Category: Personal Finance

6 Factors That Can Drive Gold To Bounce Back To Fresh Record Highs

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1. Rising number of coronavirus cases across the globe including India:

On Wednesday, the health ministry in an update said a new Covid 19 variant has been found in as many as 18 states. Besides, in the last 24 hours, India recorded over 50000 new Covid 19 cases, the highest one-day rise this year, taking the total tally to 1.17 crore, the third highest case tally only after the US and Brazil.

As per the data from John Hopkins University (March 22, 2021) total deaths due to Covid 19 around the globe have reached 2.7 million and confirmed cases are at 123.2 million. This is the statistics across close to 200 countries. Further the report highlighted after the US, Brazil and India, Russia, the UK and several European countries have reported the highest number of Covid 19 cases.

2. Fresh lockdowns again:

2. Fresh lockdowns again:

In some of the countries partial lockdown is being put in place and this is making investors jittery and reducing their risk appetite. On Saturday, countries like France, Poland and Ukraine implemented new lockdowns to curb rising coronavirus infection. And any lockdown measures will dent the economic recovery across the globe and in times of economic unrest, the yellow metal gains appeal as a safe-haven.

3. Central bank's accommodative stance and fresh stimulus:

3. Central bank’s accommodative stance and fresh stimulus:

Globally central banks have been infusing liquidity to support the economies still under the recovery phase from the pandemic led downturn. This scenario doesn’t augurs well for the economy as it tends to increase debt and impact inflation, nonetheless it would be beneficial for the bullion market.

4. Low interest rates:

Interest rates are unlikely to head northwards in the near to medium term and gold shares an inverse relationship with interest rates. Meaning to say that in low interest regime, the opportunity cost of holding the bullion reduces and hence people tend to buy the bullion aggressively which pushes demand and hence the price of gold.

5. Low prices are pushing demand for physical gold:

5. Low prices are pushing demand for physical gold:

After the price of gold has corrected sharply from its all time high, there has been a pickup in demand for physical as well as paper gold in India. Investors looking at gold as a long term investment are betting on SGBs that earn regular interest income, while ahead of the wedding season there is seen demand for physical gold. This increase in demand could also support metal prices.

6. Inflationary expectations:

6. Inflationary expectations:

On higher liquidity there are surfacing concerns over inflation. And in times of inflationary distress, while the value of currency erodes, usual investment avenues fail to deliver inflation-beating returns and hence people tend to park their funds in gold. Moreover, gold acts as a perfect hedge against inflation as it is not impacted by variations in the value of currency.

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Fidelity applies to launch a bitcoin ETF, BFSI News, ET BFSI

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– Fidelity applied on Wednesday to launch an exchange traded fund to track the performance of bitcoin, the latest move on Wall Street to embrace the digital currency.

Fidelity’s Wise Origin Bitcoin Trust would hold bitcoin and value its shares based on prices from major cryptocurrency exchanges, including Coinbase and Bitstamp, according to a preliminary filing to the Securities and Exchange Commission.

“The digital assets ecosystem has grown significantly in recent years, creating an even more robust marketplace for investors and accelerating demand among institutions. An increasingly wide range of investors seeking access to bitcoin has underscored the need for a more diversified set of products offering exposure to digital assets,” Fidelity said in an emailed statement.

Fidelity’s filing follows bitcoin’s surge to an all-time high of nearly $62,000 this month, the latest milestone in a meteoric rise partly fueled by bigger U.S. investors.

Earlier this week, former Trump administration White House communications director Anthony Scaramucci jumped into the fray for a bitcoin exchange-traded fund with his SkyBridge Capital joining forces with First Trust Advisors, according to a filing.

Coinbase Global Inc, the largest U.S. cryptocurrency exchange, said last week that recent private market transactions had valued the company at around $68 billion this year ahead of a planned stock market listing.



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Banks may seek review of SC order; yet to get ex gratia from first round

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According to Emkay, bankers believe that the interest waiver relief should be extended only to small retail and enterprise borrowers, who are most affected by the pandemic, and not to large borrowers, who have better repayment capacity and are also eligible for other relief measures such as restructuring.

Banks may ask the government or the Reserve Bank of India (RBI) to seek a review of Tuesday’s Supreme Court order, directing the government to pay the compound interest for all loans during the moratorium period. Executives from the non-banking financial company (NBFC) sector on Wednesday said lenders were yet to receive reimbursements for the claims they filed in the first round, when the compound interest was paid to borrowers with loans of up to Rs 2 crore.

In a note, analysts at Emkay Global Financial Services wrote that the banking industry may move to get the apex court order overturned. “As per our discussion with bankers, they suggest that IBA (Indian Banks’ Association)/RBI/Govt should file a writ petition challenging the court directive to waive interest on interest on loans of over Rs 2 crore (except for consolidated exposure),” the report said. According to Emkay, bankers believe that the interest waiver relief should be extended only to small retail and enterprise borrowers, who are most affected by the pandemic, and not to large borrowers, who have better repayment capacity and are also eligible for other relief measures such as restructuring.

Ramesh Iyer, vice-chairman and managing director, Mahindra & Mahindra Financial Services, said all NBFCs had applied for the reimbursement and were yet to get it back. Raman Agarwal, co-chairman, Finance Industry Development Council (FIDC), said this was the case for all lenders. “That is true for everyone, for banks also…Now we have filed our claims through SBI, which was the nodal agency, and all the claims are lying with the government. We haven’t heard of anybody yet being reimbursed. They are processing; it’s going to take some time.”

Lenders themselves have paid the ex gratia amounts to their respective borrowers, and the last date for doing so was November 5, 2020.

Analysts at Icra have estimated the total compound interest for six month of moratorium across all lenders at Rs 13,500-14,000 crore, of which about Rs 6,500 crore was towards the first round. “With the announcement of waiver for all borrowers, the additional relief of ~Rs 7,000-7,500 crore will need to be provided to borrowers,” the rating agency said on Tuesday.

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From April 1, You Need To Make All Such Disclosures In ITR

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Personal Finance

oi-Roshni Agarwal

|

Beginning April 1, if you have been trading in shares or have substantial dividend income then you no longer can hide this information from the tax department. This is because from the new financial year 2021-22, the taxmann will also get information pertaining to your share trading, transactions in mutual funds, dividend income and post office deposits or deposits with the NBFC. Further such information will also be shown in the new Form 26AS.

From April 1, You Need To Make All Such Disclosures In ITR

From April 1, You Need To Make All Such Disclosures In ITR

Until now, taxpayers had been hiding such information on share trading or mutual fund transactions either due to ignorance or to get away with the hassle of computing capital gain or loss on such transactions for the financial year or in order to avoid filing a more complicated return as against ITR 1 or simply to reduce their tax-outgo.

Now the IT department will source all the relevant information direct from your brokerage house, AMC, post office, so it will be difficult for assessees to hide such income source and investments.

What has changed in the Union Budget 2021?

In the Budget 2021 announcement finance minister Nirmala Sitharaman said that ITR forms will henceforth come pre-filled with information including capital gains from listed shares, dividend income, interest income from post office, banks etc. in order to simplify the process of ITR filing. Though till now, taxpayers were able to auto-populate basic details including name, address, PAN, bank details, tax payment, TDS etc.

Further, to implement the proposal, on March 12, 2021, the CBDT came up with the notification which said that a particular category of persons required to furnish SFT or statement of financial transaction under section 285BA of the Income Tax Act and should include information related to capital gains of sale of listed shares or mutual fund units, dividend income together with interest income. And the category of persons defined as per the release are recognised Stock Exchange such as BSE, NSE, depositories, clearing corporation, registrar, share transfer agents, companies distributing dividend, banking companies or a co-operative bank covered under the banking laws, Post Master General defined under the Indian Post Office Act, 1898 and NBFCs.

And so as the AIS or Annual information statement will have extensive data, taxpayer need to show all such details including salary, interest income, dividend, capital gains from mutual funds and shares in his or her ITR, else severe penalty consequences shall arise.

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How NPS Tier-1 Accounts Has Outperformed Corporate Debt Funds?

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Investment

oi-Vipul Das

|

Over the last three years, HDFC Pension Fund Scheme has been the top performer among National Pension System (NPS) funds in the corporate debt funds category. HDFC Pension Fund Scheme is a pension fund managed by HDFC. Over the last three years, it has delivered an annual return of 10.09 percent, outperformed other high-rated Debt Corporate Bonds. According to NPS trust, other pension fund managers’ Schemes C (corporate debt) performed well as well, with high returns up to 10.09 percent over the same period. They outperformed their corporate bond mutual fund peers, which returned 8.68 percent on average.

HDFC Pension Fund Scheme was followed by SBI Pension Funds with a three-year return of 9.92 percent, and LIC Pension Fund, with a return of 9.86 percent, came in second and third, respectively. The least outstanding scheme in this category was Kotak Pension Fund, which has a three-year yield of 8.46 percent. Some pension funds has even outperformed corporate bond mutual funds with an average return of 8.45 percent in the five-year return category. Over a five-year period, HDFC Pension Fund’s Scheme C has the highest annual return of 9.60 percent. ICICI Prudential Pension Fund and SBI Pension Fund came in second and third, respectively, with 9.44 percent and 9.44 percent returns. Even the worst-performing fund, Kotak Pension Fund, with an 8.64 percent return is failed to touch the benchmark’s performance over the five years which is 9.69%.

NPS Scheme C Tier-1 Returns

NPS Scheme C Tier-1 Returns

Pension Fund 3 Year Returns 5 Year Returns
Aditya Birla Sun Life Pension Management Ltd. 9.57% NA
HDFC Pension Management Co. Ltd. 10.09% 9.60%
ICICI Pru. Pension Fund Mgmt Co. Ltd. 9.67% 9.44%
Kotak Mahindra Pension Fund Ltd. 8.46% 8.64%
LIC Pension Fund Ltd. 9.86% 9.20%
SBI Pension Funds Pvt. Ltd 9.92% 9.44%
UTI Retirement Solutions Ltd. 9.26% 8.97%
Benchmark Return as on 19/03/2021 10.60% 9.69%
Source: NPS Trust

Corporate Debt Fund Returns

Corporate Debt Fund Returns

Fund Name 3 Year Returns 5 Year Returns
ABSL Corporate Bond 9.11% 8.74%
HDFC Corporate Bond 9.06% 8.77%
ICICI Pru Corporate Bond 8.78% 8.55%
Kotak Corporate Bond 8.60% 8.44%
Axis Corporate Debt Dir 8.76% –
IDFC Corporate Bond Dir 8.51% 8.46%
Source: Value Research

Note

Note

One can open a NPS Tier-1 account with a minimum deposit of Rs 1000 per year and the account matures at 60 years old, although it can be extended to 70 years of age. NPS Tier 1 contributions up to Rs 1.5 lakh are eligible for a tax deduction under Section 80 C and an additional Rs 50,000 under Section 80 CCD (1B) of the Income Tax Act, 1961. The NPS Tier 1 account balance can be withdrawn tax-free up to 60% of the balance and the remaining 40% should be used to buy an annuity.



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Barbeque Nation Hospitality IPO Opens Today: Should You Subscribe?

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IPO details:

The issue size of the IPO is Rs. 453 crore and includes a fresh share issuance of Rs. 180 crore and an offer for sale or OFS of up to 54,57,470 equity shares. Ipo price band is Rs. 498-500

Link Intime India Private Ltd is the registrar of the IPO. As per brokerages, the share allocation for Barbeque Nation is likely to be completed by April 1 and the stock will debut on the bourses on April 7.

The lot size for subscription is 30 and 10% of the quota is reserved for retail investors.

The investment bankers for the issue are IIFL Securities, Axis Capital, Ambit Capital and SBI Capital Markets.

Promoters of Barbeque Nation include Sayaji Hotels, Sayaji Housekeeping Services, Kayum Dhanani, Raoof Dhanani and Suchitra Dhanani and is also backed by CX Partners.

Further, ahead of the issue, the company aggregated Rs. 202 crore from 15 anchor investors.

Company profile:

Company profile:

The company owns and operates a chain of Barbeque Nation restaurants across India. Also it has Toscano restaurant and UBQ by Barbeque Nation Restaurant under its banner. Jhunjhunwala holds stake in the firm through his investment firm Alchemy Capital that has the ownership in 5,75,000 shares or 2% stake in Barbeque Nation Hospitality.

As of the quarter ended December, the company owns and operates 164 restaurants that include 147 Barbeque Nation fine dining restaurants across 77 Indian cities, 7 international outlets and 11 Toscano stores offering Italian cuisine.

Some of the key shareholders in the firm are

CX Partners, Jubilant Foodworks, Xponentia and Alchemy.

Issue objective:

The proceeds from the issue will be put towards expanding and opening of new restaurants, pre-payment or repayment of all or a part of company’s outstanding borrowings and general corporate purposes.

Key risks:

Key risks:

Sales have registered recovery after the pandemic but risks emerges again

After being hit severely amid the pandemic, the company has recorded recovery in sales, with sales scaling to 84% by November 2020. Primarily, the strong recovery is led by the company’s delivery business which now accounts for close to 15% of the total firm’s revenue against 3 percent in FY20. What has further helped the company is its various cost optimization measures and strengthening of its digital offering after it revamped its BBQ App. But now the second Covid 19 wave remains an operational risk for the company in the near term.

Future growth prospects depend on delivery and footprint expansion

The company remains focused on menu innovation and augmenting customer experience and improving their satisfaction level. Further by adding the delivery platform, the company has managed to increase restaurant throughput without additional costs pressure. So, as the Italian cuisine foray is in the early phase and international presence has also not yielded substantial results, overall expansion in the near future shall be in the country while at the same time delivery business shall also be ramped up.

Financials:

Owing to the high depreciation and interest charges that have swollen due to aggressive company expansion, the company despite high EBITDA margins has not yet become a profitable entity. Margins have also been impacted owing to losses suffered in international outlets in FY 19 and Covid impact in FY20 and 8MFY21. Now after the pre-IPO fund raise and IPO, debt is likely to reduce which can bring the company closer to profitability.

IPO valuation:

Considering near term headwinds, Yes Securities has come up with some concerns on the valuation front. “Company is targeting a market cap of Rs 18.8bn post-issue which equates to 12.2x FY20 EV/EBITDA and 2.2x P/S, which is significantly lesser than QSR peers like Westlife and Burger King. But given the highly capital intensive and more volatile dine-in business model, we believe the discount is justified. Moreover, given the recent pre-IPO allotment in December and January was done at 50% less than IPO price and COVID concerns have again come back which would be a near term headwind for the space, the pricing looks on the higher side with not a lot left on the table for investors”, said the brokerage.

Should you subscribe to the IPO of Barbeque Nation?

Though there has been a strong growth outlook for the sector with industry CAGR expected at 18% and strong brand equity that should facilitate the company in grabbing market share, Yes Securities advices on avoiding the IPO and look for better entry point post listing of the issue.

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How Interest Earned From A Savings Account Is Taxed?

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Taxes

oi-Vipul Das

|

Interest earned on a savings bank account that exceeds the deduction cap is taxed as ‘Income from other sources’ at the taxpayer’s tax slab rate. However, if you fail to report it on your ITR, you will receive an income tax notice and as a result you will face penalties. Section 80TTA of the Income Tax Act allows a deduction for interest received on a savings bank account up to Rs 10,000 per year. This limit covers interest from all bank, co-operative bank, and post office savings accounts. It’s worth noting here is that the exemption under Section 80TTA is based on the total interest received across all of your bank accounts, not per bank account. Section 80TTA allows individuals under the age of 60 to claim a deduction on interest income. Those aged 60 and above can claim a tax deduction on interest income of up to Rs 50,000 or actual interest income, whichever is lower, under section 80TTB.

How Interest Earned From A Savings Account Is Taxed?

Important points to note

  • The interest part of a savings account is categorized under “Income from Other Sources.”
  • The interest income will be disclosed on your tax return and subject to the relevant slab rate of taxation.
  • TDS is not due on a savings account, according to Section 19A of the Income Tax Act of 1961.
  • For interest received on NRO accounts, TDS is deducted at a rate of 30% for NRIs.
  • On NRE accounts, no TDS is withheld by the bank.
  • Savings account interest that exceeds Rs 10,000 is taxed as per your tax slab rate.
  • Interest earned on a savings account up to Rs 10,000 is legally tax-deductible.

Section 80 TTA of Income Tax Act, 1961

  • Individuals and HUFs are the only ones who can take advantage of the deduction whereas companies and firms are not.
  • Interest received on all savings accounts held in post offices, banks, or co-operative banks is eligible for an overall deduction of Rs 10,000.
  • Interest received from any of these sources over Rs 10,000 is subject to taxation.

Section 80TTB

  • Senior citizens over the age of 60 are eligible for a deduction of up to Rs 50,000 per year on interest on savings accounts and fixed deposits under this section.
  • Interest on fixed deposits is also eligible for the same deduction under this section.

Note

Interest received on time deposits, fixed deposits, recurring deposits, or any other, is not eligible for the Section 80TTA deduction. On interest income from bank savings accounts, no tax is deducted at source. Senior residents are not covered under Section 80TTA. On the other hand, section 80TTB allows a senior citizen to deduct interest received on savings deposits and fixed deposits with banks, post offices, or co-operative banks for an amount up to Rs 50,000.



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Last Date To Avail CLSS Advantage By MIG-I, II Category Is March 31, 2021

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Personal Finance

oi-Roshni Agarwal

|

If you fall in the MIG-I and MIG-II categories and wish to take subsidy advantage being offered under the PMAY CLSS then the last date is March 31, 2021. This is unless the centre further extends the date. Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme (CLSS) for MIG or Middle Income Group was launched on January 1, 2017.

Last Date To Avail CLSS Advantage By MIG-I, II Category Is March 31, 2021

Last Date To Avail CLSS Advantage By MIG-I, II Category Is March 31, 2021

Details of the CLSS scheme for MIG category

MIG-I category of homebuyers precisely includes those with income in the range of Rs. 6 lakh to Rs. 12 lakh and they get an interest subsidy of 4% on a loan amount of up to Rs. 9 lakh.

Likewise, MIG-II category includes buyers with income ranging between Rs. 12 lakh and Rs. 18 lakh and they get a rebate of 3% on loan up to Rs. 9 lakh. Thus the PMAY CLSS subsidy amount comes to be at Rs 2,35,068 and Rs 2,30,156 for two categories, respectively.

The benefit under PMAY can be taken in case if one wants to buy a house from a developer or from the resale market via secondary buying. Also, one may secure a loan for constructing a house.

Eligibility to avail CLSS benefit:

The benefit of the subsidy on home buying can be availed by a beneficiary family that includes husband, wife and unmarried children. Further, the beneficiary should not own a pucca house either in his or her name or in the name of any other member of his or her family in any part of the country. Also, the title of the house constructed or purchased by taking a loan under the scheme should be in favour of the female head of the family or in the joint name with the male head.

So, if the children are living with their parents in a house owned by the latter then they can still opt for the CLSS scheme if they are earning and do not own a house.

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FE CFO Awards 2020: India’s UPI is better for transactions than cryptocurrency

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Being able to buy financial products through the video KYC route or subscribing to an IPO through UPI are examples of how the laying down of digital railroads in India has helped subscription-based services to grow and helped democratise the financial services industry, he said.

Cryptocurrencies could be acceptable in India as a store of value but they are not ideal for transactions as the country has much better alternatives, Infosys non-executive chairman Nandan Nilekani said at the FE CFO Awards 2020 on Tuesday.

While the US and Chinese digital economies have been centred around data monopolies, India’s digital infrastructure has laid the railroads for democratisation of services, he said.

“My view is: Don’t think of crypto as a transactional currency because it will never be able to meet the transactional efficiency of UPI (Unified Payments Interface) in India anyway. UPI does 2.3 billion transactions a month and the architecture built by NPCI (National payments Corporation of India) is for 1 billion transactions a day at almost zero cost. So bitcoin can never compete on transactional efficiency,” Nilekani said. Rather, we need to think of bitcoin as a store of value.

“Think of it like an asset class, like gold and real estate. You can put some rules around it,” he said.
Nilekani added: “So we should have a model of crypto as an asset class which I can hold; I may have to declare it, I may have to pay taxes on it, all that is required. But bring that within the system.”

The launch of a digital rupee must also be considered, he observed. The Indian government and the Reserve Bank of India (RBI) can definitely look at a digital rupee and it can use the distribution architecture of UPI to reach 200 billion people. “No other country can do that. The UPI architecture allows multiple stored-value accounts,” he said. This means that on UPI one can have a bank account, a wallet, a bitcoin account or an account from digital rupee.

It is unfair to compare the Indian digital ecosystem to that in the US because the two economies have followed very different trajectories in this space, Nilekani said. While the US has enabled the build-up of large Internet conglomerates and search engines on the back of advertising-driven models, India has invested public funds to set up public infrastructure. “What happened in the US is that once the government set up the Internet, after 1995 the Internet became a private space.

They did not invest in improving the Internet from an architecture point of view after 2000, whereas in India in the last 10 years, Aadhaar, UPI and the account aggregators have been extensions to the Internet that only India has done.”

Being able to buy financial products through the video KYC route or subscribing to an IPO through UPI are examples of how the laying down of digital railroads in India has helped subscription-based services to grow and helped democratise the financial services industry, he said.

“All this stuff (digital infrastructure) will actually make it easier for the small guys to get access to credit. Through e-commerce, small businesses get access to markets. Like that, if we can get more and more companies on this digital highway, they will see growth coming.”

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5 Options That Can Help You In Your Last Minute Tax Planning

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1. Go for preventive health check up before the year end and get tax benefit:

As there is again a threat of being infected by the lethal coronavirus in the country, what might be the better way to help you save tax then going for a preventive health checkup? These checkups provide tax benefit on the amount incurred on them.

Within the 80D deduction offered in respect of a health insurance plan bought for self and family, you also are entitled to a tax benefit on the amount spent on preventive health check up. Here the tax benefit is up to Rs. 5000. And the benefit falls within the overall deduction allowed of up to Rs. 25000 per year or Rs. 50000 in case of a senior citizen.

This benefit is also available in case the payment for preventive health check up to Rs. 5000 is paid via cash. Note the tax benefit against health insurance premium is available only if the payment is made in non-cash i.e. through cheque, net banking or any other digital route.

2. Invest in a pension plan:

2. Invest in a pension plan:

For the premiums paid towards a new, renewed pension plan or an annuity plan offered by an insurance company, you can claim a deduction. In addition for the NPS scheme, apart from the deduction allowed under 80C, if one subscribes to the scheme voluntarily then an additional deduction of Rs. 50000 over Rs. 1.5 lakh shall be extended under Section 80CCD (1B).

Furthermore, a deduction of not over 10% of the salary or 20% of gross income in case of self-employed can also be claimed if one has investments in NPS.

3. Equity linked savings scheme:

3. Equity linked savings scheme:

For claiming tax deduction that is available under Section 80C and at the same time getting equity like return one can invest in ELSS funds which are a type of mutual funds with a shorter lock in period of 3 years. ELSS funds invest 80-100 percent of their corpus in equity and hence carry a degree of market risks. Nonetheless one can earn a higher return than other investments covered under 80C including provident fund etc.

4. Money in your savings account also help you save on tax outgo:

4. Money in your savings account also help you save on tax outgo:

Interest from the savings account held in a bank or post office can also be claimed as deduction up to a maximum of Rs. 10000 under Section 80TTA of the Income Tax Act. Note that this relief is not available on interest income from FDs, RDs and bonds. However the same is extended in lieu of post office deposit held for 5 years. Also, senior citizens aged 60 years and above can claim a deduction of up to Rs. 50,000 on FD at bank or post office.

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