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Income tax slab for Financial Year 2017 – 18

The below given income tax slab is applicable for financial year 2017 – 18 and assessment year 2018 – 19.

Income tax slab for financial year 2017 -18 & assessment year 2018 – 19

(Amounts are in Indian rupees)

For Men and Women:

Rate Men Women
Exemption limit Up to 2,50,000 Up to 2,50,000
5% of taxable income Income between 2,50,001 to 5,00,000 Income between 2,50,001 to 5,00,000
20% of taxable income Income between 5,00,001 to 10,00,000 Income between 5,00,001 to 10,00,000
30% of taxable income Income more than 10,00,000 Income more than 10,00,000

 

For Senior citizens (Age between 60 and 80) and very senior citizens (Age above 80):

Rate Senior citizens Very senior citizens (Aged 80 and above)
Exemption limit Up to 3,00,000 Up to 5,00,000
5% of taxable income Income between 3,00,001 to 5,00,000 Nil up to 5,00,000
20% of taxable income Income between 5,00,001 to 10,00,000 Income between 5,00,001 to 10,00,000
30% of taxable income Income more than 10,00,000 Income more than 10,00,000

 

Surcharge: 10% of tax amount, where taxable income is between 50,00,000 to 1 crore.

15% of the tax amount, where taxable income is more than 1 crore.

Education Cess : 3% of tax amount along with surcharge.

Rebate: As per section 87A of Income tax act 1961, rebate of INR 2,500 will be given to those individual tax payers whose total taxable income doesn’t exceed INR 3,50,000.

Discounted bill – Meaning & Example

Discounted bill is a bill (Bill of exchange or promissory notes) sold by corporate to banks or credit institutions to raise fund. These bills are sold at discounted price than the par value. The discounted amount then credited to the seller’s account.

At the date of maturity, bank collects the amount from customer on behalf of seller and the amount of discount becomes interest for the bank.

It would be better to understand this process with the help of an example.

Example of Discounted Bill:

XYZ Ltd receives an order to deliver 100 chairs from one of its valuable customers ABC Ltd which agrees to make the payment of Rs. 50000 (100 chairs at the rate of Rs. 500 each) after 6 months from the date of delivery. XYZ Ltd delivers 100 chairs on 20th Jan 2015. On the basis of payment terms, ABC Ltd has to pay the amount on 20th July 2015.

On 15th Feb 2015, XYZ Ltd gets an order from another customer to deliver 1000 chairs. XYZ Ltd needs to purchase raw material to manufacture 1000 chairs but it does not have enough fund for that. Also the company cannot ask ABC Ltd to pay the bill as there is an agreement between the two that the bill will be paid on 20th July 2015.

XYZ Ltd approaches a bank to sell the bill and after due diligence bank agrees to purchase the bill at Rs. 45000 considering risk and interest factors. Bank now ask the company to inform ABC Ltd that it has to pay the bill to bank instead of XYZ Ltd. After confirmation for the same, bank credits the amount of Rs. 45000 in the account of XYZ Ltd.

On 20th July 2015, bank collects the amount of Rs. 50000 from ABC Ltd. Now the difference between the par value (Rs. 50000) and credited amount (Rs 45000) to the XYZ Ltd’s account is the earning for bank.

Most common mistakes of share market

Everyone starts investing in share market to earn profit but most of them end up with losing their money. Share market is a game of intelligence and risk. If a person is not able to measure the risk factor or not willing to take the risk then there is no place for that person in share market.

In this article I am going to point out two big mistakes repeatedly done by investors while investing in share market. These two mistakes often result in loss of money and hope.

Investing a large portion of money in single stock:

This is one of the biggest mistakes of share market, Investors do on daily basis. Here I would like to focus on why this is done even by investors who have enough knowledge of share market?

The answer is quick return. In expectation of quick return we do this mistake and ends in wasting a lot of our money.Share market is game of patient people. People who waits for the right time to take action. For example: John has been investing in share market from last two years. In this time he has not earned any profit but he is tracking some stocks from last couple of months. These stocks are seeming quite stable to him. Now one day he finds that stock of ABC Ltd, which he is tracking is rising unexpectedly.For John it’s time to earn some profit as the time has come when one of the stock he is considering stable, is rising everyday. He waits for some time to make sure that rise is not temporary. John now takes the risk and invest 2/3 of his total investment in that stock by considering that:

It’s a stable stock (As he was tracking the same)

To earn in share market, risk has to be taken.

He has knowledge of share market (As he is playing this game from last couple of years).

John found that the price of stock has fallen for the day. But he just keep taking risk as this is the common scenario that the price goes up and down. Also he was not able to sell those share as it would have result in loss of money. But John is now facing the situation where he cannot sell the stock and stock price is going down everyday.

Impatient:

This is the second mistake comes in to picture when someone focuses his mind on earning profit quickly. Impatient here refers to by/ Sell in hurry and without doing much basic analysis.

This mistake is too common for new investors, who thinks they know a lot of share market. To earn profit quickly they just invest in stocks whose price is going up irrespective of the risk associated with these stocks.

Impatient may occur in these two situations:

When stock’s market price is more than the purchasing price:

This situation prevents an investor to make more money as the rise in price is not temporarily.

When stock’s price is lesser than the purchasing price:

This situation sometimes gives mental satisfaction (as investor has been holding the loss from last few time and now ready to accept it) but always results in monetary loss.

Difference between Fixed deposit and Recurring Deposit

Before getting started to the difference between fixed deposit and recurring deposit, it is wise to understand the meaning of both the terms.

Fixed Deposit

Fixed deposits (FD) are deposits with banks or some other financial institution for a predefined time period. An investor has to deposit a fixed amount of money (ranging from thousands to lakhs) at the time of creating FD. Also fixed deposit provides an investor the option to choose the tenure ranging from 7 days to 10 years.

Recurring Deposit

Recurring deposit is another banking instrument used for saving purpose. It provides an investor the flexibility to save a specific amount of money every month in RD account. The amount may vary from a thousand to lakh per month. This amount has to be deposited with a financial institution for a predetermined time period (Tenure).

Difference between Fixed deposit and Recurring Deposit:

Fixed deposit and recurring deposit can differentiate on the basis of below mentioned points:

Amount of Money:

Recurring Deposit can be start with a small amount of money. In comparison to recurring deposit fixed deposit is started with larger amount of month.

If one has lump sum of money than fixed deposit is better option than recurring deposit.

Objective:

The primary objective to start a recurring deposit account is to save money. As RD can be start with minimal amount of money, this instrument is used to save a small amount of money every month.

The sole objective behind opening a fixed deposit account is to use the money as an investment option.

Interest Rate:

Although both fixed deposit and recurring deposit attract same interest rates but return from both these instruments are different. It is because fixed deposit is started with a lump sum amount and it fetches interest for the whole period on that amount.

On the other hand recurring deposit is used to deposit small amount of money every month so the interest is paid accordingly.

For example a recurring deposit which is started with INR 1000 fetches interest on 1000 for the whole year, 2000 for 11 months, 3000 for 10 months and so on.

Taxability:

TDS is deducted on fixed deposit if interest amount exceeds INR 10000 but in case of recurring deposit this rule is not applicable.

CIBIL Score – Everything one needs to know

What is CIBIL?

Credit Information Bureau (India) Ltd or CIBIL is a credit information company which collects and maintains individual’s payments of loans and credit cards.

 

Know about CIBIL Score
Image courtesy: CIBIL’s Official Website

What is CIBIL Score?

CIBIL TransUnion Score is a 3 digit number ranging from 300 to 900 points.

What is Credit Information Report (CIR)?

Credit Information Report (CIR) is the history of one’s credit payment with banks or financial institutions.

Why CIBIL score is important?

Every time an individual applies for a loan from any bank or other financial institutions, CIBIL Score is checked.

What is a good CIBIL Score?

A CIBIL TransUnion Score of more than 700 points is considered as good.

When does CIBIL start recording transactions?

The time when an individual applies for a loan or credit card, his/ her transactions get started to record.

What does CIBIL consider while assigning an individual a CIBIL Score?

Individual’s payment history of loans is considered.

Do normal transactions in individual’s account affect CIBIL Score?

NO, Credit Information Report does not affected by saving, investment or deposit history.

How can an individual get to know his/ her CIBIL Score?

An individual can purchase his/ her CIR from the official website of CIBIL.