3 Gold Schemes Lauched by Modi Sarkar

Gold schemes launched by Modi Sarkar

To curb the gold import and to control investors to invest in gold, the PM Narendra Modi has launched three schemes of gold. These schemes are known as gold monetization scheme, gold sovereign bond and gold coin and gold bullion scheme. According to government of India, gold bonds would be more beneficial than physical gold. Interest earned on gold monetization scheme will be exempt from income, wealth and capital gain tax. Now we will highlight main point of these schemes.

Gold Monetisation Scheme:

Under this scheme the minimum deposit at any one time shall be raw gold(bars, coins, jewellery excluding stones and other metals) equivalent to 30 gram of gold of 995 fineness. There is no maximum limit  for deposit under this scheme. The designated bank will accept gold deposit for the short term (1-3 year), medium term (5-7 year) and long term (12-15 year) under this scheme. Interest on deposits under the scheme will start accruing from the date of conversion of the gold deposited into tradable gold bars after refinement or 30 days after receipt of gold.

The gold will be accepted at the collection and purity testing centres (CPTC) certified by Bureau of Indian Standards and notified the central government. The RBI has notified the interest rate 2.25% for medium term and 2.5% for long term deposit. The bank will issue the certificate of gold deposit to the depositors. Premature withdrawal is allowed with minimum lock-in period and penalty determined by banks.

Gold Sovereign Bond Scheme:

The RBI (Reserve Bank of India) will issue gold bonds on behalf of the central government of India. RBI has fixed the price of first tranche of gold bond at Rs 2,684 per gram of gold. The minimum investment limit is 2 gram and maximum investment limit is 500 gram per person in one financial year.

The bond tenure will be 8 years with exit option beginning the 5th years onwards. These bonds will also listed in exchanges for trading. These bonds can be used as collateral for loan purposes. The rate of interest will be 2.75% per annum payable semi annually on the initial value of investment. These bonds will be available only to resident Indian individuals, HUF, trusts, universities and charitable institutions.

Indian Gold Coin and Bullion Scheme:

These coins will be the first ever issued by government and will be bear Ashok Chakra. It is being launched ahead of Dhanteras, a auspicious occasion for purchasing precious metals. These coins will be available in denomination of 5 and 10 grams. A 20 gram gold bars has also been launched. These coins will be available on all MMTC outlets.

The investor can earn some interest benefit for their idle gold which the investors kept in house or banks and gain nothing. However, gold bond will be taxable as per current income tax act. It has been stated the capital gain treatment will be similar as per current physical gold norms. Some experts says that the current scheme will not bring out much gold as people are more concern about tax provision and in future the tax department inquiry about the source of gold.

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

What should FD investors do in falling interest rate time?

What should  FD investors do in falling interest rate time?

Decreasing inflation rate and demand of growth are putting some pressure on RBI to decrease the interest rate. Calls for lower interest rate getting louder day by day as the industry and government both are seemed determined towards high growth. The big question what should the fix deposit investor in current environment who do not want risk of the share market’s ups and downs.

Many banks are offering 8.5% to 9.5% interest on fix deposit till tenure 5 years. If you want to take a little bit risk, you can earn more from companies fix deposit. There is much possibility of rate cut in 2015 by RBI. It is the right time to lock your money in these instruments.

The largest public sector bank SBI is offering 8.5% on its fix deposit. Of course you should go with high rated NBFC or companies fix deposit with a little bit of risk. For 3 year fix deposit, HDFC is offering 9.0%, Mahindra Finance is offering 9.75%, Shriram Transport FD offering 10.5%, Bajaj Finance is 9.65% offering and GATI is offering 12 % according to their credit rating.

Now a days many manufacturing companies are popular among investors. JK paper, Kores India, JK Tyres are offering between 9.5 to 12% return which is much higher than bank fix deposit. Many companies are offering monthly income option. Companies pay the interest every month or quarterly or half yearly as per your choice. Retired individuals and senior citizen often look for these options which give them fix monthly income.

Since fixed deposits are unsecured instruments, investor should go with high rated and well managed companies. AAA or AA ratings are consider very safe among investors in fix deposit.

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 seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

A New Tax Saving option in FY 2013-14...

A new tax saving option…Section 80EE

After 13 days break, I have come back to my routine Mumbai life. I was travelling in these days. Due to travelling there had some disconnect to our readers. During my journey, I have observed most of people are rushing for tax saving and talking about various tax saving options like section 80C, section 80D etc. Today, I am going to talk about very little known section 80EE.

you have purchased new house in the financial year 2013-14 then you can save more tax. As per existing rule you can avail tax benefit up to Rs 1.5 lakh interest paid on your home loan under section 24. In the FY 2013-14 during budget speech, the finance minister has announce the new tax saving option section 80EE for new home buyer in 2013-14. New home buyer will be entitled to a tax deduction of up to Rs 1 lakh on interest paid on home loan under section 80EE. It will be additional benefit apart from section 24.

There are some conditions for availing this deduction:

·         Home loan should be taken in 2013-14.

·         It is for the first time home buyer.

·         The maximum cap of loan amount is Rs 25 lakh.

·         Property value should not be more than Rs 40 lakh.

·         If your interest amount is less than Rs 1 lakh then you can claim remaining amount in next financial year.

For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Is only tax saving important enough?

Is only tax saving important enough?

Jan to march, in this quarter people rush for tax saving. Some people wait till last week of the march and make a investment decision in hurry. Often they stuck with those investments which they don’t need and return also come very poor. In today’s article we will discuss about some points which are also important when you make investment decision for tax saving.

• ·         Before go to nearest bank, investment advisor or your CA do your proper homework.

• ·         Avoid to rush for save tax. Make your tax planning well before the end of financial year. It will prevent you make wrong decision in hurry.

• ·         Do not purchase a small new insurance or ULIP policy every year. Keep in mind your section 80(C) limit. You can save only upto Rs  lakh including all your investment and expenses under this section .

• ·         If you are salaried, calculate your PF and PPF contribution, HRA if applicable. Your principal repayment on home loan and tution fee for children also come under section 80(C).

• ·         Today’s many government backed companies bonds like IIFCL (Indian Infrastructure Finance Company), IREDA (Indian Renewable Energy Development Agency) and many more in the market. It is good for long term investment and safety points but it is not as good if you need liquidity in short to near term.

• ·         The return of these bonds are tax free but the investment in these bonds are taxable. These bonds are not under section 80(C).

• ·         Tax planning mutual funds (ELSS) have the shortest lock-in period of 3 years and PPF (Public Provident Fund) have longest lock-in period of 5 years.

• ·         If your investment horizon more than 5-7 years then the most suitable option is ELSS for tax saving.

• At last the more important thing please do not ignore return and liquidity need in rush to save tax.

For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Public Provident Fund : The best Tax Saving option in debt category

PPF: The Best option in Debt segment

First of all, Happy Makar Sankrant to all of my readers. As you know tax planning season already begun and the investor are busy to find the best tax saving instrument. When we talk about investment, it can be divided in two broad category: 1. Equity segment 2. Debt segment. Both categories have their own different characteristics. PPF (Public Provident Fund) is the best option available in the debt segment. Here we are going to discuss in details about this category:

Public Provident Fund (PPF) :

All Indian residents are eligible for PPF scheme. NRI are not eligible for this scheme. It can be opened with the name of minor by the legal guardian. However, each person allowed have only one PPF account. If person become NRI after opening the PPF, in that case subscription would be continue till maturity.

A minimum yearly deposit of Rs 500 needed to open and maintain the account. You cannot deposit more than 12 times in a financial year but you can invest more than 1 times in a particular month. If you deposit before 5th of any month then only you will get the interest for that month. The maximum limit of deposit is Rs 1 lakh in a particular financial year. Online NEFT transfer facility is also available in these days in many banks.

The govt of India decide every year the return rate of the PPF. The rate of interest for current FY year 2013-14 is 8.7%. The minimum tenure of the PPF investment is 15 years. You can extend it in 5 years with or without contribution after 15 year. You can also withdraw up to 60% amount at the time of completion of 15 years.

Loan and withdrawal facility are also available in PPF account also. The rate of interest charged on loan 2% more than the prevailing on interest rate on PPF after 1st December, 2011.  If you have taken loan before 1st Dec 2011 then you have to pay interest on loan only 1% more than prevailing PPF rate. Pre mature withdrawal allowed from the end of the sixth financial year from when the PPF commenced. The maximum amount can be withdraw is equal to 50% of the amount in the account at the end of the 4th year preceding the year in which the amount is withdrawal or the end of the preceding year whichever is lower.

If PPF account holder does not deposit Rs 500 during entire financial year, the PPF account would be deactivated. To activate the account you have to pay Rs 50 penalty and minimum Rs 500 for each inactive year. Nominee facility is also available and you can appoint more than 1 nominee and can allocate the particular percentage to each nominee.

Annual contribution qualify for tax exemption under section 80C with maximum limit of Rs 1 Lakh including all instruments available under this section. The interest earned on contribution and withdrawal are also exempt from tax. It is the safest option for conservative investors who do not want take risk. For your information we are providing the interest rate offer by the PPF over the time:

• 01/04/1986  to 14/01/2000    :   12%
• 15/01/2000  to  28/02/2001   :   11%
• 01/03/2001  to  28/02/2002   :   10.5 % 
• 01/03/2002  to  28/02/2003   :   9% 
• 01/03/2003  to  30/11/2011   :   8%
• 01/12/2011  to  31/03/2012   :   8.6%
• 01/04/2012  to  31/03/2013   :   8.8%
• 01/04/2013  to   onwards        :   8.7%

Once again my best wish to all of you for good financial health and physical health on the eve of Makar Sankranti. For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

HUDCO Tax Free Bond - Opening on 17 September

HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED

After the REC tax-free bonds, the next company to come up with such an issue is Housing and Urban Development Corporation Limited (HUDCO). The company will be launching its issue from the coming Tuesday, September 17.

As compared to REC’s 8.26% (10Y), 8.71% (15Y) and 8.62% (20Y), HUDCO is offering 8.39%, 8.76% and 8.74% rate of interest for the respective tenors.

Though the interest will be paid annually but the date is not available. No prospectus available on company’s website.

HUDCO is raising total Rs. 5,000 crore from this tax-free bonds issue in this financial year, out of which it has already raised Rs. 190.80 crore through private placement. So, now it plans to raise the remaining Rs. 4,809.20 crore through this public issue, including the green-shoe option of Rs. 4,059.20 crore. The base issue size is Rs. 750 crore.

The official closing date of the issue is October 14 and the company may extend or preclose the issue, depending on the investors’ response to the issue.

The main features of REC issue as maintained below:

Rating of the issue - CARE and India Ratings have assigned a rating of ‘AA+’ to this issue, which is also ‘Secured’ in nature. HUDCO is wholly-

owned by the government of India, so the investors’ investment is quite safe.

Listing - HUDCO will get these bonds listed only on the Bombay Stock Exchange (BSE). The allotment and the listing will happen within 12 working days from the closing date of the issue. Investors can apply for these bonds either in physical form or in demat form, as per their comfort and requirement.

Interest on Application Money & Refund - The investors will get interest on their application money also, from the date of investment till the deemed date of allotment, at the same rate of interest as the applicable coupon rate is. Unlike REC issue which is to pay 5% p.a. interest on the refund money, HUDCO will pay the applicable coupon rate.

Categories of Investors & Basis of Allotment - The investors again have been classified in the following four categories and each category will have certain percentage of the issue reserved for the allotment:

Category I – Qualified Institutional Bidders (QIBs) – 10% of the issue is reserved

Category II – Non-Institutional Investors (NIIs) – 20% of the issue is reserved

Category III – High Net Worth Individuals including HUFs, NRIs & QFIs – 30% of the issue is reserved

Category IV – Resident Indian Individuals including HUFs, NRIs & QFIs – 40% of the issue is reserved

QIBs portion had 20% of the issue reserved in the REC issue and after observing their response in that issue, their reserved portion has been reduced to 10% in this issue. Category III HNI investors will get this 10% share of the pie. NRIs are eligible to invest in this issue as well, on a repatriation basis as well as on non-repatriation basis. Qualified Foreign Investors (QFIs) are also eligible.

Minimum & Maximum Investment - There is no change in the minimum investment requirement of Rs. 5,000 i.e. at least 5 bonds of Rs. 1,000 face value each. Retail Investors’ investment limit stands at Rs. 10 lakhs, beyond which they will be considered as HNIs and will get a lower rate of interest.

Interest rates of this issue look very attractive for the investor. I think it is good investment option for the investor of any tax bracket. Investors must go with it for safe and reasonable return.

For more detail about any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi, Certified Financial Planner

Arvind.trivedi79@gmail.com

Muthoot Finance NCD Details

Muthoot Finance Limited, a flagship company of the Muthoot group, is primarily into the gold financing business which constitutes 99% of its total advances. It is also the largest gold loan company in India.  Muthoot started its lending business in 2001 after getting RBI’s registration to function as an NBFC and currently it has a network of 3,780 branches all over India. The company till date has no major plans to diversify its business from gold loans to any other streams of financing. This issue will be the fourth issue from this company in just over one year’s time. Muthoot collected Rs. 1,413 crore through its previous three issues – Rs. 693 crore from Series I, Rs. 460 crore from Series II and Rs. 260 crore from Series III. The size of this NCD issue is Rs. 500 crore including a green-shoe option of Rs. 250 crore.

Muthoot reported revenues of Rs. 4,549 crore in FY12 as against Rs.2,316 crore in FY11, a jump of almost 96%. Net profit of the company increased by a massive 81% from 494 crore in FY11 to 892 crore in FY12.  Gross NPAs and Net NPAs of the company stood at 0.56% and 0.57% respectively as on March 31, 2012 as against 0.29% and 0.33% respectively as on March 31, 2011.

Again, NRIs and foreign nationals among others are not eligible to invest in this issue. The allotment will be made on a “first-come-first-served” basis. These bonds will also list on both the stock exchanges – NSE and BSE. Investors will have the option to apply these bonds in physical form also except the “Option V” bonds which are available only in the  demat  mode. The detail as given below

Issue of Muthoot Finance Secured Non-Convertible Debentures (NCDs)

Options	Particulars
Issuer	Muthoot Finance Limited
Issue period	17 September 2012 To 5 October 2012
Issue Size	Rs 500 Crores (Public issue of Rs 250 Crores with an option to retain over-subscription of Rs 250 Crores)
Basis of allocation	First come first serve basis
Listing	Proposed to be listed on BSE and NSE
Rating	ICRA AA-/Stable and CRISIL AA-/Stable
Face Value and Issue Price	Rs 1,000 per NCD (Trading Lot - 1 NCD and in multiples of 1 NCD)
Minimum Application	Rs 10,000 (10 NCDs) and in multiples of 1 NCD thereafter
Interest Payment Date	Annual Frequency - on 1st day after 31 March and Monthly Frequency - 1st day of next month.
Trading and Issuance	Both physical and dematerialised form (NCDs under Option V will be compulsorily allotted in dematerialised form.)
Interest Payable	Interest on application 11.50% p.a and Interest on refund 6.00% p.a. (Refer Terms and Conditions)
Who can apply: Institutional, Non Institutional, Indian Nationals Resident in India and HUF
Investor Category	I (Institutional)	II (Non Institutional and HNl)	III (Retail)
Issue allocation %	15%	35%	50%

Specific terms for each series of Bonds:

Series	I	II	III	IV	V
Frequency of Interest Payment	Annual	Annual	Monthly	Annual	Cumulative
Tenor (In months)	24	36	60	60	72
Coupon Rate (%) p.a	11.50%	11.75%	11.75%	12.00%	NA
Effective Yield (%) p.a	11.50%	11.75%	11.75%	12.00%	12.25%
Redemption Amount per NCD	Face value + interest				Rs. 2,000

View on this issue:

As the Reserve Bank of India (RBI) has become stricter with the gold financing norms. Competition from the banks and other gold financing companies has also increased. It is the most unattractive issue of this financial year.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com