Career or family responsibilities and commitments are going to follow us till our death. We cannot escape from them. If  we are in control of our life, then getting over stress is a cat walk. We should start taking control of our thoughts, our emotions, our schedule, our environment, and the way we deal with problems. The ultimate goal is to maintain a balanced life, with time for work, enough time for relationships, relaxation, and fun. In addition to this we need the temperament to control, when we are under pressure and to meet challenges head on.

Finding  ‘WHY we get stress in our life and  WHAT are the stressors?’

Managing the stress  starts with finding out for WHAT are the stressors and WHY we get stress in our life. This is the toughest part. We cannot predict the true sources of stress, as there are lot of possibility that they may be hidden and it’s always  possibe  to neglect  our own stress-indicators like thoughts, feelings, and behaviors.
For instance, we may know that we are constantly getting paranoid about work deadlines. But it may be what we think or perceive, but actual job demand can be some thing else, which may 100%  lead to stress.

How can we find out our true sources of stress?

We should look closely at our habits, attitude, and excuses:

• We cannot consider stress as a temporary one (“as though 100%  of the things are going on right – now”) even though we cannot remember the last time we took a breath?
• We shouldn’t consider stress as an integral part of our work or personal life (“That is everything and everyone are crazy around us”) or as a part and parcel of our personality (“That is we have a lot of guts, that’s all”).
• For our stress we cannot blame others or external events and we cannot also view it as entirely normal and unexceptional?

Unless we accept the responsibility on ourselves for the part we have played in creating or maintaining it, it will be impossibe to control our stress level.

We got to have a look at the steps or the action we took to over come the stress.

This personal diary will give us the exact  picture on the ways we managed to cope with stress in our life. We should be truthfully justify that our coping strategies are healthy or unhealthy, whether it was helpful or worthless? Unfortunately, lot of us will try to over come the stress in ways that compound the problem.

Unhealthy activities to overcome the stress

These are  unhealthy activities which may provide temporary relief, but they may be very dangerous in the long run:

Steps to manage stress

#1: Avoid unnecessary stress

We cannot avoid all the situations or events by which we get stress and it’s not healthy also to avoid a situation event where we have to face it and take necessary actions. However we will get surprised that by avoiding certain things in life the number of stressors which we faced before would have come down.

• We should learn how to say “no” – We should Know our limits and stick to those. Whether it can be our personal life or professional life, we should refuse the added responsibilities when it is put on our shoulder when we are close to reaching them. Taking on more than you can handle is welcoming the stress.

• Get away from the people who we think will stress us out – If someone constantly causes stress in our life and there is on point in continuing relationship, Try to get out of that relationship or else  limit the amount of time you spend with that particular person.

• Start taking control of our environment – Say for instance if the movie makes us anxious, we should switch off  TV. If we get stress when we travel via a congested road, We should look for an alternate that is taking a longer but not congested road. If we don’t like going to market place for purchase, then we should go for grocery shopping online.
• Avoid having conversation on topics in the red alert zone – If we get upset over religion or politics, we should cut them off from our conversation dictionary. Is somebody repeatedly argue about the same subject stop bringing it up again or excuse yourself when that particular the topic is been discussed.

• preparing  to-do list – First we should analyze our schedule, responsibilities, and daily tasks. If we have got too much on our list impossible to finish all, then we should distinguish between the “immediate” and the “musts.” Drop tasks that are must but have enough time then push them to the bottom of the list or eliminate them entirely.

The Bombay Stock Exchange benchmark Sensex rebounded to post a gain of over 495 points on Wednesday, July 30, 2008.

The banking, capital goods and realty stocks, made handsome recovery on positive trends in global markets and metal and IT and tech stocks gained marginally. Investors purchased fundamentally strong stocks available at lower levels.

There was a steep rise in global stock markets, following a fall in crude oil prices, also boosted the sentiments here.

Realty segment index shot up 244.17 points at 5,041.88 as all the 14 participant company stocks recorded handsome gains.

Indiabulls realty rose 13.5 per cent,

DLF Ltd by 4 per cent,

Anant Raj by 6.98 per cent,

Ansal Infrastructure by 5.72 per cent

and Unitech by 3.41 per cent on fresh buying.

PSU index rose by 162.12 points at 6,676.91,

IT index by 133.52 points at 3,722.09,

auto index by 99.65 points at 3,672.86,

teck index by 96.17 points at 3,030.52,

power index by 80.41 points at 2,554.22,

consumer durable index by 37.57 points at 3659.20 and

healthcare index by 74.77 points at 4207.91.

However, FMCG was marginally down by 3.06 per cent at 2,133.22 as stocks of ITC Ltd fell by 1.11 per cent on emergence of profit booking by funds.

As the buying activity spilled over a wide-front, small-cap index shot up by 96.59 points at 6,927.60 and mid-cap index by 92.43 points at 5,581.01.

]]> http://ooolalah.wordpress.com/2008/07/31/market-recovers-sensex-up-496-points/feed/ 0 maddychennai http://ooolalah.wordpress.com/2008/07/26/other-instruments-which-gets-tax-exemption/ http://ooolalah.wordpress.com/2008/07/26/other-instruments-which-gets-tax-exemption/#comments Sat, 26 Jul 2008 01:46:55 +0000 maddychennai http://ooolalah.wordpress.com/?p=105 ]]> Other instruments which gets tax exemption

Cash gifts:

Cash gifts received from specified relatives are exempt from income tax, and there is no upper limit also. Similarly, cash gifts of any amount and from anyone received during your child birth, marriage or any other specified event are totally tax-free.

However, if you receive a cash gift of more than Rs 50,000 from a friend, you are required to pay tax on the excess amount exceeding Rs 50,000.

Charity:

You get a tax relief if you donate to institutions approved under Section 80G of the Income Tax Act. The rate of deduction is either 50 or 100 per cent, depending on the choice of fund.

There is no restriction on the amount of charity. However, donations must be made only to specified trusts. Also, only donations of up to 10 per cent of your total income qualify for such a deduction.

Money transfer:

If you invest in your wife’s or child’s (who is below 18) name, the income generated from such investments will be clubbed with your income and taxed accordingly.

However, if you transfer money to a child who is over 18 years of age and invest in his name, then the income generated from such investment will not be clubbed with your income. Instead, that will be clubbed with the income of your child and taxed accordingly.

Long-term capital gains:

If you invest in stocks, “you should sell them only after a period of 12 months to avail nil/ lower tax rate on long-term capital gains,” advises Sonu Iyer, Partner – Tax, Ernst & Young.

However, you are required to mention the amount of gain in your I-T return under the head ‘capital gains’ and claim exemption.

Tax Rebates under Indian Income Tax Act

How many ways can a salaried person save on income tax? I mean u/s 80C, 80D etc.?

The hike in income tax exemption limit for men to Rs 1.5 lakh and for women to Rs 1.8 lakh is in effective from April 1, 2008.

Taxation of income needs to take into account two important factors – firstly, the scope of tax must be wide enough to ensure the state does not overwhelmingly rely on a set of people and secondly, the quantum of taxation must be so much as to not to offset the incentive to earn more money. However, in today’s era of complex transactions it has become even more difficult to zero in onto a particular stage in transactions to identify the point in time when the income may be assumed to have reached a person and at which juncture it is advisable to tax the income in the hands of that particular individual.

Best tax saving instruments:

Section 80C tends to be most popular since you can get an exemption of up to Rs 1 lakh on contributions to a wide range of investments.

1. Employee Provident Fund (EPF):

· Contributions to Employees Provident Fund/GPF [Many folks make the investment for full amount of Rs. 1 Lacs. You can reduce this amount from 1 Lac as this has already been invested by you on a monthly basis].

· Public Provident Fund (maximum Rs 70,000 in a year)

2. Public Provident Fund (PPF):

Popular investment and tax saving option. This scheme is a statutory scheme of the Central Government of India. This is for 15 years.

• The rate of interest is 8% compounded annually.
• Interest is totally tax free.
• Tax saving instrument under section 80C.
• Loan facility available from third year.
• Withdrawl after 7th year.

3. Bank Term Deposits:

Few Banks like HSBC, Barclays, ICICI, HDFC etc are offering very good interest rates for deposits of more than a year duration. You can get more than 8.5% return on such investments.
HSBC: 8.75% for 36 months
Barclays: 9.5% for 366 days
ICICI: 8.75% for 590 days
HDFC: 8.75% for 2 years 15 days
Kotak: 8.75% for 1 year

• For Senior Citizens, it is 0.25% to 0.5% higher
• Some Banks don’t even charge penalty in case of premature withdrawl.
• Some Banks provide monthly, quaterly, half yearly, yearly compoundedly, so the return can differ.
• Now, that there is tax benefits for 5 yrs+ Fixed Deposits under Section 80C gives lot of advantage to Fixed Deposits.
• Much safer option compared to Equities. Regular return with peace of mind.
• The above rates are as of today. They keep changing it frequently. HSBC for example, was offering more than 9% till sometime back.

This was a great option a couple of years back when the rate of interest was 9%. Coupled with tax benefit, this was an ideal investment option. However, with rate of interest being lowered and tax benefit being offered on Bank Term Deposits as well, this is no longer the best option.

4. Post Office MIS:

This is another good option right now as there is a 0.5% additional bonus that was offered recently. This is very good and safe investment for retired folks.

• Interest rate of 8% per annum payable monthly.
• Maturity period is 6 years.
• Minimum investment amount is Rs.1000/- or in multiple thereof.
• Maximum amount is Rs. 3 lakhs in a single account and Rs. 6 lakhs in a joint account.
• Premature encashment facility after one year at some penalty.
• Interest income is taxable, but no TDS.
• The Only Post Office scheme where monthly interest is payable.

5. National Savings Certificate (NSC):

Another popular investment and tax saving option.

• Rate of Interest of 8% compounded half yearly.
• Lock-in of 6 years
• A Tax saving instrument under Section 80C
• Interest is taxable but no TDS.

This was a great option a couple of years back when the rate of interest was 9%. Coupled with tax benefit, this was an ideal investment option. However, with rate of interest being lowered and tax benefit being offered on Bank Term Deposits as well, this is no longer the best option.

6. Insurance policies:

There are a range of life insurance products to choose from, such as term life insurance, whole life insurance, variable life insurance, universal life insurance, and variable universal life insurance. Annuities are tax-deferred investments that guarantee you regular payments at some future time, usually retirement. It is a market-linked security.

Tax benefit: Rebate under section 88

Interest or returns are not taxable

Interest rate: Depends on fund management

The Maximum investment limit is Rs 70000

Liquidity – Minimum lock-in of 2 years for participatory policies and 5 years for unit-linked.

7. Equity-linked savings schemes (ELSS):

Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme is suited for young people as they have the ability to take on higher risk. The ELSS funds should invest more than 80 per cent of their money in equity and related instruments. It is ideal to invest in them when the markets are down. These funds are now open all the year round. The other way of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked security and therefore there will be risks accordingly.

They offer a 20 per cent tax rebate on investments up to Rs 10,000 in a given financial year.

Tax benefit: Rebate under section 88

Long-term capital gains tax are exempt from tax.

Returns are market linked.

The Maximum investment limit is Rs 10000.

Liquidity: Lock-in for three years.

8. Pension plan deductions:

Aggregate deduction u/s 80 C, u/s 80 CCC and 80 CCD can not exceed Rs. 1,00,000.
Deduction under section 80D.Under This section, a deduction up to Rs 10,000 (Rs 15,000 in case of senior citizens) is allowed in respect of premium paid by cheque towards health insurance policy, like “Mediclaim”. Such premium can be paid towards health insurance of spouse, dependent parents as well as dependent children.

Accordingly a person who is under/in 30% tax bracket can save income tax up to Rs 3,060 (or Rs. 3366 if annual income exceeds Rs 10,00,000) by paying Rs 10,000 as premium in “Mediclaim” policy in a year.

One significant point to note is that pension plan deductions under Section 80CCC are also available within the overall limit of Section 80C and if any investment is made under the former section, the qualifying amount under Section 80C stands reduced to that extent. Pension plans apart from playing a significant role in retirement planning, also offer tax benefits under a dedicated section i.e. Section 80CCC. Premiums paid for the same are eligible for deduction. It is a market-linked security.

Interest rate – Depends on fund management

The Maximum investment limit is Rs 10000.

Most insurance companies give the individual an option to withdraw a part (25-33 per cent) of this sum as a lump sum on maturity. The amount withdrawn or the cash component is tax-free.

As there is no tax rebate for those with income above Rs 500,000 it is better to invest in a retirement plan and thereby, claim the Section 80CCC deduction.

For interest or returns 2/3rd withdrawals are taxed but annuities are taxable

Liquidity – Lock-in for the term of the policy.

9. Medical insurance:

You can also look beyond Section 80C to reduce your tax liability. For instance, if you have taken a medical insurance plan for yourself, your spouse, dependent parents and dependent children, you can under Section 80D claim deduction up to Rs 15,000 for the premium paid.

For senior citizen tax payers, the limit now has been enhanced to Rs 20,000. One condition being that the premium should be paid through a cheque.

10. Medical treatment of dependent:

Expenses on the medical treatment of a dependent who is a person with a disability also qualify for tax benefits under Section 80DD. In this case, deductions up to Rs 50,000 can be claimed. A life insurance policy bought for the benefit of such a handicapped person is also eligible for this benefit up to Rs 50,000.

In case the disability is severe, the claim can go up to Rs 75,000. However, to claim any deduction under this section, certification by a medical authority is mandatory.

Medical treatment of specified ailments:

Deductions of expenses on medical treatment of specified ailments (such as AIDS, cancer and neurological diseases) can be claimed under Section 80DDB. The maximum amount of deduction allowed from gross total income is restricted to Rs 40,000 (which goes up to Rs 60,000 if the age of the person treated is 65 years or more) on condition that no medical reimbursement is received from any insurance company or employer for this amount.

In order to claim this deduction, however, you will have to submit Form 10-1 from a specialist doctor working in a government hospital in India, confirming the treatment of the disease.

11. Interest component of home loan:

The principal repayment that borrowers make on their home loan is eligible for income deduction under Section 80C of the Income Tax Act. The limit under Section 80C is Rs 1 lakh.

Under Section 24 of the Income Tax Act, the maximum amount of interest that can be deducted from your taxable income is Rs 1.5 lakhs.

One condition being that your house must have been financed by a housing loan taken after April 1, 1999. It is also essential that the acquisition or the construction of the property is completed within three years from the end of the financial year in which the loan is taken.

Other instruments which gets tax exemption

ICICI Bank, the country’s largest private lender, gained the most in almost six months. It settled at Rs.617.60, a gain of Rs.66.40, or 12.05 per cent.

HDFC Bank rose the most in eight months to close at Rs.1,033.55, up Rs.75.45, or 7.87 per cent.

Oil and gas index rose by 379.96 points to 9,232.04.

PSU index rose by 254.48 points to 6,121.15.

Realty index rose by 242.22 points to 4,670.24.

Power index rose by 79.04 points to 2,381.81.

FMCG index rose by 54.10 points to 1,196.04.

Auto index rose by 65.15 points to 3,600.93.

Consumer durable index rose by 23.14 points to 3,463.74.

Tech index by 17.04 points at 2,881.84 and

Healthcare index rose by 14.57 points to 3,990.85 points.

”TDS/TCS certificates are required to be annexed to the returns of income.”

A senior CBDT official said that all informations regarding TDS are recorded in the PAN (permanent account number) data of a tax payer.

Till-date-return on private investment in public equity (PIPE) deals of 2007 on volume basis has declined by 16.08 per cent.

In IT and ITeS sector, there was sharp dip in current mark-to-market values of around 41 per cent in PIPE deals of 2007.

In infrastructure sector the decline was 52 per cent, in healthcare 44 per cent and in manufacturing 34 per cent.

Real estate sector also witnessed a sharp decline of 46 per cent.

Barring BFSI, telecom and retail sectors, all other segments like IT and ITeS, infrastructure, healthcare and life sciences, manufacturing and real estate reported negative returns.

Despite tough capital market conditions and the slowing economy, Bharti Airtel has done well both in financial performance and in the capital markets, the report added.

Retail sector outperformed largely because of Provogue

BFSI sector have yielded an overall marginal positive return of 8 per cent so far this year, the retail sector gave positive returns (43 per cent) on current mark-to-market basis.

HDFC, Bharti and Provogue deals in BFSI, Telecom and Retail segments respectively stood out the volatile capital market conditions.

While IPO is a tough exit option, one could be through secondary sales or a strategic sale. A secondary sale is one where a smaller private equity player sells to a bigger private equity player.

ChrysCapital is one good example, which partly sold its stake in Shriram EPC, in a pre-IPO deal to the US-based Argonaut Partners.

There is also an alternate solution for private equity players to get out of this scenario. The option of selling out to a strategic partner.

Take the case of Actis, which sold its stake in Punjab Tractors to Mahindra and Mahindra, thereby helping the tractor industry consolidate in India.

While the going till now has been easy, those private equity firms will have to work hard and bring in their contacts and strategic guidance to grow companies. This is before they can exit and think of returns.

With bigger global private equity players like Blackstone, Carlyle, Barings and 3i having raised funds for India, what they will be looking out for is investee companies. In that scenario, one can surely expect exits through either the secondary sales route or selling out to a strategic partner over the next 12 months.

Try Principal Child Benefit’s investment, there objective is – ‘To generate regular returns and/or capital appreciation/accretion with the aim of giving lumpsum capital growth at the end of the chosen target period or otherwise to the Beneficiary (child).’

Even more explicit is UTI Children Career Plan’s investment, there objective is – ‘to provide children after they attain the age of 18 years a means to receive scholarship to meet the cost of higher education and/or to help them in setting up a profession, practice or business or enabling them to set up a home or finance the cost of other social obligation.

Asset allocation
Although most child funds take on a degree of risk by investing in stock markets, they are relatively less risky compared to diversified equity funds that can invest upto 100% of their assets in equities. They are relatively less risky because fund houses have taken adequate measures to ensure that child funds are managed conservatively.

The most important measure adopted by fund houses is to cap the equity investments at a reasonable level. Most of them have capped the equity weightage of the portfolio at varying levels, usually not exceeding 70% of the net assets. These funds have the flexibility to invest in equity and debt markets depending on the fund manager’s view on these markets. These funds work like asset allocation plans allowing the fund manager to shift across asset classes so as to maximise returns for the investor. For instance, in an equity fund, the fund manager is usually compelled to remain completely invested in equities even when stock markets appear overvalued and therefore poised for a correction. But a child fund with a cap on the equity component can always shift a portion of its assets in debt when the going gets rough.

On the same lines when equity markets are overvalued, the fund manager can shift a portion of his assets to debt so as to capture gains. When equity markets decline, he can add to the equity component. By smartly allocating assets across debt and equities, he can ensure that he enters low and exits high, the cornerstone of a successful investment strategy

Lock-in period:
We mentioned that fund houses make provisions to ensure that the risk associated with child funds is controlled. One way to lower the risk of equities is to make long-term investments. Over the short-term equities are the riskiest assets; over the long-term, if you tread wisely, they can generate the best risk adjusted returns for you. That is just what fund houses do; they give the fund manager the time and flexibility to make really long-term investments in the child fund. For that, they have what is commonly referred to as a lock-in period.

If you are an investor in PPF (Public Provident Fund) and NSC (National Savings Certificate) then you already know what a lock-in period means. In fact, fixed deposit (FDs) investors are equally aware of this term. Only difference is that child funds have an equity flavour, while NSC, PPF and FDs are debt instruments. Reason why it makes imminent sense for equities to have a lock-in is because they demonstrate their potential over the long-term (at least 3 years in our view). When the fund manager is certain that he can invest the money for a longer period of time without being concerned about the investor standing outside his office demanding his money, he can make more prudent investments that stand a good chance of making money over the long-term.

For parents, who want to build a corpus for their children over the long-term, a lock-in must be seen as an ally for two reasons. One, it enables the fund manager to make investments that are in the investor’s long-term interests. Second, it acts as a deterrent for the parent from making premature withdrawals.

As parents will appreciate, child funds have a lot of features working for them. Even if some of these features appear restrictive in nature (cap on equity investments, lock-in period) remember over the long-term they work to the parent’s benefit. They instill discipline and have the potential to generate a corpus for the child, and in the final analysis that is all that matters.

We need money to fund children’s future education (professional or post-graduation courses), So we can consider it as a Long-term. For long-term goal, the best practice is to start saving some money each month while they are still young.

Systematic Investment Plan (SIP) for the future

The best bet for ensuring a sizeable corpus for our children’s long-term education needs is a Systematic Investment Plan (SIP) that puts aside some funds in an equity-based mutual fund.

The equity fund is not recommended if there is no 2-3 years of gap (short term) at our disposal for meeting the cost. That’s because, the equity markets can be very risky in the short-term, and can even eat the capital’s value.

The equity fund is only recommended if we have plenty of time to plan, if you see the past record, who invested in these more than three years ago have managed to make very decent gains despite the stock markets losing over 40 per cent of their value recently.

If you are still not convinced with the equity fund, then you can go for risk-free investments like recurring/fixed deposits or SIP in a debt fund.

Insuring your child:

Children’s insurance policies is another alternate which they ensure cash flows at regular intervals. The milestones for withdrawals from such policies, and even their tenure, can be fixed according to your convenience. An added advantage is that these policies allow for cash flows even in the event of a parent’s death.

Taking a loan is not a bad idea:

Educational loans is a good bet. Banks provide these for students pursuing higher education, and are now offering them even to parents unlike in the past.

The interest rate on such loans is competitively priced at around 12 per cent. As per latest tax rules, the interest paid on such loans is deductible from taxable income without any limit, but not the principal amount.

Even those who don’t have any educational loans can enjoy tax benefits on ‘tuition fees’ of up to Rs 1 lakh through Section 80C.