Byapaar.com -The Indian Business Blog

The Indian stock market is back to its normal bullish run again after a prolonged dull run. The BSE Sensex gained 551 points to close at 15049.86 on Monday, single largest gain in a day since July 23^rd, 2008 when the index surged 838 points. The index has been hovering around 14000 mark for long time. This bullish run has been due to rate-sensitive stocks and that of state owned oil and gas companies gaining ground as news of Hurricane Gustav sparing major US oil fields caused a further collapse of international crude price. The price of crude oil has been cooling down steadily after it hit high of $147.27 per barrel on 11^th July as Russia’s conflict with Georgia disrupted supply of oil and gas. Demand of fuel in US and China, the two biggest energy consumers has also softened the international market.

More than anything else, international oil price has single most important bearing on Indian economy as India’s 90 percent energy consumption depends on crude oil exports. Since oil prices started to soar, the country’s trade deficit has also been widening every month and it touched a record $10.80 billion for the month of July on higher oil import bill. Inflation has also been rising rampantly despite the government raising interest rates to check it. It also came down to 12.34, the first time in moths after a prolonged series of increase.

Now that everything is over, we can hope the inflation to come down to normal (4 to 5 percent), the trade gap to decrease, stock market to be buoyant and the overall health of the economy to become better.

Despite the decrease in the international crude price, the government has ruled out any slash in the existing fuel price. In a meeting with the media, Petroleum Minister Murli Deora told reporters

“Where is the scope for reducing prices? Oil companies are still making losses,”

Petroleum Secretary R.S. Pandey said that

“Oil companies continue to lose money on petrol, diesel, domestic LPG cylinder and kerosene. There has not been a substantial reduction in global prices to warrant a price cut,”

Airlines also announced that the fall in Air Turbine Fuel will not see an immediate reduction in air fares.

The general notion is that it feels great to be famous – to be someone! But sometimes it is great too if you are nobody like me who works as Asst. Teacher in a semi-govt. school in a semi-urban locality in one of the remotest and non-descript part of the country. Why do I feel great? Because I don’t have to go through the arduous task of filling tax returns every year like my colleagues do! Yes you read it right! I don’t have to pay income taxes (I belong a special community in a special area where nobody from my community has to pay) although my income from regular job and online is roughly around Rs. 500,000 per annum. I don’t even have a (PAN) card! But from what I see my colleagues go through, I reckon it is not funny to file returns especially as every year there are some changes made in tax policies by the government. So, I find my mates go around finding the best and cheapest tax accountant available in the town. Professional consultation is not always for just filling of returns, but salaried individuals with limited income also need to exploit the different schemes on offer by the government to save some paisa for the future and thereby get tax rebates.

As I have avid interest in economic and business affairs, I do read lots of finance and business related papers and journals. The other day I found one of the magazines (Outlook Money) that I subscribe to enclose a little pocket book titled “The Complete Tax Guide for 2008-09” which is really a handy item for all normal tax-payers. It gives a complete guide from calculating incomes to deductions, computation and tax planning, clubbing of income to filing of returns. I believe most net junkies don’t have time to read books anymore. While business houses can afford to hire chartered accountant firms for audit services, individuals can save lots of money if they have basic ideas about tax laws and tax saving schemes. Here, I’ll write what is advised on that handy book about “tax saving strategies during your lifetime.”

The budget of 2008 had much to offer to the salaried tax payers of the country. The smooth passing of the Finance Bill with no changes to the proposals made can bring in showers this financial year. There are two ways in which tax payers will benefit. One, the threshold level of income tax has gone up. This means that a greater part of the income come under zero tax status.

Two, the tax slabs have also been raised. Currently the maximum marginal rate of tax of 30 percent is applicable from the income level of Rs. 250,000, this now stands doubled at Rs. 500,000 for the next financial year. This means an under 65 year old male tax payer with a gross Read the rest of this entry »

Finally the turbulence of politics is over with the UPA led by the Indian National Congress withstanding a tight no-confidence motion in the Lok Sabha on 22^nd July. The Left Front has been blocking almost all major reforms which are so badly needed to push the economy to the next level. It has been frustrating 4 years for both pro-reform Prime Minister Mr. Manmohan Singh and also the business community. Now that all is over, the UPA government is determined to push through reforms in many fields like insurance, telecom etc. despite the alarmingly high rate of inflation that stands @ 11.98% today!

High rate of inflation has also made the apex bank (Reserve bank of India) to raise interest and thereby make bank deposit attractive. On the other hand, the long bull run of the stock market also ended with the start of the turbulence of government instability and skyrocketing international fuel price.

So as an individual – where do I put my money? Most banks are offering an attractive 10% annual interest rate. But is it long lasting? Despite forecast of an economic slowdown, businesses remain upbeat on long-term economic prospect of the country.

So the ideal way to invest your money is to divide your funds and put them into both the markets. While it is not guaranteed that bank rates will always remain the same, one can not also say for sure when the equity/stock market is going to recover! Read the rest of this entry »