SUKANYA SAMRIDDHI YOJNA

SUKANYA SAMRIDDHI YOJNA

Modi government has launched campaign ‘Beti Bachao Beti Padao’. Under this scheme the government has launched Sukanya Samriddhi Yojna Account. It is a small saving deposit scheme for the girl child to support her education and marriage. This account can be opened in the name of girl child from the time she is born till she becomes 10 year old. It can be opened in a post office or any public sector bank.

It can be opened with a minimum amount of Rs 1000 and maximum of Rs 1.5 lakh. The money can be deposited till 14 year from the date of account opening by parents or guardians. The interest rate will be decided by government every year. For FY 2014-15, the interest rate is 9.1% and it is compounded annually. The interest will be tax free. You can avail section 80C tax benefit, the amount deposit in this account till Rs 1.5 lakh in each financial year.

The account will mature after 21 years from the date of account opening. 50% fund can be withdrawn after the girl turns 18 year old. The premature closure of account is allowed in the case of death of girl child. If you do not deposit any amount in a whole year, a penalty of Rs 50 charged. One family can open only 2 accounts even if there are more than 2 girl child in family. Only 1 account per girl child is allowed. You cannot operate account online.

This scheme is better than post office schemes and fix deposit schemes or RD schemes. It will give the same tax benefit as PPF. It is good plan for your child because at least the government will try to meet the inflation rate at least. Interest rate will be announced every year. It is illiquid investment so invest in planned manner. Birth certificate of girl child, address proof and photo identity proof of girl child and parents/ guardian are required documents for opening the account.

It is less risky investment option and it will not give return like mutual funds or share market. As an asset allocation plan for debt investment, one can consider it. In my personal opinion, if you invest for 21 year then it is not much good option. A good mutual fund will give much better return if you compare between mutual fund and this scheme. I have still not opened this account for my daughter as I already invest in mutual fund.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Union Budget 2015-16: An Overview

Union Budget 2015-16: An Overview and Analysis

An Overview on Budget 2015-16:

1.     GDP growth estimated between 8.0 – 8.5%.

2.   Fiscal deficit target relaxed to 3.9% of GDP in FY 2015-16      with increased focused on public investment in infrastructure  and also proposed to fiscal deficit target 3% within 3 financial  years.

3.    Net market borrowing  to be Rs 4.56 lakh crores.

4.  No change in personal income tax slab and rate of tax for companies in respect of income earned in the financial year 2015-16.

5.  Proposal to reduce corporate tax from 30% to 25% over next 4 years, starting from next financial year

6. Wealth tax abolished, additional surcharge 2% imposed on individuals having income more than Rs 1 crores.

7.  Excise duty on cigarettes is being increased by 15% to 25%.

8.  Service tax is being increased from 12% plus education cess  to 14%.

9. Online and mobile advertising, radio taxis or radio cabs, services provided byair-conditioned contract carriages are now under service tax.

10.Total subsidies limited at 1.7% of GDP in FY16 against 2.1% of GDP in FY15 due to fall in fuel subsidies.

Banking and Financial services:

Announcement of autonomous bank Board Bureau and Holding company structure for PSU banks in 2015-16 is positive for PSU banks in long term. Reduce in corporate tax is positive for banking and financial services companies as most of them pay full tax rates. Overall budget impact is positive.

Oil & Gas Sector:

The impact of budget on this sector is neutral. The subsidy for FY16 is 30,000 crore marginally negative for oil companies. Focus on DBT (Direct Benefit Transfer) to curb subsidy leakages is positive for entire sector.

Infrastructure / Capital Goods Sector:

Road development allocation has been increased to 85,565 Cr(this budget) from 37,845 Cr(last budget) in this budget. NHAI target has to complete 8,500 KM road development. It is positive for all road developers. Infra investment trusts to be set up to securitizes infra project assets. Announcement of  National Investment and Infrastructure Fund (NIIF) and infuse Rs 20,000 Cr every year in this fund has been positive for all infra companies.

Power Sector:

Announcement of 5 new Ultra Mega Power Projects of 4000 MW, in the plug and pay mode is positive for new investments in this sector. Focus on renewable energy by increasing the capacity is positive for long term.

FMCG Sector:

Increase in service tax and from 12.36% to 14% can hit the consumer demand and will impact negative for this sector.

Retail Sector:

Excise duty on leather footwear having more than Rs 1000 is being reduced to 6% from 12%. It is positive for footwear companies. Gold Monetisation Scheme is positive for jewellers and consumer both.

Travel Sector:

Facility of Visa on arrival to be extended from 43 countries to 150 countries is positive for tourism economy. Development in heritage sites in India is also positive for this sector.

The budget has been positive for agriculture sector, logistic sector, real estate. Housing for all is big positive for housing development companies. For cement and metal sector this budget has been neutral. 

While the budget cleared most of the issues related to FII, it failed to meet general expectations about reduction of MAT in SEZ, reduction in STT and CTT and reduction of custom duty on gold. Increase in service tax may discourage the consumption. The revival of investment in near term is limited but the good result will come in next 3-4 years not in immediate future.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com