वित्तीय वर्ष समाप्त होने से पहले समीक्षा करने वाली बातें

कुछ ही हफ्तों में चालू वित्त वर्ष समाप्त होने वाला है। टैक्स प्लानिंग, बजटिंग और अन्य वित्तीय मामलों के लिए वित्तीय वर्ष बहुत महत्वपूर्ण है। तो आइए विभिन्न बिंदुओं को देखें और समझें कि इस वर्ष के पूरा होने से पहले हमें क्या करने की आवश्यकता है।

1. अपने कर बचत निवेश का उपयोग करें

हर साल आप कुछ टैक्स सेविंग इंस्ट्रूमेंट्स जैसे टैक्स सेवर म्यूचुअल फंड, पीपीएफ, इंश्योरेंस, टैक्स सेवर एफडी, आदि में 1.5 लाख रुपये तक का निवेश कर सकते हैं, जो धारा 80 सी के तहत कर मुक्त हैं। इसके अलावा आप एनपीएस में 80 सीसीडी (1) के साथ-साथ स्वयं और माता-पिता के लिए मेडिक्लेम पॉलिसियों में 1 लाख तक की बचत कर सकते हैं (धारा 80 डी के तहत) आपको सुनिश्चित करना चाहिए कि आप इन पर अधिकतम निवेश कर रहे हैं। आपके एचआर को आमतौर पर साल के अंत से पहले निवेश प्रमाण की आवश्यकता होगी, इसलिए कोशिश करें और इसे उससे पहले समाप्त कर लें। अपने वित्तीय सलाहकार से परामर्श करें, कि आपके जोखिम प्रोफाइल के अनुसार  किस 80C विकल्प में निवेश करना है।

2. पूंजीगत लाभ/हानि का प्रबंधन करें

अब लॉन्ग टर्म कैपिटल गेन (LTCG) में  1 लाख रुपये से ऊपर के मुनाफे पर टैक्स लगता है (इक्विटी और संबंधित निवेश के लिए लागू)। इसलिए यदि आपने इक्विटी में निवेश किया है और निकट भविष्य में धन की आवश्यकता है तो उसके अनुसार लाभ बुक करना बेहतर होगा। आप नुकसान भी बुक कर सकते हैं और मुनाफे के साथ सेट ऑफ कर सकते हैं लेकिन याद रखें कि शॉर्ट टर्म कैपिटल लॉस को लॉन्ग टर्म और शॉर्ट टर्म कैपिटल गेन दोनों के खिलाफ सेट किया जा सकता है लेकिन लॉन्ग टर्म कैपिटल लॉस को लॉन्ग टर्म कैपिटल गेन से ही एडजस्ट किया जा सकता है।

3. उच्च लागत वाले कर्ज का भुगतान करें

यदि आपके पास क्रेडिट कार्ड की बकाया राशि जैसे उच्च लागत वाले ऋण पर कोई बकाया है, तो उसे चुकाने के लिए इसे अपनी पहली प्राथमिकता बनाएं। क्रेडिट कार्ड द्वारा ली जाने वाली ब्याज दरें अत्यधिक होती हैं और प्रति वर्ष 40-50% (व्यक्तिगत ऋण के लिए 15% की तुलना में) तक जा सकती हैं। यह आपके मित्र या माता-पिता या यहां तक ​​कि व्यक्तिगत ऋण से कुछ राशि उधार लेने और अपने क्रेडिट कार्ड ऋण को तुरंत चुकाने के लायक भी है। आप धीरे-धीरे उन्हें अपनी बचत से पैसा वापस कर सकते हैं।

4. टीडीएस बचाएं

सावधि जमा और आवर्ती जमा धारक टीडीएस कटौती से डरते हैं। यदि आप वर्तमान में 10,000 रुपये से अधिक ब्याज कमाते हैं तो बैंक टीडीएस में कटौती कर सकते हैं। टीडीएस बचाने के लिए, फॉर्म 15जी या फॉर्म 15एच भरना बेहतर है, आपको इसे वित्तीय वर्ष की शुरुआत के पहले सप्ताह (अर्थात अप्रैल'22) में दाखिल करना होगा ताकि अगले वित्तीय वर्ष के लिए कर नहीं काटा जा सके।

5. वित्तीय लक्ष्यों की समीक्षा करें

अपने सभी वित्तीय लक्ष्यों पर अपनी प्रगति का जायजा लें और जांचें कि क्या आप उन्हें समय पर प्राप्त करने की राह पर हैं। यदि आवश्यक हो तो आपको उन्हें वापस पटरी पर लाने के लिए उनमें से कुछ को ऊपर करना पड़ सकता है। यदि आपने अभी तक अपने लिए कोई वित्तीय लक्ष्य निर्धारित नहीं किया है, तो ऐसा करने का यह एक अच्छा समय हो सकता है। इमरजेंसी फंड, टैक्स सेविंग और रिटायरमेंट तीन लक्ष्य हैं जिनसे आप शुरुआत कर सकते हैं।

6. खर्च की समीक्षा करें, नए साल के लिए बजट की योजना बनाएं और एसआईपी शुरु करें

वर्ष को पीछे मुड़कर देखना महत्वपूर्ण है कि आपने कितना खर्च किया। इसमें से कितनी योजना बनाई गई थी और कितनी आवेगपूर्ण थी जिनसे बचा जा सकता था? क्या आपने अपना बचत लक्ष्य पूरा किया? यदि नहीं, तो एक बचत लक्ष्य निर्धारित करें (शुरुआत में आपके वेतन का 20-30% एक अच्छी संख्या है) और निवेश प्रकार की अपनी पसंद के आधार पर म्यूचुअल फंड या आवर्ती जमा में एसआईपी के रूप में उसके लिए स्वचालित बचत सेट करें। वेतन दिवस के करीब एक दिन के लिए अपना एसआईपी सेट करें ताकि आप दूसरे तरीके के बजाय खर्च करने से पहले बचत करें। शेष राशि के लिए एक बजट की योजना बनाएं और सुनिश्चित करें कि आप नए साल में इससे अधिक खर्च नहीं करते हैं।

अगर आपको लगता है कि वित्त के संबंध में कुछ मदद की आवश्यकता हैं, तो वित्तीय विशेषज्ञ की मदद लें, जो बजट तैयार करने में आपकी मदद कर सकता है और सुनिश्चित कर सकता है कि आपके पास पर्याप्त बीमा और बचत है। जितनी जल्दी आप अपने पैसे पर पकड़ बना लेते हैं, उतना ही अच्छा है और यह आपको कोई भी महंगी लेकिन टालने योग्य पैसे की गलतियाँ करने से भी रोकेगा।

Things to review before the Financial Year Ends

In few weeks the current financial year is coming to an end. Financial year is very important for tax planning, budgeting and other financial related matters. So let’s look at various points and understand that what we need to do before the completion of this year.

1. Utilise your tax saving investments

Every year you can invest up to Rs 1.5 lakh in certain tax savings instruments like Tax Saver Mutual Funds, PPF, Insurance, Tax Saver FDs, etc which are tax exempt under section 80C. Further you can also save upto 50,000 in NPS under 80 CCD(1) as well as in Mediclaim policies for self and parents (upto 1 lakhs under section 80D) Make sure you are maxing out on these. Your HR will usually require investment proofs before year end so try and finish this off before then. Consult your financial advisor on which 80C investments to make as per your risk profile.

2. Manage Capital Gains/Losses

Now Long-term Capital Gain Tax (LTCG) is applicable for equity and related investments over and above of Rs. 1 lakhs profit. So if you have investments in equities and need money in near term better to book profit accordingly. You can also book losses and set off with profits but remember that Short-term capital loss can be set off against both long-term and short-term capital gain but Long-term capital loss can only be adjusted towards long-term capital gains.  

3. Pay off high-cost debt

If you have any outstanding on high cost debt like credit card’s dues, make it your first priority to pay that off. Interest rates charged by credit cards are exorbitant and can go up to 40-50% per annum (compared to 15% for a personal loan). It is even worth borrowing some amount from your friend or parents or even personal loan and pay off your credit card debt immediately. You can slowly return them the money from your savings.

4. Save TDS

Fixed deposits and recurring deposit holders are afraid of the deduction of TDS. If you currently earn more than Rs. 10,000, Banks may cut TDS. To save TDS, filling in Form 15G or Form 15H is preferable, you need to file it in the first week of the starting of the financial year (i.e. April’22) so that tax is not deducted for next financial year.

5. Review Financial Goals

Take stock of your progress on all your financial goals and check if you are on track to achieving them in time. If needed you may have to top some of them up to get them back on track. In case you haven’t laid down any financial goals for yourself yet, this might be a good time to do so. Emergency Fund, Tax Saving and Retirement are three goals that you can start with.

6. Review spending, plan a budget for the new year and set up SIPs

It is important to look back at the year and see how much you spent. How much of it was planned and how much was impulsive and could have been avoided? Did you meet your savings target? If not then fix a savings target (20-30% of your salary is a good number to begin with) and set up automated savings for that in way of SIPs in Mutual Funds or Recurring Deposits depending on your preference of investment type. Set up your SIPs for a day close to the salary day so that you save first before spending rather than the other way round. Plan a budget for the rest of the amount and make sure you don’t exceed that in the new year.

If you feel you can do with some help regarding your finances, then seek out the help of financial expert who can help you prepare a budget and ensure that you have adequate insurance and savings. The sooner you get a grip on your money, the better it is and it will also prevent you from making any expensive but avoidable money mistakes.

Dividend on Mutual Funds: Does it really makes sense?

Dividend from mutual funds was the biggest selling point in 2017, as it was sold as a REGULAR INCOME from mutual funds and that also TAX FREE. 

But is this really so and does it really makes sense to have dividends from mutual fund schemes especially in current tax rules according to which the dividend payment is subject to Dividend Distribution Tax (DDT) which is 10% (effective rate is11.648 % after including surcharge and cess if you add the effect of “grossing up”, the full tax rate is 12.942%) in case of Equity Schemes and 28.84% for other than Equity Schemes. Sales people tell the investors that it is still tax free in the hands of the investors, True, but ultimately the DDT is paid out from the income/gains of the investors fund only and the returns get reduced by the same amount so how does it makes a difference whether the Mutual fund company pays DDT or investor pays tax on it?

So let’s understand more about Dividend by Mutual Funds and its implications.

What is Dividend?

According to Oxford Dictionary:  Dividend is A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).

Which means that when companies make a profit, they bring some of it back in the business, and distribute the rest to shareholders.

How is it Different in case of Mutual Funds?

In case of mutual funds, the fund management company works as a custodian to the funds of the investors. Here all gains/losses belongs to investors, after deducting the management expenses which could be up to about 3% of the total portfolio.

Therefore whether the money comes as dividend or as withdrawal, there is no difference in total gains to the investors, except the taxation which is applicable differently in case of dividend and capital gains.

What is the Tax implication on Mutual Fund gains?

Mutual Fund tax implications are different. Lets understand it more.

Let’s say the value of our investment in a mutual fund is ₹1 lakh, and then the fund gives 10% dividend means ₹10,000 as dividend. In that case the value of that investment will be reduced to ₹90,000.

Now for debt funds, what we receive is actually ₹7,116 because the debt fund would withhold 29.12% of the dividend and pay ₹2,912 as tax to the government. Which means by taking dividend we have reduced our total investment value from ₹1 lakh to ₹97,088.

In equity funds, there was no such tax till 2017-18. However from April 2018, even in an equity fund, there’s a 10% tax. So after accounting for the surcharges, we will get only ₹8,706 as dividend as ₹1,294 will be paid to the government. Which means by taking dividend we have reduced our total investment value from ₹1 lakh to  ₹98,706.

There is another investment option which is called as Dividend Reinvestment. Earlier it was popular because it led to lower taxation. However now, it actually have double impact of taxation on the investments as the money to be reinvested after dividend declaration will be net amount after paying dividend distribution tax and further there’s a 10% tax on long term capital gains. Even though the percentage of tax on capital gains is the same as dividend, however new returns in the hands of investors will be severely impacted because the dividend tax constantly reduces the amount available for further growth.

So does it really makes sense to opt for a dividend plan?

Absolute No. There is no sense of opting for dividend option except in case of corporates who are in top tax brackets and invest in liquid funds dividend option which has lower taxation as compared to their respective income tax bracket.

So What could be the alternate for regular cash flow?

For those who were opting dividend option just to get some tax free money it is better to continue in growth scheme which will help in creating long term wealth by compounding effect.

However for those who needs regular cash flow (like retired person without any regular income) there is one option called as Systematic Withdrawal Plans (SWP). In SWP investors can specify amount and date for withdrawal and money will be credited to their accounts accordingly by redeeming respective units. These are almost good enough as it will have fix amount and date so as to match the requirements.

What are other points to consider?

As said earlier the mutual funds withdrawal have Short Term Capital Gain Tax if redeemed before one year (for equity funds and three year for debt funds) and Long Term Capital Gain Tax which should be kept in mind. There are some schemes who charge exit penalty on withdrawal which is generally 1% and applicable for withdrawal before one year although it will have very negligible impact but one should consider it while opting for the SWP.  

Further the fact is that whatever amount we withdraw it will reduce our total investment value, So while withdrawing any amount we need to keep this in mind that our future growth on the investments will be reduced by that much amount including the compounding impact of the withdrawal amount.  Therefore we should withdraw only that much amount which is actually required.

Finally whether a person needs regular cash flow our want long term wealth creation dividend option cannot be the best option in either case and we should be wise enough to choose the right option based on our specific requirements.

FMP’s a better alternative to Fixed Deposits

FMP stands for Fixed Maturity Plan. These are essentially close-ended income schemes with a fixed maturity date i.e. that run for a fixed period of time. This period could range from one month to as long as three years or more. When the fixed period comes to an end, the scheme matures, and your money is paid back to you.

Some of the FMPs do invest a small portion of portfolio in equity which are called dual advantage fund. The portfolio is generally invested in debt and money market instruments maturing in line with the tenure of the scheme. The objective is to lock-in the investment at a specified rate of return thereby immunizing the scheme against market fluctuations.

Liquidity

In most open-ended mutual fund schemes, one can redeem one’s units anytime. However, the structure of the FMP does not lend itself to this kind of liquidity. In FMP Invest money you are more or less sure you are not going to need during the tenure of the plan. If you withdraw before the scheme closes, generally it is not permitted however you can sell it in the secondary market as all the closed ended scheme have to be listed in stock exchanges although finding a buyer for these securities is bit difficult. Though income schemes invest in similar instruments as an FMP, being open-ended and not having a specific tenure based investment strategy, these are subject to interest rate risk leading to fluctuations in the NAV.

What is better — A Bank Deposit or a FMP?

Lately the interest rates on bank deposits have fallen leading many investors to wonder whether a simple Bank Fixed Deposit (FD) would serve better than having to go through the process of investing in an FMP. Though compare to Bank FDs , FMPs currently offer a little higher rate of return; the tax impact tilts the scales in significant favour of the FMP.

Interest on Bank FDs is fully taxable whereas the return from FMPs is either subject to the Dividend Distribution Tax (for the dividend option) or the capital gains tax rate (for the growth option). The capital gain is calculated after adjusting with Cost Inflation Index. The Distribution Tax rate @28.84% or the capital gains tax rate @20% are lower than the income tax rate, especially in the case of investors in the higher tax bracket where income tax on interest will be at 34.60% (30%+12% Surcharge and Education Cess). Tax directly eats into returns, which is why FMPs have the edge over Bank FDs.

Are FMPs for you?

If you are looking for a fixed income avenue that yields a reasonable return with minimum risk, adequate liquidity and tax efficiency, FMPs will provide you with an effective shelter.

Let’s see how a longer termed FMP (of over one year) has an even better edge than a Fixed Deposit. The reason is that for an FMP of over one year, the return is taxed as long-term capital gain and not normal income. The following table summarizes the advantage that an FMP has over a fixed deposit.

In the case of an FMP, you have an option of paying tax on long-term capital gains @20% after indexing cost while for interest income you have to pay the tax as applicable to your tax bracket.

S. No.	Particulars	FMP of Mutual Funds	Fixed Deposit
A	Investment Amount	100,00,000	100,00,000
B	Post Expense Indicative Yield	7.50%	7.50%
C	Maturity Value after three years	124,22,969	124,22,969
D	Gain = C-A	24,22,969	24,22,969
E	Expected Annual CI Index	5.00%
F	Index Value for three years	1500000	0
G	Net Gain After Indexation (D-F)	9,22,969	24,22,969
H	Tax Payable @20%/ 30%	1,84,594	7,26,891
I	Total Income Cash Flow (D-H)	22,38,375	16,96,078
J	Maturity Value after three years	122,38,375	116,96,078
K	DIFFERENCE IN TOTAL CASH FLOW	5,42,297
	Additional return in % (K/A)	5.42%

As we can see from the table given above that the net return in FMPs can be as high as 5.4% compared to FDs when we expect the returns from both the instruments will be same although FMPs give little higher returns than FDs.

Are FMPs for Corporates/ Entities who are at higher tax bracket?

Well, FMPs are for everyone those who are looking a fix kind of returns. However the favorable tax structure makes it more attractive for those who comes under highest tax bracket. Corporates, Association of Persons and High Net worth Individuals. In fact, you can look upon FMPs as fixed deposits offered by mutual funds. Just like bank fixed deposits, Tax incidence differs as explained above.

As compared to other fixed income products like Bonds, Corporate Fixed Deposits FMPs fair better due to long term capital gain tax benefits as compared to interest which is fully taxable.

Also FMPs are quite safe since the underlying investments are either money market instruments or rated paper. Before investing, we can get an idea about the indicative yield from the scheme based on the current market scenario. The word used is “indicates” as against “assures” as SEBI rules do not allow mutual funds to assure returns. In any case, just like in the case of a bank fixed deposit, in an FMP too, investors would know beforehand what the return is going to be. 

And lastly, to choose an FMP, you should do just what you would do take a right advise through a professional Advisor.