Personal finance softwares

Personal finance software can be a big help

One of the biggest pitfalls in personal finances is being unorganized. When you aren't sure where the money is going, and you aren't sure what you have, it can lead to a personal finance mess. Organizing your finances doesn't have to be difficult, though. One of the easiest ways to organize your finances, and keep them organized, is to use personal finance software. Quicken and Microsoft both offer personal finance software that is easy to use, and that can be synched with the Internet if you like.

Organize your finances: getting started

Perhaps the hardest part of organizing finances is getting started. It can be a daunting task to set up all of those accounts and find all of that information and then record it on your personal finance software. This can seem like a daunting task, but if you can break it down into pieces, you can make it easier. Set aside a small amount of time each day, perhaps 15 to 30 minutes, to set up accounts on your personal finance software. Start with you checking account, and go through your last bank statement and your checks to see where you are. This might actually take a couple of days. But keep at it. Then continue setting up accounts as you have the time -- for savings, credit cards, loans and even investments.

Keeping your personal finance information organized

Once you have your information entered into your personal finance software, you can more easily keep track. At the end of each day, I take five minutes to enter in anything I spent or deposited that day. Each week, I take time to pay bills and/or reconcile accounts (using statements). Personal finance software makes all of this easy, bringing up everything that you entered into the computer during the statement period so that you can easily check it off using the statement for a guide. And, it can be even easier to keep track when you use your personal finance software to sync with your online banking and investments.

Personal finance software can be a great financial planning tool. You can print out reports that help you analyze your spending, and most personal finance software programs have a feature that can help you generate a budget, and then track how well you are sticking to it. Categories help you keep track of your spending, so that you can determine where, exactly, your money is going, and you can also use them to keep track of what is tax deductible, from business expenses to charitable contributions, so that it is easier to find that information at tax time.

New Draft tax code for india

As a major development in the Indian taxing regime, our government is proposing a new tax regime/tax code/direct tax code which is supposed to be replacing India Income Tax act 1961.

According to new tax code / new direct tax code a new initial tax slab will be 10% tax up to Rs. 10 Lakh Income.

The government proposed major tax reforms through a draft code that aims at moderating income tax rates, Securities Transaction Tax (STT) and increasing deduction for savings up to Rs 3 lakh.

“We expect to have better compliance and better collection of taxes,” Mukherjee said.

These new changes are currently under discussion and for collecting public opinion.

Direct tax code to be implemented only by the end of 2011 or early 2012 after completed the process of debate and suggestion from public.

Summary of the new proposed changes

According to the new recommendations of the Code :

• 10 per cent tax rate should apply to an annual income of Rs 1.6-10 lakh per annum (Now 10 per cent is levied on incomes of Rs 1.6-3 lakh, 20 per cent on Rs 3-5 lakh and 30 per cent above Rs 5 lakh).
• 20 per cent rate rate should apply to an annual income to Rs 10-25 lakh per annum.
• The maximum rate of 30 per cent should apply to income above Rs 25 lakh per annum.
• Perquisites given to employees should be included in salary income (likely to inflate the taxable income of certain categories of salaried persons).
• Tax rates for companies should be reduced to 25 per cent for both domestic and overseas companies. Currently, domestic companies are taxed at 30 per cent with surcharge and cess coming later.
• Foreign companies should pay an additional tax of 15 per cent as branch profit tax.
• Abolition of the controversial STT (but the Code also suggests reintroduction of tax on long term capital gains on securities trading).

Source : Internet

Tax slabs for financial year 2009-2010

There is a slight change in the income tax slabs for financial year 2009-2010 introduced in Annual Budget 2009.

India Income tax slabs 2009-2010 for Men

Income tax slab (in Rs.)	Tax
0 to 1,60,000	No tax
1,60,001 to 3,00,000	10%
3,00,001 to 5,00,000	20%
Above 5,00,000	30%

India Income tax slabs 2009-2010 for women

Income tax slab(in Rs.)	Tax
0 to 1,90,000	No tax
1,90,001 to 3,00,000	10%
3,00,001 to 5,00,000	20%
Above 5,00,000	30%

India Income tax slabs 2009-2010 for Senior citizen

Income tax slab(in Rs.)	Tax
0 to 2,40,000	No tax
2,40,001 to 3,00,000	10%
3,00,001 to 5,00,000	20%
Above 5,00,000	30%

The surcharge on the tax for income above Rs 10 lakh is removed.

Recession and India

From last few months or may be an year or so everyone is talking about recession, economy is bad , etc, etc..,
But what actually is recession ??
A recession is when there are 2 quarters of negative growth in the economy. Note that this means the GDP should be negetive. Not a slowdown in growth (say, from a growth rate of 8.5% of GDP to 7.0% of GDP) but a negative number. For example, if growth is -3% in one quarter and then falls again by 2% then because we have two consecutive quarters of negative growth, we can say that the economy is in a recession. A reversal. A decline.

And what actually is economic slowdown ??
It's slowdown in economic activity which actually fuels the GDP of a country.
So, when the GDP rates are positive but less than that of previous years, we say this as a slowdown.

US , UK and many europian countries are in recession, i.e negetive GDP numbers.

India, China and some of the emerging markets are suffering from slowdown.

So, the US is in a recession and most of its financial institutions are morally bankrupt and financially close to the edge. Yet, Indian stock markets is getting affected the most and why is that ??
This is because Indian Stock market has lot money from investors from US and other FII who just come in for a short term, make money and go back. When their economy itself is bad, they needed their money back and there they go .. every one is taking money back from India.

And the people suffering is the small investors who came into markets when they should not and trying to exit when everything is gone.

India is a story that is starting now and people who are patient and ready to be in markets for long term should be in the markets regarless of the fluctuations. India is not in recession and it has a strong local market and un matchable resource called PEOPLE.

So, be patient and we will be the next super power calling the shots.

Cheers....
Vinay

Income Tax Returns

As the financial year 2008-2009 has ended its time for all of us to think about filing income tax returns. By thins time, our employers may have finished all the paper work required for getting us Form-16 which is required for filing income tax returns for the financial year 2008-2009. We may be getting Form -16 within few weeks from now.

Now we all have to start thinking about income tax returns submission.

So, what actually is return of income?

Return on income is nothing but a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income is communicated to the Income tax department after the end of the financial year. Different forms are prescribed for filing of returns for different Status of the individual and nature of the income earned. This is something like a summary of all the financial activity done by a individual within a particular financial year.

The form is available from http://www.incometaxindia.gov.in/ or we can get them from the Public Relation Officer [PRO] of IT department.

As per the new procedure, we need not attach any documents when filing returns.

Most of the salaries employees will have to fill either ITR1 or ITR2 form. After filling this form, we can submit this to the Assessing Office of the respective IT department or send it through post or file it electronically (online). We can also submit our returns in the nearby post office also.

Filing of return is your constitutional duty and earns for you the dignity of consciously contributing to the development of the nation. This apart, your IT returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits etc.

How to apply and get a PAN card

Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department.
A typical PAN is AABPS1205E.
It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans for any payments due to Income Tax Department.
It is also compulsory to quote PAN in all documents pertaining to financial transactions notified from time-to-time by the Central Board of Direct Taxes. Some such transactions are sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding Rs. 25,000/-to hotels and restaurants or in connection with travel to any foreign country. It is also mandatory to mention PAN for obtaining a telephone or cellular telephone connection. Likewise, PAN has to be mentioned for making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or depositing cash of Rs. 50,000/- or more in a Bank.

In order to improve PAN related services, the Income Tax department has authorized UTI Investor Services Ltd (UTIISL) to set up and manage IT PAN Service Centers in all cities or towns where there is an Income Tax office and National Securities Depository Limited (NSDL) to dispense PAN services from TIN Facilitation Centers. For convenience of PAN applicants in big cities, UTIISL has set up more than one IT PAN Service Center and likewise there are more than one TIN Facilitation Centers.
PAN application should be made only on Form 49A. A PAN application (Form 49A) can be downloaded from the website of Income Tax department or UTIISL or NSDL (www.incometaxindia.gov.in,www.utiisl.co.in or tin.nsdl.com) or printed by local printers or photocopied (on A4 size 70 GSM paper) or obtained from any other source. The form is also available at IT PAN Service centers and TIN Facilitation centers.

PAN application may be made on Form 49A obtained from any source other than IT PAN Service Centers or TIN Facilitation Centers. For instance, a PAN application may be made on form downloaded from the website of Income Tax department or UTIISL or NSDL; or on form printed by local printers or a photocopy of downloaded or printed .

Application for fresh allotment of PAN can be made through Internet. Further, requests for changes or correction in PAN data or request for new PAN card (for an existing PAN) may also be made through Internet. For more details visit (www.tin-nsdl.com)

Location of IT PAN Service Centers or TIN Facilitation Centers in any city may be obtained from local Income Tax Office or any office of UTI/UTIISL or NSDL in that city or from websites of the Income Tax department (www.incometaxindia.gov.in or UTIISL(www.utiisl.co.in) or NSDL (http://tin.nsdl.com)

Required Documents for getting PAN card are
a. Individual applicants will have to affix one recent, coloured photograph (Stamp Size: 3.5 cms x 2.5 cms) on Form 49A;
b. Any one document listed in Rule 114 must be supplied as proof of 'Identity' and 'Address'; and
c. Designation and code of the concerned Assessing Officer of Income Tax department will have to be mentioned in Form 49A.

For Identity Proof, we can submit
Copy of school leaving certificate or matriculation certificate or degree of a recognized educational institution or depository account or credit card or bank account or water bill or ration card or property tax assessment order or passport or voter identity card or driving license or certificate of identity signed by a MP or an MLA or a Municipal Councilor or a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of Identity;
In case PAN application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of Identity.

For Address proof, we can submit -
Copy of electricity bill or telephone bill or depository account or credit card or bank account or ration card or employer certificate or passport or voter identity card or property tax assessment order or driving license or rent receipt or certificate of address signed by a MP/ MLA/Municipal Councilor / a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of Address;
In case PAN application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of Address.

Buy or sell shares in stock market

How to buy shares in Indian Stock Market?

Simple steps to buy or sell shares in Indian Stock Market.

Prerequisites

1. You need to have a DEMAT and Trading account – Contact any banks or stock brokers such as IndiaBulls, India Infoline , Reliance Money etc.
2. You need to have a PAN number. – Check out my earlier blog on PAN.
3. You need to have a Bank account, preferably in the same city and with online transaction facility which makes life easier.

Steps

1. Once you have a DEMAT or Trading account, you will be given an online access for buying or selling shares.
2. Select the stock or shares of the company you want to buy.
3. Decide on price and quantity of the shares.
4. Transfer money or allocate money to your trading account from your bank account sufficient enough to buy the shares and pay for additional charges such as brokerage, commissions and any other charges.
5. Using online account , put an order to buy the shares. This will be an easy process as you can check current market price – share value of the company and send the order to stock market using simple user interface.
6. Once ordering is done, you will receive a confirmation of your order and once your share is bought, you will get a confirmation of your trade.
7. After a couple of days, the share will be credited to your account.
8. If you want to sell, you can use same online account and specify the number of shares you want to sell and put the order.
9. Once the order is executed, you will get an online confirmation for this and amount will be credited back to your account within 2-3 days.
10. You can transfer money back to your bank account or use the money to buy some other shares.

Tax implication

If you are transacting in stock market, and if are buying and selling a particular share within an year, you need to pay 10% of your profit as a capital gain tax. If the interval between buying and selling is more than one year, you need not pay any taxes. The dividend obtained from the shares does not attract any tax. If there are any losses in a year, you can deduct the amount from any other capital gains (only) when calculating your taxes!!

Happy Investing ……….
Vinay

Stock Markets and Investing in stock market

According to some sources, only 8 % of the Indian population knows that there is something called stock market and only 4 % invests in stock market directly or indirectly.

During these times, investing in market may seem like a bad word. But historically there is not other investment vehicle that has given more return on investment that stock market. Ace investors enter the stock market during turbulent times and exit when they make good money during good times. There are lot of people who made huge money as well as there are more people who lost all they had. The people who made money are typically investors who spent time and energy learning about stock markets and investing in stock markets and people who lost money are those who just wanted to make quick money.

As any other job or business, there is no easy money available. You have to be patient, work hard, spent time and have sufficient knowledge about what you are doing. During initial years, you have to learn, invest and then earn.

It is very unfortunate that only very small percentage of people do this. So as a first step, here are some basics about stock market.

To invest in stock market, you have two main ways.

1. Invest directly in stocks.
2. Invest in Mutual funds which in turn will invest in stocks.

For investing in stocks, you have to have a DEMAT account and a TRADING account. DEMAT account is something like a bank account in which your stocks will be held. You need to pay/transfer money to your DEMAT account to buy shares. For opening a DEMAT and TRADING account, you need to approach a stock broker. He acts as a mediator between you and the stock market and buy/sell for you. There are lot of players like ICICI, HDFC, Indiabulls , etc which offer this service. They charge a certain percentage of your transaction as a commission or brokerage.

During this internet age, you need not go to a broker or bank for investing in stock market. All can be done online. Once you open an account, the broker will give you facilities such as trade online, transfer money online to and from your bank account to your stock market account – DEMAT/TRADING. You can get live information about the stock market from various websites including those services provided by the stock broker. You can get information about which stocks to invest, which of them are performing well and which are not and all the details and news about the stocks from lot of websites. So, investing in stock market has become very easy and less cumbersome.

For investing in Mutual funds, you need not have a trading account. Your stock broker/ any banks provide this service of buying or selling mutual funds. Nowadays, you can invest in mutual funds online also. But you have to invest through banks or mutual fund offices for the first time.
Now there is a mandatory requirement of PAN – Permanent Account Number for investing in Stock Market or Mutual funds. Read one of my earlier posts to know about PAN.

When you buy a Mutual Fund, the service provider will buy or invest in stock market in different stocks in the stock market ( there are some mutual funds which do not invest in stock market). The mutual funds are evaluated using the variation in the stocks it has invested depending on which it decides its NAV. When you buy a Mutual fund, a certain number of mutual fund units with that day NAV will be allocated to you.

So, if you take good decisions and consider a long term, say 5 – 10 years horizon, there is not other investment vehicle that has given higher returns which beats the inflation. But the catch word is long term and persistent non panicky investment decisions.

If you have not invested in stock markets, this is the right time. Start doing some research on stocks and start investing and start with a very small amount and grow as you gain confidence. Hard work always pays of. This is definitely not gambling unless you gamble with your money.

Check my other blogs to gain more information on stocks and tax implecations.

Cheers
Vinay

Tips to stay afloat in bad times

As anticipated by many people, its here ... India is starting to feel the effect of bad economic conditions which is prevailing all over the world. Started in US and spread like a wild fire all over the world, its affecting each and every person around the world. Job Losses, Less money in hand, depreciating assets, mounting liabilities are causing lot of worries to people. We have to take some effective steps to overcome this situation which is not appearing to last of couple of years.

Here are some tips which make you sail this troubled times without drowning.

1. Loans .... These will have snowball effect in these times. So, clear as much loans as possible. Avoid taking any loan.
2. Keep cash in hand. Delay any investment particularly related to risk prone sectors such as equity, real estate and commodities.
3. Gold and FD's are good investment options.
4. Try for prepayment of any outstanding loans and credit card balances.
5. Be ready with cash which can be deployed easily in case of trend reversal which may happen any time.
6. Don't even think of Job change. Cling on to existing jobs at least for another year in the mean time try to improve your skill sets and job expertise.
7. Try to create some income generating assets such as rental income, interest income etc.
8. Not a good time to buy or sell real estate and vehicles.
9. Don't plan for any expensive vacations.
10. Avoid expensive eat outs or entertainments.
11. Bring down house hold expenses by cutting down unwanted spendings.
12. And most important thing of all .. Don't panic .. Its all in the game ... Its like a cycle .. and conditions will and have to pick up and for India population which once was considered problem will definitely become an asset and growth story of India is not hoax... Its real and India will become the next super power and economic center point of the world and land of dreams.

Hope for the best and plan to make it even better.... :)