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Kotak Emerging Equity Scheme Declares Dividend

NFO Launch : Kotak FMP Series 45

Kotak Mahindra Mutual Fund has launched Kotak FMP Series 45 (370 Days), a close-ended income scheme.

Scheme Codes
Scheme Name
Scheme Code
Kotak FMP Series 45 - Growth
Kotak FMP Series 45 - Dividend

The investment objective of the scheme is to generate returns through investments in debt and money market instruments with a view to significantly reduce the interest rate risk. The scheme will invest in debt and money market securities, maturing on or before maturity of the scheme.

L&T Mutual Fund launches 370 day FMP

L&T Mutual Fund is pleased to announce the launch of L&T FMP - III (April370D A), a Close Ended Income Scheme having a Tenure of 370 days.

Salient Features of L&T FMP - III (April370D A)

•  The Scheme will invest in a basket of debt / fixed income securities maturing on or within 370 days.
•  The Scheme has opened for subscription on April 26, 2011 and will close on May 5, 2011.
•  The Scheme is for 370 days and will mature on May 9, 2012.
•  There is no Entry or Exit Load.

Revised schedule of SBIMF SDFS 90 Days -43

SDFS 90 Days – 43 NFO closure has been extended from May 02, 2011 to May 04, 2011. Revised schedule is given below:
SDFS – 90 Days - 43
02nd May 2011 to 04th May 2011
Min. Investment
Rs. 5000
Exit Load
Allotment Date
05th May 2011
Maturity Date
02nd August 2011
(Cheque to be drawn in f/o: “SBIMF – SDFS -90 Days –43”)

The scheme detail and KIM cum application form are attached herewith for your perusal and use.

Click on the following links to download:

Launch of DSP BlackRock FMP-12M-Series-19

Launch of DSP BlackRock FMP-12M-Series-19

Date of Opening:     May 2, 2011 (Monday)

Date of Closing:      May 5, 2011 (Thursday)
– All switches needed to submitted before 3:00 p.m. on the closing date.
– All applications need to be submitted before 4.00 p.m. on the closing date.

OptionsGrowth (Default option) and Div Payout

Min Application:  Rs.5,000/- and multiples of Rs.1/-thereafter

Date of MaturityMay 10, 2012 (Thursday)

Date of payoutMay 11, 2012 (Friday)

Listing:  The units are proposed to be listed on NSE or any other recognized Stock Exchange as may be approved by the Trustee, within 5 business days from the date of allotment

Entry Load – NIL
Exit Load – Not Applicable
 (The Units under the Schemes cannot be directly redeemed with the Mutual Fund as the Units will be listed on the Stock Exchange/s).


Now Pan details will become compulsory on transaction of 5 lakhs or more if you buy gold in cash!

The finance ministry is planning to make quoting of the permanent account number (PAN) mandatory for more transactions in order to avoid black money transactions.

The income tax department may make quoting of PAN in documents for sale and purchase of bullion or jewellery involving cash transfer of Rs 5 lakh or more mandatory.

Rules are being changed with regard to PAN requirement in cash transactions to track the investment pattern of high net worth individuals.

Source: Business Standard

Comparative Tax Planning Under different investment avenues

Taxability Chart for different Investment Avenues for Tax Planning

NRI Corner: Taxation and other queries related to investment in mutual funds

What is the tax liability on receipt of Income on Mutual Fund Units?

As per Section 10(33) of the Income Tax Act, 1961 (‘Act’) income received in respect of units of a mutual fund specified under Section 10(23D) is exempt from income tax in India and the mutual funds are subject to pay distribution tax in debt oriented schemes. Hence all dividends are tax-free in the hands of non-resident investors and no TDS is applicable on the same.

What is the tax liability on Redemptions? What is the rate of Tax Deduction at Source for NRIs / PIOs? What is the tax - rate on capital gains for NRIs / PIOs?

Under Section 2(42A) of the Income Tax Act, units of the Scheme held as a capital asset, for a period of more than twelve months immediately preceding the date of transfer, will be treated as a long term capital asset for the computation of capital gains – thus attracting long term capital gains tax rate.

In all other cases it would be treated as a short-term capital asset and would attract short-term capital gains tax rate. Hence depending on the period of investments, long term or short capital gains and tax thereon is applicable on redemption’s.

Though there is currently no long-term capital gain tax liability for redemptions from equity schemes, there is a liability at the time of redeeming from the debt schemes.

For the tax structure on capital gains,

What are the applicable Tax Rates and TDS Rates to NRI’?


     @ after providing for indexation
    ## Subject to NRI's having Permanent Account Number in India
    *STT @ 0.25% will be deducted on equity funds at the time of redemption and switch to the other schemes.
    Mutual Fund would also pay securities transaction tax wherever applicable on the securities bought/sold.
    ^Assuming the investor falls into the highest tax bracket
    # The total income of the corporate would exceed Rs. 1 Crore
    ** The tax rates are subject to DTAA benefits available to NRI's
    *** These are the tax rates applicable to capital gains, in case the rate of tax is lower than 20% and if the NRI does not have a Permanent
    Account Number, then for the purpose of TDS, the withholding tax rate would be 20%.

    5.What is the rate of Tax Deduction at Source for FIIs? 

    No tax would be deductible at source from the capital gains (whether long-term or short-term) arising on repurchase/redemption of units in view of the provisions of Section 196D(2) of the Act.

    6.What is the proof of the Tax Deduction at Source? 
    A TDS certificate is issued in the name of the investor mentioning the details of the transaction and the tax deducted. The TDS certificate is commonly known as Form16 A.

    7.When the TDS certificate will be issued?

    A TDS Certificate in Form 16A is despatched within 10 days of the month following redemption date at the registered address of the investor. To obtain a duplicate TDS certificate, investor can write a letter quoting his account number requesting for a duplicate TDS Certificate.

    Is the indexation benefit available to NRIs?

    Yes, in case units are held for more than twelve months i.e. on long-term capital gains.

    Can an NRI gift the units of MFs to resident Indians?
    An NRI may gift the units to any investor Indian or an NRI. Units gifted by any person would not be liable to any gift tax since the units held under the schemes are also not subject to provisions on the Gift Tax act, 1958.

    Are units of MFs chargeable in Wealth Tax?

    No. Units issued to investors (including NRIs) etc. will not be treated as assets as defined under section 2(ea) of the Wealth-Tax Act, 1957 and hence will not be liable to wealth-tax.

    Can a dividend from mutual credited to an investor’s NRO account be repatriated?
    Yes. Though an investment may be done on a non-repatriable basis, according to the provisions for NRI investments, the income generated from investments (dividend in this case) done on a non-repatriable basis qualify for full repatriation.

    12. Is there any Tax liability on switching from one option to the other?

    Yes. On switching from the Growth option to the Dividend option, the investor is liable to TDS at the applicable tax rate.

    Is Securities Transaction Tax applicable to NRI investors? 

    Wef 1st April 2011, Nomination details in mutual fund Investments is mandatory

    With effect from 1st April 2011, Nomination details in mutual fund Investments is mandatory for new investments in mutual funds (creating new folio) In case you don't wish to add a nominee, you need to submit
    a declaration confirmation about your non-intention of nominee

    Nomination by a unit holder shall be applicable for investments in all schemes in the folio
    or account.
    ii. In case a folio has joint holders, ALL Joint holders should sign the request for
    nomination/cancellation of nomination, even if the mode of holding is not "Joint".
    iii. Every new nomination for a folio/account will overwrite the existing nomination.
    iv. Nomination shall not be allowed in a folio held on behalf of a minor.
    v. Investors who do not wish to nominate must sign separately confirming their nonintention
    to nominate.
    vi. Nomination by a unit holder shall be applicable for investments in all schemes in the folio.
    vii. Nomination form cannot be signed by Power of Attorney (PoA) holders.

    All you wanted to know about PPF (Public Provident Fund)

    Public Provident Fund is one the best Tax Savings Scheme. PPF is a long-term, government-backed small savings scheme of the Central government started with the objective of providing old age income security to the workers in the unorganised sector and self-employed individuals.
    Suitable for
    It is especially suitable for self-employed professionals and small businessmen who are not covered by the Employees' Provident Fund. Those who don't have access to an organised setup can realise long-term goals through the PPF.

    Annual limit
    There is an annual limit of Rs 70,000 that one can invest in the PPF.

    The 8% compounding interest you earn on the balance can work wonders for you, especially because a PPF account is a long-term investment.This is tax-free money. In the 30% tax bracket, this is equivalent to receiving almost 11.5% interest on a bank fixed deposit. The PPF offers the highest post-tax returns among all fixed income options since no tax is levied on the investment, income and withdrawals.

    What is the minimum and maximum amount of deposit?
    The minimum deposit that you can make into a PPF account in a year is Rs 500. The maximum is Rs 70,000.

    The excellent point:
    If you contribute Rs 70,000 a year to your PPF for 15 years, your investment would grow to Rs 22.92 lakh on maturity. 

    What are the tax benefits from PPF?
    The amount you invest is eligible for deduction under the Rs 100,000 limit of Section 80C. On maturity, the entire amount including the interest is non-taxable.

    What is the interest rate offered through PPF?
    Currently, the interest rate offered through PPF is around 8 per cent, which is compounded annually. Interest is calculated on the lowest balance between the fifth day and last day of the calendar month and is credited to the account on March 31 every year. So to derive the maximum, the deposits should be made between 1st and 5th day of the month.

    Best way to get started:
    Open PPF in your bank as ask to link it with your savings account. Then you can transfer/view details of you PPF account online too.

    How to open PPF account:

    1. Make a trip to your local post office. You can open it at any head post office or selection grade sub post offices.

    2. Visit the nationalised bank in your neighborhood. Selected branches of nationalised banks can also open accounts.

    3. Drop by a State Bank of India branch

    Most important point related to PPF account

    You can have only one PPF account in your name. If at any point it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest.

    You cannot open a joint account with another individual. The account can only be opened in one person's name.
    Procure and submit account opening form and Identity/address Proofs

    It would only 3 minutes to fill. Choose a nominee and get a witness signature. Now you have to submit anyone of following Proofs.

    Pan card
    Driving license
    Voter id
    Ration card
    Two Passport Size Photographs

    Any government issued identity or address proof should work. Keep originals of proof in hand for verification if needed. That's it. The bank should now be able to open the account. Usually it may take about 20 minutes or so.

    Deductions Under 80C, 80CCC and 80CCD for Tax Planning

    The aggregate amount of deduction available under section 80C, 80CCD and 80CCC can't exceed Rupees one Lakh (1,00,000) per annum.

    The above section is categorized under two:

    1. Investment option deductions
    2. Expenses related deductions

    1. Investment options deductions are as follows

    Public Provident Fund (PPF)
    Employees Provident Fund
    Equity Linked Savings Schemes(ELSS Funds of Mutual Fund)
    Unit linked Insurance Plans
     Infrastructure Bonds (max investment amount is Rs.20,000/-
    National Saving Certificates (NSC) 5 years
    Bank and Post office Time Deposit Schemes
    New Pension Scheme Under 80CCD
    Life Insurance Premium(includes premium paid for life insurance and pension funds both quality for deduction under 80C and 80CCC respectively)

    2. Expenses related deductions

    1. Children tuition fees. The maximum limit for the tuition fees is Rs.12000/- per child. Full time education of any two children in any school, college or University subject to over all limit of tax deduction.

    2. Repayment of Housing Loan Principal amount with the max limit of 1,00,000 and other deductions which are also entitled are as follows: Expenses incurred on purchase of house property, stamp duty, registration fees and legal expenses incurred for the purpose of purchase of house property.

    Five Common Myths In Mutual funds Investment

     Five fund myths

    It is easy, even for an intelligent investor, to be taken in by the hype surrounding a mutual fund scheme. Such misconceptions can impact the investments, which is why they need to be debunked.
    1. A fund with a net asset value (NAV) of Rs 10 is cheaper than the one whose NAV is Rs 50
    2. A balanced fund will always have a 50:50 debt to equity ratio
    3. Large corpus funds generate higher returns
    4. Funds that regularly declare dividends are good buys
    5. SIP always scores over lump-sum investing

    Here are the five common myths:

    1. A fund with a net asset value (NAV) of Rs 10 is cheaper than the one whose NAV is Rs 50:

    The NAV of a mutual fund represents the market value of all its investments. Any capital appreciation in the fund scheme will depend on the price movement of its underlying securities. Suppose you invest Rs 1,000 each in Fund A (a new scheme with an NAV of Rs 10) and Fund B (an older scheme with an NAV of Rs 50). You will get 100 units of Fund A and 20 units of Fund B. Let's assume that both the schemes invest in just one stock, quoting at Rs 100. If the stock appreciates by 10%, the NAVs of the two will rise by 10%, to Rs 11 and Rs 55, respectively. In both cases, the value of investment rises to Rs 1,100-an identical gain of 10%. Fund B's NAV is higher as it has been around for a longer time and had bought the scrip earlier, which appreciated. Any subsequent rise and fall in the funds' NAVs will depend on how the scrip moves.

    2. A balanced fund will always have a 50:50 debt to equity ratio:

    Balanced funds aim to achieve a balance between equities and debt. But the balance can tip depending on the nature of the fund. The equity-oriented balanced funds usually invest at least 65% in equities and the rest in debt. The others do this in a 40:60 ratio.

    3. Large corpus funds generate higher returns:

    A fund with a very large corpus is prone to inefficiencies as rising assets become unmanageable after a point. Also, most fund managers are more dextrous managing mid-sized funds. A large fund forces them to broaden their stock universe. This can lead them to include less researched or low-potential stocks in the fund's portfolio or increase the stake in certain stocks, leading to a selection bias. HDFC Equity has a corpus of Rs 2,680 crore, but its three-year annualised return is -1.68%, whereas the best performer for the same period is Reliance Regular Savings Fund, with an annualised return of 7.71% and an AUM of Rs 618 crore. At one-fifth the assets, the Reliance fund has fared far better.

    4. Funds that regularly declare dividends are good buys:

    Fund houses declare dividends when they have distributable surplus. However, there are times when fund managers declare dividends as they do not have adequate investment opportunities. In some circumstances, a fund manager may sell some quality stocks to generate surplus for dividend distribution to attract investors.

    5. SIP always scores over lump-sum investing:

    A systematic investment plan (SIP) is the best way to invest during volatility as it lowers the average per unit cost. This is also termed as rupee cost averaging. However, investing systematically during a bull run results in lower returns. When markets are constantly rising, SIP fails to lower the average cost and so results in lower returns compared with a lumpsum investment.

    Revised Process related to Minor Investment , Nomination , Transmission

    This is with reference to Addendum 98, following are process & document related changes applicable w.e.f. 1st April,2011.
    Summary points:
    Minor Investment -
     No joint Holding allowed in Investment on behalf of Minor
    Only natural Guardian ( Father/Mother /Court appointed Legal Guardian ) allowed.
    Birth date proof to be submitted alongwith application. Documents like Birthcertificate , School leaving certificate ,passport copy, Anyother proof evidencing Date of Birth
    In case of Court appointed Guardian , supporting documentary evidence required.

    Minor Attaining Majority -
    Minor to submit application to transfer folio in his own name once he becomes major,
    Guardian can not undertake any txn (including SIP ,STP ,SWP) once minor become major.

    Change in Guardian
    Change of Guardian is possible either due to Mutual Consent or demise of existing Guardian.
    Documents to be submitted are (1) Request letter from new Guardian (2) No objection letter /consent letter from existing guardian if alive
    Notarized copy of Death certificate of deceased guardian

    Nomination Mandatory -
    Nomination shall be mandatory for all new folios
    Nomination will be at folio level and shall be applicable to all schemes
    All joint holder to sign nomination form
    Nomination shall not be allowed in Folio held on behalf of Minor
    In case Investor does not want to update nominee details , written confirmation to that effect from Investor will be required.

    Also refer:

    Procedure for Transmission - Change in Guardian due to demise of Existing Guardian


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