Income tax calculator - FY 2010 - 2011

Budget 2010 was really a boom for citizens. The new tax slab announced is almost saving upto 51,000 for any person paying tax. The tax slab announced are

Slabs (Rs)	Rate
0 – 160000	0
160001 – 500000	10
500001 – 800000	20
800001 and above	30

Old tax slabs:

Slabs (Rs)	Rate
0 – 160000	0
160001 – 300000	10
300001 – 500000	20
500001 and above	30

Impact:

Taxable income (Rs)	Tax -before budget	Tax after budget	Saving
	(Rs)	(Rs)	(Rs)
200000	4120	4120	0
500000	55620	35019	20601
1000000	210120	158619	51501
1200000	271919	220419	51500
1500000	364619	313119	51500
2000000	519119	467619	51500
2500000	673619	622119	51500
4000000	1137119	1085619	51500

Female individual taxpayer

New tax slabs:

Slabs (Rs)	Rate
0 – 190000	0
190001 – 500000	10
500001 – 800000	20
800001 and above	30

Old tax slabs:

Slabs (Rs)	Rate
0 – 190000	0
190001 – 300000	10
300001 – 500000	20
500001 and above	30

Impact:

Taxable income (Rs)	Tax -before budget	Tax after budget	Saving
	(Rs)	(Rs)	(Rs)
200000	1029	1029	0
500000	52529	31929	20600
1000000	207029	155529	51500
1200000	268829	217329	51500
1500000	361529	310029	51500
2000000	516029	464529	51500
2500000	670529	619029	51500
4000000	1134029	1082529	51500

Senior Citizens

New tax slabs:

Slabs (Rs)	Rate
0 – 240000	0
240001 – 500000	10
500001 – 800000	20
800001 and above	30

Old tax slabs:

Slabs (Rs)	Rate
0 – 240000	0
240001 – 300000	10
300001 – 500000	20
500001 and above	30

Impact:

Taxable income (Rs)	Tax before budget	Tax after budget	Saving
	(Rs)	(Rs)	(Rs)
200000	0	0	0
500000	47379	26780	20599
1000000	201879	150379	51500
1200000	263679	212179	51500
1500000	356379	304879	51500
2000000	510879	459379	51500
2500000	665379	613879	51500
4000000	1128879	1077379	51500

You can download the 2010 tax calculator for 2010-2011

Auto Company Enjoy - Budget 2010

Finance Minister's Union Budget 2010 was positive for auto companies. Government hiked the excise duty by 2% — to 10% from 8% earlier. The industry, was expecting the duty hike and some quarters had expected a 4% hike.

The FM’s announcement came as a relief to the sector. Auto stocks like Maruti Suzuki, Tata Motors and Ashok Leyland were up between 2% and 5%.

Company Name	Last Price	Prev Close	% Chg
TVS Motor	70.35	65.9	6.75
Tata Motors	711.2	667.4	6.56
Bajaj Auto	1817.65	1712.35	6.15
Ashok Leyland	49.65	46.9	5.86
Mah and Mah	1007.75	957.1	5.29
Hero Honda	1777.65	1700.25	4.55
Maruti Suzuki	1459.95	1399.9	4.29

The auto companies will pass the hike to customers with minor price hike, which will slow down sales.

Another minor positive for auto companies was the weighted increase in research and development (R&D) exemption — though the pharmaceutical industry is the main beneficiary of the move.

The FM aims to implement direct tax code (DTC) and the goods and service tax (GST). Both tools, which would overhaul the country’s tax system, are to be implemented by April 2011. The GST aims to bring other taxes like excise, VAT, CST and other taxes under one umbrella and the GST rate may be lower than the combined total of the current taxes.

The hyper growth in the sector was also aided in part by the stimulus packages (excise duty cut from 14% to 8% and slashing of interest rates) that the government had unveiled in late 2008 and early 2009 when sales slumped.

FM says, weighted deduction reduced from 150% to 200% for in-house R&D, which is positive for auto companies. TVS Motor, Tata Motors, Bajaj Auto, Ashok Leyland, M&M, Hero Honda and Maruti rallied 4-6.7%.

Infrastructure Bonds - Additional Tax Saving

Infrastructure Bonds or Tax-Saving Bonds is to save taxes as provided under Section 88 of the Income Tax Act, 1961. The two significant economic factors playing in the investment decisions of Infrastructure Bonds are Inflation and interest rate movements. For exmaple, price of a bond will fall if interest rates rise and vice-versa.

Infrastructure Bonds are available through ICICI Safety Bonds and IDBI Flexibonds. They can reduce tax liability by upto Rs 20,000 per annum, in addition to the 1,00,000 tax excemption provided under Section 80C. Infrastructure Bonds provide investors the option of purchasing and holding the instruments either as physical certificates or in the demat form. The Tax-Saving Bond from ICICI for the month of July 2001 provides two options:

• Face value of Rs 5,000 for 3 years at the rate of 9.00% interest payable annually
• Deep Discount Bonds with a face value of Rs 6,600. These bonds are available for Rs 5,000, and are issued for 3 years and 4 months, after which they are redeemed at their face value. These infrastructure bonds are suitable for an increase in the investment. The terms for the IDBI Bonds are similar also.

Apart from the above Infrastructure Bonds, Rural Electrification Corporation (REC) has come out with an issue of tax-saving infrastructure bonds for investors seeking to utilize the additional Rs 30,000 qualifying limit for investments in Infrastructure Bonds, India.

Infrastructure Bonds do not offer any protection against high inflation since the rate of interest they offer is pre-determined. Against Infrastructure Bonds by pledging them with a bank one can borrow from banks. The amount depends on the market value of the bond and the credit quality of the instrument. Moreover, it should be noted that although Infrastructure Bonds are considered to be safe, there is no assurance of getting the full investment back.

Savings Account - Change in Interest Calculation

Savings account is something, which is almost there for 95% of the citizen and its more than one account in different banks, so think of the number of savings account in India. Well that drags us to large number, and we shall talk about that in different post. Lets target on the method banks use to calculate the interest paid out for our savings account.

There is actually a change in the way interest is calculated, and the bill was passed by RBI last year around march '09, to be effective from apr '10. You may wonder why there was 1year time given to implement this change, well RBI has given banks sufficient time to upgrade their software with the new calculation. Atleast lets be happy that RBI has decided to help customers.

Current Calculation(till march 2010): Interest paid monthly for the minimum amount in your account between 10th and last day of the month(30 or 31). Total interest is paid either quarterly or halfyearly.

New Calculation(from april 2010): Interest paid daily for the minimum amount available on that particular day. Total interest will still be paid quarterly or halfyearly.

Simple Example

Opening balance = Rs 32,000

Deposit on 13th = Rs 25,000

New Balance = Rs 57,000

Interest (old method) = Rs 93 (3.5 per cent of Rs 32,000)

Interest (new method) = Rs 132



Actually this is the case for all these decades and banks are almost fooling us with this surplus amount. With current method of calculation, banks get surplus funds(zero-cost funds) and use them to lend it to us. Also notice banks give us simple interest and when they lend they charge compound interest, so do not have excess money in savings account, invest wisely. RBI is well aware of these funds, but they recently changed the way savings account interest has to be calculated. It will take effect from April 2010.


Enjoy more interest on your savings account.

Gold Investing - Detailed Guide

Gold has become the major investment nowdays and here is a link for beginners to understand the forms of gold investment

Investing in gold

Buying gold? We tell you the best mode

Indians love Gold the most, even though other precious metals exist. The shine for Gold has not reduced with Platinum, Indians are still interested in Gold. There are many forms to buy Gold

Jewelry is a traditional form of buying gold in India. However, its not for investing reasons, rather as jewelry, it carries a heavy loss in form of wastage and making charges. This wastage and making charges vary from 10% to 35% based on the designs. Gold coin from Jeweller are best, a detailed explanation is given in my other post http://2bnamed.blogspot.com/2010/01/gold-investing-strategy.html

Bank coins is not an investment idea as that banks charge for their coins is anywhere between 5 and 10 per cent. The bank coins have lesser liquidity as they are not bought back by the banks.

World Gold Council coins issued by jewelers have lesser premium over the market price (1 to 2 per cent) and are redeemed at the market price when one takes them for selling off.

Bullion bars are great for investment but minimum investment is much higher for a common investor to invest.

Gold Exchange Traded Funds (ETFs) are really hot these days. These are like MFs who only deal with gold. Its a safe and easy way to buy Gold and the charges are very less and the gold can be accessed electronically. The disadvantage is that one never gets to ‘see’ one's holdings.

Value-averaging investment (VIP): Improved Systematic Investment Plan (SIP)

We all know Systematic Investment Plan has yielded higher returns. Almost all the mutual funds have SIP option. An improved version of SIP is Value Averaging Investment (VIP), which most of the international finance institutions are already following and yielded better returns than SIP.

In India, One mutual fund – Benchmark funds – has already implemented this method with one of their funds, with good results. In VIP the monthly amount of money invested varies based on the formula compared to SIP where the invested amount remains constant.

Strategy: The idea is to keep the value of the portfolio at an average value during the tenure of the investments. Money invested in periodic intervals in a portfolio varies in such a manner that the portfolio value keeps tending towards a pre-determined value based on a target rate of return. Since portfolio might grow or shrink from month to month, the targeted value for the portfolio might come nearer to or recede farther from the actual value, so the subsequent investment tries to compensate by investing less or more in the portfolio.

Example: Lets assume you have decided to invest Rs.5000 every month for next 1year. We shall fix a reasonable return rate as 15%. First month we pay Rs.5000 and assume the portfolio had 2% growth, so after one month, Rs.5000 will be Rs.5100. Our expected value after one-month, is (given the target return of 15 per cent), Rs. 5063 and out portfolio is already Rs.37 higher, so our investment second month is Rs.5000 - Rs.37 = Rs.4963.

Suppose if the portfolio had decreased 10%, our portfolio value after one month is Rs.4500, which is Rs.563 less than our target (15% target), so our second month investment will increase to Rs.5563 to achieve 15% target return.

Ultimately the logic is you end investing more in downward markets and invest less during upward market. Long run, assuming the equity markets generally trends upwards, this process holds the promise of better return over an equivalent SIP.

Happy Investing.