27 March 2020

Current Stock Market scenario

Current Stock Market scenario and your response as investor.
1. It's an unprecedented fall irrespective of index stock or mid cap or small cap.
2. Time has come to review your portfolio and restrict your holding to 6 to 8 sectors and 15 to 20 stocks with the advice  of your Financial Advisor
3. Value of portfolio of the majority of the investors have eroded by 40%.
4. Don't panic, do you need this money to spend now for immediate consumption? Definitely not.
5.Stock prices are below their  intrinsic value and cheap.Some stocks are  fundamentally strong and point of reversal is imminent.
6. Look out for ZERO debt securities with good governance, no pledge by promoters, when you recast your portfolio.
7. You can invest at least 30% to 40 %  depending upon your Risk Appetite at this juncture. Even if another downfall occurs sanity is bound to return.
8. India has voluntarily gone for many structural changes like Demonetization,GST ,IBC RERA etc. and hence it has hit our GDP number. But the foundation is solid for take off.
9. With good harvest of Rabi Crop rural spending will pick up plus government is expected to come out with some rescue package to boost spending.
10. Do your research, look out for good companies in  Pharma , FMCG ,Cement and Banking/NBFC.
11. FPI's who had redemption pressure have taken exit from Emerging Markets and they are bound to return value stocks
12. No asset class be it, Gold Fixed Income or Real Estate can fetch you the returns. Interest rates are heading downwards.  Cheap interest rates are bound to push Capital expenditure. Equity can offer you in coming two to three years.
 P V Bhagwat Investment Guidance Cell Committee
Lokmanya Seva Sangh , Parle.

03 February 2020

Budget 2020: New Tax Slabs

Budget 2020: New Tax Slabs, Tax on Dividend, Employer Contribution to NPS/EPF And Some Mess for NRIs
The Finance Minister presented the Union Budget 2020 on February 1, 2020. Here are the key New Taxighlights of the Union Budget from personal tax perspective.
There have been quite a few changes this time around. Therefore, divided the post into 5 broad sections.
1.    Change in Income Tax Slabs
2.    Change in Mutual Fund Taxation (includes dividend taxation and sidepocketing)
3.    Change pertaining to taxation of Employer Contribution to NPS, EPF and Superannuation Fund
4.    Changes pertaining to NRIs
5.    ESOPs, Home Loan Tax Benefits and others
Income Tax Slabs for FY2020-2021
#1 New Income Tax Slabs, New Tax Rates and a Choice
The income tax slabs have been restructured. There is a reduction in income tax rates too. However, all this comes with a choice to the taxpayer.
What is the choice?
1.    Take Deductions and stick with the old tax slabs.
2.    Don’t take deductions and opt for new tax slabs.

What are the old and new tax slabs?

Do note old tax slabs are linked to the age of the taxpayers. There is relaxation available to senior (>=60 years) and very senior citizens (>=80 years). As I see, the new tax slabs are the same for everyone, irrespective of the taxpayer age.
The new tax slabs look better. The tax rates are lower. However, if you want to opt for the new tax slabs, you can’t take various income tax deductions under Section 80C to Section 80U. You shouldn’t have any business income during the year.
What are the deductions that you must let go?
Almost everything. Here is the list (and it is not comprehensive).
1.    Standard deduction of Rs 50,000 (only for the salaried)
2.    5 lacs under Section 80C (Life Insurance, PPF, EPF, ELSS, 5-year FDs, etc)
3.    Up to Rs 2 lacs for home loan interest payment under Section 24
4.    Rs 25,000 for health insurance premium payment under Section 80 D (can be more if you are a senior citizen or are paying premium for your parents)
5.    Rs 50,000 under Section 80CCD(1B) for investment in NPS
6.    Interest on education loan under Section 80E
7.    Everything that falls under Section 80C to Section 80U
8.    Benefit of Leave Travel Allowance (LTA) under Section 10(5)
9.    Benefit of House Rent Allowance (HRA) under Section 10(13)
10. Benefit for interest payment on housing loan under Section 24 of the Income Tax Act
There are a few deductions/exemptions that are still allowed under the new regime. One is under Section 80 CCD(2) for employer contribution to NPS. The other is conveyance allowance to divyang employees.
You can see you are letting go of a number of deductions if you want to go with the new income tax slabs.
Which is a better choice?
Depends on the deductions you are taking. Here are a few examples.

In the above table, I have highlighted the various break-even points in terms of deductions in blue. Therefore, if your actual deductions are greater than the break-even points, you should stay back in the old regime or else you should opt for the new tax slabs.
If your income is above Rs 15 lacs or above, you are better off with the new regime if the deductions are up to Rs 2.5 lacs in a financial year. If your deductions are greater than Rs 2.5 lacs, you are better off sticking with the old tax slabs.
With the new proposal, everything becomes so complicated. As I see, the intention is to move to a simplified structure eventually where there is no concept of deductions. I think the Government merely wants to test waters with this hybrid structure.
Mutual Funds Taxation
#2 Dividend now taxable in the hands of the investor
Until now, dividends given by the companies or the mutual funds were not taxable in the hands of the investor. However, the companies or the mutual fund company deducts DDT (dividend distribution tax) before paying the dividend to the investors.
The effective tax hit was ~20.6% for the dividend distributed by the companies while it was ~11.5% and ~28% in case of equity and debt mutual funds respectively.
Now, DDT has been done away with. The dividend shall now be taxable in the hands of the investor at their marginal tax rates. With DDT, everyone was taxed at the same rate that the Government thinks is unfair.
This benefits those in the 0% or 5% tax brackets and adversely affects the investors in the 30% tax bracket.
Moreover, there will be TDS on dividend paid to investors. If the dividend to be paid to a resident exceeds Rs 5,000, there would be deduction at 10%. Do note this TDS is different from DDT. If excess TDS has been deducted, you can claim it back at the time of filing ITR. There was no such concept in case of DDT.
From the point of view of mutual fund investors, this will affect your choice between dividend and growth schemes.
For equity funds, if you are in 0% or 5% tax bracket, you are better off investing in dividend schemes. I assume you are reinvesting the dividends. Further, I am discounting the exemption of Rs 1 lac on LTCG on sale of equity. That will complicate matters. If you are in the higher income tax brackets, growth is clearly a better choice.
For debt funds, if you want to exit before 3 years, there is no difference between growth and dividend. You must pay tax at your marginal tax rates. If you plan to sell after 3 years, the dividend scheme is a better choice if you are in 0% or 5% tax brackets. Growth is a better choice if you are 20% or 30% tax brackets.
By the way, there are so many tax brackets now, you need to think through and make a choice. Moreover, the level of indexation will also play a role and you won’t know about growth in CII upfront.
#3 Clarification on taxation of Segregated Portfolios (Sidepocketing)
We have discussed sidepocketing  in mutual funds earlier.
Until now, there was a lack of clarity about how the holding period for side-pocketed investments will be calculated.
From the date of your original investments or from the date of side pocketing (creation of segregated portfolio)?
The Union Budget puts such doubts to rest. The date of investment shall be considered for the calculation of capital gains. For calculation of the cost of acquisition, you must make certain adjustments. This is best explained with the help of an example.
For instance, if you bought 1 unit for Rs 100 four years back. Just before sidepocketing, the NAV was Rs 140. Thereafter, 10% of the portfolio was put in a segregated portfolio. NAV of the main portfolio goes down to 126.
Cost of acquisition of the segregated portfolio shall be considered = 100* 10% = Rs 10 (since 10% of the portfolio was side pocketed)
Cost of acquisition of the main portfolio unit shall be considered as 100 -10 = Rs 90
The date of the acquisition for the main portfolio and the segregated portfolio units shall be the actual date of investment.
Btw, the above comes into picture only when you sell the units of the segregated portfolio or the main portfolio.
I am still not very clear how the income returned from the segregated portfolio will be considered. That may be considered dividend and taxed accordingly (now as per your tax slab). Again not very sure.
Employer Contribution to NPS, EPF and Superannuation Funds
#4 Upper Cap on Tax-Free Employer Contribution to NPS and EPF
Until now, there was no absolute cap on the tax-free employer contribution to EPF or NPS accounts of the employee. The caps on the tax-free contribution were expressed as a percentage of basic salary (and were not absolute). For instance, for non-central government employees, the cap on tax-free employer contribution to NPS account was 10% of the basic salary.
Now, employer contribution to NPS, EPF and the superannuation funds in excess of Rs 7.5 lacs will be taxable. Not just that, even the interest or returns earned on such excess amount will now be taxable.
I don’t know how the tax accounting will be done especially if you are contributing to more than one of these. By the way, the cap of Rs 7.5 lacs is the combined cap for all three.
NRI Related Matters
#4 Definition of NRI changed
As per the current definition, you are a tax Resident (resident as per the Income Tax Act) if you satisfy any of the above 2 conditions.
1.    You are in India for 182 days in the financial year; OR
2.    You are in India for 365 days in 4 preceding financial years AND 60 days in the financial year
The above definition remains. Just that there was an exception to this definition. Now, that exception has been modified.
For Indian citizens and PIOs staying abroad visiting India, 60 days in condition 2 was replaced by 182 days. Under the current proposal, this exception of 182 days is now reduced to 120 days. Thus, if you stay abroad and want to avoid becoming a tax-resident for the financial year, you will now have to reduce your duration of stay in India.
This can be messy for Merchant Navy people.
#5 Definition of RNOR relaxed
As per the current rules, you are an RNOR if you satisfy ANY of the following conditions:
1.    You have been an NRI in 9 out of 10 years preceding the financial year under consideration. OR
2.    You have been in India for no more than 729 days during 7 previous years preceding the financial year under consideration.
As per the budget proposal, 9 out of 10 years in condition 1 will change to 7 out of 10 years. This is a favourable move. Remember, RNOR do not have to pay tax on their global income in India.
#6 Plugging Tax loopholes for NRIs
This can be big blow to many NRI taxpayers who time their stay to avoid paying taxes anywhere.
Any Indian Citizen, who is not tax resident in any other country, shall be deemed to be tax-resident in India. For such taxpayers, their global income will be taxed in India. Many will find this rule quite onerous.  Do note, even NRIs will have to subject their entire global income to tax in India if they are not a tax-resident anywhere.
As I understand, if you are in tax jurisdiction where taxes are zero, you don’t have to worry. It is not about zero taxes but about not being a tax resident anywhere.
The Government has provided some clarification in this matter. Not sure what they mean. Income generated in India was anyways taxable in India.
Need to wait for greater clarity in this matter.
#7 TCS on LRS remittances
It does not really apply to NRIs. It applies to residents sending money abroad. Under Liberalised Remittance Scheme (LRS), you can remit up to USD 250,000 per financial year. That limit remains the same. However, there will now be Tax collection at source (TCS) at 5% if the remittance amount exceeds Rs 7 lacs. If the PAN/Aadhar is not furnished, TCS will be at 10%.
Do note this is only TCS. You can claim excess tax deducted at the time of filing ITR.
ESOPs, Home Loans and Other important Announcements
#8 Relief for ESOP holders
There is good relief for taxpayers who get ESOPs from their employer.
Under the current regime, the employees must pay taxes at 2 stages.
1.    When they exercise the option and get shares (buying of shares requires cash outflow and tax increases the burden). The difference between the exercise price and the market value of the shares is treated as perquisite and taxed at your marginal tax rate. If you see, income is received only in kind (and not cash). Therefore, tax at this stage increases the cash burden.
2.    When the shares are actually sold. Capital gains tax is to be paid at this stage.
To rectify this problem in (1), the employees will now have an option of deferring tax payment for up to 4 years. The assess must pay the tax within 14 days of the earliest of the following,
1.    48 months from the end of the financial year in the option was exercised
2.    Date of sale of such shares
3.    Date from which the assess ceases to be the employee of the person
As I understand, this rule works with select startup companies. Do consult your Chartered Accountant.
#9 Extension on Home Loan Tax Benefit under Section 80EEA
In Union Budget 2019, the Government had introduced Section 80EEA to provide additional deduction of Rs 1.5 lacs for interest paid on home loans to the first time home buyers. This was over and above the relief on interest of Rs 2 lacs under Section 24 of the Income Tax Act.
The relief under Section 80EEA was subject to the following conditions.
1.    The home loan must be sanctioned between April 1, 2019, and March 31, 2020.
2.    The stamp duty value of the house must not exceed Rs 45 lacs.
3.    You must not own any house on the date of sanction of the loan.
Remember the tax benefit would continue to be available in the following years as long as the above 3 conditions are met.
In the budget 2020, the relief under Section 80EEA has been extended by 1 year to the home loans sanctioned between April 1, 2019 and March 31, 2021.
Do note you will be able to take the tax benefit under Section 80EEA if you stick with the old tax slabs. If you opt for the new tax slabs, you won’t be able to avail this tax benefit.
#10 Other important Announcements
The Government will come with LIC IPO soon. So, if LIC policies are not enough for you, you will soon be able to purchase shares of LIC.
Deposit insurance from DICGC has been increased from Rs 1 lac to Rs 5 lacs per depositor. This is good news if you are worried about your bank fixed deposits or savings bank account balance.
Disclaimer: Please consult a Chartered Accountant before acting on the basis on contents of this post.  Additionally, these are only budget proposals. These rules can be withdrawn or amended or may not even come into force. These rules will come into force once the Finance Bill is passed by the Parliament.

07 August 2019

आधुनिक युगातील ‘फणसाळकर’ मास्तर

मा. श्री. अशोक ढेरे सरांवर लोकसत्ता अर्थवृतांत मध्ये आलेला लेख  

|| वसंत कुलकर्णी

पुलंनी गणगोतमध्ये फणसाळकर मास्तरांचे व्यक्तिचित्र रेखाटले आहे. पुलंचे आजोबा ऋग्वेदी’, सूर्यनमस्काराचार्य सोमण मास्तर, लष्करी खाक्याचे दादा पारधी, श्रीमंत चांदीवाले परांजपे आणि लौकिक अर्थाने मास्तरकी न केलेल्या परंतु मूळच्या शिक्षकी वृत्तीमुळे पाल्र्यात फणसाळकर मास्तरअशी ओळख असलेल्यांचा आदराने उल्लेख त्यांनी केला आहे. शताब्दीच्या उंबरठय़ावर असलेल्या पाल्र्याचे टिळक मंदिर स्थापन करण्यापासून कार्यक्रमाची सूचना देणारी मंदिराची घंटा वाजविण्याचे काम फणसाळकर मास्तरांनी मोठय़ा निष्ठेने केले. कालानुरूप बदल हे होतच गेले. गीता वर्गाच्या ठिकाणी स्वस्त धान्याचे दुकान आल्याची खंत पुलंनी व्यक्त केली आहे.

आता मंदिरात गीता वर्गाच्या ठिकाणी आता गुंतवणूक मार्गदर्शन केंद्र सुरू झाले आहे. हे केंद्र सुरू झाल्यालासुद्धा ३५ हून अधिक वर्षे होऊन गेली. केंद्राच्या स्थापनेपासून आजतागायत या केंद्राची धुरा वाहणारे प्राध्यापक सीए अशोक ढेरे येत्या शुक्रवारी अमृतमहोत्सवी वर्षांत पदार्पण करत आहेत. अर्थसाक्षरता आणि गुंतवणूक मार्गदर्शन या क्षेत्रातील त्यांचा उत्साह त्यांच्यापेक्षा कितीतरी वर्षांनी लहान असलेल्या माझ्यासारख्यांना कायमच प्रेरित करणारा आहे. गुंतवणूक मार्गदर्शन केंद्राचे कार्यक्रम ठरविणे, ठरल्याचे लोकांपर्यंत पोहोचविणे, ‘आम्ही पाल्रेकरसारख्या स्थानिक नियतकालिकात प्रसिद्धीसाठी पोहोचविणे आणि आपल्या सहकाऱ्यांच्या मदतीने कार्यक्रम तडीस नेणे, या सर्व गोष्टीत सर आवर्जून सहभागी होत असतात. या मार्गदर्शन केंद्रात महिन्यातील एक रविवार सर प्राप्तिकरावर वैयक्तिक समुपदेशन करतात. हे वैयक्तिक समुपदेशन नि:शुल्क असते.

मुंबई विद्यापीठाचे भूतपूर्व कुलगुरू एमडी लिमये, ढेरेसरांना पहिल्यांदा शिक्षक, मार्गदर्शक आणि नंतर महाविद्यालयात वरिष्ठ सहकारी म्हणून लाभले. शालान्त परीक्षा ते पदवी दरम्यान सरांनी उदरनिर्वाहासाठी सात-आठ नोकऱ्या केल्या. बायर इंडिया या बहुराष्ट्रीय कंपनीत लेखापाल म्हणून सर नोकरी करीत होते. एके दिवशी त्यांची बदली बायरमध्ये दिल्लीला ब्रांच अकाऊंटंट म्हणून झाली. ढेरे सर के. आर. शहा सरांचा निरोप घ्यायला गेले असताना, कशाला मुंबई सोडतोस सीए कर असा सल्ला शहा सरांनी दिला आणि आपल्याकडे आर्टकिलशिपसाठी दाखल करून घेतले. सीए करताना मासिक केवळ ५० रुपये विद्यावेतनात मुंबईत कसे भागेल हा प्रश्न भेडसावत असताना, ‘तू पाण्यात पडून पोहायला शिक, बुडणार नाहीस याची काळजी मी घेईन,’ असे लिमये सर म्हणाले आणि लिमये सरांनी गरज होती तेव्हा मदतीचा हात दिला. अशा रीतीने दोन गुरुद्वयांच्या प्रोत्साहनामुळे ढेरे सर इंटर आणि फायनल दोन्ही परीक्षेत गुणवत्ता यादीत झळकले. ढेरे सरसुद्धा या गुरूंचे ऋण नेहमीच मान्य करतात. सहज बोलतानासुद्धा गाण्याबजावण्यातील मंडळी आपल्या गुरूच्या स्मरणाने कानाच्या पाळीला हात लावतात अगदी तीच भावना ढेरे सरांची असते. लिमये सरांच्या स्मरणार्थ दरवर्षी लिमये स्मृती व्याख्यानमालेचे लोकमान्य सेवा संघाच्या माध्यमातून आयोजन होते. गुंतवणूक अर्थशास्त्र या सारख्या विषयातील एखाद्या अधिकारी व्यक्तीस निमंत्रण देऊन त्यांचे विचार ऐकविण्याचा आणि त्या निमिताने आपल्या गुरूचे स्मरण करण्याचा हा प्रघात पाल्रेकरांच्या चांगलाच परिचयाचा आहे. हे वर्ष लिमयेसरांचे शताब्दी वर्ष असल्याने मंदिरात होणारी फायनान्स फेअरलिमये सरांच्या स्मृतीस समíपत करण्याच्या योजकतेतून सरांनी आपल्या गुरूंप्रति आदर व्यक्त केला आहे.

विद्यापीठातून सेवानिवृत्त झाल्यानंतर गुंतवणूक मार्गदर्शन केंद्राची संकल्पना लिमये सरांनी मांडली आणि पाल्र्याच्या टिळक मंदिर (लोकमान्य सेवा संघाच्या) माध्यमातून ती साकारली. लोकांची अर्थनिरक्षरता लिमये सरांना टोचत असे. चांगले कष्ट करून कमावलेले पसे ८-१० टक्के परतावा असलेल्या (त्या काळी पीपीएफचा व्याज दर १४ टक्के होता) वित्तीय उत्पादनांत केवळ परताव्याची खात्री आहे म्हणून का गुंतवावे असा प्रश्न लिमये सरांना पडला. पुलंनी वर उल्लेख केलेल्या या सर्व मंडळींबद्दल लिहिले आहे – ‘‘ही साधी साधी माणसे भलत्याच गोष्टी मॅन्युफॅक्चर करण्याचे वेड घेऊन बसली होती. सोमण मास्तरांना पाल्र्यातून गामा तयार करायचा होता, माझ्या आजोबांना मॅक्स मुलरच्या तोडीचा विद्वान बनवायचा होता.’’ कदाचित लिमये सरांच्या नजरेला ही अर्थनिरक्षरता दिसली असेल आणि सेबीने अर्थसाक्षरतेचा बिगूल वाजविण्याच्या किती तरी आधी हे रणिशग फुंकले. ढेरे सर पहिल्या कार्यक्रमापासून या उपक्रमाशी जोडले गेले आहेत. सुरुवातीच्या काळात ताळेबंद कसा वाचावा, कोणते रेशो महत्त्वाचे, कंपनीची आर्थिक स्थिती कशी तपासावी इत्यादींवर शनिवारी संध्याकाळी व्याख्याने होत असत. लोकांची आणि वक्त्याची सोय म्हणून हल्ली महिन्यांतून दोन रविवार ११ ते १२.३० दरम्यान ही व्याख्याने होतात. व्याख्यानादरम्यान श्रोते वैयक्तिक प्रश्न विचारण्यास संकोचतात म्हणून दोन रविवार वैयक्तिक समुपदेशन सुरू झाले. दुर्दैवाने येणारी मंडळी एखाद्या गुंतवणुकीच्या शिफारसीसाठी येतात, या बद्दल ते खंत व्यक्त करतात. या उपक्रमाला सुरुवात झाली तेव्हा येणारी मंडळी साठीच्या पलीकडली होती. आजही ज्येष्ठ नागरिकांचीच या उपक्रमाला अधिक हजेरी असते. ज्या वयात पसे कमवायचे आणि त्यांची योग्य गुंतवणूक करायची त्या वयाचे श्रोते अभावानेच आढळतात.

आर्थिक क्षेत्रात सरांचे खूप मोठे योगदान आहे. सनदी लेखापालांची स्थानिक संघटना असलेल्या बीसीए जर्नलचे पाच वर्षे संपादक होते. अजूनही संपादकीय मंडळावर सर सक्रिय असतात. मुंबई शेअर बाजार, मल्टिकमॉडिटी एक्स्चेंज, राष्ट्रीय शेअर बाजाराच्या वेगवेगळ्या समित्यांवर काम केले आहे. ‘‘लवादावर काम करताना अनेकदा ब्रोकरने अशिलाला टोपी घातली आहे हे स्पष्ट दिसत असूनही सबळ कागदपत्रांच्या अभावी अशिलाच्या बाजूने निकाल देता येत नाही. गुंतवणूक व्यवहारात कागदपत्रे सांभाळणे आणि तंटाबखेडा झालाच तर ते कागदपत्रे सादर करणे आवश्यक असते,’’ असे त्यांचे सांगणे आहे. सामान्य गुंतवणूकदाराने त्यातले कळत नसल्यास डेरिव्हेटीव्हज्पासून दूरच राहायला हवे. आपले शेअर तुमची संपत्ती आहे ती तुमच्या डीमॅट खात्यात पडून राहिली तरी चालेल पण फुटकळ पसे कमावण्याच्या मोहाने डेरिव्हेटीव्हज् ट्रेिडगपासून दूर राहा. या गुंतवणूक मार्गदर्शन केंद्राचे कार्यक्रम यशस्वी करण्यासाठी सर पुढील पिढीला तयार करत आहेत. सरांचा हा अर्थसाक्षरतेचा वसा पुढे न्यायला ही सर्व मंडळी समर्थ आहेत. सागराला मिळणाऱ्या गंगेचा प्रवाह कितीही विशाल दिसला तरी गंगेचा उगम हा एका जलधारेपासून झाला आहे. आज अर्थसाक्षरतेचा बडेजाव होणारा खर्च डोळे दिपविणारा आहे. म्हणूनच ढेरे सरांच्या अर्थसाक्षरतेच्या कार्याचे महत्त्व आहे. सरांचा प्रपंच त्यांच्या पत्नी जयश्री ढेरे यांनी निगुतीने सांभाळला म्हणून त्यांना आणि सरांना भावी वाटचालीसाठी शुभेच्छा.