Historical Rise in Minimum Support Price of Indian Agricultural Products

June 19, 2017 · Filed Under business · Comment 

The recent months have seen a sharp decline in farm output prices on the back of increased farm output. This in turn has resulted in large-scale protests by farmers, which has forced various state governments to announce farm-loan waiver schemes. We note that the recent decline in inflation is largely due to sharp decline in prices of certain food items.

FY2007-13 saw large increases in minimum support prices (MSP) of agricultural products Minimum support prices for crop year, March fiscal year-ends, 2007-17 (Rs/100 kgs)

The Following Chart Read more

Economics of POS Vs ATM in India for Banks

June 10, 2017 · Filed Under bank · Comment 

India is still under-invested in both ATMs and POS [Credit Card Point of Sale systems]. The ATM industry, in their view, has enormous potential to grow in the medium term. This is evidenced even in countries where digital payment has shown higher acceptance rates. We have the debit card/ATM card population currently.

The economics of POS business favors issuing banks as compared to acquisition (Customer) banks. This is primarily because most of the MDR [Merchant Discount Rate] fees are taken by the issuing bank which results in a skewed investment scenario.

For example, the competition’s response to Read more

New Income Tax Cost Inflation Index for FY 2017-18

February 23, 2017 · Filed Under business · 3 Comments 

The Finance minister in his Budget Speech on Feb-01-2017, revised the Cost Inflation Index used by the Indian Income Tax Department to calculate Long Term Capital Gains Tax with Indexation benefit. The revision was shift in base year from 1981 to 2001. What does this mean ? This means any “asset” as defined by the Indian Income Tax department and which comes under the purview of Long Term Capital Gain [For Example – Real Estate] and if acquired before 2001, then for the purpose of determining the Indexed Cost of Acquisition, the base year henceforth will be 2001.

Let us illustrate with an example. Suppose you bought a Plot of Land in 1980 for Rs 10,000. You plan Read more

NHAI / REC Reduce Interest Rates on 54EC Capital Gain Tax Exemption Bonds

November 29, 2016 · Filed Under bank · Comment 

Breaking NewsKeeping in mind the reducing trend in interest rates on FDs and other fixed income securities after the Demonetisation of Rs 500 and Rs 1,000 notes by the most respected Government of India, both REC and NHAI have decided to reduce the rate of interest for 54EC Capital Gain Tax Exemption bonds wef 01.12.2016. The new rate of interest for these bonds will be 5.25 % per annum. The amount invested in REC 54EC Capital Gain Tax Exemption Bonds where the amount of investment is credited in REC’s Collection Accounts on or after 1st December, 2016 and where deemed date of allotment for the bonds is 31st December, 2016 or a later date, the coupon/ interest rate will be 5.25 % per annum.

Capital Gains Bond After Real Estate / Property Sale
These Capital Gains Bonds are very popular with Indians after selling their Real Estate / Property Read more

Rs 500 + Rs 1000 Currency Ban – Modi Corners Corrupt Congress Politicians / Bureaucrats

November 10, 2016 · Filed Under bank · Comment 

Discontinuing usage of either of Rs 500 or Rs 1000 notes can significantly increase the physical risks of holding black money [What we have seen is, weight of Rs 1 Crore in the form of hard cash rises from 12kgs to 100kgs if the denomination of the sum is changed from 1,000-Rupee notes to 100-Rupee notes]. In line with these expectations, the Government banned Rs500 and Rs1,000 notes. Modi-led NDA Government is committed to the crackdown on black money.

The Key takeaways from this call of demonetizing existing currency notes – (1) this move reflects the NDA’s strong resolve to curb Read more

India all Set to Migrate to 4 Slab GST from April 2017

November 4, 2016 · Filed Under business · Comment 

The GST Council agreed on the crucial GST tax rates, which were broadly in line with the structures discussed at the October meeting. The April 1, 2017 deadline for its implementation seems achievable now.

The GST Council has agreed on GST tax slabs for various goods and services: (1) 0% for essential goods and services including food items, education, and healthcare, (2) 5% as threshold rate for goods such as textiles, (3) 12% as a lower rate for goods and services, (4) 18% as the standard GST rate, (5) 28% as higher rate for luxury items including consumer durables and some Read more

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