay taxes mainly through two ways – dividend distribution, capital gains. The table below throws some light on this:

MF Taxation – Individuals (2011 – 12)

	Dividend Distribution	Capital Gains  – Short Term	Capital Gains  – Long Term
Equity	Nil	15%	Nil
Debt – Funds other than Liquid	12.5%	As per Income Tax slab	Lower of – 10% without indexation –  20% with indexation
Debt – Liquid Funds	25%	As per Income Tax slab	Lower of – 10% without indexation – 20% with indexation

– Education cess and other sucharges additional

– Short Term (less than one year), Long Term (more than one year)

As you can see if you had invested in a Debt scheme, you have to pay dividend distribution tax ie money which gets ploughed back is little lesser than if you had stayed invested. However, you have to pay higher capital gains tax on the NAV gains in case of growth option. So what do we make out:

Short term – Dividend Reinvestment
Long Term – Growth

Please note it will not work in all the situations (esp zero or low tax bracket), one should do calculations for individual case.

In case of Equity scheme, impact of DDT would not be there and only capital gains will come into picture.

Short Term – Dividend Rinvestment
Long Term – Growth

As a side note, we don’t encourage to invest in equity funds for short term.

For the long term, one would like to believe there is no difference between the two. However, please note that in Dividend Reinvestment you are buying new units every time and will have to be careful about short term capital gains tax when you are actually looking to come out of your investments. It is therefore advisable to go with Growth option.

The tax laws are constantly changing (for eg there was DDT on equity schemes in past) and DTC (Direct Tax Code) could come with substantial changes. It is important to be cognizant of that before making the decision.

Note: Readers are not authorized to copy or reproduce this article. Please write to sure.response@finatwork.com for further clarifications.

The introduction of additional tax regime is one of the biggest takeaways from Budget 2020. In past, Govt had used taxation as a tool to nudge people towards good investment behaviour. However, creation of new tax regime is a clear indication that Govt wants to empower people and step back from guardian role. Now its up to the individual what s/he wants to do – spend that extra disposable income or invest it the way s/he wishes.

People in higher tax brackets (above INR 20 lacs), might find new one as “no nonsense” tax regime, however which regime will work better from net tax liability perspective will depend on case to case basis (based on deductions and exemptions one is planning to avail).

Those in lower tax brackets, will have to make choice if they wish to have more “disposable income in hand” or enjoy higher tax benefit while investing in specified areas (life, health, retirement, housing etc).

Note: IT Dept has put up a calculator which helps you compare which one will work out better for you, you can access it here (https://www.incometaxindiaefiling.gov.in/Tax_Calculator/index.html?lang=eng)

Removal of Dividend Distribution Tax (DDT) is another area where it will have uneven impact. Those in higher income tax brackets, would find it being taxed at higher tax rate. While not much can be done on dividend from stocks (will have to declare it while filing taxes), they would be better off switching from dividend option to growth option of Mutual Funds. People in lower income tax brackets, particularly those who are Retired and dependent upon dividend income, would welcome this change.

Now having these out of the way, let us look at the rest:

Negatives:

1) Cumulative ceiling by employer for provident fund, NPS and superannuation fund has been limited to Rs 7.5 lakh annually. Any contribution by employer above this to be considered as perquisite and will be taxed in the hands of the individual.

2) Definition of Non Resident Indian (NRI) from tax perspective has been changed. There is a tightening of residency criterion, people have to now spend more time abroad to qualify as NRI
Earlier: Considered resident if stayed in India for 182 days or more
Now: 2 scenarios either stay for 182 days or more OR stays more than 120 days in current financial Year + 365 days or more in the preceding 4 financial years.

Positives:

1) Reduction in burden of taxation on employees of startups by deferring tax payment by five years, or till they leave the company, or when they sell their shares, whichever is earliest
2) New investment avenue in the form of debt exchange traded funds (ETFs), comprising primarily government securities
3) Deposit insurance coverage hiked to Rs 5 lakh from Rs 1 lakh
4) Non-resident Indians can invest in certain specified categories of government securities
5) Difference between consideration value of real estate transaction and circle rate for calculation of capital gains increased to 10% from 5%
6) Deduction of 100% of profit allowed to startups with turnover of Rs 100 crore for three consecutive assessment years from Rs 25 crore. Also, the period of eligibility for claiming deduction extended to 10 years from seven years earlier
7) Tax dispute scheme: Penalty and interest to be waived, only disputed tax amount to be paid (before 31st March 2020)

This Budget was set in the backdrop of challenging growth environment. There were expectations around significant reduction of income tax rates and boost towards consumption. Some of the steps seem to be in the right direction, will let the readers judge the extent to which Govt has been successful.