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Monthly Archives: January 2020

Opinion | Budget request: Stop crushing the already taxed

Posted on January 29, 2020 by monikahalan
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Stung by the suit-boot-ki-sarkar jibe and wanting to distance itself from allegations of crony capitalism, levied ironically by those who wrote the manual on it, the Narendra Modi government used every subsequent budget to display its socialist face. In its attempt to get the rich to pay for the poor, the government has gone on increasing the burden on direct taxes on the relatively well-off Indians.

We asked our Budget 2020 knowledge partner EY to run some numbers for us on taxes that different income levels paid 10 years ago and what they pay today. The numbers tell their own story. Taxes at the bottom of the income slab have reduced; the person with ₹5 lakh of gross income used to pay around ₹22,000 as tax in FY11 but today goes tax-free. Those earning ₹12 lakh are better off by about 36% and pay just under ₹65,000 less in personal income taxes in a year. But start going up the income ladder and the taxes rise hugely. At an annual income of ₹55 lakh, you pay an additional 6% tax, at an income of ₹1.5 crore, you pay an additional 14% and at ₹6 crore annual income, you pay a huge 38% more tax.

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Posted in Expense Account, Money Box, Narendra Modi, Personal Finance | Tagged Budget2020, rich, taxes | Leave a reply

Do student protests precede big reforms?

Posted on January 22, 2020 by monikahalan
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The expectation from Budget 2020 is that it will provide a stimulus to the staggering economy by spending on infrastructure (that leads to job creation and higher wages) and by putting more money in the hands of the people to rekindle consumption by reducing what 35 million Indians pay as income tax. The spending on infra route has a delayed cycle of impact because it takes time for the projects to come up and the ripple effect of jobs and consumption to take place. Putting more money in the hands of the people has a direct impact if people indeed spend the taxes they save. The problem in India is that consumption may have stalled due to the informal economy holding on to their cash and not spending it. While getting the informal part to formalize is a waiting game, it does look as if the government has little option but to let go of the Financial Responsibility and Budget Management (FRBM) target for financial year 2020-21 that restricts the fiscal deficit to 3% of the GDP.
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Posted in Expense Account, Let's Talk Money, Money Box, Personal Finance | Tagged Budget 2020, compliance, deficit, FRBM | Leave a reply

Opinion | Why markets are happy in these troubled times

Posted on January 15, 2020 by monikahalan
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India today looks as if somebody stuck a pole into a beehive and shook the bees out of their daily routines. You don’t mess with bees’ routines for they get really angry! Indians today are angry over what they perceive are the acts of a “fascist” government, including raising hostel fees that have been stagnant for over 40 years and have no relation to the current levels of purchasing power. Others are angry at those who are angry. Yet others are letting off steam unrelated to the current issues but maybe just the stress in the extended family—why waste a good fight? Most others are generally feeling bad about the news of a slowing GDP, a consumption pull back and an overhang of bad news about the economy. One part of the country, however, seems to be immune to this anger and grief—the republic of the stock market is literally on its own trip and is hitting new highs every other day. What’s going on?

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Posted in Expense Account, Investments, Let's Talk Money, Money Box, Money With Monika, Mutual Funds, Personal Finance | Tagged economy, FII, GDP, Nifty, Sensex, SIPs, slowdown, stock markets | Leave a reply

Opinion: Budget should clean up capital gains, DDT mess

Posted on January 8, 2020 by monikahalan
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The problem of the Indian budget exercise has been to somehow get the reluctant individual to pay income tax. Step back and see that a government needs tax revenue to run the government itself, pay for government institutions (health, education and defence, to name just a few), spend on infrastructure, pay interest on borrowings and so on. A prudent government’s capacity to spend depends on its capacity to raise revenue through taxes—both direct and indirect. A profligate government will simply borrow recklessly and kick the problem down the road for future governments to handle.

A key problem that faces the Indian budget is that too few people pay income tax, with just 32.3 million people filing ITR-1 (the return for salaried individuals) on a population base of 1.37 billion. Successive governments have attempted to get the reluctant Indian to pay income tax and failed. Therefore, they have used a tax on incomes and profits on investment to try and get those who should pay, to pay. But successive governments have then gone on increasing the burden and the complexity of this taxation so that today two taxes are in a total mess: the dividend distribution tax (DDT) and the capital gains tax.

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Posted in Expense Account | Tagged Budget 2020, Capital gains, DDT, LTCG, STCG, tax payers, tax returns | Leave a reply

Opinion | Balance in your financial life leads to equilibrium in your overall life

Posted on January 2, 2020 by monikahalan
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Don’t you get bored? This is an old colleague who has seen me write on personal finance for years and years. The question got me thinking—why am I not bored writing about money? I found the answer in my yoga class of all places. Yoga maestro B.K.S. Iyengar did the same poses for over 80 years every day, several times a day, but he did not get bored because each time his pose was a window into a deeper reflection of what that pose was doing to his body and mind. Practice makes you proficient, but beyond proficiency is abhyasa, or study. After you get proficient, then comes the study of what your chosen vehicle shows you about yourself and the world and helps you go deeper and deeper. The meaning of seeing the universe in a drop of water or a grain of sand suddenly becomes clear. So, no, not bored of money and engaging with it yet.

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Posted in Expense Account, Financial Literacy, Mint, Money Box, Money With Monika, Personal Finance | Tagged Balance, BKS Iyengar, Equilibrium, Yoga | Leave a reply

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