Effects Of Budget 2018 On Your Financial Planning


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Benefits and Risks of Life Insurance Premium Finance

Life Insurance Premium finance is the safer way of purchasing life insurance, especially for high net worth individuals. It allows a company to borrow the cost of life insurance premiums. It usually occurs when the company has a very high premium that makes it necessary to borrow the amount in part or in whole to prevent reducing the company's liquidity. More often than not, traditional lenders don't provide premium financing, and business owners need to look for specific premium financing providers to secure the loan. Benefits of Premium Finance When a company releases a large amount of payment, its owner must first consider whether the funds are needed for the daily operation of the company or for the expansion of the business. And in order to prevent liquidating some of the ... Read more

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In the Union Budget 2018, the government of India has levied LTCG tax of 10% for gains of more than Rs. 100,000. This has been one of the major moves made by the government, which had a telling effect on the investors, which could be seen in the stock market fluctuations on the Budget day.
The big question that you might want to ask as an investor is what this means in terms of your financial planning, especially in case of equity mutual funds. You would want to know whether you should invest in the equity markets at the moment or would debt be a better option.
The big move from the Budget 2018 for equity mutual funds is that they will have to tax the dividends, which you were receiving for free until now. What is it that you need to do in terms of your financial planning? Make fresh investments in the stock market, invest in alump sum, or stagger your investments. Well, as an investor, you have a right to get logical and practical answers to these questions.
As an investor, you must remember that taxation doesn’t really change the fundamental attractiveness of the equity markets and the role the equities play in your portfolio. What really matters for the equity is how the economy turns and the growth comes back. That’s what determines the final values of equity investments to investors.
Yes, LTCG tax might just reduce the attractiveness of the equity investments in the short term to the extent that you are taxed. However, you must remember that directionally, it doesn’t take away the role of equities itself as a major part of your portfolio or asset allocation. Moreover, LTCG tax, you must remember doesn’t change any underlying fundamentals. Taxation has been prevalent in many global markets as well. Stock market corrections happening purely due to the LTCG tax event of the Budget 2018 are a short-term event. This also creates opportunities for the long-term investors.
Here’s a small illustration of how the LTCG tax will be calculated. Let’s assume you bought a share costing Rs. 100 on May 15, 2017. Now, by Jan 31, 2018, let’s imagine the share appreciated and price became Rs. 200. You didn’t sell the share thenbut decided to sell it on May 16, 2018, when the price of the share is Rs. 250. This is when the definition of long-term, which is 1 year, really kicks in. Capital gains will be the difference between selling price and the cut-off price (since it’s higher than the cost price). Therefore, the gain here is Rs 50 (250-200), which means the tax you will need to pay on LTCG @ 10% of Rs. 50 is Rs. 5.
In fact, the bod yields have also been increasing over the past few years, so, there are some key decisions you need to take as an investor whether to invest in the debt or the equity markets. Investment Advisory Services play a very crucial role given the LTCG tax development in the Union Budget 2018. As a retail investor or NRI investor, you can approach a known and experienced stockbroker in Mumbai to plan out your equity investments and asset allocation in the wake of these changes. The role of financial services in Mumbai has been increasing over the years in terms of guiding investors expertly to achieve their desired corpus at the end of their investment time horizon.

Added 27 days ago
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