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)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Tuesday, February 19, 2008
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)
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