Waiver from filing returns to benefit 85 lakh tax payers

The idea behind exempting persons earning less than Rs5 lakh a year from filing I-T returns is that in cases where there are no other sources of income, filing of a return is a duplication of existing information

New Delhi: As many as 85 lakh tax payers will benefit from the government’s decision to exempt persons earning less than Rs5 lakh a year from filing income tax (I-T) returns, reports PTI quoting a finance ministry official.

“The decision, which will come into effect from 1 June 2011, will reduce the compliance burden about 85 lakh small taxpayers,” he said.

As per the memorandum to the Finance Bill 2011, the government will issue a notification exempting the ‘classes of persons’ from the requirement of furnishing income tax returns.

Tax payers with income of less than Rs5 lakh will not have to file tax returns for the assessment year 2011-12 and a notification in this regard is likely next month, the official said.

In case such a salary earner has income from other sources like dividend, interest, etc and does not want to file returns, he will have to disclose such income to his employer for tax deduction.

However, if such an assesse wants to claim a refund, he will have to file the I-T return.

The Form 16 issued to salaried employees will be treated as Income Tax Return.

The idea behind the move is that in cases where there are no other sources of income, filing of a return is a duplication of existing information.


Beginning of a global meltdown, or a pause that refreshes?

The crash in silver and some other commodities highlights the dilemma of every investor in a potential bubble. Do you see the market heading for the cliff and sit out?  Or, do you believe the growth forecasts and stay on board?

Momentum is a prime ingredient of any investment decision, but how do you know when it is time to get off the train before it goes off a cliff? Many silver traders received a harsh lesson when they ran out of greater fools. Recently we have seen run-ups in a number of other commodities and markets. Have these markets run out of momentum? Is this the beginning of a global meltdown or is this the pause that refreshes?

The main point about silver was that its run and fall, despite the commentators, had little to do with economics. The 26% (and counting) decline was not triggered by any major change in supply, demand for the commodity or change in the global political or economic situation. It was triggered by a rise in the Chicago Mercantile Exchange (Comex) margin requirements on silver futures four times in two weeks. But this is not that unusual. Silver can swing 2% in a day and margin requirements must go up when prices go up. So the Comex damping volatility was simply doing its job.

Other reasons given for the fall have to do with the failure of the market to breach the psychologically important $50, or simple profit-taking. The apologists have plenty of reasons why the collapse should not have happened, such as increased industrial demand and tight supply, although both of these things existed before the current run-up. If you are really desperate, you can always cite the declining dollar and Chinese growth. Although both assumptions are considered religious dogma among financial analysts and economists, they are still assumptions open to question.

The reality is that it was a bubble and it was time. Silver had risen 57% in 2011 alone and the turnover of the leading vehicle for US retail speculation, the iShares Silver Trust, was up over 10 times in April. Certainly these are extremes, and financial historians will no doubt tell us that all the signals were there, but the speculators simply didn’t read them. But is there something more here, and what does silver’s collapse tells us about potential bubbles in other frothy markets?

Two famous stars of investing have radically different views on the subject. One, John Paulson, the head of hedge-fund giant Paulson & Co, has kept his portfolio of gold investments. The other, the legendary George Soros, is head of Soros Fund Management, one of the biggest hedge-fund firms in the world that has sold much of its gold and silver investments over the past month. The reasons for this diametrically opposed strategy represents the Apollonian (rational) versus Dionysian (emotional) view of investing.

Mr Paulson appears to be the more rational investor. Paulson has most of his personal wealth in gold-denominated funds and believes that gold could climb as high as $4,000 an ounce over the next three to five years, a courageous view after this week’s sell-off. Mr Paulson’s view is very logical and rational. He sees gold as a hedge against currency devaluation. With various central banks in developing countries printing money as never before, any good economist, and Mr Paulson uses the best, would assume that paper money would depreciate against hard assets such as gold. It would also be rational to assume that such depreciation would be reflected in the market. In other words, the markets accurately reflect economic reality and gold would appreciate substantially against the dollar.

Mr Soros also has access to the best economists. But Mr Soros does not necessarily believe that markets reflect economic truth. He believes in what he calls ‘reflexivity’. Reflexivity is a special condition that can arise due to excess leverage and the trend-following tendency of traders. In these circumstances, which may have occurred with metals and other commodities, the investor bias grows and creates a bubble. So according to Mr Soros, the market is often irrational and completely wrong.

What is interesting is that both investors followed the trend, using momentum to make money. This is despite Mr Soros’s prediction last September that gold was the “ultimate bubble.” Mr Soros could have followed his reason and not invested in what he knew was a bubble. He could have stayed out or shorted the market, but he still followed the herd to his profit as did Mr Paulson.
All of which leads to a dilemma for investors. Assume it is April 1999. The dot.com fury is beginning to escalate. Do you see that the market is heading for a cliff and sit it out? Do you believe the forecasts of an ever-growing internet and stay on board. After all, the market did recover 20% by August 2000 after its first bottom in May. Or do you realize that the market is irrational and get on board, but feel confident you can leave before the cliff? Or be a contrarian and short the market? Perhaps the lesson is that there is nothing more rational than understanding the irrational.

(The writer is president of Emerging Market Strategies and can be contacted at [email protected]  or [email protected].)




6 years ago

"there is nothing more rational than understanding the irrational"

Everything is hidden in the above words.

Moneylife Foundation makes its first Capital appearance with an ‘Investor, Empower Yourself’ seminar

A large number of people attended the seminar held at New Gurgaon—there was strong participation from other parts of the NCR too, along with attendees from Allahabad, Ludhiana and Chandigarh and other cities in the northern region

Moneylife Foundation had its first outing beyond Maharashtra with an ‘Investor, Empower Yourself’ seminar, which was held at the lush Town & Country Club at New Gurgaon, in the National Capital Region (NCR), on Saturday, 7th May. The event was held with the support of the Indiabulls Group.

It was a full-day event, with over 300 people participating. The venue was fully packed—despite placing additional chairs, some people had to be accommodated as standees.

The event was a great success, with the support of an eager team of Indiabulls’ senior personnel, led by the CEO of Indiabulls Financial Services Ltd, Gagan Banga.
A large number of people had come from Delhi as well as other parts of the NCR; a few attendees were from far-off places like Allahabad, Ludhiana and Chandigarh and other cities in the region too.

Moneylife Foundation has held a number of seminars to promote financial literacy and promote advocacy. These events have been held at the Moneylife Knowledge Centre in Mumbai, and have also been conducted in various cities across Maharashtra.

This foray was the first in the NCR, and this is the start of many more such events to follow. Demand has been overwhelming—and we are also constantly inundated by requests from citizens all over India to hold events in their cities.

In the event held at Gurgaon, there were suggestions that future events like these be held in larger auditoriums and also be telecast on video screens as well as on the Internet for those who cannot make it to the venues.

There is no dearth of people who want to know more about how to invest well and invest safely in the northern part of the country—as is the case in other Indian regions.

There was also an opinion expressed that trying to conduct these seminars in regional languages as well as in Hindi might be a good idea too.
Sucheta Dalal, Trustee, Moneylife Foundation and Managing Editor, Moneylife, and Debashis Basu, Trustee, Moneylife Foundation and Editor, Moneylife, and Sachin Chaudhary, Whole Time Director, Indiabulls Housing Finance, helped the audience to understand how to become an aware and empowered investor.

Moneylife Foundation has completed 15 months of spreading financial literacy, and guiding & empowering investors with pro-customer advocacy. The Foundation has hosted around 49 speakers and has conducted 61 events. Currently, more than 5,000 people are members of the Foundation. 
The most heartening thing to note in this seminar held in Gurgaon was that a number of people present were already investment-savvy and financially literate—and they posted a number of intelligent questions to the panel. And the audience came away satisfied.
Like we said, this was the Foundation’s first foray outside Maharashtra; stay tuned for more events that we are planning across India.




6 years ago

TV channels like ETNow/CNBC/BloombergUTV will also be interested in telecast of events like these, either live or 30 minutes of highlights.

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