| S&P BSE Sensex* |
Re/US $ |
Gold Rs/10g |
Crude
($/barrel) |
FD Rates (1-Yr)
|
27,437.94 | -1004.16 
-3.53% |
63.32
| -1.02
-1.64% |
26,900.00
| 0.00
0.00%
|
60.54
|0.34
0.56%
|
7.25% - 8.75%
|
Weekly changes as on April 23, 2015
*BSE Sensex as on April 24, 2015
Impact 
If you are thinking of buying a property in the name of your close relatives, you may be in for big trouble.
With an aim of fighting black money not only stashed overseas, but also in India, the NDA Government is keen on passing the new and more comprehensive Benami Transaction (Prohibition) Bill in the second phase of the Budget session.
The Benami Transaction (Prohibition) Bill, 2011, was introduced in the Lok Sabha on August 18, 2011 under the UPA regime. It defined benami as "where a property is transferred to, or is held by, a person for a consideration provided, or paid by, another person." Moreover, property referred to 'any' property which is the subject matter of a benami transaction. Also, the Bill allowed a person to buy property in the name of his / her spouse, brother or sister, or any lineal ascendant or descendant.
The Parliamentary Standing Committee headed by the BJP leader Mr Yashwant Sinha was appointed to examine the bill. The committee submitted its report on the then proposed Bill suggesting quite a few modifications in order to make it more effective. However, the then Government couldn't get it through and the Bill eventually lapsed.
But now, it is likely that the NDA Government may accept the major recommendations of the then standing parliamentary committee. This is because Government is making an effort to prevent black money, which often finds its way through benami transactions.
Some of the key changes that may be introduced in the new Benami Transactions (Prohibition) Bill, are...
- Sharp pruning to the list of relatives in whose name the property can be acquired, to include only spouse and unmarried daughters
- Risk of imprisonment and confiscation of property if acquired in the name of any other person – brother, sister, father, mother, son
- Enhancement of jail term from two years as proposed in the erstwhile benami Bill
The impact...
Hoarders of black money would find it difficult to deploy it for
creating assets, as possible loopholes would be sealed making the proposed Bill more effective. Moreover, the proposed legislation will complement the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, which is aimed at cracking down on black money held abroad. Likewise, it could even boost tax revenue of the Government.
PersonalFN is of the view that, considering the fact that BJP has a majority in Lok Sabha, getting the bill through the lower house wouldn't be a problem for the NDA Government. But at Rajya Sabha i.e. in the upper house since the NDA Government does not have the required numbers, opposition may create an uproar and attempt to block the Bill.
PersonalFN believes you should consult a legal expert as well as a financial planner while taking any important financial decision. This would help you take the legitimate route in your endeavour to save tax and meet your long term financial goals. If you want to seek advice on financial planning please free to get in touch with us at PersonalFN. Our
financial planning team would be happy to help you.
Do you think effective law against benami transactions would prevent circulation of black money in the economy? Share your views here.
Does Monsoon Forecast Spells Worries for Debt Fund Investors?
Impact
Trends in inflation and expectations about the future trend significantly affect the monetary policy decisions. As far as India is concerned, RBI has set a target of
containing retail inflation below 6.0% by January 2016. Over last few months, inflation has moderated, giving RBI some room to adopting accommodative policy stance.
Benign inflation is the key for further policy rate cuts.
Retail inflation has higher representation to food price inflation and in India food prices are greatly affected by the monsoon rainfall. Year in which rainfall is normal or above average, harvest is higher and price pressures are lower. However, when there is a deficit in rainfall, food prices go up sharply.
Will below average monsoon push retail inflation higher?
(Source: MOSPI, PersonalFN Research)
In the recent times, we have seen fruits and vegetable prices going up due to unseasonal rain. Moreover, the unseasonal rain has also damaged the rabi crop already.
To add to worries, the monsoon forecasts are not very encouraging this year. As per the estimates of Indian Meteorological Department (IMD), the rainfall during southwest monsoon is likely to be 93% of the Long Period Average (LPA) with a chance of ± 5% error. IMD has stated in its report that weak El Nino conditions prevail over the Pacific at present. IMD fears El Nino conditions are likely to persist during the southwest monsoon season. El Nino conditions affect the monsoon rainfall negatively in India. On the other hand, private weather forecasting company, Skymet, expects the rainfall this season to be 102% of LPA (± 4% error) which is considered normal.
Impact on debt markets...
Forecast of weak monsoon has not created any panic among investors in the debt market. Bond yields are steady and there is no selling pressure either. Having said this, markets will be affected to a great extent if further reports confirm the forecast of weak southwest monsoon this year. How RBI reads into this would also matter a lot for debt markets as monsoon affects the
assessment of RBI for deciding on policy rates.
PersonalFN is of the view that, instead of speculating on climatic conditions or other factors driving the debt markets, you should look at your time horizon before investing in debt funds. Ideally, your time horizon should concur with the maturity profile of a fund which you like to invest in. Please remember,
debt funds are not risk free and thus PersonalFN suggests that you shouldn’t hold more than 20% of your debt portfolio in long term debt funds.
4 Reasons Why You Should Avoid Investing in Close-ended Equity Funds
Impact
As equity markets have rallied sharply over last 1 year, confidence of investors in equity investing is back. The participation of retail investors is also on the upswing. Aiming to take advantage of the upbeat investor' sentiment, mutual fund houses
have launched a number New Fund Offers (NFOs).
Many of the NFOs launched recently, are the close ended funds. Even distributors are promoting them with a great zeal. You must know what makes these schemes more preferred for the distributers and why are fund houses launching so many of them at a time when the markets appear overvalued.
To read PersonalFN's views on this, please click here.
How Your Aadhar Will Help You File Your Income Tax Return Easily?
Impact
You might have experienced the convenience of
filing your income tax returns online. It is simple and easy! Thanks to the advanced e-filing portals provided by the government. But, e-filling of income tax returns is not a complete paperless activity for you if you don't use digital signature. As a result, most of us have to send a physical signed copy of ITR-V to the income tax department for verification, which is then duly acknowledged by the department. The activity of filing income tax return is not complete unless the income tax department receives your signed copy of ITR-V. Especially this part of the entire process makes it cumbersome and time-consuming for many of you. Don't worry now. Filing of returns is going completely electronic soon.
To read PersonalFN's views on this, please click here.
And Other News...
It seems that stagnant gold prices have made Indian investors dump their investments in gold. As per the data published by Association of Mutual Funds in India (AMFI), gold Exchange Traded Funds (ETFs) have witnessed outflows for the consecutive second Financial Year (FY) in FY 2014-15. Investors pulled off close to Rs 1,500 crore from gold ETFs in FY 2014-15. Last fiscal the outflows amounted to little under Rs 2,300 crore. Apart from weak gold prices, sharp rallies in equity markets negatively affected the investors' sentiment about gold this fiscal.
PersonalFN is of the view that, you shouldn't chase the price momentum in any asset class. Prices can quickly reverse and may not give you opportunity to time your entry and exit. Therefore, rather than focusing on the attractiveness of an asset class, you should adequately diversify your portfolio. Weightages of different asset classes in your portfolio may vary depending on your income, financial goals and risk appetite among other factors.
Financial Terms. Simplified.
Money Laundering: "The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source. "
(Source: Investopedia)
Quote : "Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little." - Fred Schwed Jr