Nitty Gritty of GST – Friday First Cut Episode 13
The government has notified several changes in the GST law and has also put into effect several amendments brought in vide the Finance This alert covers the key changes notified in the GST law.
Rule 86B has been inserted to restrict the utilization of Input Tax Credit (ITC) to the extent of 99% of tax liability for the relevant period for taxpayers having taxable supply (other than exempt supply and zero-rated supply) in a month exceeding INR 5 million. This restriction does not apply to taxpayers
Must read: Tax Planning For Salaried Youngsters
New updates and amendments have been brought into GST guidelines in 2021 changes in rule 86B, QRMP scheme and many more.
Check out this video to understand the most important aspects of GST that have received changes.
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MWP Act – A Financial Boon for Women – Friday First Cut Episode 12
What is the MWP Act?
MWP Act refers to the Married Women’s Property Act. This was created in 1874 with a motive to protect the interests of married women over the property. In 1923, there was an amendment to this Act which states that the proceeds of the insurance under this Act would belong to beneficiaries who would-be wife and children.
Must Read: Quick tips for financial planning in 2021
What is Section 6 and what it implies?
Section 6 of the Married Women’s Property Act (MWPA) was drafted to include Life Insurance Plans.
In such a scenario, the proceeds from the Insurance policy would be protected from the
- Creditors
- Court orders
- Tax orders issued
What are the Benefits?
Interests of the beneficiaries (wife and children) are protected and it is guaranteed that wife and children would have the right to the proceeds.
Stay tuned for our upcoming videos on GST for small business…….
Will vs Nomination vs Joint Holding – https://www.youtube.com/watch?v=x85u7…
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Checklist for successful Estate Planning – Friday First Cut Episode 11
Estate planning means accounting for all of your assets and ensuring that transfer happens as smoothly as possible to the people or entities you wish should receive them. Check out this video to get a list of pointers to note for a successful Estate planning.
Stay tuned for our upcoming videos on MWP Act – A Financial Boon for Women…………
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Will vs Nomination vs Joint Holding
How to ensure that our loved ones are protected even when we are not there with them? We need to make sure that they are taken care of even after an unfortunate event of death.
Will: Will allows the testator to explicitly assign and allocate the assets to the person whom he wants to bequeath the wealth. Will should be dated, signed and should be written in a sound mind which requires the medical certificate to the effect. If there are multiple Wills then the latest one would be held as a valid and effective Will.
Nomination: Nominations are necessary in case of bank account, policies, mutual funds, Demat account etc. In case there is no nomination or in case there is a different nominee and different beneficiary in Will, then a legal dispute arises.
Joint Holdings: In case, it is already known that an asset should go to a particular person, then it is better to have joint ownership.
Stay tuned for our upcoming videos on Checklist for successful Estate Planning…….
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Friday First Cut – Ep 08: Estate Planning is not just Will creation
https://www.youtube.com/watch?v=dqupS–Kwqc
Important points to consider while writing a Will
Why do I have to prepare the Will? Am I not too young to prepare the Will?
We all think the same but is it really true? We can’t leave our loved ones without any security or protection when we are not there with them.
Will preparation is a meticulous task but has to be drafted considering the important aspects. We have come up with few pointer heads to help you with Will preparation.
- Trust
Succession Planning which determines which asset goes to whom post-death of the asset holder. It is possible to do this by creating Testamentary Trusts which is especially useful where the person has minor kids or successors with a disability to take care of.
- Life insurance
Term Insurance is the best option to loom at while preparing a Will. Term insurance is beneficial for Will planning since it protects your loved ones from sudden income loss. Also, the proceeds are tax-free in the hands of the beneficiary.
- Nomination
A nomination is a vital process in bank accounts, fixed deposits, insurance policies etc. The legal heirs would need to know what assets they are entitled to. It is easy to reckon and assign if Will consists of nomination for each asset.
- Power of Attorney
Power of Attorney is given where the deceased person has not nominated or transferred an asset to a legal heir or successor. The person with designated Power of Authority can sign the legal documents like the return of income or bank account ownership etc.
These are just a few pointers to go ahead with. However, keep tuned in to have some more insights on personal finance planning.
Should you stay invested or pay off your loan?
Sensex being Bullish all the way and touching all-time highs! Seems like a dream come true. But wait, is there more to it or is it plain riding on the waves of the unknown? These are peculiar times and there is no perfect answer to any question as of now due to the dynamic scenario. Then how should you determine whether to stay invested or to pay off your loan?
Here are some pointers which will help you out in making this decision.
Identify the expected rate of return on your investments – This is a little tricky where you should evaluate the current market price against the investment already made.
Calculate the interest you will be paying on the loan – This would be available with you in the nature of the payment schedule, which would be further bifurcated into interest and principal.
Compare expected returns and interest payable – Ideally, if the expected returns exceed the interest payable, then you could think of staying put in the markets.
Assess the liquidity position – However, you also need to assess whether it is really beneficial to spend the cash through loan repayment.
Square off the loan with higher interest – If you have dispensable cash at your hand, then it is better to pay off the loan with a higher interest rate.
Assess the tax benefits with housing loan – Housing loans have tax benefits such as deduction of interest on the loan and 80 C deduction. This may result in a decrease in the effective rate of interest payable.
Try to match your financial goals to arrive at a final decision – Financial goals with long term spectrum would be needed to be matched with long term investment options. So you may want to divert the cash retained by repaying the loan prematurely.
Stay tuned for our upcoming blogs on Will & Estate planning…….
3 Money ratios that can help manage your finances
Handling finances is a little tricky! But not if you learn the tricks of the trade – Money Ratios. Money Ratios are like a torch on the foggy road, so they will teach you how to evaluate the financial health.
What are Money Ratios?
Money Ratios refer to the financial perimeters which can be calculated based on the components of Personal Finances like debt, monthly expenditure etc.
Let’s learn about Money Ratios
- Liquidity Ratio
Liquidity Ratio helps you evaluate the cash position so as to understand the capability of the individual to cover the monthly expenditure in case of unforeseen events.
It is calculated as below
Liquidity Ratio = Cash / Monthly Expenditure
Liquidity Ratio denotes how many months of income you have at disposal in case of contingency. Ideally, it is better to have Liquidity Ratio of 5-7 for the individuals who do not have a stable income.
- Solvency Ratio
Solvency Ratio is helpful for those individuals who have debt (housing or otherwise) in their portfolio. Solvency Ratio denotes whether the assets in your portfolio can pay off the debt liability.
It is calculated as below
Solvency Ratio = Net worth / Total Assets
Net worth is calculated by deducting the liabilities from the assets.
For e.g. if an individual has loan of Rs.10 lakhs and has total assets of Rs. 20 lakhs including fixed deposits and real estate. In this case, Net Worth = 20 lakhs – 10 lakhs = 10 Lakhs. Solvency Ratio will be 0.50 which means that assets can service the debts sufficiently.
- Debt to Income Ratio
Debt to Income Ratio refers to Equal Monthly Instalments divided by monthly income. This denotes the individual’s ability to pay the monthly instalments of the debt with his monthly income.
Debt to Income Ratio on the lower side is considered satisfactory by the lenders. More the monthly income is, lower is the Debt to Income Ratio.
How to save tax under Section 80C ? and What is Section 80C?
Section 80C is the most popular section of Income-tax. Maximum 150000 deduction is allowed and you can save up to 45000 tax every year by utilizing this section. Under 80C, public provident fund, life insurance policies, tax-saving fd’s, equity-linked saving schemes (ELSS) are few most popular tax saving options. But many few people know tuition fees paid for child education can also be claimed.
In this video, our expert Mr Manish Hingar, CBO, Financial hospital has discussed the importance of section 80C, avenues in it and how to utilize this section for maximum tax benefit.
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Best financial advice for Indian investors & What asset class is appropriate for different age group
In India, when it comes to financial planning or financial discussion, more than 70% of people don’t want to disclose their financials or they don’t discuss their financial goals with experts. Mostly we take advice from our friends or colleague or we do some research by ourselves before making any investments.
But in this fast-growing financial market of India, things can change course in a fraction of second. It is thus hard to know the hidden face of the market outlook and upcoming changes in the market through self-research or by relying on a friend’s advice. Herein comes the importance of a financial planner. Financial planners or experts keep themselves updated about the market and suggest the best possible solutions as per your need.
In this video, our experts Mr. Vishal Kapoor CEO, IDFC AMC have discussed the basic things an investor should consider before making any investment decision. Watch the full video and mention any queries related to investment. Our expert will revert back soon.
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Episode 003 – Friday First Cut – Top 5 Financial Resolutions for 2021
It’s time to bid adieu to 2020 and welcome the New Year 2021. We all make New year’s resolutions but we ignore the most important part: Financial Health. Let’s change the tradition and make financial resolutions for 2021.
Create a Budget
Preparing the budget is an important tool to control costs and expenditure. Here is an effective tip to make an efficient budget. Consider all your income and expenditure. Also, consider that a certain percentage of your income would be allocated towards savings and investments.
Various websites and applications offer the budget tools for day to day routine as well a periodic requirements.
Increase your health insurance cover
The uprise of COVID 19 in the year, 2020 made us understand the importance of Health insurance. You need to look at the Health Insurance Cover even if you are covered by the group Insurance Cover. It may so happen that some Health Insurance policies may not cover a particular disease or cover might be restricted to a particular threshold.
Review your life insurance
We all invest in Life Insurance but mostly as a tax saving instrument. Every person has to opt for Life Insurance Cover which would render benefits to the family in case of an unfortunate incident. This would also require taking into account the inflation factor and unforeseen expenses.
Start tax planning early
Tax planning is mostly carried out mostly when the due date approaches. However, this would neither serve the purpose nor would be beneficial in terms of liquidity leverage. There are various tax instruments available according to your risk appetite, liquidity status, and investment goals.
Write a Will
Usually, Indian people will look at will writing as an exercise of succession management which is required only post-retirement. However, the nominations and investments are required to be known by the family.
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