Latest Expert Exchange Queries
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 STANDARD :: VAT Audit :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: TDS :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: form 3cd :: cpt :: articles on VAT and GST in India
 
 
« General »
 Why consumers should welcome GST
 Retailers need to file single GST return every month
 Aadhaar is must for income tax returns if you have one; Here's how you can file it online
 Will it be a tax haven above the law?
 Your mutual fund investment tax efficient? Here are 3 steps to ensure utmost efficiency for your portfolio
 Finally a goods and services tax. But what lies ahead?
 Tax May Rise On Outbound M&As, Indian Mncs’ Investments
 Filing income tax return? Do remember to claim benefits on your reimbursements
 Banks will have a hard slog ahead to get GST-ready
 Clarification regarding applicability of Section 16 (1)(a) of the Companies Act. 2013 with reference to cases under corresponding provisions of Companies Act. 1956
 Introduce indemnity clauses with suppliers on tax compliance: Expert

Experts' take on whether one should invest in equity for saving tax
March, 04th 2013

As we head towards the end of the financial year, a familiar exercise is set to be repeated. The month of March will see a rush of investors, who are looking to make last-minute investments in various tax-saving instruments.

Equity investments that offer tax savings are a popular avenue for most such people. However, is it a good idea to put one's money in an asset class primarily to save tax? ET talked to prominent industy experts and here is what they had to say.

Rajiv Deep Bajaj Vice-Chairman & Managing Director, Bajaj Capital

YES

Equity not only gives superior returns, as can be seen from the long-term performance of ELSS schemes, but also leads to a tax saving of up to 30% of the investment, subject to a limit of Rs 1 lakh. Hence, up to 30% downside is underwritten by the government. Under Section 80C, investments in both debt (PPF, EPF, etc) and equity tax-saving options (ELSS) help save the same amount of tax, up to 30%, depending on one's tax slab.

The difference is in the return potential of the investment. While debt gives, at best, a high single-digit return, ELSS gives returns almost twice as high if held for over three or five years. So, discipline is inherent in ELSS investments due to the three-year lock-in period, and we know that long-term investment is essential to get the best from equity.

Hence, tax-saving and long-term investing work in tandem to deliver the desired results. The performance of ELSS is a case in point. In 10 years since February 2003, ELSS funds have given an average return of 22-23% per annum if held for three years, and 17-18% if held for five years (computed on a daily rolling basis). The RGESS outscores debt options both in terms of saving tax as well as return potential. The eligible investors get tax benefit under Section 80CCG over and above the Rs 1 lakh limit under Section 80C.

Hansi Mehrotra Managing Director (India), Hubbis

NO

Investing in tax schemes is a sure way to lose money. Such products are not only designed badly, but also cloud the judgement. You are likely to invest in tax schemes just before the end of the financial year, which may not be the best time to do so. You tend not to do your homework on the merits of the investment, analyse the fundamentals and valuation of the stock, or assess the skills of the mutual fund team.

This means it may not be a good investment at any time. Take the RGESS, which provides tax incentives to first-time stock investors. What are the chances that to be able to outperform the market they know when to enter it or analyse annual reports to assess the merits of the company, or assess the skill of the mutual fund? Very low. They will probably fall prey to the greed of last year's 25% return. In the case of a Ulip, it's worse. The investment is bundled with insurance, has no transparency and high sales commissions. Even if investors weren't blinded by the tax incentive, they would struggle to assess its merits.

A better way would be to lower tax on dividends and long-term capital gains. Another option could be deduction in the New Pension System. One can invest in it and switch to equity option at the right valuation. So, one should invest only on merit and ignore tax incentives. That's just icing on the cake.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

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