admin on October 19th, 2010

Applying for IPO through ASBA – This is wonderful facility provided by banks. The application amount will remain blocked in your account till allotment and only the amount allotted will be taken for the IPO. During this period, you will continue to earn interest. Above all, this facility is FREE.

Step 1: Go to http://www.nseindia.com and click on “ASBA e-Forms”

Go to NSE India Website

Go to NSE India Website



Step 2: Click on IPO Symbol as shown
Select the IPO to apply for

Select the IPO to apply for



STEP 3: Click on “Bid cum application form download”
Click on bid cum application form

Click on bid cum application form



STEP 4: Enter the details asked/shown.
Fill the form as shown

Fill the form as shown



STEP 5: Download and PRINT the ASBA form.
5 (1) Ensure Category is ticked (IND for individual)
Select the category

Select the category



5(2)Ensure 2 Signatures
5(3)Tick not a US person declaration
Signatures and tick

Signatures and tick



STEP 6: Submit the ASBA form along with a photocopy of the PAN Card to any of the designated branches of the applicant’s bank.

List of Banks providing ASBA Facility (Click to get the list of designated branches)

Alternatively, some banks like Axis Bank and HDFC Banks also provide online channel for applying in IPO through ASBA.

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Finance Minister PC is expected to launch Rajiv Gandhi Equity Savings Scheme (RGESS) on February 9, 2013 to woo first-time stock market investors.

This is a welcome step to get domestic money which could help in increasing domestic participation percentage in equity markets. On one hand it will remove inhibitions related with stock markets due to proposed tax savings, on the other hand it will also provide much required liquidity infusion and stability to the markets. This scheme has been already notified by the Central Board of Direct Taxes (CBDT).

As per notification, a one-time deduction for income tax will be available to a “new retail investor.” The maximum investment amount allowed is Rs 50,000 and the investor gets a tax rebate that is 50% deduction of the amount invested. (Maximum deduction allowed is 50,000*50% = 25,000 under Income tax section 80CCG)

But there are too many conditions to be eligible for this deduction.  First, one should be a new investor, which means one should not have any Demat account before November 23, 2012 or should not have traded in Equity or derivative segment before that date. This will be tracked through depository participants (NSDL and CDSL) using pan card details. Second, This deduction is available only to investors with taxable income of less than Rs 10 lakh. Apart of this,  There is also one year blanket lock-in which leaves investment in this scheme a bit illiquid. There are also limitations on the stocks you can invest in under this scheme.

Overall, this looks like a good step towards financial inclusion of masses into Indian capital Markets. But there are doubts about success of this scheme due to many filters applied for eligibility in this scheme. Though, For first time investors this is good way to save upto 5,000 rupees (25,000*20% = 5,000) in form of saved tax. We will see all the Asset management companies to launch RGESS compliant mutual funds in near term which will provide hassle free way of investing to new retail investors.

 

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admin1 on October 4th, 2012

Staring OCT 1,  there have been some changes in Mutual fund schemes in India. Main focus for these reforms has been to get more capital participation from small cities which could bring more money on the table. Though SEBI has also enabled Fund Management Companies (FMC) to charge a bit extra for this.

Fund houses can charge investment and advisory fee on MF schemes, which would have to be disclosed in the initial offer document provided. For a fund of funds scheme, total expenses levied would be capped at 2.50% of the net assets of the scheme.Apart of current expenses, SEBI would allow to levy brokerage and transaction costs incurred for trade execution purposes and is included in the cost of investment. Ceiling for this has been kept at 0.12% in case of cash market and 0.05% in case of derivatives.
Besides, mutual funds are allowed to charge additional 0.30% of daily net assets, if the new inflows from places other than top-15 cities are more than 30% of the gross new inflows in the scheme, or are 15% of the average assets under management, whichever is higher.The expenses marked under this effect would have to be used for distribution expenses incurred for bringing inflows from small cities.
Among other measures, the fund houses are required to calculate the NAV of the scheme on daily basis and they need to publish the same in minimum two daily newspapers with nation-wide circulation. Also, any exit load charged by the FMCs will be required to be credited to back to the scheme.

Fund Houses also need to keep part of their assets for the purpose of investor education and awareness purposes.

Lastly for more clarity in the schemes, the fund houses will need to make more disclosures. They are mandated to shift to the one plan per scheme model.  Moving away from the present practice of cluttering one scheme with numerous plans will surely result in less confusion in mind of investors.

Overall reforms look good to get more Financial/Capital inclusion from smaller cities. But someone has to pay, which will be investors in this case.

 

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This year onward, there will be no tax benefit from Infrastructure Bonds. So on one hand Mr. Pranab Mukherjee gave some extra money by increasing basic exemption limit by 20,000 Rs and with other hand he took back more by taking back 20,000 tax deduction provided under section 80CCF using Long term infrastructure bonds.

Initially this section was introduced in FY 2010-11 for one year and then was extended for FY 2011-12. But contrary to experts’ opinion of increase in this limit, FinMin choose to not mention anything about 80CCF and thus removing it from picture.

20000 increase in basic exemption limit provided 2000 extra to every men. But removal of infra bonds results in extra tax of same 2000 for Men in 10% limit, 4000 for 20% tax limit and 6000 for 30% tax limit. (Not including cess and other changes). For women tax payers, condition is even worse. With no change in basic exemption limit for them it could only be bad for them.

This is negative not only for individuals but infrastructure companies as well. Long term infra bond was source of low interest capital for these companies. Now after removal of this tax benefit from investors, these companies will have to go to market for fund raising on higher interest rates. In country like India where condition of infrastructure is already bleak; I am not sure how removal of provisions of 80CCF will work for Greater Good.

 

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Income Tax Slabs for FY 2012-2013 (Assessment Year 2013-14)

Income tax slabs applicable for financial year 2012-2013 are as follows. Assessment year for income tax return filing is 2013-14

For General tax payers Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 2,00,000

0 %

Rs. 2,00,001 to 5,00,000

10%

Rs. 5,00,001 to 10,00,000

20%

Above Rs. 10,00,000

30%

For Women Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 2,00,000

0 %

Rs. 2,00,001 to 5,00,000

10%

Rs. 5,00,001 to 10,00,000

20%

Above Rs. 10,00,000

30%

For Senior citizen (60 – 80 years) Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 2,50,000

0 %

Rs. 2,50,001 to 5,00,000

10%

Rs. 5,00,001 to 10,00,000

20%

Above Rs. 10,00,000

30%

For Very Senior citizen (Above 80 years) Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 5,00,000

0 %

Rs. 5,00,001 to 10,00,000

20%

Above Rs. 10,00,000

30%

So, with this years budget Pranab da has not done anything radical. Just a little tweaks here and there. Now no-tax limit has been increased from 1.8 lakhs to 2 lakhs for Men. Which equated them to the fairer sex. So with no change in initial no tax  limit for women, Finance Ministry doesn’t seek any tax for first 2 lakh of income.

Further 20% tax bracket has been increased from 8 Lakhs to 10 Lakhs for each individual tax paying group. This effectively gives 20,000 more in hands of tax payers with income more than 10 Lakhs.

Overall, there is nothing much in this year’s budget from income tax perspective. People can be happy with a little bit extra money in hand but it will be taken away in form of service tax increase and inflation.

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admin1 on February 21st, 2012

Buyback of shares essentially means repurchase of its own share by a company having substantial cash reserves particularly when the prevailing rate of its shares in the market is much lower than the book value or what the company perceives to be its true value. In effect, share buyback or share repurchase is investment by a company in its own stocks.

It is a process of buying back its floating shares from existing shareholders. It enables companies to go back to its shareholders and offer to purchase from the shares they hold. It is viewed as a strong signal to the market that it wants to reward the shareholders and is serious about delivering shareholder value so that it is able to achieve firm’s basic objective of maximising the market value of its outstanding securities.

Share buyback a very popular strategy in the developed markets but its origin in Indian corporate environment is quire recent. Before October 1998, share buyback was prohibited in Indian equity market in order to prevent improper use of company’s assets by speculators in management of a company who may seek to take control of the firm for their own advantage. Another thought was that it could increase possibilities of insider trading and might act as anti competitive. This was considered necessary to protect interests of the creditors and depositors who had parked their funds on the basis of certain capital structure.

These thoughts were challenged in late 80s and early 90s by declining trend in share markets. It was widely felt necessary to adopt measures to restore the confidence of shareholders and make the corporate happy. In Oct 1998, the union government promulgated the companies ordinance, 1998 approving buyback of shares for the first time in India. Major reasons behind this were:

  • Reviving the sagging capital market by creating and sustaining investors’ interest in capital market.
  • Improving the standards of corporate governance and hence performance of corporate enterprises.
  • Better potential use of cash reserves.
  • Providing opportunity for restructuring debt equity ratio with minimum hassle.
  • Help in increasing promoters’ holding which will help in avoiding takeover bids.

 

The use of share buybacks has grown in intensity in India since its inception because buybacks strategy has long been advocated as one of the great hopes for economic revival. It contracts the capital base and decreases the floating stock. Hence it is expected to result in an enhancement of shareholders’ value and share prices provided that there is no erosion in the profitability of the company and market behaves rationally. But this is not only important for share prices and shareholders’ value but it is also important for the purpose of capital restructuring. It helps companies to tackle market inefficiencies by correcting perceived market share valuation.

This method is widely used all across the world for these purposes. Share repurchases have increased in the U.S. in the past twenty years, from $5 B in 1980 to $349b in 2005.

In 2008, India Inc was combating a slowing economy and liquidity crunch; the year saw many corporate entities spending money on buying back their shares. Many companies, including blue chips like Reliance Infrastructure and DLF, bought back shares worth more than Rs 1,100 crore between March and December 2008. With share prices having fallen sharply during the year, promoters of many companies were able to raise their stakes cheaply.

Name

Board meeting
Date

Price in Rs

Change
%

Date*

Mar 18 ‘09

DLF

10/07/08

458.35

159.10

-65.29

Gujarat Fluro

23/03/08

179.45

63.00

-64.89

HEG

19/08/08

264.64

100.40

-62.06

R System

04/09/2008

93.05

48.90

-47.45

SRF

25/04/08

139.05

74.20

-46.64

Ipca Labs

11/11/2008

427.95

306.45

-28.39

Bosch

02/09/2008

4048.35

2983.40

-26.31

Austin Eng

08/01/2009

59.15

44.05

-25.53

HOV Services

13/01/09

32.75

26.95

-17.71

Alembic

14/11/08

36.4

30.25

-16.90

* Board meeting date
Source: www.business-standard.com; Buybacks fail to enthuse investors; 19th Mar

 

Though as discussed earlier and with the data in table, it is evident that buybacks were not successful in cushioning the price of their shares but were able to increase promoters share holding quite cheaply.

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admin1 on February 20th, 2012

Tax free bonds, that’s something new in Indian investment arena. It is an additional option to invest in debt market, that too in bonds issued by state-owned infrastructure developers. This promises around 8.5% returns, which is not offered by any other high rated debt instrument category.

These bonds require no tax payment on the interest earned which takes pre tax return to 12% for people in 30% tax bracket. Even for people in 20% tax bracket, pre tax return of 11% is not that bad from a AAA debt instrument.

NHAI (National Highway Authority of India) and PFC (Power Finance Corporation) have already issued their bonds and others like Indian Railways, HUDCO and REC also look to grab this financing opportunity. It’s a win-win situation for both the parties, where investors are getting good returns on their investments and companies in infrastructure sector are able to source financing for the greater good.

In India, where interest rates look like on the roof and RBI giving indication of drop in interest rates in coming times; there could not be any better time to invest in these securities. All these bonds will get listed in the market and people can look for capital gains, with fall in interest rates. As the value of the bonds go up with the interest rates coming down. (Though capital gain will not be tax free)

For example, NHAI’s 15 year tax-free bonds got a fabulous listing on the NSE, After opening at Rs 1,035, it stabilized with premium of ~4%. Similarly, the 10-year bond (N1) also was trading at Rs 1,028.4, up around 3 percent. Though these bonds can be bought from the market as well but due to the premium involved, it is best to buy through the public offers.

These bonds offer a higher return to retail investors than Institutional or HNI investors. So it is suggested to apply for a max of Rs 5 lakh in any single bond issue to retain your retail status.

To sum it all, it is good to invest in these tax-free bonds as they offer decent return even after being a good rated debt investment. These are good even from liquidity point of view as these will be listed on exchanges and last but not the least, with interest rate cut season closing in, you can expect good capital gain as well. Though we will not suggest you to cash out immediately, invest only if you have a little longer investment horizon.

Finally a word of caution; these are tax free bonds but are not guaranteed by Indian sovereign. So there is a little credit risk involved, which means there is a risk of issuer defaulting. Government may support these firms as in case of Air India, but Investors must do their homework on the issuer’s credit quality before investing.

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admin1 on February 19th, 2012

Many of our friends say that they have already taken care of 1,20,000 Rs investment they can do for tax saving, but is there anything else which they can do?

Answer is yes, Even after you are done with Rs 1 lakh investment under 80C and Rs 20000 in infrastructure bonds you can still do a lot to save a lot.

House

All the tax planners say that buying a house using Home loan is the best way, but in recent times how many can afford that, is a big question. But world is not finished yet you can save tax even by renting a house. Income tax laws in India allow tax deduction on the House rent Allowance (HRA) given to salaried people under Income tax ACT section 10 (13A). This deduction is capped at minimum of

  • Actual HRA earned by the assessee for the year
  • Rent paid minus 10% of basic salary
  • 40% of Basic (50% of basic in case of metro cities)

Maintenance and electricity charges are not considered for the same. Income tax department will ask for rent receipts as the proof of rent. And even pan number of landlord will be required if annual rent is more than Rs 1,80,000.

If you reside in self owned house, then you need not to worry about all this. You can take benefit of deduction under 80C for Principal payment of home loan. Further Under section 14, you can claim for deductions on interest part of your home loan which is deduction of another Rs 1,50,000. In case of joint ownership, all the owners can have these deduction on pro rata ownership basis.

 

Medical Insurance

Obviously none of us plan to be sick but it is still wise to look for way out if you or your loved ones fall sick. In today’s world medical emergency cost could be unbearable for just anybody. So a good medical insurance is a MUST. It not only leaves out pain of not having money for medical needs of your family, but along with it also saves you some bucks in form of tax deductions.

Deduction under Income tax section 80D is available for the purpose. Deduction limits are:

  • Rs 15000, in case of Self, Spouse and children
  • Rs 30000, in case of Self, Spouse, Children and Parents below 60 years.
  • Rs 35000, in case of Self, Spouse, Children and anyone Parents above 60 years.

It is always recommended to have Good medical Insurance to cover your family. Refer following links for your Medical insurance needs.

 

Education Loan Interest 

Last but not the least if you are bleeding with the loan you had taken for your higher studies, now you can use that to decrease you tax payment.

Any amount paid by you in current year as interest payment for the Education loan can be fully deducted from your income for tax calculation.  There is no capping on this under Income tax Act Section 80E. This can be availed even if you have taken it for Spouse or Children.

 

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admin1 on February 18th, 2012

“It’s already February and I haven’t done anything to save my tax, What should I do?”

This is a very common question asked by many these days. Actually answer is not that difficult, may be you are already doing part of what is required.

Income tax rules allow deductions under various sections which help us to save tax. Most important of them is 80C which allows up to Rs 1 lakh deduction. It can be done using various methods including provident Fund, Public Provident Fund, Housing loan interest, ELSS and life insurance premiums etc.

Component What can be claimed? Not allowed
PF / VPF through salary
  • This is generally cut by companies as part of your provident fund. Maximum limit is same; Rs 1 lakh
  • While employer’s contribution is tax exempted, your contribution is counted towards section 80C investments.
  • There is option to contribute through voluntary option. (VPF)
Housing loan principal including Registration / Stamp duty
  • If you are paying EMI on house loan then principal part of it can be taken as deduction under 80C
  • You need to have possession of property and certificate of ownership to claim tax deduction under 80C
  • Amount paid as stamp duty when buying  house, and the amount paid for the registration of the documents of the house can be claimed under section 80C in the year of purchase of the house

Benefit can’t be taken for under construction home.

Loan has to be from some bank or financial institution and not from family / friends.

Life insurance premium
  • Every person having dependents should have life insurance so this comes as another favourite.
  • Policy can be from any company approved by IRDA (Insurance regulatory & Development Authority)
  • Allowed for Premium paid for self, spouse and children.

Premium paid for parents is not covered.

For Single premium plans, max 20% of sum assured is allowed for deductions.

Public Provident Fund (PPF)
  • It is statutory scheme of Government of India. Accounts can be opened at post offices and various banks.
  • This scheme is for 15 years. But here interest earned is also tax free. So actual returns through PPF comes out to be much higher than normal Fixed deposits.
  • Account can be opened for self, spouse and children for 80C benefit. The contribution to the account can vary from year to year, from a minimum of Rs 500 to a maximum of Rs 100,000 in any given year.
Only deposits in current Financial year considered.
PPF in name of parents is not allowed for 80C deduction.
Mutual Fund / ELSS
  • If one has not reached the limit of Rs. 100000, then investment of the remaining amount in Equity Linked Savings Scheme (ELSS) is next best.
  • Equities provide the best, inflation-beating return in the long term. After all, what can be better than something that gives great return and helps save tax at the same time? Though lock-in period is 3 years for these schemes.
Allowed only for self. Investments in name of Spouse, children and parents are not allowed for 80C tax benefits
National Savings Certificate (NSC) and NSC interest
  • Self named NSC certificate upto limit of Rs 1 lakh is allowed for deduction.
  • Interest accrued every year is liable for tax. Though interest is also deemed to be reinvested and so eligible for tax deduction.
Certificates in name of spouse, children or parents are not allowed.
Previous year certificates are not allowed. Though NSC interest component will be considered.
Fixed Deposits
  • Fixed deposits in scheduled banks with minimum period of 5 years are eligible. (Please clarify with the bank about the eligibility of 80C deduction for individual scheme)
Not allowed if in name of spouse, children or Parents.
5 year time deposit in Post office
  • Self named five year time deposit is allowed for 80C benefits
Not allowed if in name of spouse, children or Parents.
Unit linked Insurance Plan (ULIP)
  • ULIPs cover Life insurance with some benefits of equity investments. But go through the various charges and fine prints for individual policies so that you don’t end up loosing while saving tax.
Allowed for self, spouse and children. ULIPs in name of parents are not allowed for 80C benefits.
Children Tuition fees
  • Tuition fees paid on two children’s education upto limit of Rs 1 Lakh. Even if you have more then two children, you can claim tuition fees paid of only two children.
  • Though, husband and wife both have a separate limit of two children each, so they can claim deduction upto 4 children.
Donations, Uniform fee, late fee, Transport charges, hostel charges, Mess charges, library fees, scooter/cycle/car stand charges are not allowed.
Fee for private tuition / Coaching classes is not allowed.
Senior citizen saving scheme
  • Senior citizen > 60 years can make deposits under this scheme which will be allowed for deduction under Section 80C

 

 

Long Term Infrastructure Bonds

 

Apart of 80C, another very easy and effective method is by investing in long term infrastructure bonds. Under section 80CCF, It allows another 20000 investment which will not be considered for your tax calculations.

For tax benefits it has to be self named and investment term should not be less than 10 years. Investment in name of spouse, children and parents is not allowed for this benefit.

These bonds provide interest rates in tune of 9% annually. But saving on tax of 20000 is major benefit here, which will increase effective return.

Interest earned on these bonds is not tax exempt. But it is recommended for people in 20-30% tax bracket to investment in these bonds if they don’t see any liquidity concern for them for the term of the bonds.

Again companies provide option of annual / cumulative options for interest payment. If you don’t need annual payment for your expenses then it is always better to go for cumulative option. In current times with high interest rates it also reduces reinvestment risk for investors.


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Income tax slabs applicable for financial year 2011-2012 are as follows. Assessment year for income tax return filing is 2012-13

For General tax payers Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 1,80,000

0 %

Rs. 1,80,001 to 5,00,000

10%

Rs. 5,00,001 to 8,00,000

20%

Above Rs. 8,00,000

30%

For Women Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 1,90,000

0 %

Rs. 1,90,001 to 5,00,000

10%

Rs. 5,00,001 to 8,00,000

20%

Above Rs. 8,00,000

30%

For Senior citizen (60 – 80 years) Income tax slabs

Yearly Income

Tax Rate

Rs. 0 to 2,50,000

0 %

Rs. 2,50,001 to 5,00,000

10%

Rs. 5,00,001 to 8,00,000

20%

Above Rs. 8,00,000

30%

For Very Senior citizen (Above 80 years) Income tax slab

Yearly Income

Tax Rate

Rs. 0 to 5,00,000

0 %

Rs. 5,00,001 to 8,00,000

20%

Above Rs. 8,00,000

30%

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admin on August 23rd, 2011

IPO – TD Power Systems Limited (TDPS) is coming to the capital market with an initial public offering to raise money from the primary markets. The IPO has a lower price band of Rs. 256 and upper price of  Rs. 261. CARE has assigned the IPO rating of 4/5 IPO Grade to this IPO of TD Power Systems Ltd. The lot size is 25 shares.

ASBA Form for TD Power Systems (TDPS) IPO download details – http://fintub.com/capital-markets/how-to-apply-ipo-using-asba/

TD POWER SYSTEMS LIMITED
*Non-Retail investors i.e. QIB and Non-Institutional Investors shall mandatorily use ASBA facility
Symbol – Series TDPSL EQ
Issue Period Aug 24, 2011 to Aug 26, 2011
Post issue Modification Period August 27,2011
Issue Size Public issue of [.] Equity Shares aggregating upto Rs 2270 million.
Issue Type 100% Book Building
Price Range / Price Band Rs.256 to Rs.261
Face Value Rs.10/-
Tick Size Re. 1/-
Market Lot / Lot Size 25 Equity Shares
Minimum Order Quantity 25 Equity Shares
IPO Grading / IPO Rating IPO GRADE 4
Rating Agency CARE
Maximum Subscription Amount for Retail Investor Rs.200000
IPO Market Timings 10.00 a.m. to 5.00 p.m.
Global Co-ordinator and Book Running Lead Manager Enam Securities Private Limited
Book Running Lead Manager Antique Capital Markets Private Limited,Equirus Capital Private Limited
Syndicate Member Antique Stock Broking Limited,India Infoline Limited
Categories* FI,IC,MF,FII,OTH,CO,IND, and NOH.
No. of Cities with Bidding Centers 40
Name of the registrar LINK INTIME INDIA PRIVATE LIMITED
Address of the registrar C -13, Pannalal Silk Mills Compound,L.B.S Marg, Bhandup (West),Mumbai ? 400 078
Contact person name number and Email id Mr. Sachin Achar,Telephone: +91 22 25960320 Fax: +91 22 25940329,tdpsl.ipo@linkintime.co.in

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