How can I exchange old Rs 1000 and Rs 500 notes?

Modi has taken a bold and effective step to curb black money. If you don’t have a black money, it should not bother you much. Your hard earned money will always be yours. You have enough time and opportunities to exchange the old Rs 500 and Rs 1000 notes to legally valid currency notes.

1. You can deposit in your account in any bank or post starting from 10/11/2016 to 30/12/2016. There is no limit for this deposit.
2. Once you deposit your Rs 1000 and Rs 500 notes, you can withdraw in legally valid currency notes up to Rs 10000 per day and Rs 20000 per week from the bank or post offices.
3. One can exchange the notes at banks or head and sub post offices producing identification documents like PAN, EPIC, Adhar, Passport etc. This kind of exchange of notes is capped at Rs 4000 up to 24/11/2016 and Rs 20000 from 25/11/2016 to 30/12/2016.
4. Even if you can not exchange your old Rs 1000 and Rs 500 notes during the given period up to 30/12/2016, you can exchange notes at specified RBI offices with a declaration up to end of this financial year.
5. One can withdraw up to only Rs 2000 at ATMs as of now from 10/11/2016 and it will be increased to Rs 4000 soon.

Mutual fund investors forget common sense, they are net sellers when market is low

I have seen many mutual fund investors complaining their investments in mutual funds not yielding expected returns. When someone invests in mutual funds, entry and exit timings are also the deciding factors of your returns on investments. I have seen a number of my investors asking for suggestions for funds when the market is high. They are lured by the reports which mention the double digits numbers in returns column when the market is high. They are afraid of investing in equity and equity funds when the market is low. Their sentiments are purely governed by the short-term fund performance reports like 6 months or a year which are usually negative during the lower performance of stock markets. Anyone who has common sense can tell this is against common sense.

MF Inflows and market performance. Pic courtesy : Moneylife

Moneylife Advisory has published an article in their blog, comparing the fund flows in equity funds and market performance.  The article has proved with data that the mutual fund's investors tend to buy high and sell low. Indian share market was low in February 2016 and started recovery in March 2016. The net investment in mutual funds would have been positive or at least stagnant during this period to make the attractive returns. Mutual fund investors have done the reverse, net fund flow is negative during this period. There was more redemption than purchase. They have withdrawn from mutual fund rather investing when the market is low. During August 2016, the stock market is witnessing a huge inflow of funds, both foreign and domestic pushing the market to an all-time high. The mutual fund investors have also enthusiastically invested in last month. Investing in mutual funds when the market is high does not make much harm if someone is looking at a long horizon. But redeeming funds when the market is low will definitely make harm to your returns. 

I have some investments in SBI Magnum Tax Gain. My lock in period in the fund was over and was planning to redeem to make fresh investments for present year tax exemptions. If I had redeemed when the market was low, I would have got around Rs 100 per unit. Now I am getting Rs 125 per unit. I am getting 25% extra return for waiting just 5 months!! My three years waiting could have gone in vain if I was also one among them who made the net inflow negative when the market was low. (This fund is an example, I am not suggesting this fund)

Be a wise investor and use common sense. Invest low and redeem high.

Subramanian Swamy rightly said replace private bank's shares in GSTN with PSBs

GST bill became law previous week after president signed it post ratification by the majority of states. GST brings most of the indirect taxes under one roof. As always, the banks will be playing a major role in collecting the taxes and providing the data of collected taxes to the concerned departments. This needs a huge infrastructure to maintain, process, analyse and to connect the government department with the banks network.

Goods and Services Tax Network, (GSTN) is a Section 25 (not for profit), non-Government, private limited company. It was incorporated during the previous UPA regime to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST). We can see the first two parties, state and central governments in the share holdings of GSTN. The important stake holders- Public Sector Banks which collects the taxes for the government are not in the scene. The government of India holds 24.5 per cent stake in GSTN while states together hold another 24.5 per cent. Balance 51% equity is with non-Government financial institutions like ICICI Bank, HDFC Bank, HDFC Ltd, LIC Housing Finance and NSE SIC.

GSTN has applied for loan of Rs 550 crores from IDFC. The central government is standing as guarantor for this loan though it is not a majority share holder. This is questioned by Mr Subramanian Swamy- why the majority stake holders are not the guarantors for this loan? In a way he right, but the government's interest in faster implementation of GST is not questionable. His comments on shareholding of GSTN makes the issue interesting.

Subramanian Swamy

As Mr Swamy's says partnering with private institutions to set up an institutions like GSTN to handle highly sensetive data is the matter of worry. I am not saying ICICI, HDFC or LICHF are unreliable, but when someone inside the house are capable of doing some job, calling an outsider to do the same job makes no sense. Firstly, public sector financial institutions holds the majority of share in banking industry and they are capable of partnering with government for implementation of such a high aimed mission like GST even during the period of high bad debts. Secondly, it is not ICICI or HDFC would be collecting the majority of the taxes, but it is definitely SBI, a public sector bank will be the indispensable tax collector for the government even in future. Third reason is by making public sector banks to hold stakes in GSTN, goverment would have had better control over it. Mandatory audit by CAG is always better than an offer to CAG audit. Mr Swamy's proposal to replace GSTN share holding of  private banks with public sector banks makes some sense because tax data is sensitive and also confidential. 

A reply to heavy weekend tax players

A reply to WhatsApp message complaining government imposes heavy tax on their weekend merry.

People say they are being taxed heavily.

But I am not.

I earn 10 lakhs per annum and I pay only 56,650/- per annum as the tax. That means just 5.66% tax on my total income. Where my friends in the USA are paying 30% flat of their income!

I own a two wheeler and a four wheeler. Roads are smoother and better than UPA government, wear and tear lesser than yesterday; vehicles are BS IV and I am getting BS-IV petrol everywhere. I am getting extra mileage than yesterday's, which saves me a lot.

I am health cautious and do not eat junks on every weekend. I never want to pay extra hard earned money for the lights, cushions and English speaking waitress in restaurants. I get rice, vegetables, fruits and every agriculture products without tax. My family gets LPG subsidy for cooking healthy food. We enjoy tax-free eating.

I invest in equities and equity oriented mutual funds and I have the patience to wait for at least a year. India being the fastest growing economy, I am getting good tax free returns. My investment returns are not taxed, unlike your fixed deposits returns.

If you feel your goods are taxed more than double the value it has, ask your congress MPs to support GST Bill to remove recurring taxes on goods and services.

I thank my government for taxing those who do not know how to invest and save tax, but to go on outing every weekend to eat junks and spoil their health.

I am happy to pay the taxes.

Forward this message to every responsible citizen of India.

Panama Papers Offshore Leaks explains how Vijay Mallya siphoned off the money

While banks are having a hard time with Vijay Mallya being unable to recover a huge NPA, Mallya is  said to be holidaying in London. The banks are complaining he has siphoned off the loan given to Kingfisher Airlines.

When I searched few names in Offshore Leak, the web page returned the name of Dr Vijay Mallya. I was well expecting his name in the Panama Papers. Dr Mallya owns Venture New Holding Ltd in the tax heaven of North East Carribean nation- British Virgin Island. He is also the beneficiary owner of this firm. This holds another firm Sharecorp Ltd which is registered in India. Through this company Vijay Mallya was able to have business links with different countries like Singapore, China, Britan, Italy, USA to name few. He could have siphoned off the money through this network, also avoiding the taxation. The profit was routed back to him through Venture New Holding Ltd, legally avoiding the tax, being registered in the tax heaven, British Virgin Island.

Vijay Mallya holding shadow company in British Virgin Island.
Click on the image to view larger image.

He could have owned the asset through these firms more than that is required to liquidate his loans. It is impossible for anyone to hold a company in a tax heaven like British Virgin Island without any interest of siphoning off the money or tax avoidance. The banks should pursue the matter with the investigation agencies to look into the Mallya's case in a different angle.