Latest Expert Exchange Queries

Make your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: form 3cd :: due date for vat payment :: VAT Audit :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: empanelment :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt
 
 
ICAI »
 Multipurpose Empanelment Form for the year 2017-18
 Notification CPT - June, 2017
 Notification Final - May, 2017
 Result of the Chartered Accountants Final Examination held in May 2017 and Common Proficiency Test (CPT) held in June 2017 declared.
 Invitation for expression of interest from software development companies for providing software relevant to the Practitioners & CA Firms of ICAI by 31 August, 2017.
 Alternate website for CA Final and CPT May/June 2017 Results
 CPE Events 17th July - 22th July 2017
 Result of the Chartered Accountants Final Examination held in May 2017 and Common Proficiency Test (CPT) held in June 2017 are likely to be declared on Tuesday, the 18th July 2017.
 Result of the Information Systems Audit [ISA] Assessment Test held on 24th June 2017 is likely to be declared on 18th July, 2017.
  Ind AS Transition Facilitation Group (ITFG) Clarification Bulletin 10
 Announcement for revision in fee of Expert Advisory Committee (applicable with effect from July 1, 2017)

How to decide whether to invest in tax-free bonds or not
October, 19th 2015

Narayan, who is in his early forties, wants to invest in a fixed income product. His adviser has told him about some tax-free bonds issued by public sector companies. These are long tenure bonds, typically maturing after 10, 15 or 20 years and would make an ideal inclusion in his retirement portfolio.

Every year, interest/coupon will be paid out to Narayan and it will be tax-free income. The principal invested will be returned on maturity. These bonds will also be listed on a stock exchange, which would allow an option to investors to benefit from any appreciation in the price and exit before maturity. Narayan is wondering whether he should invest in such bonds.

Before he decides to invest, Narayan must weigh the pros and cons of tax-free bonds against other competing investments. As an investment providing tax-free income, the bonds fare well compared to bank fixed deposits and debt mutual funds. He must compute the effective pre-tax interest rate equivalent and compare. The higher his tax bracket, the higher will be the benefit.

In other words, if he falls in the 10% tax bracket, the benefit will not be much. Further, compared to other corporate bonds, these bonds will be highly rated in terms of credit quality. As government undertakings, the risk of default is minimal.

However, Narayan must bear in mind the really long tenure. If he thinks he will be able to sell it off on the stock exchange when interest rates drop and make handsome capital gains, he must also remember that selling such bonds may not be possible for retail investors like himself. These bonds are not traded frequently. He must be open to the possibility that he may be stuck with the investment for 10, 15 or 20 years. He must, therefore, ensure that he does not have a short-term goal associated with tax-free bonds.

Narayan must understand that his investment decisions should not be driven by tax considerations alone. He should not invest in tax-free bonds just because the interest is tax-free. He must follow the primary rule of investing— product choice should be driven by his financial goals. Taxfree bonds would be attractive for him if he falls in the higher tax bracket, is looking for regular income and has no concerns on liquidity.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Enterprise Resource Planning Solutions ERP Solutions Enterprise Resource Planning Software Solutions ERP Software Solutions Supply Chain Management Solutions SCM Solutions Supply Chain Management Software Solutions SCM Software Solutions Enterprise Resource Planning Solutions India ERP Solutions India Enterprise Resource Planning Software Solutions India ERP Software Solutions India Supply Chain Management Solutions India SCM Solutions India Supply Chain Management Software Solutions India SCM Software Solutions India

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions