Budget 2017 highlights – Relief for Common Man

Nutan Gupta

01 Feb 2017

Finance Minister Arun Jaitley announced the Budget 2017 and it has a lot in store for the common man. The main focus of the government remains to turn India into a cashless economy and eradicate poverty. Here are some announcements made by Jaitley and its effect on the common man:

  • No cash transactions above Rs. 3 lakh

  • Jaitley reduces existing income tax rate for individuals with income between Rs. 2.5 lakh to 5 lakh to 5% from 10%

  • Zero tax liability for people with annual income of Rs. 3 lakh.

  • Surcharge of 10% on individuals earning between Rs. 50 lakh to Rs. 1 crore to make up for Rs 15,000 crore loss due to cut in personal I-T rate

  • 15% surcharge on income above Rs. 1 crore to continue

  • The government reiterates its commitment to cleaning up the system by decreasing cash transactions in the system.

  • Cap of Rs. 2000 on single cash donations to political parties, suggests that the RBI act will be amended to issue electoral bond which can be redeemed by political parties. What this means is that a person who wants to make a donation to a political party can buy bonds against bank transactions in the form of cheques and digital payment which would then be redeemable as they mature. This could be a potential game changer about how politics are funded in the country and in the investment people make in their leadership

  • Aadhaar based payment to come soon, that means the aadhaar machine that reads thumb prints and transfers money via aadhaar linked bank accounts. The machines cost only Rs. 2000, if that happens, it will a huge lift for cashless transactions

  • 1 crore households to be brought out of poverty by 2019

  • Long term capital gains tax remain untouched, Nifty and Sensex surge by 155 points and 486 points respectively.

For more budget related highlights, click here


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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Budget 2017 highlights – Relief for Common Man

Nutan Gupta

01 Feb 2017

Finance Minister Arun Jaitley announced the Budget 2017 and it has a lot in store for the common man. The main focus of the government remains to turn India into a cashless economy and eradicate poverty. Here are some announcements made by Jaitley and its effect on the common man:

  • No cash transactions above Rs. 3 lakh

  • Jaitley reduces existing income tax rate for individuals with income between Rs. 2.5 lakh to 5 lakh to 5% from 10%

  • Zero tax liability for people with annual income of Rs. 3 lakh.

  • Surcharge of 10% on individuals earning between Rs. 50 lakh to Rs. 1 crore to make up for Rs 15,000 crore loss due to cut in personal I-T rate

  • 15% surcharge on income above Rs. 1 crore to continue

  • The government reiterates its commitment to cleaning up the system by decreasing cash transactions in the system.

  • Cap of Rs. 2000 on single cash donations to political parties, suggests that the RBI act will be amended to issue electoral bond which can be redeemed by political parties. What this means is that a person who wants to make a donation to a political party can buy bonds against bank transactions in the form of cheques and digital payment which would then be redeemable as they mature. This could be a potential game changer about how politics are funded in the country and in the investment people make in their leadership

  • Aadhaar based payment to come soon, that means the aadhaar machine that reads thumb prints and transfers money via aadhaar linked bank accounts. The machines cost only Rs. 2000, if that happens, it will a huge lift for cashless transactions

  • 1 crore households to be brought out of poverty by 2019

  • Long term capital gains tax remain untouched, Nifty and Sensex surge by 155 points and 486 points respectively.

For more budget related highlights, click here