Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get 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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: VAT RATES :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: cpt :: VAT Audit :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: ACCOUNTING STANDARD :: form 3cd :: due date for vat payment :: list of goods taxed at 4% :: empanelment
 
 
Direct Tax »
 CBDT asks I-T dept to take urgent steps
 I-T department asks taxpayers to update their information on e-filing portal
 Companies may have to submit income estimates by 15 November
 CBDT proposal on advance estimates of tax liability irks industry
 Advance tax calculation: Firms may have to furnish Apr-Sept income estimates
 Companies may have to furnish Apr-Sept income estimates to I-T dept
 CBDT working on a draft rule that makes it compulsory for companies to provide income estimates by Nov 15
 Companies, HNIs may soon have to specify reason for paying less advance tax than previous year
 TDS Applicability On Government Contracts Under Gst (Under Section 51 Of The Cgst Act, 2017)
 CBEC tells field officers to take GST disputes to Supreme Court
 Jurisdiction-free income-tax assessment on the cards

Tax break not worth direct stock play
March, 22nd 2012

The proposed Rajiv Gandhi Equity Savings Scheme is expected to come with safeguards that will permit small investors to purchase shares only in the top 100 stocks traded on Bombay Stock Exchange and the National Stock Exchange.

An exception is, however, expected to be made for public sector companies with the government expected to relax the rule to allow trading in stocks that are part of the top 500 list. The move is aimed at increasing retail participation in not just the stock market but also in disinvestment exercise.

However, market experts are not very enthused about the scheme, which will allow a 50% deduction for those who invest up to Rs 50,000 in stocks, provided their taxable income is below Rs 10 lakh.

The funds will not be allowed to be withdrawn for three years, even churning of portfolio is not permitted during the first year. The scheme can be availed only once in a lifetime.

Financial experts said the scheme may give tax deductions but investors could well end up with much lower gains even if investments are made in blue-chip companies.

Investments even in blue-chip stocks wouldn't bring enough gains for average retail investors if the past record is any indication.

Several blue-chips including almost the entire Reliance pack, Bharti Airtel, BHEL and NTPC have given lower returns than diversified equity mutual funds (MFs) and tax saver funds in the past three years (till March 19).

DLF was up 11.3% in three years, and NTPC declined 3.7% during the same period. Tax-saver MFs that come with a three-year lock-in period have gained 26.8% annually in three years while diversified equity funds gave 29% annual returns.

Several sensex stocks have gained at a lower pace than the index itself. The markets have been on a roller-coaster ride in the past three years. The sharp market rally after the general elections results were announced in 2009 was followed by sporadic periods of volatility. Sensex gained 24.2% a year in three years while Nifty gave annual returns of 23.2% during the same period.

"It would be much better if the government gets them (new investor) to invest in an index," said Suresh Sadagopan, founder, Ladder7 Financial Advisories.

Jayant Pai, head of marketing at Parag Parikh Financial Advisory Services, is of the same opinion. "If they restrict it (investments) to index stocks it would be good," Pai said.

"Details on it (RGESS) should be out in a month's time," finance secretary R S Gujral said on sidelines of a Fimeet on Tuesday.

The government can allow investors to participate in RGESS through exchange traded funds (ETFs), said experts. A separate ETF can be created for the scheme with either Nifty or BSE-100 as the underlying index. But even this can be no guarantee against losses or underperformance, said market observers.

"It (index) is a filter. But it is not foolproof and will not prevent investments from losing their value," said another expert. Unlike MFs, investments in stocks could completely lose the entire value. Stocks of leading companies had lost up to 90% in value in the market downturn during the global financial crisis.

With investments in equity-linked savings scheme (ELSS) - as tax-saver MFs are known - also eligible for tax deductions, investors wouldn't have enough money left to deploy in stocks, said experts. "ELSS is a better option than RGESS as MFs have a clear track record," Pai said.

The government has drawn upon the experience in Europe which had tried the model and increased retail participation in the 1970s. A similar scheme, with much higher cut-off, was first tried in France which was then used by Belgium, West Germany and Sweden.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

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