We are aware that debt mutual funds are subject to a dividend distribution tax (DDT). From April 1st 2018, equity mutual funds will also be subject to DDT. Here some examples as to how DDT affects mutual fund dividends and lowers returns. This post is in response to Ankit Jain’s comment in Equity Mutual Fund Dividends are…
Continue reading →On Feb 2nd the day after the budget, the Sensex fell by about 2%. If you this is a “big fall” or if you are worried, you only have two choices: get used to it and be ready for more or leave and head to fixed income. The following charts were published on Mar 11,…
Continue reading →Budget 2018 has proposed that equity-oriented mutual funds be subject to a 10% dividend distribution tax (DDT) to ensure parity with the 10% LTCG tax on growth equity mutual funds. If you include the surcharge and cess, the rate of dividend tax is 11.648% and if you add the effect of “grossing up”, the full tax…
Continue reading →I am surprised at how many people assume that the 10% Equity LTCG tax introduced in Budget 2018 also applies to mutual funds. That is, they think that the Equity LTCG tax is a form of double taxation -the fund houses pay tax once and we tax again when we redeem. This is NOT true!…
Continue reading →Readers may recall that I have been covering equity LTCG tax in a series of posts. First, the implications, followed by simple examples on how to calculate LTCG tax after accounting for the grandfather rule. Then we discussed an illustration of how much Equity LTCG tax we need to pay. Now, in the second part of…
Continue reading →The day after Budget 2018 proposed LTCG tax on equity and equity oriented mutual funds, life insurers saw an opportunity to push ULIPS as the “go to” instrument now. Abandoning mutual funds in favour of ULIPS only to avoid the LTCG tax is like undergoing chemotherapy to shave a head (Robin Williams*). In this post, I…
Continue reading →It was announced in Budget 2018-2019: Long Term Capital Gains from Equity to be taxed at 10%. Here is an illustration of how much long-term capital gains tax you need to pay on a long-term systematic investment in equity or equity mutual funds. This is part one where the LTCG tax after each year of investment…
Continue reading →Here are eight lesser-known, but important budget 2018 proposals. I have now updated the three budget articles posted yesterday. Please do have a look: UPDATE: Equity LTCG Taxation: How much tax do I need to pay? Illustration part 1 Long-Term Capital Gains Taxation from Equity: Examples (Budget 2018-2019) Budget 2018-2019: Long-Term Capital Gains from Equity to…
Continue reading →As published it was announced in Budget 2018-2019: Long Term Capital Gains from Equity to be taxed at 10%. Here are some examples of how this works. Example 1: I purchase 10,000 units of an equity oriented fund (or stock, see definition of fund in the above post) at Rs. 10 NAV per unit on 4th Aug…
Continue reading →Budget 2018 has a slew of benefits for senior citizens. Here is a list. Also see: Budget 2018-2019: Long Term Capital Gains from Equity to be taxed at 10% – Implications New: Long Term Capital Gains Taxation from Equity: Examples (Budget 2018-2019) UPDATE: Equity LTCG Taxation: How much tax do I need to pay? Illustration part 1 1:…
Continue reading →The Economic Survey 2017-2018 was published yesterday with a clear warning that the stock market valuations are too high and unless earnings increase, a correction should be expected. The survey also argued that the bond market seems to have forgotten about the growth in the national small savings fund. Amidst the euphoria about increased GDP growth…
Continue reading →All of us dream. Some of our dreams are serious enough to become goals and like it or not, many dreams are financial. That is they require money to implement. Here are three key factors that decide how well we can achieve our financial goals. Although each individual is different, there are some similarities. This…
Continue reading →Each time the markets move up for a few sessions, it makes many investors uncomfortable. Is it a bubble? Is it euphoria? They wonder and if the movement results in an all-time time, the worry machines are turning in full swing. In this post, I discuss some reasons for this investor behaviour and how one…
Continue reading →We discuss how to create a retirement income plan with 27-year old Amar as a case study. We shall consider asset allocation for each year of investment before and after investment and how Amar can derive an inflation-protected income and be financially free after retirement. This is step 11 of Re-assemble, a series on the basics…
Continue reading →Claim settlement ratios (CSR) published by IRDA do not represent the probability of claim acceptance. Most private insurers have a claim settlement ratio comparable to that of LIC. Therefore the CSR will not help you choose a term life insurance policy. At best, CSRs would help you reject a few insurers. Here are some insights…
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