VARIOUS SEGMENTS OF MUTUAL FUNDS IN INDIA

31. October 2009 · Write a comment · Categories: General Tax · Tags: , , , ,

VARIOUS SEGMENTS OF MUTUAL FUNDS IN INDIA

INTRODUCTION-

Mutual fund in India is a kind of collective investment that is managed professionally. In Mutual fund in India, the money is collected from a large number of investors and then it is invested in bonds, stocks, and various other securities

The fund manager of Mutual fund in India collects the interest income which is then distributed among the individual investors on the basis of the number of units that they hold. Mutual fund’s value of a share is calculated on a daily basis and is known as per share Net Asset Value (NAV).

Classification of Mutual Funds in India has been done on the basis of their investment objective and structure. Classification of Mutual Funds in India has be done into main types such as Income Funds, Sector- Specific Funds, Large Cap Funds, Fixed- Income Funds, Interval Funds, Closed- End Funds, and Tax Saving Funds. Income Funds in India are a kind of mutual fund whose aim is to provide to the investors with steady and regular income. They usually invest their principal in securities such as corporate debentures, bonds, and government securities.

Sector- Specific Funds in India are funds that make investments in specified sectors only. They give importance to one sector only such as pharmaceuticals, software, infrastructure, and health care. Large Cap Funds in India are a kind of mutual fund that makes investment in the shares of large blue chip companies. Fixed- Income Funds in India makes investment in debt securities that have been issued either by the banks, government, or companies. They are also known as income funds and debt funds.

Interval Funds in India are a combination of both the open and close ended funds. They offer the investors flexibility for they can be sold and repurchased at the period of time that has been predetermined. Closed- End Funds in India are a kind of mutual fund that has a maturity period that has been specified and which usually varies from three to fifteen years. Tax Saving Funds in India offer tax rebates to the investor under the Section 88, Income Tax Act. They are also known as equity- linked savings scheme.

INTERVAL FUNDS-

Interval Funds in India combine the characteristics of both the close ended funds and open ended funds. This means that Interval Funds in India can be repurchased and sold at the time that has been predetermined. Interval Funds in India are usually repurchased every six or twelve months or as has been unveiled in the annual report and prospectus of the fund. Interval Funds in India are sold and repurchased at the prices that are related to the Net Asset Value (NAV)

Mutual Fund companies that have launched Interval Funds in India are:

Birla Sun Life Mutual Fund Prudential ICICI Mutual Fund ABN-AMRO Mutual Fund

TAX SAVINGS FUND-

Tax Saving Funds in India offer to the investors rebates in taxes under the Income Tax Act, Section 88 and they are also known as equity-linked savings schemes. Tax Saving Funds in India usually have a period of lock- which is generally of three years. As a result of this, the manager of the fund is not concerned about factors such as the pressures of redemption, performance of the fund during a short time, and thus does his job by keeping in view the long term goal. The fund manager of the Tax Saving Funds in India invests the money in instruments that are related to equity.

Tax Saving Funds in India are suitable for those investors who want to increase their investments and also want to benefit from the rebates in taxes. The advantage of Tax Saving Funds in India is that they grant the investors an opportunity to make investments in an avenue that is market- linked and at the same time claim benefits in taxes. The dividends that are earned in Tax Saving Funds in India are tax free.

Major Tax Saving Funds in India are:

Franklin India Tax Shield HDFC Tax Saver Sundaram Tax Saver HDFC Long Term Advantage Prudential ICICI Tax Plan Birla Equity Plan UTI Equity Tax Savings Tata Tax Saving Fund Magnum Tax Gain

FIXED INCOME FUND-

Fixed- Income Funds in India are also known as debt funds or income funds. Fixed- Income Funds in India make investments in debt securities that have been issued either by the banks, government or companies. The debt securities in which Fixed- Income Funds in India makes investments are also known as commercial papers of deposit or treasury bills if the duration is less than one year and in case the duration is more than one year then the debt securities are known as bonds or debentures. The issuer of the debt securities has the obligation to pay the interest and principal on the time schedule that has been fixed.

Fixed- Income Funds in India have a face value and it is on this that the calculation of interest takes place. Investors who are investing in Fixed- Income Funds in India are mainly concerned with the time period, maturity value, rate of interest payment, rate of interest, and face value. Fixed- Income Funds in India are usually held till maturity.

Sundaram BNP Paribas Mutual Fund Franklin Templeton India Mutual Fund Fidelity Fund Management Reliance Mutual Fund

OPEN ENDED FUND-

Open- End Funds in India is such that the investors can sell as well as buy all through out the year. The investors sell and buy units of Open- End Funds in India at the related prices of Net Asset Value (NAV) each day. An investor can buy Open- End Funds in India either from a brokerage house or through the mutual fund company. Open- End Funds in India have no fixed date of maturity. The main advantage of Open- End Funds in India is that it offers liquidity to the investors for they can sell the units whenever they need the money.

Major Open- End Funds in India are:

UTI Gold Exchange Traded Fund Standard Chartered Premier Equity Fund Sahara Mid- Cap Fund Lotus India Tax Plan Reliance Tax Saver (ELSS) Fund Canara Robeco Equity Tax Saver- 93 DSP Merrill Lynch Tax Saver Fund Tata Life Sciences and Technology Fund JM Arbitrage Advantage Fund Kotak Gold ETF

MID CAP FUNDS-

Mid-cap funds are a special type of mutual fund wherein, the corpus accumulated is invested in small or medium sized companies. In the absence of any standardized definition or definite classification of small or medium sized company, each mutual fund classifies small and medium sized companies according to its own policies. In general, companies with a market capitalization up to Rs 500 crores are regarded as small and companies with a market capitalization over Rs 500 crores but below Rs 1,000 cores are defined as medium sized by the mutual fund industry. Mid-cap funds bear high risk factors and thus offer high returns in case of positive movements of the indexes.

Further, opportunity of investment in Mid-cap funds is high due to low identification factor in the market. Another important feature of these Mid-Cap Funds is that they tend to grow in size as more investors gets involved. The net effect is that, huge amount of money are invested against few stocks. Experts are of the opinion that investments in Mid-Cap Funds should follow investment patterns of sectoral funds and one should not focus only on these funds alone. Further, investment in Mid-Cap Funds should have long term perspective.

With the rise of large caps the heavy weight investors like the mutual funds and Foreign Institutional Investors are increasingly investing in mid cap funds. However investment in Mid-cap funds should be undertaken with caution since these tend to be volatile because of the high risk involved.

BALANCED FUND-

Balanced funds also known as the hybrid funds wherein, the corpus accumulated is invested in combination of common stock, preferred stock, bonds and short-term bonds. In other words, it is a combination of many stocks and bonds, which is structured to strike a balance of income and capital appreciation. This combination is essentially done to minimize the risk involved in such investments. Thus, the balanced funds provide the investors with an opportunity to invest in a single mutual fund that offers growth and income at the same time. The stocks meet the growth requirements and the bonds meet the income requirements. Further, this combination helps to negate any fall in the value of the stocks in the financial market.

NO LOAD FUND-

he mutual funds in India are broadly classified as Load funds and No load Fund. Out of the basic two types of mutual funds – the investment in No Load Funds does not attract any commission for such investments. In other words, No Load Funds can be bought without paying any commission. Another most significant feature of the No Load Funds is that it can be held for a longer term and the proceeds are generally reinvested further.

Furthermore, the profit accrued by investing in No Load Funds shows the exact profit earned on such investments. The Chapter III of the Income Tax Act, 1961 provides tax exemption on investment on No Load Funds. With the rise of the Indian mutual fund market, the popularity of no load funds has increased considerably much to the satisfaction of the fund managers.

VALUE FUND-

Amongst the wide variety of mutual funds are available in India, value funds is a type of mutual fund wherein the main focus is on the safety of the investment and not on the growth of the investment made on such funds. Value funds represent stocks of mature companies, whose growth has become stagnant. Further, these stocks of the value funds utilize their earnings to pay off dividends to the investors.

One of the typical characteristics of the value fund is that, they generate income from the dividends and they also offer long term growth from capital

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Obama and the Federal Government Offers Financial Help to First Time Home Owners

30. October 2009 · Write a comment · Categories: General Tax · Tags: , , , , , , , , ,

Young families have found that purchasing a new home has become almost impossible during the last few years. Now, the federal government is offering help via a new stimulus package. By assisting families in making their first home purchase, the government is hoping to stop the decline in the US real estate market and help Americans again achieve their dream of homeownership. The First Time Home Buyers Stimulus Package is specifically directed to buyers who have not owned a home for the past three years. Both new homes and pre-owned home qualify for federal assistance. The government specifically hopes that new home purchases will assist job creation in the currently weak housing industry.

The program in hoping to stimulate the economy and encourage home purchases via tax credits, assistance with down payments, and lower mortgage rates.

The program began in 2008 but was initially only modestly successful. The economic was too weak at that point and most Americans were very reluctant to purchase a new home when house prices were still declining.

The current program permits a 10 percent tax credit for any home purchased between January 1, 2009 and December 31, 2009. The maximum allowed amount is ,000. Homeowners may claim the credit on their income tax either in the first year of purchase or the following year. For many this tax saving could be substantial and could permit additional savings in the family budget.

The program also facilitates a reduced down payment. As the housing sector of the economy worsened, many banks have tightened their loan requirements. In the case of home mortgages, a ten percent down payments and in some case twenty percent down payments is now common. This program will assist Americans to comply with the least down payment possible, and will produce lower loan origination fees.

The program income guidelines are clearly intended to assist middle class Americans. If you are unmarried, your annual income can not exceed ,000. The annual income limit for a couple is double that — at or below 0,000.

The third portion of the program involves receiving a tax rebate. The actual dollar amount of the rebate will be determined by the interest rate of the home mortgage. Additionally, under this plan the first time homebuyer can actually qualify for both a tax credit and a tax rebate. This distinction is very important. Under this program, a tax rebate can be received for both owner-occupied homes as well as income property. One benefit of being a landlord, not often understood by first time buyers, is that maintenance expenses on income property are legitimate tax deductions. This makes income property a very good investment.

The success of this government program will be a win for our country and a win for first time home buyers. It is well understood by everyone, that our economic recovery and future growth, are very dependent on a healthy housing market. Middle-class Americans would be wise to take advantage of this program to improve their personal lives and at the same time help our countries return to a healthy housing economy.

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Claiming Back a UK Tax Refund. Is it a myth that you can claim back a tax rebate?

30. October 2009 · Write a comment · Categories: General Tax · Tags: , , , , ,

In the UK you will pay 22% income tax on earnings above £2231 and 40% on any earnings over £34,600.
If you’re a PAYE (Pay as You Earn) worker, such as a receptionist or a teacher, your employer will deduct these taxes from your earnings. If you’re self-employed, such as a construction subcontractor, you are responsible for your own tax return.
Tax agents can help you file your tax return and get back a tax refund. The average tax refund is £963 for PAYE and £1453 for self-employed customers.
Why not let a tax expert check on a tax refund calculator to ascertain if you are due a tax rebate. Every single application is processed for compliance and any deductions or credits owed before they go to the tax office will ensure your tax refund is returned to you in the quickest time possible.
Student tax refunds
Just being a student doesn’t mean you’re exempt from paying tax. You are liable to pay tax the same as everybody else. What often happens though is that students get put on the wrong tax code and often end up paying too much. If this happens you’ll need to claim a student tax refund
Visitors to the UK
If you’re not usually resident in the UK and have come here to work then you are still eligible to pay tax this means if you pay too much you can also claim a tax refund from HMRC. The same rules apply to you as to everyone else it all depends how much you earned and how much tax you paid. When you come to make your claim you’ll also need to complete an extra form which will tell HMRC about your entry into the UK. Learn how to claim your tax refund.

Find your Empowerment zone tax credit for businesses

29. October 2009 · Write a comment · Categories: General Tax · Tags: , , , ,

Empowerment zones
The federal governing authority has chosen some inexpensively depressed “zones” or areas for tax advantages. And If our industry comes inside the Empowerment Zone premises, and we hire individuals residing in that same zone, we can get credit liability on federal tax. With that, the companies situated inside the empowering zone might be allowed to amplify tax expensing on apparatus purchase and tax inducement for ecological remediation.

Tax Credits
The higher authorities and leaders of the empowerment zone work efficiently to carry out their strategic plans for better implementation on them and also to improve their economical and social conditions in their respective area.
Salary credits are particularly striking to companies searching to expand their business. These companies hire and keep inhabitants and impose credits liability for their federal tax.

Eligible Business in Empowerment zone for tax credit
    Companies with trained workers who are able to service in the Empowering zone.
    Companies with accessible credit for a given period of time for the employees to work in the empowerment zone.

Criteria for Employees to qualify

An employee residing in empowerment zone. Available credit for the new workers and the existing ones. After a period of 90 days from employment, there has to be credit available for full or part time work. Empowerment zone youth column. The hires youth must be between the age of 18 to 24 and must be living in empowerment zone. Company must not have relatives of the worker or employee working in that same company.

Credit Calculation
Percentage of salaries being paid for any calendar year is twenty percent and the qualifying salaries must be confined per calendar year, to a fixed rate or value.
Use FUTA method for the calculation of salaries.

Conclusion
This article comprises of the empowerment zone tax credit systems and its regulations in general and some of its general business policies and criteria for its proper implementation and working.

Paper stop promotion policy paper rose less than expected

28. October 2009 · Write a comment · Categories: General Tax · Tags: , , , , , , ,

Wait was worth it! “As planned, on February 11 will be light on the revitalization of the State Council executive meeting planning, but due to our study, delayed until now.” Involved in light industry, a person familiar with the revitalization plan, said.

“We have some differences, and in mid-December 2008 to complete the light compared with the first draft of the revitalization plan, with many changes. Paper Is light an important part of the revitalization plans, the Papermaking Industry’s key policy is to restore the export tax rebate rate and the technological transformation, while others proposed in the draft before the policy is not adopted. “Said the aforementioned source.

2 19, the State Council executive meeting approved in principle the light rejuvenation program. Out to do by the positive impact of the policy, on February 17 and 18, the paper industry fell almost 10% of the plate.

Paper “Reviving the” policy introduced by the end of February

After the Spring Festival, created Cardboard Block started, rising, as of February 16, or about 30%, as industrial promotion policy is expected to promote a strong plate.

“Spring Festival, the market price of price increases for paper and light industrial revitalization plan has been expected, so the more powerful paper industry up there.” Securities industry analyst 10000 Golden State Friends of Lin said.

But on February 17 and 18, in the light before the introduction of the revitalization plan, paper stocks suddenly fell sharply, adding, “diving” force, a two-day total decline of 10%.

“There are three reasons, First, systematic market crash, so follow to the paper plate down; Second, with the upcoming light industrial planning may lead to the situation of capital flight in profit; the most important thing is the actual policy of the future may be lower than market expectations. “10,000 Friends of Lin said.

Has been market rumors that the revitalization plan will put light in which the policy paper is particularly the revitalization of the market expectations. Proposed in the draft revitalization plan

light, light industry output value of 10% annual growth, average annual export growth of 8%, an annual increase of 3 million jobs, industry-wide emissions of major pollutants reduced by 10% to 12%.

Newly issued light revitalization planning decision on the part of labor-intensive and high technology, energy saving Environmental protection Abolish restrictions on processing trade of products. Further improve the export tax rebate rate of some light industrial products. Increase the tax on small and medium enterprises in light industry and credit support.

Before the market rumors, the revitalization plan proposed by the paper industry specific policies including the restoration of export tax rebate rate, technological innovation, energy saving and environmental protection, commercial purchasing and storage, and many other policies.

The policy paper industry’s most exciting is to restore the export tax rebate rate. This is from January 1, 2004, the State paper and paperboard products 13% abolish the export tax rebate policy for the first time recovery, although the level of recovery is less than the market expected, but this will still be played on exports to provide the paper industry vibration function. Paper industry in the export share of the larger companies will benefit.

“On the revitalization plan, whether it is paper-making industry, or household appliances, food and other industries, the policy is expected to have fried all over, so will be more concerned about the future market fundamentals. Faced with the upcoming annual and quarterly not nice , paper plates may ‘break in’ again. “One fund manager said.

Part of the policy is expected to fall

“Many of the contents of the draft amendment may be attributed to the changing economic environment, and various departments for the paper industry’s awareness of differences.” Said the aforementioned source.

Write the first draft of light revitalization planning time is fierce in the last economic downturn in the fourth quarter.

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