Charity vs Spending; where Government get bigger tax

Sheila donated Rs.5,000 to PM/CM Relief Fund.

On the other hand, Paandu bought two bottles whisky bottle worth Rs 5,000/-

The #Question is who contributed more to the #growth of our country ?

01. On the Rs 5000 Sheila donated, she got a 30% #tax_rebate. Therefore, she actually landed up earning back Rs 1,500/-, In other words, by donating Rs 5,000 she made a #net contribution of just Rs 3,500/- to the country. 

02. On Alcohol, the total taxes (excise and GST) added up to approximately 72% of the MRP. So when Paandu paid Rs 5000,/-, Rs 3600/- went to the state exchequer... Against 3500 rs from Sheila

...and 48 pegs from two 750 ml whisky bottle 🍷🍷. And the chakna , peanuts, soda and other bites he consumed worth Rs 5000 along with whisky contributed about 1000 Rs more to government. That makes it 4600 vs 3500.

Therefore, not only did Paandu contribute more, he created jobs at the Distillery, their suppliers of labels, bottles, caps, machinery , farms , Snack companies, jobs at the Marketing Company, jobs at the Wine Shop , Retail shops selling chakna, snacks and moreover he was in high spirits doing so, 

.... while Sheila doesn't even know where her money went !!

Think of it... 

Next time, think before ‘you’ serve your Nation !!!

Be a responsible citizen!!  

In #economic_terms this is called #Velocity of Money. The faster you consume 🍸🍹🥂 the more is produced. 

#Labour get employment. #Manufacturer produces products. Consumer enjoys 🍺🍻🥂🥃🍸🍹🍾. 

#Economy grows and Markets rockets. And it is Happy New Year every day. Cheers!! 

The next time you keep the ₹ 50/- back in your pocket, you are a liability to the economy. Tip the waiter, your hairdresser or your petrol pump attendant and keep rotating Economy 😂😂😂📈📈

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Getting Wealthy vs Staying Wealthy

This weekend brings a valued book reading and sharing learning from The Psychology of Money, few bullet points:

#Good investing is not necessarily about making good decisions, It’s about consistently not screwing up.

#There are a million ways to get wealthy, and plenty of books on how to do so…..But there’s only one way to stay wealthy: some combination of frugality and paranoia.

Even if “wealthy” is not a word you’d apply to yourself, the lessons from that observation apply to everyone, at all income levels.

#Getting money is one thing………#Keeping it is another.

#If I had to summarize money success in a single word it would be #Survival

#Capitalism is hard. But part of the reason this happens is because getting money and keeping money are two different skills.

#Getting money requires taking risks, being optimistic, and putting yourself out there.

But #Keeping money requires the opposite of taking risk. It requires #humility, and fear that what you’ve made can be taken away from you just as fast. It requires frugality and an acceptance that at least some of what you’ve made is #attributable to #luck, so past success can’t be relied upon to repeat indefinitely.

#Michael Moritz, the billionaire head of Sequoia Capital, was asked by Charlie Rose why Sequoia was so successful. Moritz mentioned, We assume that tomorrow won’t be like yesterday. We can’t afford to rest on our laurels. We can’t be complacent. We can’t assume that yesterday’s success translates into #tomorrow’s good fortune.

Not “growth” or “brains” or “insight.” The ability to stick around for a long time, without wiping out or being forced to give up, is what makes the biggest difference. This should be the cornerstone of your strategy, whether it’s in investing or your #career or a #business you own.

#Compounding only works if you can give an asset years and years to grow. It’s like planting oak trees: A year of growth will never show much progress, 10 years can make a meaningful difference, and 50 years can create something absolutely #extraordinary.

#But getting and keeping that #extraordinary growth requires surviving all the unpredictable ups and downs that everyone inevitably experiences over time.

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Why Willful Defaulters are laughing away from Banks ??

New RBI data shows wilful defaulters are laughing all the way away from banks

The saying goes if you owe the bank $100 that is your problem; if you owe the bank $100 million, that's the bank's problem.

Banks put all their might to get the money back from retail borrowers if they default on a car or an auto loan. Delay one instalment and banks come knocking on the door. They even resort to naming and shaming tactics, using third parties. The tactics seem to work in most cases and the borrower pays back.

But it is an entirely different game when it comes to corporate loan default, which is at a much bigger scale. Banks seem to forget their drill when faced with powerful defaulters, who have a battery of lawyers which drag the lenders from court to court for years on end. And in the end, banks have little to show by way of recovery.

The numbers game...Ugly numbers are already popping up. The Reserve Bank of India data, shared with Parliament, on December 19 shows that the country’s top 50 "wilful defaulters" owed Rs 92,570 crore to Indian banks as of March 31, 2022.

Wilful defaulters are those borrowers who have the means to pay back the banks but wouldn't do so. Banks ostracise such defaulters from the financial system. Gitanjali Gems, promoted by fugitive economic offender Mehul Choksi, tops the list with Rs 7,848 crore, followed by Era Infra, an exposure of Rs 5,879 crore and Rei Agro which has defaulted on loans worth Rs 4,803 crore.

Choksi, said to be an Antiguan citizen now, is beyond the reach of Indian law. The government and its several law enforcement agencies have, so far, failed to lay hands on any of the high-profile bank defaulters, which include former liquor baron Vijay Mallya, Winsome Diamonds & Jewellery promoter Jatin Mehta and Choksi’s nephew Nirav Modi, who is fighting his extradition from the UK.

But it’s not just about wilful defaults. Much of the Rs 10 lakh crore loan that banks wrote off in the last five financial years belongs to corporates.

Of the total loan write-off, banks could recover only a fraction—around Rs one lakh crore. The remaining Rs 9 lakh crore is as good as gone, though technically the process of recovery is always on.

It’s our money

Every rupee that a bank writes off has to be provided for—called provisioning in the bankspeak.

Banks' profitability thus takes a hit. Who are the real losers? Common shareholders and depositors. Banks are supposed to be the guardians of public money. They raise deposits from small and big depositors and use these to lend to businesses.

So whenever a loan is not repaid, it’s the shareholder of the banks (value erosion) and the depositors (as the bank turns weaker in terms of capital and profitability) who suffer.

The government has, time and again, reiterated its intent to clamp down on wilful defaulters.

Coordinated action by the government, RBI and other sector regulators is critical to tackling wilful defaulters as seen in the Kingfisher case.

Banks are sitting ducks for cronies and crooks. In most cases, banks haven’t made meaningful progress in the recovery from deep-pocketed and well-connected promoters. At the end of a long legal process, the value of underlying assets deteriorates and banks are left empty-handed.

The government’s intervention to speed up the recovery process is equally critical since each penny it feeds to state-run banks from the exchequer is public money.

A lot of ground needs to be covered and quickly, as the loan write-off and wilful defaulter numbers show. Do the government and the RBI have the will to clamp down on wilful defaulters?

(extracts of newspapers)

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Is Paying Dividend, a Healthy Reinvestment favouring Shareholders

 

Paying dividend may not always be the best option. Many investors are very serious about dividends and they consider receiving Dividends is very important part of their Investing. They invest only in companies that have a good dividend history and avoid other that are not generous enough with their dividends payouts. But a high dividend-pay-out ratio may not always be the best take for investors. A healthy dividend pay-out is often lapped up by markets. The stock gets a thumps up and all parties, the company and its shareholders are happy about the outcome. But dividend largesse may not always be in the favour of investors value creation mechanism. Companies could deploy that cash into existing growth opportunities to remain competitive and best in the game. According to our investing matrix, a company can utilise its cash in four ways.

First, Reinvest the proceeds back into the business

Second, Go in for related acquisition

Third, Repurchase shares and…

Fourth, finally pay out dividends

See how paying no dividend could impact the fortunes of companies; If Infosys had paid no dividends and simply repurchased shares, or developed new software and IT centres, it would have created more value for its Stakeholders, since ROI of their funds / business management is much higher that money in the hands of shareholders. Since investors will use their dividend money to buy other shares, or to buy bonds or to make bank FDR or spending. Other than spending, all other modes of reinvestment by shareholders will be lower than using that money by companies for betterment of their businesses. This concept that Utilising cash for other than dividends, is not the standard thing that is taught in the corporate finance department of our major universities. Why do we debate negatively, rather than applying this simple idea to make business stronger with internal accruals. Fund manager’s preference for no dividends do’not mean that they disapprove dividends that they gets from their investments…. but they vote in favour of more deeper value creation for shareholders.

The one thing I will tell you is the worst investment you can have is Cash. Everybody is talking about cash being king and all that sort of things. Cash is going to be come worthless over time, but good businesses are going to become worth more and costlier over time.

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Investment with Moats Risk Management

 

While investing in equity, How to safeguard a Good story suddenly going bad, leaving no profitable exit…. lets choose companies with #unbreachable_moats. Capital flows to the point of maximum returns. When a company delivered outsized profits, its success attracts #competition. Other entrepreneurs enter the field with their own setup, often with #lower_priced_offerings, and take away the #first_movers market share. Competition forces the leader to cut prices and this whittles down his margins, impacting their bottom line directly.

Thus, over the time, the profits of most companies tend to regress to the mean. Legendry investors liked to invest in, the companies with big moat surrounding their business model and brand equity. Wealth creators in equity market guide big moats consists of following #matrix of

#early mover advantage

#high switching costs

#intangible assets

#network effect

# economies of scale.

If investors choose a company based on these moats, and do keep a close watch to ensure that the stocks script unfolds along the expected lines. One reason is that over the time lot of moats got breached, so timely moat tracking is must to keep value alive in equity. Next is to keep a watch on competitive advantage, other things could go wrong, say the management could slip up on execution, thus when you invest in a company with a visible economic advantage, you still cannot afford to let your guards down and let bottom line screwed up unknowingly. Its like building your investment castle, surrounded with big moats, having crocodiles within to create real value for your portfolio. One build, keep #tracking developments on the matrix of five, as mentioned above.

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Value Investing v/s Growth Investing

 #Value_Investing vs. #Growth_Investing: What is Right for You????

There's no right or wrong when it comes to investing methods. Let's take a #closer_look at these two stock investment techniques, examining their advantages and disadvantages.

What is #Value_Investing?

A value investor seeks companies that are undervalued and invest in them. Typically, these businesses are undervalued and progress at a snail's pace. They do, however, have strong fundamentals. These investors believe that the market will quickly understand the value, and the stock's share price would 'catch up,' resulting in substantial gains.

If we look at metrics, value stocks have a lower PE ratio than other stocks, making them attractive to value investors.

The low PE ratio can be because of multiple factors such as economic conditions, consumer behaviour, and the industry's cyclical nature. During market highs and lows, value equities often have reduced price volatility.

#Features of Value Stocks

The stock price of value stocks is lower than the general market. The premise behind value investing is that if other investors recognize the inherent value of a company, the stock will rise in price.

It carries a lower risk than the overall market.

Value stocks may be better suited to long-term investors because they take longer to turn around.

#What is Growth Investing?

#growth_investor seeks companies with a higher-than-average growth rate. Revenues, balance sheets, cash flows, and profitability all reflect consistent and substantial growth. Growth stocks can be large-cap, mid-cap and small-cap stocks. These companies have new products, services, and prices that beat their competitors.

Growth stocks have a sound track record of profit growth and are projected to continue with this trend in the foreseeable future. This steady rate of growth is essential for attracting potential investors. Furthermore, because of their greater PE ratio, these stocks are more 'expensive' than other stocks. It is because investors are willing to pay a higher price for these equities than they are currently earning. After all, they believe future earnings will justify the price.

#Features of Growth stocks

The price of the stocks is higher than the average market. Investors are willing to pay high PE multiples hoping to sell the company at even greater prices as they grow.

These stocks have higher earnings growth. While some companies' earnings may suffer during periods of slower economic recovery, growing companies may be able to maintain high earnings growth regardless of economic conditions.

Growth stocks may be more #volatile than the broader market.

What Are the #Differences Between Growth and Value Stocks?

It's important to think about how long it took and how much risk was involved in getting the results you want when comparing the performance of growth and value stocks.

Because they are frequently found among larger, more established companies, value stocks are at least theoretically regarded as having a lower level of risk and volatility. Even if they don't return to the analyst or investor's target price, they may still provide some capital gain, and these companies frequently pay dividends.

On the other hand, growth stocks typically do not pay #dividends and instead reinvest retained earnings to help the firm grow. Growth stocks have a #higher #risk of losing money for investors, especially if the company fails to meet growth projections.

For example, a company with a hot new product may have its stock price drop if the product is a failure or has design defects that prevent it from functioning correctly. Growth stocks, in general, offer the greatest potential profit while also posing the most risk to investors.

#Investor's_Matrix

So, we can conclude that growth stocks can outperform when #interest_rates are down, and company earnings are growing.

They may do well when the market recovers, but #value_stocks are more inclined to underperform in a long-term bull market.

Importance of Digital Literacy in Education & Economy

Digital literacy is the ability to learn, understand, and adapt to technology-inclined changes in a constantly evolving digital world. The pandemic has re-emphasized the importance of being equipped with the right skill set to efficiently use technology to sustain and even preserve the “normalcy” of our day-to-day lives. The idea is to have in place a system so resilient that, despite severe disruptions, life can carry on without having to come to a screeching halt. Today, digital literacy is just as important as any other subject that children and young adults are taught at educational establishments and could even be leveraged as a teaching platform in itself.

The future has enormous potential to be transformed into a digital world; in fact, we are already witnessing a technological revolution. From ordering medicines to delivering shipments using drones, the future is set to be one where digital solutions are going to be able to cater to a myriad of requirements. The youth of today should be educated and well-versed in tech-enabled solutions as it is going to be their future. Industries across verticals have already begun adopting automated solutions that reflect a strong impact on numerous facets of their business, both internal and external. Tech will continue to govern numerous facets of our lives, from becoming a medium of teaching in itself to adopting digital solutions that provide better career and life prospects. Going forward, digital literacy is going to be an imperative aspect of our education system.

Companies which are consistently been investing in and adapting to new technology, which includes redesigning ERP to a microservices-based design and launching future-ready solutions. The intent is to make sure that decisions are based on data and not just instinct. Deploying ML also enables us to drive operational efficiencies through optimised routing, address correction, and also aids in operations by predicting volumes and manpower requirements. We keep exploring new avenues and areas where we could make use of AI and ML to impact operations and drive efficiency and optimization.

How the youth can be digitally empowered, what kind of exposure and engagement opportunities in the educational curriculum can educational institutes implement to raise the interest of youths to up-scale their digital skills, and should it become a must for schools, colleges, and other educational institutes to conduct workshops or crash-courses programmes to drive the importance of technology for businesses ???

Teaching and learning is a two-way street. The future necessitates individuals who can remain resilient by adapting to the needs of the hour efficiently. Therefore, schools and colleges must start building a technologically inclined foundation for students to help them adapt better to the world of tomorrow. The in-school curriculum must be tailored to include programmes that induct individuals into adopting tech solutions; this in turn will help them leverage their strengths to do more rewarding tasks. Currently, some institutes have an IT component as a pre-requisite course. However, the level of depth with which the subject is being taught needs to penetrate much further to truly make an impact. Courses to familiarise children with such subjects can also be introduced at an earlier stage with a much simpler explanation provided. We all begin school by learning the alphabet in order to speak fluently in any language; technology and automation should also be considered a language, allowing children to learn the basics, setting up a strong foundation for them and then banking on it to further increase their knowledge and agility in the long-run.

Having said that, schools and educational institutes can only do so much. Growth can only be witnessed if the individual is also willing to learn and invest well in themselves by looking online, finding the right courses, and actively working towards the pursuit of When asked what advice as an IT leader would he give to the youth considering their career in the technology industry, what should they know about the industry before starting their career, and what challenges they could face and how do they overcome the challenges, he said, to anyone looking to begin their careers in information technology or any of its sister streams, my only insight on this front is: opportunities and more opportunities! The industry is growing at an exponential pace, and the opportunity for career growth is optimal. Especially in a post-pandemic world, the significance of the industry has been propelled to much greater heights and shows immense promise. My only advice would be to grasp every opportunity coming your way and consistently invest in updating your industry knowledge.

Children of the present and in the future too, have and will grow up alongside technological leaps. Having said that, networking across industries and age groups will also be incredibly important. While technology and digitalization are the future of tomorrow, it is crucial to not entirely eliminate the element of human touch while interacting with a customer. Challenges on this front could arise. However, leveraging the insight of your seniors and curating solutions that are a combination of artificial and augmented intelligence is the best way forward to negate those challenges.

Getting introduced to learning more about industries and businesses early on is also a very important aspect of bridging the learning curve. This will assist students in connecting theory to real life and comprehending the impact of technology on actual business. Mentors also play an important role in guiding youth to take the right steps to achieve their goals; their experience and wisdom enrich one’s learning.

Understanding design concepts is another important step in this journey, and the earlier one begins, the better. Mathematics and physics are also important subjects to master, particularly for engineering, AI/ML, and analytics.Understanding the concepts in detail can help develop better solutions for businesses and customers in the future.

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Saving Economy v/s Spending Economy; which is better……

Indians wastefully save…. Ask them to spend, on imported cars and, seriously, even on cosmetics!  This will put India on a growth curve. This is one of the reason for MNC's coming down to India, seeing the consumer spending. Does it not look true, with our traditional thought, let’s examine the same with global facts…

The Japanese save a lot.  They do not spend much.  Also, Japan exports far more than it imports. It has an annual trade surplus of over US$100 billion. Yet the Japanese economy is considered weak, even collapsing.

Americans spend a lot and save very little. Also United States of America (USA) imports more than it exports.  USA has an annual trade deficit of over $400 billion. Yet, the USA economy is considered strong and expected to get stronger.

But where do Americans get money to spend? 

They borrow from other countries like Japan, China and even India. Virtually others of the world have to save for the Americans to spend.  Global savings are mostly invested in USA, in dollars.

India itself keeps its foreign currency assets of over $50 billion in US securities.  China has sunk over $1.1 trillion in US securities.  Japan's stakes in US securities is in trillions.

RESULT :

The USA has taken over $5 trillion from the world.   

So, as the world saves for the USA - It is the Americans who are spending freely.   

Today, to keep the USA consumption going, that is for the USA economy to work, other countries have to remit $180 billion every quarter to the USA, which is $2 billion a day, to the USA!

A Chinese economist asked a neat question. Who has invested more, USA in China, or China in USA?   

The US has invested in China less than half of what China has invested in the USA.

The same is the case with India.  India has invested over $50 billion in the US.   

But the US has invested less than $20 billion in India.

Why is the world after USA?

The secret lies in American spending, that they hardly save for.  In fact they use their credit cards to spend their future income.  That the USA spends is what makes it attractive to export to the USA.  So USA imports more than what it exports year after year.

The result is…..The world is dependent on USA consumption for its growth.  By its deepening culture of consumption, the USA has habituated the world to feed on USA consumption. But as the USA needs money to finance its consumption, the world provides the money.

It is like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop.  If the customer will not buy, the shop won't have business, unless the shopkeeper funds him. The US is like the lucky customer….and the world is like the helpless shopkeeper financier.

Who is America's biggest shopkeeper financier? Japan and China of course.  Yet Japan is regarded as weak economically.  Modern economists complain that Japanese do not spend, so they do not grow.  To force the Japanese to spend, the Japanese government exerted itself, reduced the savings interest rates to almost zero, even charged savers for keeping their money in the bank.  Still the Japanese did not spend (habits don't change, even with taxes, do they?).  Their traditional postal savings alone has over $1.2 trillion.  Thus, savings, far from being the strength of Japan, has become its pain.

CONCLUSION: That a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend.

This is a very Interesting article written by an Economist about the world economy. Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

The Power of Money & Happiness Index

#Down_to_earth_&_very_practical_approach_to_happiness_with_Money

(Life experience, as written by a #youngest_billionaire at 26 yrs.)

Some of you may already know that I travel around the world pretty frequently, having to visit and conduct meets at my offices in Malaysia , Indonesia , Thailand and China. I am in the airport almost every other week so I get to bump into many people who have read my books.

Recently, someone came up to me on a plane to KL and looked rather shocked. He asked, 'How come a millionaire like you is traveling economy?' My reply was, 'That's why I am a millionaire. ' He still looked pretty confused.

This again confirms that greatest lie ever told about wealth (which I wrote about in my latest book 'Secrets of Self-Made Millionaires').

#Many people have been brainwashed to think that millionaires have to wear Gucci, Hugo Boss, Rolex, and sit on first class in air travel. This is why so many people never become rich #because the moment they earn more money, they think that it is only natural that they spend more, putting them back to square one.

#The truth is that most self-made millionaires are frugal and only spend on what is necessary and of value. That is why they are able to accumulate and multiply their wealth so much faster.

Over the last 7 years, I have saved about 80% of my income while today I save only about 60% (because I have my wife, mother in law, 2 maids, 2 kids, etc. to support). Still, it is way above most people who save 10% of their income (if they are lucky).

I refuse to buy a first class ticket or to buy a $300 shirt because I think that it is a complete waste of money. #However, I happily pay $1,300 to send my 2-year old daughter to Julia Gabriel Speech and Drama without thinking twice.

When I joined the YEO, a few years back (YEO is an exclusive club open to those who are under 40 and make over $1m a year in their own business), I discovered that those who were self-made thought like me. Many of them with net worth well over $5 m, #travelled economy class and some even drove Toyotas and Nissans, not Audis, Mercs, BMWs..

I noticed that it was only those who never had to work hard to build their own wealth (there were also a few ministers' and tycoons' sons in the club) who spent like there was no tomorrow. Somehow, #when you did not have to build everything from scratch, you do not really value money. #This is precisely the reason why a family's wealth (no matter how much) rarely lasts past the third generation.

#Thank_God_my_rich_dad foresaw this terrible possibility and refused to give me a cent to start my business.

Then some people ask me, 'What is the point in making so much money if you don't enjoy it?' 

#The thing is that I don't really find happiness in buying branded clothes, jewellery or sitting first class. Even if buying something makes me happy it is only for a while, it does not last.

#Material happiness never lasts, it just gives you a quick fix. After a while you feel lousy again and have to buy the next thing which you think will make you happy. I always think that if you need material things to make you happy, then you live a pretty sad and unfulfilled life..

#Instead, What makes me happy is........when I see my children laughing and playing and learning so fast. 

What makes me happy is when I see my companies and teams reaching more and more people every year in so many more countries.

What makes me really happy is when I read all the emails from people touched and inspired someone's life.

What makes me really happy is reading all your wonderful posts about how this blog is inspiring you. #This_happiness_makes me feel really good for a long time, much much more than what a Rolex would do for me.

I think the point I want to put across is that #happiness_must_come_from doing your life's work (be it teaching, building homes, designing, trading, winning tournaments etc.) and the money that comes is only a by-product.

#keep_sharing_this_with the children, and make them read this article, every year to follow....

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

USD v/s Rouble.... bigger trouble matrix for EU and favourable for India

https://www.linkedin.com/posts/yogesh-birla-323821229_if-the-eu-refuses-to-pay-gas-in-roubles-activity-6915636815701921792-5L-5?utm_source=linkedin_share&utm_medium=android_app

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Indian Women in Saving and Investment Economy

One fine day, I was asked a perplexing question,

Why do Indian women play no role in savings and investments ?????

I replied it's not true and following will be sufficient enough to prove my views :-

Women in their inimitable manner, have played an important role on the savings front in Indian households. This is a popular misconception, because women's investment choices are possibly more traditional. Being wired differently than men, women place great importance on factors like safety and tangibility, which amply reflect in their saving & investing preferences.

##GOLD, most of the yellow metals in Indian homes is purchased and owned by women. Even the gold inherited, reflects women's choices, rooted in our society since time inmemorial. No wonder, how Indian household own enough gold to meet America's requirement for next 100 years. You will notice the emotive appeal of every gold loan advertisement, is always directed towards a female gender. This asset has helped finance and mushroom many small and medium businesses across the country. These precious assets are powerful hedging instrument that women safeguard for helping economy in business.

##PROPERTY, DIAMONDS, same is the case with property, diamonds, art and collectibles, which are investable assets of measurable value. The likes of Cryptos / Bitcoins have a long way to go before they can earn a ladies trust as lifetime asset creation.

##FIXED INCOME INSTRUMENTS, when it comes to fixed income, I bet most of the post office deposits and Kisan Vikas Patra instruments are driven by women savings.

##CASH is actually queen !! Women are adept at best cash management. All will agree that during demonetisation in India, most cash was deposited by the woman members of the family.

##SHARES, coming to Equities, there is a big difference between low participation and no participation by women. But this too is changing.....It is heartening to note that indian study found that proportion of women equity investors too have grown from 16 % to 24% in just last two years in India stock markets.

##INTANGIBLE ASSETS, last but not the least are the intangible assets. Our little kids are the most precious assets to us. Need not to be mentioned, who plays the pivotal role in nurturing our future generations for individual, or for the nation.

Is there a need for more equal opportunity ?? 

Yes, But no one can deny the immeasurable role women play in our finances, saving economy and our overall life.

HAPPY WOMEN'S DAY !!

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

CryptoCurrency- Legality & Taxation in India – Budget 2022

It’s still a yaksh question, Why Taxation of Virtual Digital Assets (VDA) doesnot make it Legal in India ? 

Trading of crypto currency, NFT and other virtual digital assets (VDA) is rising on a rapid pace. The tax proposals by the Budget 2022 will achieve some level of certainty for the Income Tax Calculation. However legality of such transactions are yet to be blessed by the Indian Government. Taxation of VDA is being clarified by inserting section 115BBH in the Income Tax Act.

HIGHLIGHTS:

--Income from sale of VDA, such as CryptoCurrency, NFT etc would be taxed at base rate of 30% in India.

--No other expenses would be allowed as deduction, other than cost of acquisition.

--Loss from any other source cannot be set-off against income from VDA.

--Loss arising from sale of VDA cannot be setoff against any other income.

--Loss arising from VDA cannot be carried forward.

Still, cost of acquisition and sales consideration has not been defined, it is unclear whether brokerage paid, will be part of cost or will be deducted from sales consideration or not. This amendment will be applicable from 01-04-2022, hence the taxability of income from VDA is still open for interpretation for FY 2021-22.

Provision of taxability, does not itself makes the transaction legal. For determining legality of Cryptocurrency, it will be left to The CryptoCurrency and Regulation of Official Digital Currency Bill, 2021. The scope of income tax act is restricted to provide for taxability of any transaction and even illegal transactions are being taxed.

Gifting of virtual digital asset have also been brought under tax ambit, by including it in the definition of property, under section 56. Therefore any gift of more than INR 50,000 (except few circumstances) would be taxable in the hands of recipient of such digital asset. It is generally seen that tax base is widened if tax is collected by way of TDS. Therefore, section 194S is proposed to be inserted which provided the following:

TDS deduction to be 1% on transactions. For specified persons TDS only to be deducted if value of the transaction exceeds INR 50,000 in a financial year. For other than specified person, TDS to be deducted if value of the transaction exceeds Rs. 10,000 in a particular financial year.

Important thing about Crypto Taxation is, the way Crypto transactions are conducted, buyer is not aware about the whereabouts of the seller. Therefore it will be impossible to deduct TDS of seller. In this case buyer may deduct TDS of the intermediary portal and take a reimbursement from them, which will be very cumbersome process. It would have been better, if the TDS would have been deducted by the crypto-portal itself, as an e-commerce operator under section 194-O.

If a NRI purchases VDA from a resident, it may have to take a TAN number in India and deduct the TDS. This will be again a very onerous responsibility.

Trading of crypto currency, NFT and other virtual assets is rising on a rapid pace. The above proposals by the budget will achieve some level of certainty of the Income Tax calculations only. However legality of such transactions are yet to be blessed by the government of India. Additionally, its taxability with relation to GST transaction is also not very clear. It will be great, if government clarifies its position and rest this controversy, once and forever. Shall conclude with the words, Earn & Pay Tax…...….let them fix Legality issues.

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com