Wednesday, 21 March 2012

Time is Running out

Tax Planning with ELSS and INFRA BONDS

As you know, now only few days are remain left to grab the opportunity of the Tax savings U/s. 80C and 80 CCF of IT Act.

Under Section 80C of Income Tax Act, Certain Investments are deductible ( Up to a Maximum of Rs. 1,00,000/- ) from your Income. This Tax Break is available in all Tax Brackets, and this is one of  the easiest form of the Tax Planning.

The instruments eligible for deduction under Section  80C fall into Two broad categories:

(A). Fixed Rate Instruments, which offer fixed returns and are suitable for conservative, risk-averse investors. Here primary attraction is the safety – the deposits are insulated from market fluctuations. Such instruments typically offer annual after-tax rates of return in the range of 5% to 10%. It includes,

(1). Tax saving Fixed Deposits
(2). National saving Certificates
(3). Post Office Term Deposits etc.
(4). Public Provident Fund – PPF
(5). Senior Citizens Savings Scheme.
(6). Employee Provident Fund - EPF
(7). Guaranteed Annuity Plan from Life Insurance Companies.
(8). Guaranteed Return Endowment Plans from Life Insurance Companies.

(2). Market – Linked Investments, which offer the potential of higher returns, are also exposed to higher risk. The Three important types are Equity Linked Saving Scheme (ELSS) ; Unit Linked Insurance Plan (ULIP) and Retirement or Pension Plan from Mutual Fund.

Market-linked instruments such as ELSS ; Ulips and Pension plans Of Mutual Funds are usually investments in equity markets – equity markets are volatile, so such schemes are expose to potentially higher market risk. How ever historically, on a long term basis, the rate of return on equity has out-paced inflation, and market investment has contributed significantly to investor wealth.

Under Section 80CCf of Income Tax Act, Certain Investments are deductible ( up to a maximum of Rs.. 20,000/- ) from your Income. This Tax Break is available in all Tax Brackets.

The instruments eligible for deduction U/s. 80CCF is only Infrastructure Bonds.

It is said that “ Timely Planning of financial matters not only helps in reducing Tax Liabilities, but also in creating opportunities to build  Wealth.”

In this context Infrastructure (Infra) Bonds offer an attractive investment options to investors.

Section 80CCF of an Income tax Act provides an additional deduction of Rs. 20,000/- ( Over and above the Rs. 1,00,000/- allowed under Section 80C ) from the taxable income of an individual for investing in long term Infra Bonds. So if you are in 30% tax brackets you can save up to Rs.6180/-.  by investing in these Bonds.

These bonds come with some unique features,

Ø      Tenure – 10 Years
Ø      Lock-in Period – 5 Years
Ø      Rate of interest – Fixed
Ø      Easy Liquidity –  Trading through stock Exchange

See below web page for Comprehensive article about Infrastructure bonds :

Now currently there are only below mentioned Infra Bonds are available in the Market and they are, it’s so close to March 31st.

( 1 ). IFCI Infra Bonds – Series V.
( 2 ). PFC Infra Bonds.
( 3 ). PFS Infra Bonds
( 4 ). IDFC Infra Bonds – Tranche III.

I here with posting,

The Calculation Sheet of all above mentioned Infra Bonds ( Currently Open )

A wonderful Explanation and calculation of how you will get the Tax Saving by making the combination  of investments of ELSS (u/s 80C ) and Infra Bonds (u/s 80CCF) - The details are for the Category : 1( Male - Individual and HUF ) below 60 years

Calendar Of All Infrastructure Bonds ( Accounting Year 2011 – 2012 )

Flowchart Of Sec.80C & 80CCF.

Till next time , Money Happy Returns.

Date : 21/03/2012.

Jigisha Nikhil Shah

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Monday, 6 February 2012

Is the Bear Market Over ?

While writing this article at late evening , I show the News Flash on TV that today BSE Sensex Touched 17604.96 Points (closed).

Then I thought that I have to check BSE Sensex & Mutual Fund’s Scheme , to my surprise, Once again BSE Sensex History repeated , data shows that Investors , who invest through Systematic investment plans or via the lump sum route, get the gain because they remain invested during difficult times. See below Item No.(1).

Trimming the market is next to impossible and chasing momentum may not be in the best interest of investors. Investors tend to pay too much attention to short-term events and lose sight of the fact that chasing short-term returns may not lead to wealth creation over the long term and miss important long term trends by stopping SIP, but  Investors who stayed  invested have benefited the most because of THE POWER OF COMPOUNDING.

For Full Details Article  with Calculation Sheet , pl see the blow link

Till next time , Money Happy Returns.

Date : 03/02/2012.

Jigisha Nikhil Shah

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Friday, 3 February 2012

Why Gold is in Demand ? ( Video )

Gold : No doubt, it is the best performing asset class during last 5-10 years …during the last one year itself gold has generated returns of around 40% while equities are down by approximately 15-20%.

The basic idea behind investing in gold is to diversify your portfolio ( Asset Allocation ) to reduce investment risk and not to earn those spectacular returns. You invest 5-10% of your portfolio and that too gradually in small proportions over a period of time. 

Here I am posting One Excellent Video in Zip File ( 4.11 Mts – 16.55 MB Size ). It also require the VLC Media Player.

Pl see below link

This Video gives you some basic Ideas about gold and also solve some common questions like :

( 1 ). Why Should I Invest ?
( 2 ). Why Gold Price is increasing ?
( 3 ). What is Current Status ?  
( 4 ). Why Whole World buying Gold ?  
( 5 ). What is the Next Price Of Gold ?

This File is very helpful to all categories.

Pl see and Reply Soon.

Till next time , Happy Investing !!!..

Jigisha Nikhil Shah

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Thursday, 2 February 2012

My Financial Quotes

Today I am sharing My Favorite presentation of Quotes from Financial Wizards.  


Till next time , Happy Investing !!!..

Jigisha Nikhil Shah

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Friday, 27 January 2012

How to Select Infrastructure Bond ( U/s.80CCF ) Of Income Tax Act.

It is time to start working on your tax savings.... just few months away from March 31,2012.It is the time to execute some action.

Infrastructure bonds are gaining popularity as a tax saving instrument because of the recently introduced tax benefit under 80CCF. 

The investment made under such bonds are available for tax deduction under Section 80CCF which is over and above the Rs 1,00,000/- limit under Section 80C. An investor is free to invest for higher amounts; but the tax deduction is allowed only upto Rs 20,000/-.

As you know currently Six Infrastructure bonds issues are running on , like

( a ).  L & T Infrastructure Finance ( L & T )
( b ).  IFCI
( c ).  Infrastructure Development Finance Company Ltd ( IDFC )
( d ).  Rural Electrification Corporation Ltd ( REC )
( e ).  PFS
( f ).   SREI Infrastructure Finance ( SREI )

You can find Full details of above mentioned currently running Infrastructure Bonds on web site easily. So no need to discuss more......

Some Interesting points to remember , while investing in Infra Bond u/s.80 CCF Of IT Act.:

( 1 ). All Infra bond has lock-in Period of 5 Yrs., so can't get exit before 5 yrs.

( 2 ). Tax Adjusted Yield from the Infra bond depends on your income Tax bracket. Higher the tax bracket , greater will be the effective yield.

( 3 ). A Shorter holding period will fetch a higher yield. So it is better to tender the bonds for a buy-back , not hold them till maturity.

( 4 ). You will have to pay tax on interest received , because it will be added to your regular income.

( 5 ). Those who are in higher tax slab, always Select the Cumulative option , here Interest gets re-invested at the bond's coupon rate , also you will get Indexation benefit.

( 6 ). While investing in Infra bond , check the Credit Rating of Bond issuer company and it is advisable to select the " AAA " Credit Rating. It indicating high safety for timely servicing of debt obligations.

( 7 ). Investment in Infra bond , is One time investment and you get tax benefit in current year only. Next year if you want tax benefit you have to invest again.

( 8 ). The Infra Bonds are trade able on the stock exchange after completion of lock-In period i.e.5 Yrs.

( 9 ). The Interest on such bond shall not be Higher than the Yields prevailing for 10 year Government Of India Bonds ( G-Sec ) the time of issuance of such Infrastructure Bonds. 

( 10 ). Only the bonds which are in demat mode can be trade able on the stock exchange. If you apply in physical mode , then TDS will be deducted on the Interest which you will receive every year ( as per category ).

Benefit Of Demat : ( Securities Dematerialisation )

( a ). Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. ( b ). Reduction in paperwork .    ( c ). Nomination facility.( d ). Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately.( e ). Holding investments in equity and debt instruments in a single account.( f ). Elimination of signature differ risk.

Hint :

For a 30% Tax bracket, I think its definitely worth investing in Infrastructure bond as post yield return comes to around 11-12%.

Unlike other categories, it does not make much sense for a person in the lowest tax category ( below Rs 5 lakh ) to invest into infra bonds. Five year lock-in and a small tax benefit is not a great incentive to go for it.

Till next time , Money Happy Returns.

Jigisha Nikhil Shah

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IRFC Tax Free Bond : Ultimate Solution For NRI


Don’t allow taxes to eat out your returns. Instead , invest in India’s most trusted PSUs bonds which gives you completely Tax free return. Go ahead , enjoy the full benefit of your investments

   Salient Features 

Ø   The Income by way of interest on these Bonds is fully exempted from Income Tax and shall not form part of Total Income as per provision under section 10 (15) (iv) (h) of I.T. Act, 1961.

Ø   Wealth Tax is not levied on investment in Bond under section 2(ea) of the Wealth -tax Act, 1957

Ø    Tax Free bonds are issued by Government Owned Undertakings and carry high credit rating

Ø    Bonds to be allotted on first-cum-first serve basis up to the issue size of relevant tranches

Ø     Bonds are likely to be issued either in Demat form or physical form at the option of bondholders.

Ø    Bonds are listed on the WDN segment of the BSE and the NSE. and so, they will be traded, and this will provide liquidity to the instrument in a transparent manner.

Ø     No Limit on Investment

Ø     IRFC Tax Free Bonds are a lucrative option for investors in the 30% tax bracket. The return generated by the bonds are much higher than bank deposit. No banks are offering 11% interest rate neither for  short or for such a long period.

Ø  NRI’s can invest in bonds through Repatriable as well as Non - Repatriable basis.

IRFC – Tax Free Bonds have 10 or 15 Yrs Maturity and offer an average 8.00 to 8.10 % of interest ( 8.15 to 8.30% of Interest – With Some Condition ). Pre tax yield on these bonds are close to 11 per cent. The coupon is attractive given the fact that it is tax free returns and compares favorably than other current avenues, like bank or corporate deposits.

Analysis & Calculation For IRFC Bonds 2012

( 1 ). What is the face value of each bond? Minimum Investment Size?

Rs. 1,000/- per Bond. ; Minimum 10 Bonds ; Minimum Investment Size-Rs.10000( thereafter in multiples of 5 bonds)

( 2 ). Who is NRI ?

A Non-Resident Indian is a citizen of India ( holding a valid passport of Government of India ) temporarily residing in the country of his / her present residence.

NRI includes Person of Indian Origin ( PIO ).

A PIO is a citizen of any country other than Pakistan or Bangladesh if :

( a ). He / she at any time held an Indian passport
( b ). He / she or either of his/her parents or any of his/her grandparents was a citizen of India
( c ). The person is a spouse of an Indian citizen or a person referred in A and B above.

( 3 ). What Type Of Accounts For NRI – Currently In India ?

( 4 ). If I ’m an NRI can I invest in these bonds ?
Yes. NRI’s can invest in bonds through Repatriable as well as Non - Repatriable basis.

( 1 ). In case of NRIs applying under repatriation basis: If it is received either by inward remittance of freely convertible foreign exchange through normal  banking channels i.e. through rupee denominated demand drafts/cheque drawn on a bank in India or by transfer of funds held in the investor’s rupee denominated accounts i.e. Non-resident External (NRE) account maintained with an RBI authorised dealer or a RBI authorised bank in India.

( 2 ). In case of NRIs applying under non - repatriation basis - If it is received either by inward remittance of freely convertible foreign exchange through normal banking channels i.e. through rupee denominated demand drafts/cheque drawn on a bank in India or by transfer of funds held in the investor’s rupee denominated accounts i.e.. Non-resident Ordinary (NRO) account and Non Resident Ordinary (NRO) maintained with an RBI authorised dealer or a RBI authorised bank in India.

( 5 ). Can person who has foreign citizenship and having PIO card apply in IRFC Issue?

Yes , Submit self attested copy of PIO Card along with application

( 6 ). Can a NRI apply for bonds in Physical mode?

Yes. NRI can apply for physical mode.
( 7 ). There is a separate form for NRI?

There is no separate form for NRIs, the form for residents and NRIs are same.

( 8 ). Documents required along with NRI application in case of Demat mode?

( I ).    Application form in original
( II ).   Cheque from respective bank account – NRE / NRO
( III ). Self attested copy of PIO card ( If client is a PIO ) Or Notarized copy of POA if application under POA.
( IV ).  Pan Card Copy of POA self certified.

( 9 ).   Documents required incase NRI applying in Physical mode?

Application in Original ( Please complete the Application Form in all respects, by providing all the information including PAN and demographic details )

Cheque from respective NRE / NRO saving as applicable.

Self-attested copy of the Income Tax Pan card
self attested copy of PIO card ( if client is a PIO )
Self-attested copy of the proof of residence.
Self-attested copy of a cancelled cheque leaf
Self attested bank statement ( if the given chq does not display the client Name and account status-NRE/NRO)
Notarized copy of POA if applicable.
Copy Of Power Of Attorney  ( Self Certified )

Important note: Applications by NRI in physical form shall be submitted only at the Collection Centres located at Mumbai, Delhi, Ahemdabad, Hyderabad, Chennai, Bangalore, Chandigarh and Kochi.

( 10 ). Can one apply in joint names?


Applications may be made in single or joint names (not exceeding three). In the case of joint Applications, all refunds/ interests/ redemption amounts will be made out in favour of the first Applicant. All communications will be addressed to the first named Applicant whose name appears in the Application Form at the address mentioned therein.

Names in the Application Form should be identical to those appearing in the account details in the Depositories. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depositories.

( 11 ). Can NRI apply by doing the direct transfer of funds to escrow account?

No, not allowed


Only cheque from respective NRE / NRO account maintained with an RBI authorised dealer or a RBI authorized bank in India will be acceptable. Demand draft along with banker certification is acceptable

( 12 ). Can cheque be signed by a person holding POA?

Cheque may be signed by the POA holder as long as the applicant`s bank clears the Cheque

Documentary requirement in case of application made under power of attorney Notarized copy of POA must be attached with the original application and cheque.

( 13 ). Who will get the interest in case of joint application?

In case of joint application, interest will be accounted to the first holder only, and will be credited to the bank account which is linked to demat account.

( 14 ). Is there TDS on the interest on allotment of bonds?

There will be no deduction of tax at source from the interest on allotment of bonds

( 15 ). Are these bonds listed any where?

Yes. The Bonds will be listed on NSE and BSE

( 16 ). Will the scanned copy of form be acceptable?

No.Scanned copy of form will not be acceptable.

( 17 ). Does this bond carry buyback options?

No. Neither “Put Option” shall be available to the Bondholder(s), nor would “Call option” be available to the Company to redeem the Bonds prior to maturity.

Tomorrow I am going to post Some Calculation Sheets here.. 

Till next time , Money Happy Returns.

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Thursday, 26 January 2012

Tax Free Bonds Calendar 2011 - 2012

Here I am posting Tax Free Calendar ( Accounting Year 2011 - 2012 ) Ready Made Chart For Investor ; Corporate and  AMFI Certified Mutual Fund Advisor Etc..

Pl Keep this Sheet in your ledger.

Till next time , Money Happy Returns.

Jigisha Nikhil Shah

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Mobile No : +91 98796 85266