Author: root

1. About the NCD issue:

Edelweiss Financial Services (EFSL) August 2021 NCD offer period -August 17- September 6,2021.

The NCD issue will be secured in nature, meaning that if there will be a financial crisis situation at the company then investors interest will be put on priority and they will be paid back their principal amount together with the applicable interest rate, if any.

The base size of the NCD will be Rs. 400 crore.

If the investor already owns NCD issue of EFSL or group companies then he or she shall be entitled to an additional pay out of 0.2 per cent per annum.

Lead manager of the NCD: Equirus Capital Private Limited

2. About Edelweiss Financial Services:

It is the country’s leading financial services conglomerate catering to both local as global customers. The company’s financial services are in areas including credit both retail and corporate, investment and advisory services encompassing asset and wealth management and life and general insurance.

3. Purpose of NCD issuance: Major proceeds from the NCD i.e. 75% will be deployed towards repaying or pre-paying the company’s existing debt and the rest shall be utilized for corporate purposes.

4. Rating:

ICRA has rated the NCD issue of EFSL as A+ with a negative outlook, while the rating accorded by Acuite Ratings and Research Ltd is AA, again with a negative outlook. The ratings signify that these NCDs come with low credit risk nonetheless they aren’t as safe as AAA-rated securities.

5. Return:

The issue offers an effective yield of up to 9.7% i.e. highly lucrative given the low interest rate structure of the economy currently.

Here is given the 8 series of the NCD issue with the pay-out options

6. Taxability:

Interest income on NCD is taxable similar to fixed deposits. But in the case when the investment is not held until maturity and redeemed within a period of one year from investment date then short term capital gain tax applies and the rate for the same is determined based on the income tax slab applicable to you. For, NCDs sold after 1 year term, LTCG is charged at 20 percent with indexation benefit.

7. Whether or not should you invest in 9.7% Edelweiss Financial Services secured NCDs?

Investors with investible surplus are looking at bagging splendid returns and that too in the short term of may be as less as a day. This can we validated as we lately saw record subscriptions for IPOs, in the hope of huge listing gains in line with the fundamentals of the company going public and the overall bullish market momentum.

Now in the case of NCDs, the gains cannot be realized in a day or so nevertheless, investors may be paid out interest along with principal amount either on a monthly, quarterly, annual or on a cumulative basis.

Coming on to this specific Edelweiss NCD issue that will be thrown open for investment from August 17 (Tuesday), investors need to keep in mind the rating which suggests that the instrument lags on the safety parameter. Furthermore, while the return offered on the instrument is substantially higher when compared to traditional fixed deposits, they are low on liquidity despite being available for trading on the exchanges. Edelweiss NCD is proposed to be listed on NSE.

Experts suggest that at a time when economy is just recovering from the Covid-led fall out, it will not be prudent to lap up instruments with even low-credit risk. Nonetheless if your risk appetite allows, you can deploy a small portion of your investible surplus into the NCD issue for a shorter term horizon of 3 years. Also, note holding NCD for less than a year will not make sense because of the taxation implication.

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Eligibility and application process

To be eligible for benefits under the National Pension Scheme (NPS), a person must be a retail trader, shopkeeper, or self-employed person, should be between the age group of 18 and 40, and have an annual turnover of Rs. 1.5 crore or less. The person should not be engaged in an organized Sector (membership of EPF/NPS/ESIC), a beneficiary of PM-SYM, and an income taxpayer. For the application procedure, on a self-certification basis, retail traders/shopkeepers and self-employed people will be needed to visit their local Common Services Centre (CSC) and register for NPS-Traders using their Aadhaar card and Savings bank/ Jan-Dhan account number.

The first month’s registration will be paid in cash, with limousine debit commencing the next month. Subsequently, retail traders/shopkeepers and self-employed people will be able to self-register using their Aadhaar numbers, savings bank account numbers, and Jan-Dhan account numbers by visiting the NPS-Traders online site or downloading the NPS mobile app.

Features

It is a voluntary and contributory pension system under which the subscriber is provided with a minimum monthly pension of Rs 3000 after reaching the age of 60, and if the subscriber dies, the beneficiary’s spouse is eligible to receive 50% of the pension as a family pension. Only the spouse is eligible for a family pension. At their facilitation desks/help desks, all state and central government labour offices, all LIC branch offices, and ESIC/EPFO offices will operate as Facilitation Centres to provide full details to retail traders/shopkeepers and self-employed persons about the Scheme, its benefits, and the procedures required.

The Ministry of Labour and Employment will oversee PM-SYM, which will be executed by the Life Insurance Corporation of India and CSC e-Governance Services India Limited (CSC SPV). The Pension Fund Manager will be LIC, and they will be in charge of paying out the pensions. If a member has not made his or her contribution on a regular basis, he or she will be permitted to do so by clearing any overdue dues, as well as any penalty costs imposed by the government. Subscribers can call customer service at 1800 267 6888 for further details and to handle any concerns regarding the scheme which is accessible 24 hours a day, seven days a week. Complaints can also be registered using the web portal/app of NPS.

Exit and withdrawal rules

Here are the exit and withdrawal rules under the National Pension Scheme according to the official website of the Ministry of Labour & Employment:

• If he/ she exits the scheme within a period of less than 10 years, the beneficiary’s share of contribution only will be returned to him with a savings bank interest rate.
• If the subscriber exits after a period of 10 years or more but before 60 years of age, the beneficiary’s share of contribution along with accumulated interest is actually earned by the fund or at the savings bank interest rate whichever is higher.
• If a beneficiary has given regular contributions and died due to any cause, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit by receiving the beneficiary’s contribution along with accumulated interest as actually earned by the fund or at the savings bank interest rate whichever is higher.
• If a beneficiary has given regular contributions and become permanently disabled due to any cause before 60 years, and is unable to continue under the scheme, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit the scheme by receiving the beneficiary’s contribution with interest as actually earned by the fund or at the savings bank interest rate whichever is higher.
• After the death of the subscriber as well as his/her spouse, the entire corpus will be credited back to the fund.

Contribution by the retail traders/ shopkeepers and self-employed persons

From the date of joining NPS-Traders until the age of 60 years, using the ‘auto-debit feature from his/her savings bank account/ Jan-Dhan account one can make contributions as shown in the chart below:

In the post-pandemic times, it is worth mentioning that if you are planning to travel abroad sooner or later then the cash transaction for buying US dollar or any other foreign currency is allowed only upto a certain limit. Thereafter, The Income Tax Department shall be intimated by the money changing department and I-T Department would start chasing you if it found that you are having disproportionate transactions as per declarations made in ITR . And finally, the Income Tax Department would start sending you the notices.

In the wake of two Corona Pandemics, the Airline Industry was closed and stalled. However, in post-pandemic time when everyday life is coming back on track slowly and steadily, the operations of airline Industry are also gaining momentum, however if you are planning to travel across the globe or length and breadth of a particular continent, keep the above-mentioned fact in mind while buying dollar from money changing institutions.

What are the rules for Cash Transaction?

Amongst several designated companies/ organisations, currency changers and banks are mandated to notify set financial activities yearly in Form 61A to the Income Tax Authority, below Section 285BA of Income Tax Act, 1961. The detailed financial deals involve the acquisition of foreign currency of an amount aggregating to Rs 10 lakhs ( 1 million) or higher in a financial year from money changers or banks or additional approved bodies under foreign exchange regulations.

The above-mentioned explanation further includes:

The credit of the foreign currency transaction to the foreign exchange card.

The Expenses that have been incurred in the foreign currency through the credit card or debit card or even the traveller’s cheque or lastly any other instruments.

Reasons for the Aforesaid Vigilance by I-T Department?

The rationale behind such vigilance is but natural to keep an account of the high-value transactions that are being undertaken by taxpayer and if the details mentioned in ITR and high value transactions are not in sync then to take the apt action against taxpayer for not disclosure of facts and figures or in other words trap the lie, cheat and other non-transparent attitude of the taxpayer.

The detailed monetary activities described by the various organisations/ institutions are reflected in the taxpayer’s Form 26AS. Within that taxpayer can guarantee that the income reported to before-mentioned related activities is properly submitted to tax and revealed in their income tax return.

What Should the Taxpayer Do if Trapped?

The Taxpayer should submit the detailed explanation of the aforesaid discrepancy and not to forget along with the necessary documents to the I-T Department.

The submission to the I-T department should involve majorly the following aforesaid items.

Explanation of the sources of Income

Taxes that have been paid in case of the aforesaid income.

In essence or to conclude, while travelling abroad and in general, It is better to stick to the norms that have been prescribed by the I-T Department and other Government Agencies while travelling abroad than to invite trouble.

Amit Gupta, the author of the article is Co-Founder and MD, SAG Infotech

The opinion herein is of the author and do not reflect the opinion of Greynium Information Technologies Pvt Ltd