Category: Personal Finance

Five things shaping Britain’s financial rulebooks after Brexit, BFSI News, ET BFSI

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Britain is conducting a review of its financial rulebooks and policies to see how it can keep its 130 billion pound ($184 billion) finance sector competitive after Brexit left it largely cut off from the European Union.

The government is due to issue papers in the coming days outlining its approach to financial technology (fintech) and capital markets, while further down the line it’s expected to propose changes to the funds and insurance sectors.

Here are five things set to shape the City of London financial hub following its loss of access to the EU:

BIG BANG DEBATE
Britain’s finance ministry is reviewing financial regulation and insurance capital rules, with minister Rishi Sunak raising the prospect of a “Big Bang 2.0” to maintain the City’s competitiveness, a reference to liberalisation of trading in the 1980s.

But it’s unclear how far any deregulation could go given that Britain says it won’t undermine global standards.

UK Finance, a banking body, wants a formal remit for regulators to ditch rules that put them at a competitive disadvantage globally. Insurers want cuts in capital requirements to free up cash for green and long term investments.

But the Bank of England says the City must not become an “anything goes” financial centre, and that insurers hold the right amount of capital.

Cross-border firms want to avoid Britain diverging from international norms as this would add to compliance costs.

City veterans say Britain should focus on allowing firms to hire globally, and ensuring that regulators respond nimbly and proportionately to crypto-assets, sustainable finance, long-term investing and restructurings after COVID-19.

COPYING NEW YORK
London has fallen behind New York in attracting company flotations and a government-backed review of listing rules is likely to recommend allowing “dual class” shares and a lower “free float”, perhaps for a limited period.

Dual class shares are stocks in the same company with different voting rights, while “free float” refers to the proportion of a company’s shares that are publicly available.

The potential changes could attract more tech and fintech companies whose founders typically want to retain a large degree of control.

It could also recommend making it easier for special purpose acquisition companies (SPACs) – businesses that raise money on stock markets to buy other companies – an area in which New York has also dominated, with Amsterdam catching up fast.

UK asset managers warn that strong corporate governance standards could be diluted by tinkering with listing rules.

BEYOND SANDBOXES
Britain is home to one of the world’s biggest innovative fintech sectors, its “sandboxes” – which allow fintech firms to test new products on real consumers under regulatory supervision – copied across the world. But Brexit means Britain has to work harder to attract and retain fintechs as they will no longer have direct access to the world’s biggest trading area.

A government-backed review to buttress the sector is due to report back on Friday with recommendations that could include cutting red tape for fintechs that want to recruit staff from across the world, and make listing in Britain more attractive.

Other ideas could include helping fledgling fintech navigate government departments and regulators more easily, along with ways of boosting funding for start-ups.

FUNDS ARE THE FUTURE
Britain is reviewing how to make itself a more competitive place for listing investment funds, a core tool for bringing fresh capital into markets.

UK-based asset managers run many funds listed in the EU, but this global system of cross-border management known as delegation could be tightened up by the bloc.

Having more funds listed in Britain would also mean that the shares they hold would be traded in London. Billions of euros in trading euro shares have left the UK for Amsterdam since Brexit due to the bloc’s restrictions on where funds can trade shares.

THINK GLOBAL
As the City will get only limited access at best to the EU, industry officials say it makes more sense to focus on getting better access to other markets like Singapore, Hong Kong, Japan and the United States, while at the same time keeping the UK financial market open to the world, including the EU.

Negotiations between Britain and Switzerland for a “mutual recognition” deal in financial rules is the way to go, industry officials say. Better global access would also keep the City ahead of EU centres like Amsterdam, Paris and Frankfurt.

($1 = 0.7056 pounds)

(Reporting by Huw Jones. Editing by Mark Potter)



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Why You Should Close Your Old Bank Account?

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Maintaining Minimum Balance

The majority of bank accounts require you to maintain a monthly average balance (MAB) of Rs 500 to Rs 2 lakh per month. When salary is not credited for three consecutive months, your account is converted to standard savings accounts, forcing you to maintain the average monthly balance. If you have multiple accounts, you need to maintain a minimum balance in all the accounts.

Extra Charges

Also, when you don’t maintain the required balance, the bank will deduct the charges depending on the account. The Bank will also deduct the debit card maintenance fees on a yearly basis if it is linked to your account. Consider if you have 3 idle accounts, and you maintain average balance and pay for yearly debit card fees, calculate how much you are paying even when you are not using the account.

If you wish to maintain multiple accounts make sure your debit card is not linked, and you have not availed of any other extra services which keep mounting every year.

maintain keep in a certain state, position, or activity; e.g., “keep clean” More (Definitions, Synonyms, Translation)

Inoperative/ Dormant account

Inoperative/ Dormant account

As per the Reserve Bank of India (RBI) directive, if there are no ‘customer-induced transactions’ for more than 24 months, a bank account is automatically listed as inoperative or dormant.

If there are no transactions in the account for a period of two years, all savings and current accounts will be considered inoperative or inactive. Such accounts will be separated and held in separate ledgers.

To reactivate your inactive account, you will have to submit a written application. Alongside your reactivation application, you will have to submit fresh KYC documents.

Interest Rates

Interest Rates

The main disadvantage here is you will receive only 4% interest for the amount held in a savings account. Whereas if the same amount is held as a fixed deposit, it will fetch a higher return. If you have multiple bank accounts you need to maintain an average monthly balance in all the accounts except your salary account. The minimum balance maintained will get you a return of 4% only.

Tax Burden

Dormant accounts are more prone to fraud as there will be less activity by the customer. There is no point in making the compilation of details and statements from so many banks making it difficult and overburdening when filing tax returns.

Conclusion

It is best to close idle accounts if you are not using them due to the above-mentioned reason. If you still want to continue you should be really careful to keep track of all the accounts.

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A New Tale Of Growth For Affordable Housing?

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Investment

oi-Sunil Fernandes

|

The Government has made it clear over the past few years that Housing for All is the priority area for charting out a course of economic development in the country. The intention was evident in the recent Budget announcements where the FM went on to boost the affordable housing sector with an extension in tax exemption and a tax holiday for another year. Both of these measures introduced in the Budget will directly impact the affordable segment, as the demand for such residential units continues to rise despite the economic slowdown caused by the lockdown.

A New Tale Of Growth For Affordable Housing?

While there are multiple reasons for this increase in demand, major ones remain the all-time low home loan interest rates, perception of real estate as an asset class strengthening among the end-users. In fact, in a recent report released by a property consultant, affordable housing already accounts for more than 35 percent of the supply across the top 7 cities in the country; amid the recent extensions and relaxations given to the segment, this becomes an opportune time for the affordable players to come and lead a new tale of growth. The buyer sentiment is welcoming for the experienced developers, as they have become increasingly cautious about their savings.

However, the segment of affordable housing is dominated by end-users, but a peak in investors’ interest is also observed, especially for the Tier II-III cities. Since the Government’s focus is also shifting from the metro to help smaller towns become the next growth hubs, the boost given to infrastructure in this Union Budget is a testimony that the real estate sector in Tier II-III cities is all set to evolve.

For the first time, an affordable home buyer will be able to avail of a cumulative deduction for home loan interest around Rs. 3.5 lakhs, comparing to the previously granted deduction of Rs.2 Lakh. More than 80 percent of the new launches have been in the Rs 45 lakh price bracket. Regulatory changes such as the introduction of RERA, GST, IBC, and relaxation in FDI have made the nature of transactions in this sector transparent. More radical improvements in the taxation system and regulatory policies are of utmost importance to bring back the sector’s lost momentum. Long standing demands like industry status to the sector, with a little bit of clarity on Input Tax Credit would have made the matters even better for the realty industry. As post unlock the affordable segment experienced an increase in the number of site visits, and these properties had some sales momentum due to the pent-up demand and realisation of people owning their home immediately. This positive sentiment is likely to remain stable during the year of 2021 as government continues to support the realtors with stressed asset funds, relaxations in policies, and a overall boost to the infrastructure sector.

-Mr. Raman Gupta, Director-Branding & Construction, GBP Group



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Federal Bank launches digital platform for savings bank accounts

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Additionally, this platform offers all the features that would provide potential customers with a convenient, hassle-free and paperless banking experience from the comfort of homes.

Federal Bank has announced the launch of Federal 24 7, an end-to-end digital platform that will help in opening and managing savings bank accounts without having to visit the branch.

Federal 24 7 enables a complete, paperless and instant digital savings account opening sitting anywhere in India with just PAN and Aadhaar number. Through Federal 24 7, customers can experience state-of-the-art video KYC based account opening, the bank said.

Additionally, this platform offers all the features that would provide potential customers with a convenient, hassle-free and paperless banking experience from the comfort of homes. The bank will issue personalised ATM-cum-debit card to all the new account holders of instant saving bank accounts.

Shalini Warrier, executive director, chief operating officer and business head – retail, said: “…As the name suggests, this platform is designed to be always available to meet the needs of our customers.” “The launch is in line with the bank’s “Digital at the fore, human at the core” strategy of offering customers more convenience through digital processes and solutions and is based on the guidelines of the RBI’s video-KYC norms.”

Once the process is complete, the account holder will get his/her account activated instantly and can start transacting immediately.

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6 Small Finance Bank FDs With Interest Rates Up To 7.75% For Senior Citizens

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AU Small Finance Bank FD Rates For Regular Customers

For the general public AU Small Finance Bank provides interest rates varying from 3.75 percent to 6.75 percent on FDs maturing in 7 days to 10 years. These FD rates are in effect from 2nd December 2020. For the maturity period between seven days and one month 15 days, AU Small Finance Bank provides an interest rate of 3.75 percent. For FDs maturing in 1 month 16 days to 3 months, the bank provides 4.25 percent interest. For the maturity period 3 months 1 day to 6 months and 6 months 1 day to 12 months the interest rate is capped at 5.00 and 5.50 percent respectively.

Tenure ROI in % (for amount less than Rs 2 cr)
7 Days to 1 Month 15 Days 3.75%
1 Month 16 Days to 3 Months 4.25%
3 Months 1 Day to 6 Months 5.00%
6 Months 1 Day to 12 Months 5.50%
12 Months 1 Day to 15 Months 6.60%
15 Months 1 Day to 18 Months 6.50%
18 Months 1 Day to 24 Months 6.50%
24 Months 1 Day to 36 Months 6.75%
36 Months 1 Day to 45 Months 6.50%
45 Months 1 Day to 60 Months 6.50%
60 Months 1 Day to 120 Months 6.75%

AU Small Finance Bank FD Rates For Senior Citizens

Elderly people get an additional 50 basis points on FDs maturing in 7 days to 10 years. On these deposits the interest rates vary from 4.25 percent to 7.25 percent.

Tenure ROI in % (for amount less than Rs 2 cr)
7 Days to 1 Month 15 Days 4.25%
1 Month 16 Days to 3 Months 4.75%
3 Months 1 Day to 6 Months 5.50%
6 Months 1 Day to 12 Months 6.00%
12 Months 1 Day to 15 Months 7.10%
15 Months 1 Day to 18 Months 7.00%
18 Months 1 Day to 24 Months 7.00%
24 Months 1 Day to 36 Months 7.25%
36 Months 1 Day to 45 Months 7.00%
45 Months 1 Day to 60 Months 7.00%
60 Months 1 Day to 120 Months 7.25%

Equitas Small Finance Bank FD Rates For Regular Customers

Equitas Small Finance Bank FD Rates For Regular Customers

Equitas Small Finance Bank is currently providing an interest rate of 3.60% to 3.65% for FDs maturing in 7 to 29 days and 30 – 45 days. For FDs maturing in 46 – 62 days and 63 – 90 days, the interest rate is capped at 4.15%. For term deposits maturing in 181-270 days, and 271 – 364 days, the bank offers 5.4%. Equitas bank provides 6.40% interest for FDs maturing in 1 year to 2 years. For 2 years 1 day to 887 days of deposits the interest rate is 6.65%. The highest interest rate provided by the bank for term fixed deposits is 6.80% for the general public for a period of 888 days. FDs maturing in 889 days to 3 years will offer an interest rate of 6.65% respectively. Equitas Small Finance Bank FD rates are effective from 25 Jan 2021.

Tenure ROI in % (for amount less than Rs 2 cr)
7 – 14 days 3.6
15 – 29 days 3.6
30 – 45 days 3.65
46 – 62 days 4.15
63 – 90 days 4.15
91 – 120 days 4.9
121 – 180 days 4.9
181 – 210 days 5.4
211 – 270 days 5.4
271 – 364 days 5.4
1 year to 18 months 6.5
18 months 1 day to 2 years 6.4
2 years 1 day 887 days 6.65
888 days 6.8
889 day to 3 years 6.65
3 years 1 day to 4 years 6.4
4 years 1 day to 5 years 6.4
5 years 1 day to 10 years 6.65

Equitas Small Finance Bank FD Rates For Senior Citizens

Equitas Small Finance Bank offers a 50-basis-point higher return to elderly people. For a maturity period of 888 days, the bank is currently providing a higher interest rate of 7.3% to senior citizens. Elderly people will get an interest rate spanning from 4.10 per cent to 7.15 per cent on deposits maturing in 7 days to 10 years respectively.

Tenure ROI in % (for amount less than Rs 2 cr)
7 – 14 days 4.1
15 – 29 days 4.1
30 – 45 days 4.15
46 – 62 days 4.65
63 – 90 days 4.65
91 – 120 days 5.4
121 – 180 days 5.4
181 – 210 days 5.9
211 – 270 days 5.9
271 – 364 days 5.9
1 year to 18 months 7
18 months 1 day to 2 years 6.9
2 years 1 day 887 days 7.15
888 days 7.3
889 day to 3 years 7.15
3 years 1 day to 4 years 6.9
4 years 1 day to 5 years 6.9
5 years 1 day to 10 years 7.15

Fincare Small Finance Bank FD Rates

Fincare Small Finance Bank FD Rates

Fincare FD rates span from 3 per cent to 6.5 per cent for regular citizens and 3.5 per cent to 7 per cent for senior citizens with tenure ranging between 7 days and 7 years. The bank provides the highest interest rate i.e. 6.5% for the general public and 7 per cent for senior citizens on FD maturing in 36 months 1 day to 42 months and 42 months 1 day to 48 months. The below rates are in effect from November 9, 2020.

Tenure General public rates in % (for amount less than Rs 2 cr) Senior citizen rates in % (for amount less than Rs 2 cr)
7 days to 45 days 3.00% 3.50%
46 days to 90 days 3.25% 3.75%
91 days to 180 days 3.50% 4.00%
181 days to 364 days 5.00% 5.50%
12 months to 15 months 6.00% 6.50%
15 months 1 day to 18 months 6.00% 6.50%
18 months 1 day to 21 months 6.25% 6.75%
21 months 1 day to 24 months 6.25% 6.75%
24 months 1 day to 30 months 6.30% 6.80%
30 months 1 day to 36 months 6.30% 6.80%
36 months 1 day to 42 months 6.50% 7.00%
42 months to 48 months 6.50% 7.00%
48 months 1 day to 59 months 6.50% 7.00%
59 months 1 day to 66 months 6.00% 6.50%
66 months 1 day to 84 months 5.50% 6.00%

Jana Small Finance Bank FD Rates

Jana Small Finance Bank FD Rates

For a tenure of 7 days to 10 years, the interest of Jana Small Finance Bank FDs varies between 2.5 per cent and 6.5 per cent for regular citizens and 3 per cent and 7 per cent for senior citizens. For a regular investor, the highest FD rate is 7.25 per cent for 3-5 years of tenure. The FD rate for senior citizens is 7.75 per cent for the same maturity period. The effective date of rates is 22-12-2020.

Tenure General public rates in % (for amount less than Rs 2 cr) Senior citizen rates in % (for amount less than Rs 2 cr)
7-14 days 2.50% 3.00%
15-60 days 3.00% 3.50%
61-90 days 3.75% 4.25%
91-180 days 4.50% 5.00%
181-364 days 6.00% 6.50%
1 Year[365 Days] 6.75% 7.25%
> 1 Year – 2 Years 7.00% 7.50%
>2 Years-3 Years 7.00% 7.50%
> 3 Year- < 5 Years 7.25% 7.75%
5 Years[1825 Days] 7.00% 7.50%
> 5 Years – 10 Years 6.50% 7.00%

Suryoday Small Finance Bank FD Rates

Suryoday Small Finance Bank FD Rates

On its 5-year fixed deposit, Suryoday Small Finance Bank provides a maximum rate of 7.25 per cent. On the 5-year FD, senior citizens will get a 7.75 per cent interest. Senior citizens, though, will get an additional 50 basis points of interest compared to the general public. Below are the latest FD rates of this small finance bank w.e.f. Feb 15, 2021.

Tenure General public rates in % (for amount less than Rs 2 cr) Senior citizen rates in % (for amount less than Rs 2 cr)
7 days to 14 days 4.00% 4.50%
15 days to 45 days 4.00% 4.50%
46 days to 90 days 5.00% 5.50%
91 days to 6 months 5.50% 6.00%
Above 6 months to 9 months 6.00% 6.50%
Above 9 months to less than 1 year 6.25% 6.75%
1 year to 2 years 6.75% 7.25%
Above 2 years to 3 years 7.00% 7.50%
Above 3 years to less than 5 years 7.10% 7.60%
5 years 7.25% 7.75%
Above 5 years to 10 years 6.50% 7.00%

Ujjivan Small Finance Bank FD Rates

Ujjivan Small Finance Bank FD Rates

For regular citizens, Ujjivan FD rates vary from 3.05 per cent to 6.5 per cent and 3.55 per cent to 7 per cent for senior citizens with tenure ranging from 7 days and 10 years. For a regular customer with a term of 1-2 years, the highest FD rate is 6.5 per cent. Even, the highest senior citizen FD rate is 7% for the same maturity period. 4th August 2020, is the effective date of rates.

Tenure General public rates in % (for amount less than Rs 2 cr) Senior citizen rates in % (for amount less than Rs 2 cr)
7 days to 29 days 3.05% 3.55%
30 days to 89 days 4.05% 4.55%
90 days to 179 days 4.80% 5.30%
180 days to 364 days 5.20% 5.70%
1 year to 2 years 6.50% 7.00%
2 years 1 day to 3 years 6.05% 6.55%
3 years 1 day to 5 years 5.80% 6.30%
5 years 1 day to 10 years 5.55% 6.05%



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How to improve your credit score post-pandemic

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When any adversity hits, we as human beings put our rational thought process on the back-burner and err. If these decisions are linked to financial matters, then the cost multiplies, snowballing beyond one’s control.

When the pandemic struck, the behaviour was no different. Loss of job or paycuts, bulky medical expenses – borrowers were forced to cut corners. Loan and card bills suffered, impacting the credit score.

As green shoots emerge, it is an opportune time to reflect on the financial faults and correct the past mistakes such that your credit score gets a fillip.

The Reserve Bank of India’s moratorium gave respite to borrowers for the period between March 1, 2020 to August 31, 2020, while ensuring that the moratorium seekers’ credit report is not affected.

However, there could be other aspects such as credit utilisation and monthly repayment obligations which need your attention now.

A good credit score not just brightens the prospects of getting a loan, but also determines the rate at which the loan is given. If another catastrophe strikes, a high credit score acts like a shield to guard you from a credit crunch.

Start with the basic step of sourcing a copy of your credit report from either of the credit bureaus. Note that every credit bureau offers the borrower a free credit report once a year.

Pay up costly loans

To make ends meet during the pandemic if you went all out seeking loans, especially withdrawing cash using credit cards, then that should be your first rectification step. Cash on credit card is the costliest loan and any surplus that you have, should be used to pay that at the first instance.

Next on your radar should be to shorten the list of loans, trimming them based on the interest rate you pay – the highest rate loan paid out first. Fewer loans mean better focus at handling debt, which augments your credit score.

Continue older loan/ credit card

To shorten the list of loans, do not consider closing the older loans or credit cards first. With the older loans and credit cards there is credit history, and this can positively impact your credit score.

Restructure loans

If you are struggling with your loan repayment as the pandemic left you without a job even six months later, then sit across the table with your bank and renegotiate the payment terms, interest rate or EMI amount, such that it is easier for you to pay. Such restructuring of loan enables you to make timely repayment on your terms, ensuring your credit score is not affected due to loan defaults.

Minimise credit utilisation

Using up 100 per cent of your credit card or overdraft limit indicates your inability at handling money. Bankers fix their gaze on what is referred to as ‘credit utilisation’ or the amount of free credit limit available on your cards. Instead of using up 90 per cent of your credit limit on one credit card, it makes immense sense to have three cards with 30 per cent credit limit consumed. This simple but critical step aids to your credit score as only a small portion of the available credit limit has been used.

Lastly, treat these credit sanitisation practices like hygiene. Difficult to establish, but once inculcated, they feel like second nature.

(The writer is, MD and CEO, CRIF High Mark)

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Life Insurance Premium Can Be Claimed For Tax Benefit Apart From 80C: Here’s How

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Taxes

oi-Roshni Agarwal

|

In view of the pandemic, this year besides 80C cover, life insurance premium also enjoys tax benefit as part of the LTC scheme. This is as this year or precisely the year 2020 saw restriction in travel due to the Covid 19 pandemic. Also, this comes as a benefit as 80C section of the Income-tax Act comprises investments such as NSC, Sukanya Samriddhi, PPF, tuition fees etc. and the limit of Rs. 1.5 lakh gets exhausted fast.

Life Insurance Premium Can Be Claimed For Tax Benefit Apart From 80C: Here's How

Life Insurance Premium Can Be Claimed For Tax Benefit Apart From 80C: Here’s How

LTC Scheme

Now in the LTC scheme, the government has extended salaried class with the advantage that they can claim for expenses made between October 12, 2020 to March 31, 2021 on purchase of good and availing services that attract GST rate of 12 per cent or more instead of travel expenses.

Insurance scheme also included in LTC scheme

Insurance premium payment for life coverage is also included under the LTC but the same premium payment cannot be claimed for tax advantage if the same is claimed as deduction under Section 80C.

When can you claim Life insurance premium under LTC scheme?

Premium payment can be claimed for tax benefit if it is a new policy issuance between October 12, 2020 to March 31, 2021 only and not on renewal premium. And the advantage is available on term plan or a ULIP or an annuity or an endowment plan.

Benefit available in lieu of new life insurance premium under LTC scheme

For a single premium plan i.e. for the policy purchased during the eligibility period, you would get tax benefit on the whole premium amount or maximum LTC benefit amount available to you, whichever is lower. But for regular premium policies issued in that period, you will get benefits on the amount of premium paid till March 31, 2021, provided the aggregate amount is within your LTC limit.

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5 Reasons Why Mutual Fund SIPs Are Good Mode of Investment

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Investment

oi-Olga Robert

By Staff

|

If you are new to investment, in a bid to make the right choice, you may have been intimidated by a plethora of options available. Researching stocks, bonds, etc. could be a tedious task, especially for someone not from a finance background.

This is where mutual funds help. They are backed by a team of professionals who make these investment decisions for you by keeping track of the performance of the market.

There are also a variety of options within mutual fund schemes to choose from, based on one’s risk appetite and financial goals.

However, despite the variety of investment options among mutual funds and even sufficient entry assistance, many hesitate to start investing. One of the major reasons being what investors consider as a ‘lack of funds.’

A smart investor knows that even a penny saved now can go a long way in creating wealth for the future, and if you were to invest this penny saved, it would be even better.

This is where SIPs come in, to help small investors.

5 Reasons Why Mutual Fund SIPs Are Good Mode of Investment

What are SIPs?

A Systematic Investment Plan (SIP) is an investment option offered by mutual fund houses that lets an investor invest a fixed amount at intervals (pre-decided by the investor) in a particular mutual fund scheme. It is an ideal mode of investment for someone who is starting with planning for a financial goal and does not wish to let debt obligations stop them from saving for the future.

Here are 5 reasons why:

1. Cultivates investment discipline

The periodic and automatic deduction that SIPs allow, encourages you to save as well as invest regularly. Instead of planning to start saving on a future date, you will be making efforts to invest in the scheme on say, a monthly basis, and manage to gather enough funds to get closer to your financial goals, like for your child’s education or retirement.

2. You can invest very little

Most investment funds in India allow you to invest as little as Rs 500 per month. You are also given the option to raise the SIP contribution as you continue with the investment or you could start another SIP in the same scheme or a different scheme of your choice, thereby raising the total investment amount you set aside each month.

3. No emotional investing in markets

Markets have their ups and downs, which may make you regret missing out on an opportunity to purchase at the right time. However, trying to time the market will be stressful, in fact, it is impractical as markets are unpredictable by their very nature.

The volatility may also cause you to make emotional investment decisions that will fail to deliver expected results.

In the case of SIP, you have to keep investing a fixed amount each month, irrespective of the short-term fluctuations in the market and let the mutual fund house make decisions for you.

4. Rupee cost averaging

In continuation of the above point, the NAV (net asset value) of a mutual fund scheme falls when markets are performing bad and rises when markets outperform.

When you keep purchasing varied quantities of mutual fund units at changing costs, your cost of purchasing the fund will average out.

In the case of SIP, you will keep investing a fixed amount irrespective of market conditions, thereby the average cost of purchasing all the units will be on the lower side as compared to making a lump sum investment when the markets are running high.

5. Easy way to start investing

Top asset management companies allow their customers to register for a SIP online and also manage their investment online.

Once the SIP has been created, these fund houses allow customers to track the performance of their investment online, make changes to their plan and even redeem it, all within the comfort of their house.

This is an investor education and awareness initiative by Axis Mutual Fund. Investors have to complete a one-time KYC process. Visit www.axismf.com or contact us on customerservice@axismf.com  for more information. Investors should deal only with Registered MFs, details of which are available on www.sebi.gov.in - Intermediaries/Market Infrastructure Institutions section.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully, before investing.

5 Reasons Why Mutual Fund SIPs Are Good Mode of Investment



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Income Tax Changes Every Taxpayers Should Know budget 2021

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Higher TDS for non-filers of income tax returns

A new amendment is proposed in the Income Tax Act in Budget 2021- Section 206AB, which allows for a higher rate of a tax deduction at source (TDS) for non-filers of income tax returns. In this part, the proposed TDS rate would be higher, twice the rate defined in the relevant clause of the Act, or twice the rate.

TDS is withheld from the salary on the basis of the income tax slab that applies to you.

TDS is deducted at the source as a fee. If the tax is excluded from the source of your salary, just believing that you have taxable income. In a given year, TDS is deducted at the source periodically.

Tax holiday on affordable housing

Tax holiday on affordable housing

The Government has extended by one more year until 31 March 2022 the 1.5 lakh additional tax exemption on interest paid on a housing loan for the purchase of affordable housing. The central government offered an extra income tax allowance of up to Rs 1.5 lakh for home loans to buy an inexpensive home in the July 2019 budget. The eligibility for this tax deduction was extended until 31 March 2022 by Sitharaman.

Availability of pre-filled ITR forms

The last day for the revised filing of the amended Union Budget 2021 income tax return or late return will now be 31 December 2021, instead of 31 March 2022, at the end of the financial year.

EPF and its interest

EPF and its interest

At the time of withdrawal, interest on the employee’s share of the contribution to the Employers’ or Employee Provident Fund (EPF) on or after 1 April 2021 shall be taxable if it exceeds Rs 2,5 lakh in any year. In fact, those making a greater contribution to the VPF account would also be affected. As of today, EPF interest is actually excluded from tax consequences. Note that only the employee’s contribution and not the employer’s part is taken into account for the said tax consequences.

Exemption from REIT/InvIT

Exemption from REIT/InvIT

The Government has agreed to allow Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) dividend payments to be exempt from TDS. The Government has indicated that only after the declaration/payment of the dividend does the advance tax liability emerge on dividend income. In order to stimulate spending, the government scrapped the dividend distribution tax and the dividend was made taxable in the hands of owners in the budget last year.

ULIPs in the tax bracket

ULIPs in the tax bracket

The refund of ULIPs is tax-exempt, given that the gross insurance premium charged would not surpass 10% of the amount covered by the policy. Earlier, any amount payable under the ULIP scheme on the death of the insured was also completely tax-free, regardless of the premium amount charged. When redeeming the ULIP scheme, the STT or securities transaction tax will also apply.

LTC scheme

LTC scheme

Employees may also exclude one-third of the defined expenditure from the leave travel concession (LTC) or Rs 36,000, whichever is less, for the 2018-21, block if they have incurred expenditure on the purchasing of goods/services liable to GST @ 12% or more, providing that the payment is made in non-cash mode and incurred during the period from 12 October 2020 to 31 March 2021. It is recommended that this amendment is only for 20-21 financial years.

In order to make it easier for individual taxpayers to comply, the ITR form will also contain pre-filled dividend, interest, and capital gains information. There may also be pre-filled reports on capital returns from traded shares, dividend profits, and interest from banks, post offices, etc. Details can also be given in the ITR forms on wage revenue, tax payments, TDS, etc.

Delayed income tax return

Delayed income tax return

Delayed or revised returns which now be filed three months before the applicable assessment year or before the end of the assessment, whichever is sooner. The final day for filing a new income tax return or a late return voluntarily will now be at the end of the financial year instead of the earlier date of 31 March 2022.

A senior citizen from filing return of income-tax

It stated in the 2021 Union Budget that senior citizens over 75 years of age with only benefits and interest as a source of income will be exempt from filing their tax return on income (ITR). He has a pension or interest income from the same bank and the bank is specified as notified by the Government, he will be eligible for this benefit.

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‘Markets relying on RBI to support FY22 borrowing calendar’

Personal Finance

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Amandeep Chopra, group president and head of fixed income, UTI AMC,

The rate cycle bottomed out last year but without the central bank changing its accommodative stance. This is the new normal. Amandeep Chopra, group president and head of fixed income, UTI AMC, in an interview with FE’s Urvashi Valecha and Malini Bhupta, explains why the higher-than-expected fiscal deficit has created concerns among market participants. Excerpts:

The government borrowing programme for the next fiscal at Rs 12 lakh crore is huge. Will the markets be able to absorb this?

The Budget has targeted growth with a strong fiscal stimulus. The fiscal deficit for FY21-22 (BE — 6.8%) is much higher than the market expectation of around 5.5%, which has created concerns among market participants. There doesn’t seem to be that level of demand among local investors. Presently, it’s unlikely that FPIs will create additional demand in FY22. This has already led to the yield curve shifting up. The market has been able to absorb gross borrowings of around `11.6 trillion so far in FY20-21 only with the help of RBI. Hence, the markets are relying on the central bank to support the borrowing calendar next year as well.

RBI’s decision to withdraw liquidity saw the yields spike. What is the yield curve suggesting? Will a calibrated withdrawal of liquidity work without a sharp reaction from the market?

The RBI has given a calibrated schedule to withdraw liquidity, which will align the short-term rates with the operative rate (reverse repo). The excess liquidity was leading to the 3-month rates trading at levels well below the reverse repo and creating an aberration in the short-term yield curve.

When do you see the rate cycle turn? Economists are suggesting that withdrawal of liquidity is a sign of rate cycle turning. Your view.

The global economic outlook has improved significantly over 2020 with most of the lead indicators rising. The benefits of a fast roll-out of vaccination have further improved this outlook and market sentiments. The combination of aggressive fiscal stimulus and central bank easing could lead to some inflationary fears as well. This has led to a generalised rise in global bond yields anticipating withdrawal of accommodation by the Fed and other central banks.

For India, we have been saying for some time now that do not expect further easing by the RBI and the rate cycle seems to have bottomed out. We have a few quarters before we see RBI starting to raise policy rates as normalcy returns to pre-pandemic levels across sectors. Given the current circumstances, how can bond investors play the debt markets?

I would not recommend the investors to play the markets during these evolving times. We recommend staying true to your asset-allocation for investing for long-term goals. The debt fund portfolios could be shuffled towards the shorter-duration funds if the investment horizon is less than three years.

From January 1, Sebi mandate on categorising the risks of MFs came into the picture. Has that had an impact on the flows into debt MFs, have retail inflows into debt funds become erratic?

Sebi reviewed the guidelines for product labels in MFs based on the recommendation of the Mutual Fund Advisory Committee (MFAC) and modified the ‘Risk-o-meter’ to depict six levels of risk.

With its implementation, each scheme was assigned a risk level and going forward the majority of the schemes are expected to settle down within one particular risk level, providing the investors with a relative framework on risk across schemes and categories.

Debt funds in January have seen outflows worth Rs 33,408.76 crore. Is this expected to continue?

The outflows in debt funds for January can primarily be attributed to outflows in the liquid fund categories to the tune of `45,315 crore. As a whole, debt funds have seen strong inflows to the tune of Rs 2,81,400 crore this financial year and I expect the trend to continue.

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