This fund has given seven dividends so far. Last year in February, it has paid 25% dividend.
(by valueresearch)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Tuesday, February 26, 2008
ING Domestic Opportunities Fund Declares 30% Dividend
ING Mutual Fund announced a 30% dividend (Rs 3.00 per unit on a face value of Rs 10), under the dividend option of ING Domestic Opportunities Fund. The record date of the same has been fixed as February 29, 2008.
20% Dividend in ABN AMRO Tax Advantage Fund
ABN AMRO Mutual Fund announced a 20% dividend (Rs 2.00 per unit on a face value of Rs 10), under the dividend option of ABN AMRO Tax Advantage Fund. The record date of the same has been fixed as February 29, 2008.
(by valueresearch)
200% Dividend under Principal Personal Tax Saver Fund
Principal Mutual Fund has announced a dividend of 200% (i.e. Rs 20 per unit on the face value of Rs 10) under Principal Personal Tax Saver Fund. The record date for the same has been fixed as February 26, 2008.
(by valueresearch)
30% Dividend in Kotak 30 Fund
Kotak Mutual Fund announced a 30% dividend (Rs 3.00 per unit on a face value of Rs 10), under the dividend option of Kotak-30 Fund. The record date of the same has been fixed as February 28, 2008.
(by valueresearch)
Less Expensive
Sebi has decided to scrap initial issue expenses for close-ended mutual funds
The Chairman of the Securities and Exchange Board of India (SEBI), M Damodaran, saw the completion of his tenure in February 2008. But before he said goodbye, he ensured that mutual fund investors would remember him fondly. Though the distributor community would certainly not.
Early January, 2008, SEBI waived off the entry load for mutual fund investors who invest directly in schemes from fund houses. Investors now have the option of bypassing the distributors and not paying any entry load. This was certainly bad news for fund distributors.
By the end of January, market regulator SEBI decided to scrap the initial issue expenses for close-ended funds. SEBI chairman, M Damodaran, explained the move as one that will “make close-ended mutual fund schemes less expensive for retail investors”.
Way back in April 2006, SEBI had prohibited mutual fund houses from charging and amortising issue expenses on open-ended schemes. This move was particularly beneficial to the long term investor in an open-ended fund, who would have to bear the cost of earlier redemptions by other unit holders. But the regulation was not of much help as fund houses rushed to launch close-ended schemes. That's because the same ruling stated that fund houses could continue to charge and amortise the initial issue expenses of the close-ended schemes for the entire period they remained closed - up to three years. But they could not charge an entry load like the open ended schemes.
After that, fund houses switched to launching more close-ended schemes. The mutual fund houses were allowed to amortise issue expenses of up to 6 per cent of the amount collected when a new scheme was launched. So if a scheme raised Rs 1,000 crore it was allowed to recover up to Rs 60 crore as initial issue expenses from the investors investing in the scheme. These expenses would include all costs related to sales, marketing, advertising, printing, mailing and commissions paid to agents and brokers. In other words, expenses that had to be incurred in order to make an investor aware of a scheme and get him to invest in it.
Distributors not only got commissions from the entry load but also from the initial issue expenses. Many distributors would pass on part of this commission as kickback to high networth investors who would put in big amounts in a new fund offering (NFO). Now that mutual funds cannot charge the investor for initial issue expenses, there is no way it can pay its distributors such high commissions.
Fund houses will still launch closed-ended schemes, if the nature of the scheme warrants such a structure. But no longer will it be a monetary move. As they are no longer in a position to pass on the initial issue expenses to the investors, there remains very little incentive for them to launch such schemes.
(by value research)
The Chairman of the Securities and Exchange Board of India (SEBI), M Damodaran, saw the completion of his tenure in February 2008. But before he said goodbye, he ensured that mutual fund investors would remember him fondly. Though the distributor community would certainly not.
Early January, 2008, SEBI waived off the entry load for mutual fund investors who invest directly in schemes from fund houses. Investors now have the option of bypassing the distributors and not paying any entry load. This was certainly bad news for fund distributors.
By the end of January, market regulator SEBI decided to scrap the initial issue expenses for close-ended funds. SEBI chairman, M Damodaran, explained the move as one that will “make close-ended mutual fund schemes less expensive for retail investors”.
Way back in April 2006, SEBI had prohibited mutual fund houses from charging and amortising issue expenses on open-ended schemes. This move was particularly beneficial to the long term investor in an open-ended fund, who would have to bear the cost of earlier redemptions by other unit holders. But the regulation was not of much help as fund houses rushed to launch close-ended schemes. That's because the same ruling stated that fund houses could continue to charge and amortise the initial issue expenses of the close-ended schemes for the entire period they remained closed - up to three years. But they could not charge an entry load like the open ended schemes.
After that, fund houses switched to launching more close-ended schemes. The mutual fund houses were allowed to amortise issue expenses of up to 6 per cent of the amount collected when a new scheme was launched. So if a scheme raised Rs 1,000 crore it was allowed to recover up to Rs 60 crore as initial issue expenses from the investors investing in the scheme. These expenses would include all costs related to sales, marketing, advertising, printing, mailing and commissions paid to agents and brokers. In other words, expenses that had to be incurred in order to make an investor aware of a scheme and get him to invest in it.
Distributors not only got commissions from the entry load but also from the initial issue expenses. Many distributors would pass on part of this commission as kickback to high networth investors who would put in big amounts in a new fund offering (NFO). Now that mutual funds cannot charge the investor for initial issue expenses, there is no way it can pay its distributors such high commissions.
Fund houses will still launch closed-ended schemes, if the nature of the scheme warrants such a structure. But no longer will it be a monetary move. As they are no longer in a position to pass on the initial issue expenses to the investors, there remains very little incentive for them to launch such schemes.
(by value research)
Invest in Existing Schemes
I want to invest one lakh in Sbi Tax Advantage Nfo and Magnum Tax Gain for tax benefits and good returns. Please advice.
-Dipak, Almora
SBI Tax Advantage is a 10 year closed ended new fund offering. It is advisable to invest in an on going tax saving scheme like Magnum Tax Gain which has a good performance history. Some other tax saving funds that you can opt for are Birla Sun Life Tax Relief, Sundaram Tax Saver or HDFC Tax Saver.
Is it worth investing in Principal Large Cap now?
-Ravi Kanetkar
Principal Large cap is an unrated equity diversified funds. The fund has been an average performer. You should look to invest in some well rated equity diversified fund with a long proven track record.
Is it advisable to invest Rs 500 each in Reliance Vision & Reliance Diversified Power sector fund as SIP? Please advice.
-Raj
This is a good combination but you should note that Reliance Vision is a diversified equity fund whereas Reliance Diversified Power is a sectoral fund (hence riskier). Choose a sectoral fund only if you have a high risk appetite.
I want to invest around Rs 40,000 in a good fund for a period of 1-2 years. Tax rebate is required.
-Rohit
If you wish to avail of the tax benefit, invest in tax saving mutual funds. Take note that these funds would have a lock in period of three years. Some good tax saving funds are Magnum Tax Gain, Birla Sun Life Tax Relief, Sundaram Tax Saver and HDFC Tax Saver.
I am investing in ICICI Prudential Life Insurance (ULIP), in maximiser (Growth) fund. My policy is almost 3 years old. Should I continue this policy for few years (i.e. 2-3 years)?
-Ajay Jagtap
ULIPs have high associated costs and are complex products. After three years you can exit from this policy and invest in some well rated equity diversified mutual funds in a phased manner via SIP.
I want to invest Rs 1 lakh in mutual funds. Please tell me top 3 funds.
-Neeraj
You can choose any three from Reliance Vision, HDFC Equity, Birla Frontline Equity or Sundaram Select Focus. These funds are well rated and have been consistent in their performance over years.
I want to invest Rs 10,000 per month for 10-15 years .My age is 43 yrs. Kindly suggest.
-Gautam Choudhury
Opt for two funds for SIP of Rs 5000 each. Well rated funds like DSP ML Top 100, Reliance Vision, HDFC Equity, or Sundaram Select Focus can be good picks.
What is a Sip?
-Abhey
SIP (systematic investment plan) is a hassle free way of investing a fixed amount in a mutual fund scheme of your choice every month/quarter. This helps you automatically average the cost of your purchase over the long term. It is the most advisable way of investing in equity mutual funds.
Please recommend funds to invest. My age is 63.
You should create a balanced portfolio with 60 per cent equity and 40 per cent debt (assuming a medium risk level). Invest in equity diversified funds like Reliance Vision, HDFC Equity or Sundaram Select Focus via SIP. For debt, choose well rated funds like ICICI Pru Long Term or Kotak Flexi Debt.
(by value research)
-Dipak, Almora
SBI Tax Advantage is a 10 year closed ended new fund offering. It is advisable to invest in an on going tax saving scheme like Magnum Tax Gain which has a good performance history. Some other tax saving funds that you can opt for are Birla Sun Life Tax Relief, Sundaram Tax Saver or HDFC Tax Saver.
Is it worth investing in Principal Large Cap now?
-Ravi Kanetkar
Principal Large cap is an unrated equity diversified funds. The fund has been an average performer. You should look to invest in some well rated equity diversified fund with a long proven track record.
Is it advisable to invest Rs 500 each in Reliance Vision & Reliance Diversified Power sector fund as SIP? Please advice.
-Raj
This is a good combination but you should note that Reliance Vision is a diversified equity fund whereas Reliance Diversified Power is a sectoral fund (hence riskier). Choose a sectoral fund only if you have a high risk appetite.
I want to invest around Rs 40,000 in a good fund for a period of 1-2 years. Tax rebate is required.
-Rohit
If you wish to avail of the tax benefit, invest in tax saving mutual funds. Take note that these funds would have a lock in period of three years. Some good tax saving funds are Magnum Tax Gain, Birla Sun Life Tax Relief, Sundaram Tax Saver and HDFC Tax Saver.
I am investing in ICICI Prudential Life Insurance (ULIP), in maximiser (Growth) fund. My policy is almost 3 years old. Should I continue this policy for few years (i.e. 2-3 years)?
-Ajay Jagtap
ULIPs have high associated costs and are complex products. After three years you can exit from this policy and invest in some well rated equity diversified mutual funds in a phased manner via SIP.
I want to invest Rs 1 lakh in mutual funds. Please tell me top 3 funds.
-Neeraj
You can choose any three from Reliance Vision, HDFC Equity, Birla Frontline Equity or Sundaram Select Focus. These funds are well rated and have been consistent in their performance over years.
I want to invest Rs 10,000 per month for 10-15 years .My age is 43 yrs. Kindly suggest.
-Gautam Choudhury
Opt for two funds for SIP of Rs 5000 each. Well rated funds like DSP ML Top 100, Reliance Vision, HDFC Equity, or Sundaram Select Focus can be good picks.
What is a Sip?
-Abhey
SIP (systematic investment plan) is a hassle free way of investing a fixed amount in a mutual fund scheme of your choice every month/quarter. This helps you automatically average the cost of your purchase over the long term. It is the most advisable way of investing in equity mutual funds.
Please recommend funds to invest. My age is 63.
You should create a balanced portfolio with 60 per cent equity and 40 per cent debt (assuming a medium risk level). Invest in equity diversified funds like Reliance Vision, HDFC Equity or Sundaram Select Focus via SIP. For debt, choose well rated funds like ICICI Pru Long Term or Kotak Flexi Debt.
(by value research)
Thursday, February 21, 2008
Profit Booking
I have two questions. If I sell my equity fund units before the completion of a year, is short term capital gains (STCG) tax deducted at source before the proceeds are credited to my bank account? If a mutual fund gives a return of 60 per cent within a year, is it wise to book profits?
-Dr. Saxena
The rate of STCG tax as per current tax norms is 10 per cent. Whether you redeem your mutual fund units or sell your shares within a year of buying, you need to pay this tax on the gain. You need to specify the short term gain in the income tax return that you file and pay the tax accordingly. The broker or the mutual fund company does not deduct this tax at source. Whether it is a good idea to book profits occasionally and pay STCG tax is a personal call as that depends on your financial status, goals and risk appetite. You need to assess the time horizon you have and for how long you would like your money to stay invested. Historically it has been proved that equity investments reap best results when one invests for the long term. Yet again, how each individual
(by value research)
-Dr. Saxena
The rate of STCG tax as per current tax norms is 10 per cent. Whether you redeem your mutual fund units or sell your shares within a year of buying, you need to pay this tax on the gain. You need to specify the short term gain in the income tax return that you file and pay the tax accordingly. The broker or the mutual fund company does not deduct this tax at source. Whether it is a good idea to book profits occasionally and pay STCG tax is a personal call as that depends on your financial status, goals and risk appetite. You need to assess the time horizon you have and for how long you would like your money to stay invested. Historically it has been proved that equity investments reap best results when one invests for the long term. Yet again, how each individual
(by value research)
Wednesday, February 20, 2008
Reliance NRI Fund
Can you tell me about the performance of Reliance NRI Fund? How is the 'beta' factor of the fund, considering the current overheated equity market? I understand that only NRIs are eligible to apply for this fund. Does this fetch any unique benefit to the NRI applicant?
-Amlanjyoti Basu
Reliance NRI Fund is a 5-star rated, diversified equity offering with assets under management of around Rs 190 crore (as on December 31, 2007). The fund has done exceptionally well till now and has delivered an annual return of 55.35 per cent in the past three years (as on January 10, 2008).
Only NRIs are eligible to purchase units of this fund and resident Indians are prohibited from doing so. But there is no special benefit for NRIs. Most other mutual fund schemes are open for purchase by NRIs on a repatriable and non-repatriable basis.
Beta is a measure of the fund's sensitivity to market movements. It is calculated based on the trailing three-year monthly returns of the fund and the benchmark and hence can change over time. Though the beta of the fund is 0.78 for its benchmark, it may not be useful gauge to evaluate a fund. Beta is very relevant for a stock but not so for a fund. A fund's portfolio keeps changing in complexion and character making beta less relevant.
(by valueresearch)
-Amlanjyoti Basu
Reliance NRI Fund is a 5-star rated, diversified equity offering with assets under management of around Rs 190 crore (as on December 31, 2007). The fund has done exceptionally well till now and has delivered an annual return of 55.35 per cent in the past three years (as on January 10, 2008).
Only NRIs are eligible to purchase units of this fund and resident Indians are prohibited from doing so. But there is no special benefit for NRIs. Most other mutual fund schemes are open for purchase by NRIs on a repatriable and non-repatriable basis.
Beta is a measure of the fund's sensitivity to market movements. It is calculated based on the trailing three-year monthly returns of the fund and the benchmark and hence can change over time. Though the beta of the fund is 0.78 for its benchmark, it may not be useful gauge to evaluate a fund. Beta is very relevant for a stock but not so for a fund. A fund's portfolio keeps changing in complexion and character making beta less relevant.
(by valueresearch)
Tuesday, February 19, 2008
50% Dividend under DSPML T.I.G.E.R. Fund
DSPML Mutual Fund has announced a dividend of 50% (i.e. Rs 5.00 per unit on the face value of Rs 10) under the dividend option of DSPML T.I.G.E.R. Fund. The record date for the same has been fixed as February 22, 2008.
This would be the fourth dividend being declared by the fund so far. Earlier, in March 2007 the fund paid 45% dividend.
(by valueresearch)
This would be the fourth dividend being declared by the fund so far. Earlier, in March 2007 the fund paid 45% dividend.
(by valueresearch)
Sunday, February 17, 2008
Tax Efficiency
Come January and there will be a significant number of individuals who will be scurrying around to do their last minute tax planning. Those who are not smart enough to start their tax planning from April itself will have only two options left. Either allow huge chunks of their salary to get deducted or invest hurriedly in one of the tax-saving options to escape the tax net at the last minute
With the way the market has been booming, fixed-return options available under Section 80C of the Income Tax Act have lost their sheen. On the other hand, Equity Linked Savings Schemes (ELSS), with an average return of 52.03 per cent per annum over the last five years, have been garnering a lot attention.
Did you know that you can save taxes on the Rs 1 lakh limit (the limit under Section 80C) yet invest much less than that? Sounds impossible, doesn't it?
According to the rules laid down by the regulatory body Securities and Exchange Board of India (SEBI), the date of dividend declaration for mutual funds can be made public five days before the record date. But why would one invest in an equity mutual fund (dividend payout option), just before it declares dividend? After all it appears that when an investor does so, all he does effectively is liquidate his investment.
But the equation is bit different in the case of an ELSS. These are diversified equity mutual funds which offer the tax benefit under Section 80C. Let's illustrate. Suppose an ELSS fund announces that it would declare a dividend of Rs X per unit after five days. Now if you are aware of this news, you can simply pump in Rs 1 lakh in the fund before the record date and opt for the dividend payout option. Of course, we made that statement on the assumption that the fund is worth investing in. Now, when the dividend is declared, you would get back a portion of the amount you invested as dividend (at the rate of Rs X per unit). This way you end up saving taxes on the fully invested amount of Rs 1 lakh but effectively pay much less.
An actual example should make things clearer. Franklin India Taxshield, a three-star rated ELSS, declared a dividend of Rs 8 per unit on November 14, 2007 (record date). Let's say someone invested Rs 1 lakh in this scheme soon after the announcement. Let's further assume that the amount was invested on November 13, 2007. The table illustrates how he would have saved taxes on Rs 1 lakh but would have by effectively invested just Rs 82,730. That's translates into a savings of Rs 17,269. Quite a difference! And for those of you who actually borrow money to meet your Section 80C rquirements, this will work out even better.
In case you were unaware, the dividend received is tax free.
So if you have not yet completed your Section 80C requirements, keep a watch for dividend declaration of ELSS funds in the coming months. To figure that out, you can refer to the Fund Action section on this website.
(by valueresearch)
With the way the market has been booming, fixed-return options available under Section 80C of the Income Tax Act have lost their sheen. On the other hand, Equity Linked Savings Schemes (ELSS), with an average return of 52.03 per cent per annum over the last five years, have been garnering a lot attention.
Did you know that you can save taxes on the Rs 1 lakh limit (the limit under Section 80C) yet invest much less than that? Sounds impossible, doesn't it?
According to the rules laid down by the regulatory body Securities and Exchange Board of India (SEBI), the date of dividend declaration for mutual funds can be made public five days before the record date. But why would one invest in an equity mutual fund (dividend payout option), just before it declares dividend? After all it appears that when an investor does so, all he does effectively is liquidate his investment.
But the equation is bit different in the case of an ELSS. These are diversified equity mutual funds which offer the tax benefit under Section 80C. Let's illustrate. Suppose an ELSS fund announces that it would declare a dividend of Rs X per unit after five days. Now if you are aware of this news, you can simply pump in Rs 1 lakh in the fund before the record date and opt for the dividend payout option. Of course, we made that statement on the assumption that the fund is worth investing in. Now, when the dividend is declared, you would get back a portion of the amount you invested as dividend (at the rate of Rs X per unit). This way you end up saving taxes on the fully invested amount of Rs 1 lakh but effectively pay much less.
An actual example should make things clearer. Franklin India Taxshield, a three-star rated ELSS, declared a dividend of Rs 8 per unit on November 14, 2007 (record date). Let's say someone invested Rs 1 lakh in this scheme soon after the announcement. Let's further assume that the amount was invested on November 13, 2007. The table illustrates how he would have saved taxes on Rs 1 lakh but would have by effectively invested just Rs 82,730. That's translates into a savings of Rs 17,269. Quite a difference! And for those of you who actually borrow money to meet your Section 80C rquirements, this will work out even better.
In case you were unaware, the dividend received is tax free.
So if you have not yet completed your Section 80C requirements, keep a watch for dividend declaration of ELSS funds in the coming months. To figure that out, you can refer to the Fund Action section on this website.
| Dividend Record Date | 14-Nov-07 | |
| Dividend Rate | Rs 8/unit | |
| NAV (as on Nov 13, 07) | 46.3 | |
| Amount Invested | Rs 1 lakh | |
| Units | 2158.7 | |
| Amount of Dividend Received | Rs 17,269.3 | |
| Net Investment | Rs 82,730.7 |
(by valueresearch)
Saturday, February 16, 2008
Record Date for Div in HDFC Prudence Fund & Premier Multicap Fund
HDFC mutual fund has a declared the dividend under the dividend option of HDFC Prudence Fund and HDFC Premier Multicap Fund . Record date for both the schemes will be 21st February 2008 . The details are as below:
HDFC Prudence Fund Dividend Rs. 5.00 (Amount of Div Per Unit)
HDFC Premier Multicap Fund Dividend Rs 2. 00 (Amount of Div Per Unit)
HDFC Premier Multicap Fund Dividend Rs 2. 00 (Amount of Div Per Unit)
Friday, February 15, 2008
Sectoral Funds Riskier
I trade in equities but recently sold my shares. With the political uncertainty, I do not want to take the risk of directly entering the stock market now. But I would like to invest the proceeds elsewhere. The amount is Rs 10 lakh and I am looking at a time frame of a year. A broker has proposed that I invest Rs 2 lakh in each of the following funds: Reliance Diversified Power Sector, Tata Infrastructure, JM Basic, DSPML T.I.G.E.R. and Reliance Banking. What is your opinion?
-Rana G S
Avoid these funds. With a time frame of just 12 months, none of the above recommended funds are suitable for investment. Also, all of the above are sectoral equity mutual funds which are far riskier than diversified equity funds. JM Basic is an exception but it is not a pure diversified offering. Sectors like banking, pharma and technology will not find a place here. Investing in such funds with a one year period in mind can prove to be very risky. If you wish to park your money for a period of one year, it is best to consider an arbitrage fund. They are far less risky. As they fall in the same category as equity oriented mutual funds, the tax treatment is similar and the gains would be tax free after a year.
(by value research)
-Rana G S
Avoid these funds. With a time frame of just 12 months, none of the above recommended funds are suitable for investment. Also, all of the above are sectoral equity mutual funds which are far riskier than diversified equity funds. JM Basic is an exception but it is not a pure diversified offering. Sectors like banking, pharma and technology will not find a place here. Investing in such funds with a one year period in mind can prove to be very risky. If you wish to park your money for a period of one year, it is best to consider an arbitrage fund. They are far less risky. As they fall in the same category as equity oriented mutual funds, the tax treatment is similar and the gains would be tax free after a year.
(by value research)
How To Save On Tax
What's special about January? Lots of things, actually. But from a tax point of view, it will be that time of the year when a lot of you will actually start figuring what your tax saving avenues should be. Little wonder that mutual funds report the highest inflows into equity linked savings schemes (ELSS) and life insurance companies record their highest sales in the first three months of the calendar year.
Guilty as charged? Well, here's some help. Here's the first part of our special section dedicated to tax saving. We start right now with the absolute basics.
You would have noticed that the tax department is more partial to women and specially, senior citizens. But those rates are the maximum you would have to pay if you did absolutely no tax planning.
The very first step that you have to follow is to figure out what Section 80C (of the Income Tax Act) is and how you can use it for your benefit. Any individual, irrespective of how much s/he earns, can reduce his taxable income by up to Rs 1 lakh, which is the limit under this section. You can decide how much you want to invest in each of the options or whether you intend putting the entire amount in just one of them. For instance, someone may choose to invest Rs 1 lakh in tax saving mutual funds, while another may fulfill his limit by making the payment towards his home loan. There are no sub-limits on any one of them except the Public Provident Fund (Rs 70,000 per financial year). And, tuition fees are limited to two children.
So if you are a salaried individual, check the exact amount of your contribution to the Employee Provident Fund (EPF). Also check your existing life insurance policies and pension plans. If it totals up to Rs 1 lakh, then you are done. If not, then you have to figure out where to put your money.
When making a decision on which investments to opt for under Section 80C, there are three factors to consider: time horizon, risk appetite and tax on interest.
A lot of these investment avenues have lock-in periods that extend for a number of years. For PPF, it is 15 years, for NSC, 6 years. The ones with the lowest lock-in period are ELSS (three years) and infrastructure bonds which generally start at three years. You will have to simultaneously also consider the risk factor. ELSS are the riskiest since they are diversified equity mutual funds. On the other hand you have PPF and NSC which are the safest since they are backed by the government. Finally, look at the tax implication on the return on your investment. For instance, the interest you earn on PPF is totally tax free. Not so in the case of NSC or your bank fixed deposits. But the capital appreciation on your ELSS will be totally free from any capital gains tax and the dividends you earn are tax-free too.
But there is more to tax saving than just Section 80C. If you are servicing a home loan, you would get a benefit on the principal amount being repaid under Section 80C. But you also get a tax exemption on the interest paid on the loan under Section 24. And under this section, the limit is Rs 1,50,000 in one financial year.
You would definitely be familiar with Section 80D. Under this section, you can claim an exemption on the premium you pay for your medical insurance, popularly known as mediclaim policy. There is a ceiling here though - Rs 15,000. Add Rs 5,000 to that amount if you are a senior citizen. The good news is that you can claim it not only for your own policy but also for your dependents, provided you are paying the premium.
And, if you have a charitable bent, then Section 80G is meant for you. Donations made under this section are eligible for a 50 per cent tax relief. To get a 100 per cent tax benefit, your donation will have to go to specified organisations/trusts like the Prime Minister's Relief Fund, CARE and Help Age India.
(by valueresearch)
Guilty as charged? Well, here's some help. Here's the first part of our special section dedicated to tax saving. We start right now with the absolute basics.
You would have noticed that the tax department is more partial to women and specially, senior citizens. But those rates are the maximum you would have to pay if you did absolutely no tax planning.
The very first step that you have to follow is to figure out what Section 80C (of the Income Tax Act) is and how you can use it for your benefit. Any individual, irrespective of how much s/he earns, can reduce his taxable income by up to Rs 1 lakh, which is the limit under this section. You can decide how much you want to invest in each of the options or whether you intend putting the entire amount in just one of them. For instance, someone may choose to invest Rs 1 lakh in tax saving mutual funds, while another may fulfill his limit by making the payment towards his home loan. There are no sub-limits on any one of them except the Public Provident Fund (Rs 70,000 per financial year). And, tuition fees are limited to two children.
So if you are a salaried individual, check the exact amount of your contribution to the Employee Provident Fund (EPF). Also check your existing life insurance policies and pension plans. If it totals up to Rs 1 lakh, then you are done. If not, then you have to figure out where to put your money.
When making a decision on which investments to opt for under Section 80C, there are three factors to consider: time horizon, risk appetite and tax on interest.
A lot of these investment avenues have lock-in periods that extend for a number of years. For PPF, it is 15 years, for NSC, 6 years. The ones with the lowest lock-in period are ELSS (three years) and infrastructure bonds which generally start at three years. You will have to simultaneously also consider the risk factor. ELSS are the riskiest since they are diversified equity mutual funds. On the other hand you have PPF and NSC which are the safest since they are backed by the government. Finally, look at the tax implication on the return on your investment. For instance, the interest you earn on PPF is totally tax free. Not so in the case of NSC or your bank fixed deposits. But the capital appreciation on your ELSS will be totally free from any capital gains tax and the dividends you earn are tax-free too.
But there is more to tax saving than just Section 80C. If you are servicing a home loan, you would get a benefit on the principal amount being repaid under Section 80C. But you also get a tax exemption on the interest paid on the loan under Section 24. And under this section, the limit is Rs 1,50,000 in one financial year.
You would definitely be familiar with Section 80D. Under this section, you can claim an exemption on the premium you pay for your medical insurance, popularly known as mediclaim policy. There is a ceiling here though - Rs 15,000. Add Rs 5,000 to that amount if you are a senior citizen. The good news is that you can claim it not only for your own policy but also for your dependents, provided you are paying the premium.
And, if you have a charitable bent, then Section 80G is meant for you. Donations made under this section are eligible for a 50 per cent tax relief. To get a 100 per cent tax benefit, your donation will have to go to specified organisations/trusts like the Prime Minister's Relief Fund, CARE and Help Age India.
(by valueresearch)
Thursday, February 14, 2008
20% Dividend under Principal Large Cap Fund
Principal Mutual Fund has announced a dividend of 20% (i.e. Rs 2.00 per unit on the face value of Rs 10) under the dividend option of Principal Large Cap Fund. The record date for the same has been fixed as February 5, 2008.
(by valueresearch)
Kotak Tax Saver Declares 35% Dividend
Kotak Mutual Fund has announced a 35% dividend under the dividend plan of Kotak Tax Saver. The record date for the dividend has been fixed as February 8, 2008.
(by valueresearch)
100% Dividend in HSBC Equity
HSBC Mutual Fund has announced a 100% dividend under the dividend plan of HSBC Equity Fund. The record date for the same has been fixed as February 8, 2008.
(by valueresearch)
60% Dividend under Franklin India Prima Plus
Franklin Templeton Mutual Fund has announced a dividend of 60% (i.e. Rs 6.00 per unit on the face value of Rs 10) under the dividend option of Franklin India Prima Plus Fund. The record date for the same has been fixed as February 13, 2008.
There will be a one-day book-closure on February 14, 2008 under both the dividend and growth options. The fund has declared ten dividends in the last nine years.
There will be a one-day book-closure on February 14, 2008 under both the dividend and growth options. The fund has declared ten dividends in the last nine years.
(by valueresearch)
ICICI Prudential Announces Dividend in Two Equity Schemes
ICICI Prudential Mutual Fund has announced a dividend of 20 per cent each in the dividend options of the following schemes: ICICI Prudential Dynamic and ICICI Prudential FMCG.
The record date for the above dividends is February 15, 2008.
(by valueresearch)
110% Dividend in Magnum Taxgain
SBI Mutual Fund has announced a 110% dividend under the dividend plan of Magnum Taxgain Fund. The record date for the same has been fixed as February 15, 2008.
(by valueresearch)
Mirae Asset Management launches its Maiden Equity Fund
Mirae Asset Management has come out with its maiden open-end equity fund called Mirae Asset India Opportunities Fund. It will be open for subscription from February 11, 2008 to March 10, 2008. Around 65%-100% of its assets would be invested in equity and equity related securities and the remaining 0%-35% would be allocated to debt and money market instruments.
Regular Plan would charge an entry load of 2.25% for investment less than Rs.5 crores. Also, an exit load of 1% would be levied for investment less than Rs.5 crores if redemption is made within 6 months and 0.50% for investment less than Rs.5 crores if redeemed after 6 months but within 1 year. However, in case of institutional plan only entry load would be applicable.
(by valueresearch)
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