Sunday, September 23, 2012

:: SCORES ::



How to Approach SEBI with your Complaint 

(The market regulator has initiated a centralized online system for lodging and tracking complaints. Here's how to redress your grievances.)

1. File the Complaint

For registering a complaint, access and click on the 'Complaint Registration' tab under 'Investor Corner'

2.  Enter your Details

(a) Enter your personal details and select a category among the following options
  • Listed companies/registrar & travel agents
  • Brokers/stock exchanges
  • Depository participants/depository
  • Mutual Funds
  • Other entities
  • Information to Sebi
(b) Enter specific details of the complaint in the specific category.

3. Supporting documents

Supporting documents up to 1 MB can be attached in the PDF format. In case the data to be loaded for each category is more than 1 MB, it can be sent by post to any of the Sebi offices.

4. Registration number


On filing the complaint, a unique registration number will be generated, which can be used for future correspondence. An e-mail acknowledging the complaint with the complaint registration number will also be sent to the e-mail ID entered in the complaint registration form.

Sending a reminder

If you want to send a reminder for the lodged complaint, click on 'Send Reminder' under 'Investor Corner' on the home page. Provide details like registration number, reminder details and the security code.

If you are not satisfied with the response

You can file a fresh complaint, send a mail to the officer entrusted with the complaint, take up the complaint with senior officers, or initiate legal proceedings against the entity.

Track your complaint

To check your complaint status, click on 'View Complaint Status' under 'Investor Corner' on the home page
  • Provide the complaint registration number which was allotted at the time of registration
  • Enter your password 
    • In case of online complaints, your e-mail address is your password.
    • In case of physical complaints, send to Sebi, enter the password send to you by Sebi in the acknowledgement letter.
  • On verifying the correctness of registration number, password and security code, the current status of your complaint is displayed.

How complaint is processed?

The complaint is scrutinized by Sebi  to see if the subject falls under its purview. If it does, Sebi forwards it to the concerned entity with an advice to send a written reply to the investors and file an action-taken report within 30 days.

Your complaint may not be taken up if

  • is incomplete or not specific
  • ...the allegation is not supported by documents
  • are simply offering suggestions or seeking guidance/explanation
  • want to seek explanation for non-trading or illiquidity of shares
  • are not satisfied with the trading price of shares
  • is about non-listing of shares of a private offer
  • concerns disputes arising from a private agreement with companies/intermediaries.

Points to Note

  1. A complaint that has been taken up with the company concerned can be registered on SCORES if the investor is not satisfied with the response.
  2. Unlisted companies and entities not registered with Sebi are not covered by SCORES.
  3. An investor, who is not familiar with SCORES or has no access to the website, can lodge a complaint in the physical form by mail to any Sebi office. Such complaints are scanned and uploaded in SCORES for processing.
  4. You can also call up Sebi's toll-free helpline service number for guidance
    • 1800 266 7575   OR

    • 1800 22 7575

          (The service is available in 14 languages)

Saturday, September 1, 2012

Investment Tax

How are your investments taxed

All financial instruments go through three stages -- Investment, Earning and Withdrawal. Since the tax rules vary across these phases, find  out how much tax you will have to pay on your investment.
  • PF & VPF  - This is the most common investment. The interest rates are decided by EPFO Trust. 
  • PPF - This assured return scheme is market linked, with 1 lakh annual investment limit. 
  • Insurance Policies - Budget 2012 says that for tax benefits, the cover should be 10 times the annual premium. 
  • ELSS funds - TAx-saver with the shortest lock-in period of three years may get scrapped under the DTC.
The Exempt-Exempt-Exempt model means all three stages are tax-free. You get tax deduction at the time of investment, the earnings are tax-free, as are the withdrawals.
  • Unit linked pension plans - Upto 33% of the pension corpus withdrawn on maturity is tax-free. Rest to be put in annuity. 
  • Pension policies - Annuity income is taxable as income at the normal rate applicable to the investor. 
  • NPS - Launched with much fanfare, it has not done too well. May be overhauled and improved soon.
The Exempt-Exempt-Tax regime gives tax deduction at the time of investment and the earning is tax-free, but withdrawal is taxed as income at marginal rate.
  • NSCs - These are now market linked like the PPF and available in 5 and 10 years options.
  • Tax-savings FDs - Best tax saving option for risk averse investors. Higher rates for senior citizens.
  • Senior Citizens Savings Scheme - A popular option that is market-linked, and has an investment limit of 15 lakh per person
The Exempt-Tax-Exempt arrangement offers tax deduction to investment but earning is taxed. The withdrawal is tax-free given the tax is paid out at the growth stage.
  • Stocks - If held for more than a year, no tax on capital gains. You pay 15% tax if sold before a year.
  • Equity funds - Just like stocks, there is no tax if held for more than a year. All dividends are tax-free
  • Balanced funds - Though up to 40% of portfolio can be in debt, these enjoy the same tax benefits as equity funds
  • Tax-free bonds - These bonds issued by infrastructure companies carries a low coupon rate 

No tax deduction here for the investor. He invests post-tax income but the earning and withdrawal are tax-free if the investment is held for at least one year.

  • Non Equity hybrid fund - After a year, profit from sale is taxed at a lower rate of flat 10% or 20% after indexation.
  • Debt funds -Tax-efficient way of investing in debt. After a year, profits are treated as capital gains.
  • FMPs - Similar to FDs, but profits are taxed at a lower rate. Very popular among HNIs
Here again, the investor puts in post-tax income. While there is no tax during the growth stage, the earning is taxed at the time of withdrawal.
  • Recurring deposits - Lock into high rates even if you don't have a lump sum. No TDS, so must pay tax yourself.
  • Post office MIS - Monthly income is fully taxable without any TDS. Onus is on the investor to pay tax.
  • Fixed deposits - TDS only up to 10% if interest is more than 10,000 a year. Here, too onus is on investor.
  • Bonds - Income from tax-saving bonds is taxable. Pay tax if you fall in the higher tax bracket
This is possibly the least tax-efficient regime with no tax deduction offered and earning fully taxable. With income taxed every year, there is no tax on principal at maturity.

Saturday, July 7, 2012

Wealth Tax

Wealth tax came into existence on 1st April 1957. It is termed as most significant direct tax. As per the wealth tax act, wealth tax is applicable to the following: 
  •  An individual person
  • A group of people who own a property
  • A company or organization  
  • A Hindu undivided family (HUF)
  • A representative or heir of a dead person
  • Non corporative tax payer
Wealth tax is the most neglected child of the direct taxes family. However, remember that ignoring wealth tax can lead to serious problems for a taxpayer, with the penalty ranging from 100% to 500% of the unpaid tax. In extreme cases of willful default, a taxpayer may be punished with imprisonment ranging from six months to seven years.

The laxity on the part of the government has encouraged taxpayers to ignore their wealth tax liability. Though financial assets do not invite wealth tax, real estate and gold, two favourite investment options of the rich, are included. In the past 4-5 years, crores of rupees has flowed into real estate, while gold prices have more than doubled in the past three years.

However, this is not reflected in the wealth tax collection, which has grown at a tardy pace, to say the least. However, this could soon change. A committee has been formed which has sought stricter punishment for tax evasion. The panel wants the minimum imprisonment for income tax and wealth tax evasion to be three years.

Most investors in real estate have no idea about the t ax implication of buying a second property. A second house won't attract wealth tax only if it is rented out for at least 300 days in a year. It can be a double whammy for the owner if the house is lying vacant, for he will not only have to pay tax on the notional rental income, but the value of the house will be added to his net taxable wealth. This is why savvy investors prefer to put money in commercial real estate, which does not attract wealth tax.

An increased focus on wealth tax compliance can bring in significant revenue for the government. The best part is that there cannot be any political opposition to such a move because the law already exists. All that the government needs to do is invoke it more seriously, that's it.

However there is good news in store. The original DTC had proposed to raise the threshold of assets for wealth tax to 50 crore INR and reduce the tax to 0.25%. It had also sought to bring financial assets under the tax ambit. The revised DTC has not specified the limit, but has hinted that financial assets will bot be included and that the threshold limit needs to be raised.

Till that happens, make sure you pay your wealth tax and file the return to avoid a massive from the tax.

Quick facts about wealth tax

What is Taxable ?

Wealth tax is payable if the value of the following unproductive assets exceeds 30 lakh INR on the last day of the fiscal year.
  • More than one property, if it is unoccupied
  • Gold and ornaments
  • Art and artefacts
  • Luxury cars, watches, yachts and aircraft
  • Over 50,000 INR in cash.

 How much is taxable ?

  • The tax is 1% of the value of the assets exceeding 30 lakh INR. For example: If the value of these assets adds up to 75 lakh INR, you have to pay 45,000 INR (1 % of 45 lakh) as wealth tax.
  • There is no surcharge or cess on wealth tax 

What is exempt from wealth tax ?

  • Any one residential property. Taxpayer can choose whichever property he wants to exempt
  • Commercial property
  • Financial assets (stocks, bonds, Ulips, mutual fund, gold funds and bank balance)
  • Any outstanding loan taken to purchase the asset on which wealth tax is payable.

Filing deadline and form to use

  •  Wealth tax return has to be filled by 31st July. If the assessee is liable for an audit, the last date of filling in 30th September
  • You have to use the four-page Form BA for filing the return
  • If you miss the last date, you can still file the return before the expiry of one year from the end of the assessment year

What is the penalty ?

  • 1% interest for every month of delay
  • Tax evasion invites penalty ranging from 100% to 500% of the evaded amount
  • In extreme cases, the imprisonment ranging from six months to seven years, with fine, if the wealth tax exceeds 1 lakh INR

Monday, April 30, 2012

Credit Score

It is derived from the 'accounts' and 'enquiries' sections of your Credit Information Report. Different credit agencies have different marking systems. For instance, CIBIL's scores ranges from 300 to 900 points while Equifax India's ranges from 1 to 999 points. The closer your score is to the upper limit, the better. Sometimes, one may get a score of NA or NH, meaning you're either new to the credit system or you're in the ownership category where you have access to credit but aren't responsible for paying back the loan. So lenders may hesitate to give you a loan if you don't have a credit record.

Financial Institutions check your credit score before extending you a loan. Apart from common mistakes, here are some moves that affect your credit. So beware

Bankers won't like it if you are 'credit hungry'. Applying for too many loans within a short period or having too many credit cards can go against you and may spoil your chances of getting a loan. This is because it is a sign of desperation and will have a negative impact as well. Access to multiple lines of credit, which may include unused credit cards, also impacts the score as it signals over-indebtedness.

Don't be surprised if your application is rejected if your friend did not repay a loan you stood guarantee to. Credit information bureaus classify ownership of a loan, that is, the responsibility of repaying, into four categories -- single/individual (you are solely responsible for paying), joint (you share responsibility with someone), authorised user (when you have access to credit but are responsible for paying, as in add-on credit cards) and guarantor (when you guarantee to honour the obligation if loan taker cannot repay). So if you have guaranteed a loan and it hasn't been paid on time, it will impact your score. Keep track of add-on credit cards and monitor joint accounts as the other holder's negligence can impact your access to credit.

Frequent use of full credit card limit will be a red flag for lenders. The figure appearing under Current Balances of the "Account(s)" section of your credit report helps the loan provider evaluate whether you'll be able to pay additional EMIs. A lower balance means you have a better change of repaying the loan. While high credit card spending may not necessarily be bad, an increase in the current balance on the card over time indicates a higher repayment burden and may negatively impact the score. Your repayment pattern and track records also influence the score. The payment history appears in the "Account(s)" section of your credit report. The Days Past Due, or DPD, shows how many days a payment is late that month. Lenders view anything other than zero negatively.

Things such as how old your lines of credit are and the quality of the mix can make a huge difference. Credit is categorised into secured loans (backed by collateral) and unsecured loans (not backed by collateral). Loans that create an asset, for instance a business, house are considered secured, while credit taken for consumption, such as personal loan or credit card spending, is unsecured. A high share of unsecured credit affects the customer's profile. This is because this means large payouts are due owing to the high interest rates on these loans. Therefore, chances of default are higher.

Ignoring discrepancies in credit information reports or credit card and loan repayment records may come back to haunt you later. If you spot a mistake, you can either approach the lender or a credit information company to get it rectified. However, it is better to approach the bank as a credit information company can't make any change in the report unless it gets the lender's written approval. So don't overlook on anything which you think is not right.

Though, as of now, mobile phone bill payments do not get captured in the credit information, there is a possibility of it getting included in the near future. According to the Credit Information Companies Regulation Act of 2005, telecom companies are allowed to access an individual's credit report. However, there is no provision for telecom companies sharing data with credit information companies. So do not overlook this bill so that you will be able to meet the future requirements of your credit scores if regulation do get updated. To keep this account pristine, comply with current rules and use all official channels to settle disputes rather than just refusing to pay your bill.

Sunday, February 12, 2012

Foreign Capital

In an attempt to increase overseas capital inflows and reduce the current account deficit due to higher imports, India has liberalised foreign investment in stock markets. Qualified foreign investors (QFIs) can now invest directly in Indian equities. Lets have an overview of such new feature introduction.

A QFI is an individual, an association or a group from a foreign country complaint with standards mandated by the Financial Action Task Force, an inter-government body that formulates policies to combat money laundering and terrorist financing. Foreign Institutional investors (FIIs) and foreign venture capital investments do not come under the QFI category.

An individual QFI can invest up to 5% of the paid-up capital of a listed company. Total investment by QFIs in a listed company cannot exceed 10% of its paid paid-up capital. Foreign investors will also be allowed to acquire equity shares by way of rights issue, bonus shares or equity shares on account of stock split, amalgamation, demerger or such corporate actions.

QFIs can invest only in listed Indian equities through depository participants (agents of depositories that provide accounts for holding securities in electronic format) registered with SEBI. Each investor will be allowed to open one trading account and one demat account with a depository participant but will not be allowed to open a dedicated bank account in India.

Depository participants will purchase equity at the instruction of QFIs within five working days. If a depository participant fails to execute the order within five working days, the funds would be repatriated back to the QFIs designated overseas bank. When QFIs sell their stock holding, the sale proceeds will also be repatriated to their designated banks within five working days. In addition, the depository participants wil ensure compliance with the "Know Your Customer" norms for QFIs. QFIs have already been allowed to invest in mutual funds.

The new scheme is expected to help increase the depth of the Indian market and in combating volatility beside increasing foreign inflows in the country.

Saturday, January 28, 2012

Fund Statement

Reading a Fund Statement

So you've invested in mutual fund? What is the entry/exit load on it? What is your current net asset value, or NAV? If these seems Greek to you, you clearly haven't been taking a close look at the statement that your fund house mails to you. Much like a bank account statement, this document offers all transaction details carried out within a defined time period. It is also available online and indicates account changes whenever there is a redemption, additional investment or dividend declaration.

Here's look at some of the important details in the mutual fund statement, which should be checked regularly by investors.

Investor's personal details
The name, address and phone number of the investor and joint investors (if any) are mentioned in this section. Ensure that all these details are correct and updated, and if there is any discrepancy, it should be communicated to the broker or fund house.

Adviser Name
This indicates the source through which you have invested. If you have done so through an agent, the latter's name and code will appear on the statement. However, if you have invested directly, these parts should be blank on your account statement.

Bank details
Make sure your bank's name and your account number are accurately mentioned to avoid problems while redeeming units. If you want to change your bank mandate, fill out the slip at the bottom of your account statement and submit it to your fund house or agent.

Folio and account numbers
Most mutual funds offer one folio number and several account numbers in the same folio for all investments under the same unitholder combination. This makes tracking all your investments with the same fund easier. Make sure you keep tabs on the different account numbers within the single folio.

Current cost and value
The cost indicates the amount you invested in a scheme while the current value is the latest market value of your investments as on the date the statements is generated.

PAN details
You must give the correct Permanent Account Number (PAN), irrespective of the amount invested. Check your PAN details mentioned in the account statement and ensure there are no discrepancies.

Transaction summary
This section details the type of transactions you have opted for, such as purchase, systematic investment plan (SIP) and systematic withdrawal plan (SWP). Transactions like dividend payout or reinvestment are also mentioned along with percentage or rupees per unit at which the dividend is reinvested or paid.

Transaction slip
At the bottom of the account statement, there is a transaction-cum-service request slip, which can be used for buying additional units, redeeming and switching units between schemes. The transaction slip can also be used if an investor wants to notify any change in his/her correspondence address and bank details.

The back of the account statement is also worth a careful look. It contains important notes relating to investor services, KYC norms, additional purchase, switch, and the like. A little due diligence and careful monitoring by you can ensure the safety of your investment.