Ca.Shrenik A.Shah

*Highlights* of the *Finance (No. 2) Bill 2024*

By - CA Shrenik A Shah

A *Tax Rates*

1. *No changes* in the tax rates for the individuals opting for the *old tax regime*.

2. *No change* in rates of *surcharge and education cess*.

3. Under the *new tax regime* of Section 115BAC, the *5% and 10% tax slabs will apply to income up to Rs. 7 lakh and Rs. 10 lakh, respectively*, thereby increasing the *income brackets by Rs. 1,00,000 in both cases*. The *tax rates* under the *new tax regime* for Assessment Year *2025-26* will be as follows :-
Up to Rs. 3,00,000 - Nil
*Rs. 3,00,001 to Rs. 7,00,000 :- 5%*
*Rs. 7,00,001 to Rs. 10,00,000 :- 10%*
Rs. 10,00,001 to Rs. 12,00,000 :- 15%
Rs. 12, 00,001 to Rs.15,00,000 :- 20%
Above Rs. 15,00,000 :- 30%

4. The rate of tax in case of *foreign company* shall be reduced *from 40% to 35%*

B *Deductions and Exemptions*

1. The *standard deduction for employees* paying tax under the *new regime* is increased *from Rs. 50,000 to Rs. 75,000.*

2. Persons paying tax under the *new regime* of Section 115BAC will get a *deduction under Section 57 for the family pension* of *up to Rs. 25,000*, compared to *Rs. 15,000 previously*.

3. *Non-government employees* will be allowed a deduction under *Section 80CCD* for *employer's contributions to NPS of up to 14% of their salary*. This increased deduction applies only if the employee's salary is chargeable to tax under the *new regime* Section 115BAC. A consequential amendment has also been made under Section 36(1)(iva) to allow a deduction to employers.

4. Section *80G is amended* to *provide deduction* of any sums paid as donations to the *National Sports Development Fund set up by the Central Government*.

5. The definition of ‘specified funds’ for exemption under section 10(4D) is amended to include retail funds and Exchange Traded Funds in IFSC
6. The specified income of Core Settlement Guarantee Funds set up by recognized clearing corporations in IFSC will be exempted under Section 10(23EE) by amending the definition of "recognized clearing corporation".
7. The requirement to explain the source of funds to avoid addition under Section 68 does not apply if the amount is credited to a Venture Capital Fund or Venture Capital Company registered with SEBI. It is now proposed to extend this relaxation to VCFs regulated by the IFSCA.

C *Business or Profession*

1. *For the first Rs. 6,00,000 of book profit or in case of a loss*, the limit of *remuneration to working partners* in a partnership firm is *increased to Rs. 3,00,000 or 90% of the book profit, whichever is higher.*

2. A *new presumptive taxation* regime under Section *44BBC* will be introduced *for nonresidents operating cruise ships*. Also, income from lease rentals for a foreign company will be exempt under Section 10(15B) if both the foreign company and the cruise ship operator have the same holding company.

3. *To prevent insurance companies from claiming non-business expenses*, it is proposed to provide that any expenditure which is not admissible under the provisions of section 37 shall be included to (i.e. added back to) the profits and gains of the life insurance business.

4. *Any expenditure* incurred *to settle proceedings related to legal contraventions*, as notified by the Central Government, shall *not be allowed under section 37(1)*.

5. *Clarification* has been inserted under *Section 28* of the Income-tax Act that *any income from letting out a residential house or part thereof by the owner shall be chargeable under the head “Income from house property”* rather than “Profits or gain from business and profession

D *Capital gains*

1. There will *only be two holding periods, 12 months and 24 months*, for determining whether the capital gains is short-term capital gains or long term capital gains. *For all listed securities, the holding period shel be 12 months and for all other assets, it shall be 24 months.*

2. The *rate for short-term capital gains* under Section *111A* on STT-paid equity shares, units of equity-oriented mutual funds, and units of a business trust *increased to 20% from the current rate of 15%*.

3. The *tax rate on long-term capital gains is 12.5%* in respect of all category of assets

4. The *exemption from long-term capital gains* under Section *112A* on STT-paid equity shares, units of equity-oriented funds, and business trusts is *increased from Rs. 1,00,000 to Rs. 1,25,000*.

5. *Indexation* available *under second proviso to section 48 is removed* for calculation of any long-term capital gains.

6. Unlisted debentures and unlisted bonds are brought to tax at applicable rates by including them under provisions of section 50AA.

7. Sections 115AD, 115AB, 115AC, 115ACA, and 115E are amended to align with the new tax rates on long-term and short-term capital gains.

8. Only mutual funds that invest more than 65% of their total proceeds in debt and money market instruments will be covered under Section 50AA. Therefore, *ETFs, Gold Mutual Funds, and Gold ETFs will not be considered specified mutual funds*.

9. Section *47(iii) is amended* to specify that *only the transfer* of a capital asset *under a gift* or will, or by an irrevocable trust, *by an individual or HUF will not be considered a transfer*. Thus, *gifts made by a company will be subject to capital gains tax*

10. The amount received on the buy-back of shares is proposed to be taxed in the hands of the recipient shareholder under section 2(22)(f). However, the cost of acquisition of such shares will be treated as a capital loss, which shall be allowed to be set off or carried forward against any other capital gains as per the extant provisions.

11. Section 55(2)(ac) is proposed to be amended to substitute the cost of acquisition with the FMV in the case of the specified unlisted equity share transferred in an offer for sale to the public included in an IPO. The FMV would mean an amount which bears to the cost of acquisition the same proportion as CII for the financial year 2017-18 bears to the CII for the first year in which the asset was held by the assessee or for the year beginning on the first day of April 2001, whichever is later.

E *TDS & TCS*

1. A *new section 194T* has been introduced, requiring *10% TDS on salary, remuneration, interest, bonus, or commission payments to partners by a partnership firm*. TDS liability arises *if the total payments exceed Rs 20,000 in a financial year*.

2. *Purchasing notified luxury goods* *exceeding Rs. 10 lakh* will be *subject to TCS* under section 206C(1F).

3. In the case of *multiple transferors or transferees* in the transfer *of immovable property*, the *threshold* for tax deduction *under Section 194-IA* will be the *total sum paid or payable by all transferees to all transferors*.

4. *Section 193 TDS* will apply *while paying interest exceeding Rs. 10,000 on Floating Rate Savings Bonds* (FRSB) 2020 (Taxable) and any securities notified by the government.

5. *Income tax paid outside India* by way of deduction, *for which an assessee is allowed a credit* against the tax payable under the Act, *is deemed to be income received* for the purpose of computing the income of the assessee.

6. Any *sum referred to in sub-section (1) of section 194J* shall *not be treated as “work”* for the purposes of TDS under section *194C*.

7. *Credit of TCS of the minor shall be allowed* where the *income of the minor is being clubbed with the parent* under section 64(1A).

8. *No prosecution under section 276B* if the deductor *has deposited TDS before the due date prescribed for filing the TDS statement of the quarter*.

9. *5% TDS rate* under Section *194DA, 194G, 194H, 194-IB, 194M* has been *reduced to 2%.*

10. *TDS rate* under Section *194-O* on payment *by e-commerce operator to e-commerce participant* is *proposed to be reduced from 1% to 0.1%*.

11. *Section 194F* providing for TDS from payments on account of re-purchase of units by Mutual Fund or Unit Trust of India is *omitted*

12. *No order can be issued treating a person as assessee-in-default* for failing to deduct or collect tax *after six years* from the end of the financial year of payment or credit, *or two years* from the end of the financial year when the correction statement is delivered, *whichever is later*.

13. Section 200A is proposed to be amended to provide that in respect of TDS statements which have been made by any other person, not being a deductor, the Board may make a scheme for processing of such statements.

14. TCS credit will be allowed for the calculation of tax to be deducted from salary.

15. Lower TDS and TCS certificates can be applied for Section 194Q and Section 206C(1H).

16. Tax collection shall be at a lower rate or shall not be collected at all in respect of specified transactions, from persons or entities notified by the Central Government in the Official Gazette

17. The *interest rate is increased from 1% to 1.5%* where *TCS has been collected but not been deposited* to Government account.

18. A *TDS/TCS correction statement cannot be filed beyond six years* after the end of the financial year in which the original statements under Section 200 and Section 206C were filed.

Regards,
CA Shrenik A Shah
Chartered Accountant

*Time કાઢીને 2 min. વાંચો*
🙏🏼
✍🏻. *જિંદગી & હકીકત.*

*એક ખિસકોલી રોજ પોતાના કામ પર સમયસર આવતી હતી અને પુરી મહેનત અને ઇમાનદારી થી કામ કરતી હતી.*🐭🐭🐭

*ખિસકોલી જરૂરત થી વધારે કામ કરીને પણ ખુબ ખુશ હતી. કેમ કે તેનો માલિક, જંગલ નો રાજા સિંહે તેને દસ બૉરી *અખરોટ* આપવા નો વાયદો કરી રાખ્યો હતો*.🦁🦁🦁🦁

*ખિસકોલી કામ કરતાં કરતાં થાકી જતી હતી તો મનમાં વિચાર આવી જતો કે લાવ, થોડો આરામ કરી લઉં, તરત જ યાદ આવી જતું કે સિંહ તેને દસ બૉરી અખરોટ દેવાનો છે. તે પાછી કામ પર લાગી જતી ! તે જ્યારે બીજી ખિસકોલીઓ ને રમતા જોતી તો તેને પણ રમવાનું મન થઇ આવતું, પણ અખરોટ યાદ આવી જતાં અને પાછી કામ પર.*....!🐿🐿🐿🐿

*એવું નહોતું કે સિંહ તેને અખરોટ દેવા નથી માંગતો, સિંહ બહુ ઇમાનદાર હતો.*👍🏽👍🏽👍🏽

*આમ જ સમય વિતતો રહ્યો.*....

*એક દિવસ એવો આવ્યો કે સિંહ રાજાએ ખિસકોલી ને દસ બૉરી અખરોટ આપી આઝાદ કરી દિધી.*👌🏽👌🏽👌🏽

*પણ... ખિસકોલી અખરોટ ની પાસે બેસી વિચાર કરવા લાગી કે હવે અખરોટ મારે શું કામ ના* ?😇😇😇😇

*આખી જિંદગી કામ કરતાં કરતાં દાંત તો ઘસાઇ ગયા, આને ખાઇશ કઇ રીતે*! ! !🍎🍎🍎🍎🍎

*આ વાત આજ જીવન ની હકીકત બની ગઇ છે ! મનુષ્ય પોતાની ઇચ્છાઓ નો ત્યાગ કરે છે, પુરી જિંદગી નોકરી, વ્યાપાર અને ધન કમાવા માં વિતાવી દે છે ! ૬૦ વરસ ની ઉમરે જ્યારે તે સેવાનિવૃત થાય છે, તો તેને ફંડ મલે છે, અથવા તો બેંક બેલેંસ હોય તેને ભોગવવા ની ક્ષમતા ખોઇ ચૂક્યો હોય છે.* 👴🏻👴🏻👴🏻👴🏻👴🏻👴🏻

*ત્યાં સુધી માં જનરેશન બદલાઇ ગઇ હોય છે. કુટુંબ ચલાવવા વાળી નવી પેઢી આવી ગઇ હોય છે.*👩🏻👦🏻👩🏻👦🏻

*શુ આ નવી પેઢી ને તે વાત નો અંદાજ આવી શકે કે આ ફંડ, બેંક બેલેંસ ના માટે કેટલી બધી ઇચ્છાઓ મારવી પડી હશે ? કેટલાં સ્વપના અધૂરા રહ્યા હશે ?*😍😍😘😍😘

*શું ફાયદો એવી બેંક બેલેંસ નો, જે મેળવવા માટે પુરી જિંદગી લાગી જાય અને મનુષ્ય તેને, પોતાના માટે ભોગવી ના શકે ! ! !*😒😒😒😒

*આ ધરતી પર કોઇ એવો અમીર હજી સુધી પેદા થયો નથી જે સમય ને ખરીદી શકે* !🥇🥈🥇

*એટલાં માટે હર પળે ખુશ થઇ જીવો, વ્યસ્ત રહો, પણ સાથે "મસ્ત" રહો, સદા સ્વસ્થ રહો*....🦋☘

*ગમતી બધી વ્યક્તિ ઓ સાથે મનભરીને જીવી લો*..👩🏻‍🏫👩🏻‍🏫👩🏻‍🏫👨🏻‍🏫👨🏼‍🌾

*દરેક ક્ષણ ને બેશુમાર રીતે પામી લો* ... 🏕🏕🏕🏕🏕

*દરેક સબંધ ને ઉજવી લો*....⛱⛱⛱

*તમારા હોવા ને ઉત્સવ બનાવી લો* .🎇🎇🎇🎇..

*BUSY* પણ અને *BE-EASY* પણ રહો
🌹🙏🏻🌹

Happy birthday Dr.Rohan Shah - My Son In Law - Rohan Shah with Hirwa Shah and Rima-Rita Shah

*એક રસપ્રદ વાંચન*

નવ વ્યક્તિગત નાણાકીય નિયમો આપણે બધા જાણતા હોવા જોઈએ

1) 72 નો નિયમ (તમારા પૈસા ડબલ કરો)
2) 70 નો નિયમ (મોંઘવારી)
3) 4% ઉપાડનો નિયમ
4) 100 માઈનસ ઉંમરનો નિયમ
5) 10, 5, 3 નિયમ
6) 50-30-20 નિયમ
7) 3X કટોકટી નિયમ
😎 40℅ EMI નિયમ
9) જીવન વીમા નિયમ

1) *72 નો નિયમ*

આપેલ દરે તમારા પૈસાને બમણા કરવા માટે જરૂરી વર્ષોની સંખ્યા, તમે ફક્ત 72 ને વ્યાજ દર દ્વારા વિભાજિત કરો
દા.ત., જો તમે જાણવા માંગતા હોવ કે તમારા પૈસાને 8% વ્યાજે બમણા કરવામાં કેટલો સમય લાગશે, તો 72 ને 8 વડે ભાગો અને 9 વર્ષ મેળવો.

6% દરે, તે 12 વર્ષ લેશે
9% દરે, તે 8 વર્ષ લેશે

2) *70 નો નિયમ*

તમારા રોકાણનું મૂલ્ય તેના વર્તમાન મૂલ્યમાં કેટલી ઝડપથી ઘટશે તે જાણવા માટે વર્તમાન ફુગાવાના દર દ્વારા 70 ને વિભાજીત કરો.

7%નો ફુગાવાનો દર 10 વર્ષમાં તમારા પૈસાની કિંમત ઘટાડીને અડધો કરી દેશે.

3) *આર્થિક સ્વતંત્રતા માટે 4% નિયમ*

કોર્પસ જરૂરી = તમારા અંદાજિત વાર્ષિક ખર્ચના 25 ગણા.

દા.ત.- જો 50 વર્ષની ઉંમર પછી તમારો વાર્ષિક ખર્ચ 500,000 છે અને તમે VRS લેવા ઈચ્છો છો તો તમારી સાથે 1.25 કરોડની જરૂર પડશે.

આમાંથી 50% નિશ્ચિત આવકમાં અને 50% ઈક્વિટીમાં નાખો.

દર વર્ષે 4% ઉપાડો, એટલે કે 5 લાખ.

આ નિયમ 30 વર્ષના સમયગાળામાં 96% સમય માટે કામ કરે છે

4) *100 માઈનસ તમારી ઉંમરનો નિયમ*

આ નિયમનો ઉપયોગ એસેટ એલોકેશન માટે થાય છે. તમારા પોર્ટફોલિયોનો કેટલો હિસ્સો ઈક્વિટીમાં ફાળવવો જોઈએ તે જાણવા માટે તમારી ઉંમર 100માંથી બાદ કરો

ધારો કે તમારી ઉંમર 30 છે તેથી (100 - 30 = 70)

ઇક્વિટી : 70%
દેવું : 30%

પરંતુ જો તમારી ઉંમર 60 છે તો (100 - 60 = 40)

ઇક્વિટી : 40%
દેવું : 60%

5) *10-5-3 નિયમ*

વ્યક્તિ પાસે વ્યાજબી વળતરની અપેક્ષાઓ હોવી જોઈએ

10℅ વળતરનો દર - ઇક્વિટી / મ્યુચ્યુઅલ ફંડ
5℅ - દેવું ( ફિક્સ્ડ ડિપોઝિટ અથવા અન્ય દેવાના સાધનો)
3℅ - બચત ખાતું

6) *50-30-20 નિયમ - ખર્ચ માટે આવકની ફાળવણી વિશે*

તમારી આવકને વિભાજીત કરો
50℅ - જરૂરિયાતો (કરિયાણા, ભાડું, emi, વગેરે)
30℅ - ઈચ્છાઓ/ઈચ્છાઓ (મનોરંજન, રજાઓ, વગેરે)
20℅ - બચત (ઇક્વિટી, MFs, દેવું, FD, વગેરે)

ઓછામાં ઓછી તમારી આવકનો 20℅ બચત કરવાનો પ્રયાસ કરો. તમે ચોક્કસપણે વધુ બચાવી શકો છો...

7) *3X ઇમરજન્સી નિયમ*

રોજગાર ગુમાવવી, તબીબી કટોકટી વગેરે જેવી કટોકટી માટે હંમેશા તમારી માસિક આવકના ઓછામાં ઓછા 3 ગણા ઈમરજન્સી ફંડમાં મૂકો.

3 X માસિક આવક

વાસ્તવમાં, સુરક્ષિત બાજુએ રહેવા માટે કોઈ વ્યક્તિ પ્રવાહીમાં અથવા તેની નજીકની પ્રવાહી સંપત્તિમાં લગભગ 6 X માસિક આવક ધરાવી શકે છે.

😎 *40℅ EMI નિયમ*

તમારી આવકના 40℅થી વધુ EMI માં ક્યારેય ન જાવ.

કહો કે જો તમે દર મહિને ₹50,000 કમાઓ છો. પછી તમારી પાસે ₹ 20,000 થી વધુ EMI ન હોવી જોઈએ.

આ નિયમનો ઉપયોગ સામાન્ય રીતે ફાઇનાન્સ કંપનીઓ લોન આપવા માટે કરે છે. તમે તેનો ઉપયોગ તમારી નાણાકીય વ્યવસ્થા કરવા માટે કરી શકો છો.

9) *જીવન વીમા નિયમ*

તમારી વાર્ષિક આવકના 20 ગણા તરીકે હંમેશા વીમા રકમ રાખો.

20 X વાર્ષિક આવક

કહો કે તમે વાર્ષિક ₹5 લાખ કમાઓ છો, આ નિયમનું પાલન કરીને yoy પાસે ઓછામાં ઓછો 1 કરોડનો વીમો હોવો જોઈએ.

આ નિયમો યુવાનો, યુવાનો અને વૃદ્ધો માટે સમાન રીતે ઉપયોગી છે. આશા છે કે તમને તે સરળ, ઉપયોગી અને સરળ લાગશે.

Evaluating Current Market
- By Shrenik A Shah
Chartered Accountant

The stock market is no doubt in a bear hug. The Nifty is very close to the 52-week low of 15,450.90 hit a year ago on 6/6/2021 and we are just a couple of hundred points away. We can see more downsides in coming days/months but with weak, intermittent rallies. Use such rallies to exit if you have bought stocks at high prices. Market is in a state where it has lost the power of discrimination b/w gold and brass. Everybody's bottom is under fire🔥With some exceptions, one may not see worthwhile profits in stock investments for at least an year or two. SELL THE PRESENT AND BUY THE FUTURE. The FII's are badly butchered as US economy faces unprecedented inflation (nay stagflation) with no let-up in oil prices.They are trying to keep their money in Safe Heaven (read bonds).Depending on how the US and world economy moves, we may see the targets of 14,000-14,500 in the Nifty -- even 12,000 can't be ruled out. In other words, what we are going to witness is mass harakiri in economic parlance. Things may not be as bad for India, but human beings have the tendency to extrapolate a situation from bad to worse. In other words, stocks may dive deep to undervalued zone and that's the time you must brace-up to buy. Be patient like a fisherman and you may be rewarded with a worthy catch. Keep the powder dry (or try to stay in cash). As most of us are indulgent in dealing with the market day-in and day-out, my suggestion is to do a daily SIP in Nifty ETF. This way you will be aligned to and stay close with the market. I have given on-line auto instruction to buy ICICI Pru Nifty ETF every day and my last purchase today is at Rs.170.90 - down from the recent high of Rs.181. This strategy will allow your investments to be anchored with the ("real") market. Also, look out to buy high dividend yield stocks for regular returns.

- Shrenik A Shah

Good Morning Dear friends,

Required Assistance with 2-3 years of experience in the field of *Taxation and Accounting mainly GST - Income tax return filing Tax Audit and TDS Return filing*, monthly ITC reconciliation, filing of GST returns
Good knowledge of GST and INCOME TAX
Salary apm
*Location: AHMEDABAD
Interested candidates please mail your CV to cashrenik62@ yahoo.com
Or WhatsApp on 9825085251

RBI just raised the repo rate 😱 and the stock markets fell by 2.5%. What does this mean and how can it affect your portfolio?

Let’s first understand what Repo Rate is:

Repo rate is just the fancy term for the interest rate at which the RBI lends money to commercial banks.

If you want to take a loan, you go to a bank and pay interest on that.
Just like that when banks borrow money from RBI they also have to pay interest.

That interest is called the Repo rate. In banking terms, it's also called a Repurchase Agreement.
But now the question is why this is so important that it becomes national news.

See because the repo rate is used to control the flow of money in our economy.
This rate decides if we are in a period of inflation or deflation.

Now the RBI finally wants to control the inflation and that is why they’ve increased the repo rate.

Now banks will have to pay more interest on the money they are borrowing from RBI.

Now because banks will have to pay more, they will also raise their interest prices for common people & businesses.

It will restrict borrowing, less money will be available in the market and that's one way they’ll curb inflation.

What will this do to companies (and your portfolio)?

As the repo rate increases, the cost of borrowing increases. This makes businesses spend less on growth and expansion. And you know if the company isn’t growing in its profits and cash flows, its stock won’t be able to generate good returns (usually).

So, during this period you can expect subdued growth in your portfolio.

RBI has also increased the CRR. This is the Cash Reserve Ratio. This is that part of a bank’s total deposits that it maintains as cash. The banks have to strictly maintain it.

Increasing the CRR means that the banks would be able to lend less, which would reduce the money available in the economy and that curb inflation

31 FINANCIAL MISTAKES THAT KEEP YOU POOR

By : Shrenik A Shah
Chartered Accountant

SECTION I :- MISTAKES IN BORROWING
1) Not prioritising which debt to pay first
2) To be Guarantor in a loan
3) High borrowing than your capacity
4) Borrowing money for marriage
5) Borrow money to buy things that depreciate in value
6) Creating money from your wealthy friend instead of money making ideas
7) To help who asks for financial assistance

SECTION II :- MISTAKES IN INVESTMENT
1) No diversification of portfolio
2) Extremely conservative approach towards money
4) No idea about power of compounding
5) Getting a higher degree you don't require
6) Failing to invest in learning
7) Depending completely on the financial expert
😎 Short term thinking and quick rich scheme

SECTION III :- MISTAKES IN INSURANCE
1) Mixing Insurance and Investment
2) Not having sufficient health insurance
3) Not understanding Health insurance properly
4) Not having Life insurance cover
5) Not having adequate Accident policy
6) Not insuring valuable things

SECTION IV :- MISTAKES IN SAVING
1) Not tracking actual expenses
2) No planning for emergency Funds
3) Buying latest gadgets and in peak season
4) Not negotiating on price
5) Spending for services, subscriptions and extra features you don't need

SECTION V :- MISTAKES IN SPENDING
1) Spending first before saving
2) No list shopping
3) Increase your expenses with increase in income
4) Not having a Budget
5) Not involving your partner in money matters.

~ CA Shrenik A Shah
+91 9825085251

*_Happy Diwali and Happy New Year!_*

While a lot of investors are sending their recommended stock lists for Samvat 2078, I thought of sending some of my learnings. Hope this list also helps:

1. The secret of being a successful investor is not in getting superior information but in having superior behaviour. Behavioural Edge will generate better alpha for longer.

2. Discipline is extremely important. One can draw a good investment plan or strategy on paper which has a promise of high returns. But it means nothing if not followed with discipline.

3. Human nature doesn’t change. It causes the recurrence of past patterns and thereby the boom-bust cycle in the financial markets. Understanding crowd behavior hence becomes very important to succeed as an investor.

4. Since a majority of investors are trying to outsmart each other in the near term, joining this herd is likely to generate average results at best. The opportunity for superior returns is in looking at the long term.

5. The new "BUY AND HOLD" is "BUY AND WATCH MINUS TRADE". Watch out for technology disruptions and developments in the businesses you are invested in. Dont watch the prices too closely. Certainly dont trade unnecessarily.

6. If an event is anticipated and the crowd understands the potential risks and rewards of the outcome, then it is very likely to be priced in. Before taking a position understand what value is left on the table.

7. Contrarian thinking is difficult but necessary. It is tempting to be part of the crowd and painful to avoid the heard instinct. However, it is extremely profitable to know where the crowd has overreacted and go contrarian.

8. Most businesses are cyclical. Even good businesses often run into temperary problems. While short term traders hate them; Investors can use these opportunities to accumulate such businesses.

9. The crowd oscillates like a pendulum between manic highs and depressive lows. It is difficult to fundamentally measure the exact top and bottom of the market. Hence it is futile to try and catch the exact time when market peaks or troughs.

10. Your time and your attention are scarce commodities. Using them to watch stock price movements and daily market commentary wont lead to any gain.

11. Trying to falsify an investment hypothesis highlights areas of risk. Identifying and measuring these risks increases the strength of the investment case.

12. Network with the right people. Investors who have a long term investment horizon and have a similar strategy as yours help you cut the market noise and stick to your investment plan. These connects are invaluable.

_Happy Investing!_

- Shrenik A Shah -
- Chartered Accountant-

@ All !
Good 😌 morning!

One day on the news channels we will see 'No cases of covid reported from across the country'

One day we will read the headlines 'No covid deaths reported today'

One day we will see ourselves flocking with long ques at the airports.

One day we will see off our kids in school van.

One day we will see the board of 'HouseFull' at the cinema hall.

One day we will freely hug and dance at the wedding together.

We all are waiting for that ONE DAY

We are facing one of the toughest times in human history ever, but this too shall pass, its just a phase.

Lets keep ourself motivated, back ourselves up and look forward to help others in whatever way we can.

Shrenik A Shah
Chartered Accountant

What are some financial tips that everyone should know?

By : CA.Shrenik A Shah
Chartered Accountant

15 Financial Lessons i wish i know before starting of my Financial Journey :

(1) Time is Scarcer resource than money

(2) A house is a place to live, not an investment

(3) Get rich quick and get poor quick are two sides of the same coin

(4)Don’t pay interest to acquire something that loses value

(5)A raise in income shouldn’t mean a raise on lifestyle

(6)If you’re excited about an investment, it’s probably a bad idea

(7)A penny saved is more than a penny earned

(8)Invest in your mind and skills first

(9)You don’t have to be rich to invest, but you have to invest to be rich

(10)Fees erode Performance

(11)Market corrections come more regularly than birthdays expect them

(12)There is an inverse relationship between investment performance and time spent watching financial news

(13)The more complicated the investment advice the less useful it is

(14)Admire people who earn more money than you, not people who spend more money than you

(15)Your life is a better benchmark than the market benchmark

CA Shrenik A Shah
Chartered Accountant

As the FY 2020-21 is closing, I decided to write a simple thread on how equities are taxed in India and how you can save income tax by following simple logical steps.
Here’s a thread for the same. 🧵👇
Do retweet for better reach and help others save taxes.


Firstly, let us understand the types of capital gains that are taxed in equities. These are,
a.Short term capital gains
b.Long term capital gains (1/n)

If an investor is holding shares listed on a recognized stock exchange (NSE, BSE) for more than 12 months, the gain/loss arising from the sale shall be ‘Long’ term. Else, it shall be ‘Short’ term. (2/n)

Let us now understand the rates of taxes on these gains. (3/n)

Short term gains on the above shall be taxed at 15% u/s 111A if STT (Securities Transaction Tax) is paid. Please note that usually every investor pays STT which is charged at 0.1%, both at the time of buying as well as selling the shares. (4/n)

Long term gains on the above shall be taxed at 10% u/s 112A only on capital gains exceeding Rs. 1 lakh. So, if your long term gains come at Rs. 3 lakh, then you need to pay Rs. 20,000 (10% of Rs. 2 lakh). (5/n)

Now, few more important things to note here before we dig deeper. Resident Individual/ HUF do not need to pay tax if their income is less than Rs. 2.5 lakh. So, if the gains on equities are less than this limit, one need not pay tax (assuming there is no other income). (6/n)

‘Short’ term loss can be adjusted against both short term gains (taxed at 15%) as well as long term gains (taxed at 10%). However, ‘Long’ term loss can be adjusted only against long term gains (taxed at 10%). (7/n)

Let me tell you the little logic behind this provision. In case you are holding the shares for long term, you must make more money. Why? Because you gave more time. (8/n)

But, if you make loss on your long term holdings, the government won’t allow you to set that off against the short term gains. Simple! (9/n)

So, the very first tax saving tip here is to book short term loss on shares. To simplify, sell the short term shares in loss before 31st March. By doing this, you are actually using that loss to set off against your short term gains and hence save tax at 15%. (10/n)

Follow this. Look at your portfolio, there can be few stocks which you bought during the financial year. If it is making loss, sell them and book the loss on paper at least. Doing this will help you set off it against both short term and long term gains. (11/n)

Remember this, if you are convinced that the stock is a great buy even though in loss, you can buy again after a couple of days. But selling once and booking loss is actually helping you save taxes. (12/n)

Also, if you are late in selling, say if you sell the stock in loss after one year, it will become long term loss. So, better to sell them during the FY. A bull market like this is the best time to sell your mistakes as many like , point out. (13/n)

And as discussed earlier, you cannot set off long term loss against short term gains (taxed at 15%). You will have to set off it against only long term gains (taxed at 10% and that too after the exemption of Rs. 1 lakh). (14/n)

Another obvious tax saving tip from our above discussion is that you must book long term gains on paper every year. Say you have shares that are making you a long term gain of Rs. 1 lakh, you need not pay tax on this as long term gains are exempt to the tune of Rs. 1 lakh. (15/n)

So, it is always prudent to book long term gains every year at least to the tune of Rs. 1 lakh. Remember, this limit of Rs. 1 lakh exemption on long term capital gains is every financial year. (16/n)

I know there are investors like sir who want to hold the shares for 4-5 years or even a decade or more. That’s a great idea. But you can book profits on paper upto Rs. 1 lakh every year and again buy the stock for another long term period. That’s smart tax saving! (17/n)

And for all these tips you need to do another simple task: File your income tax return in time. The due date for individual and HUF (non audit case) is 31st July and for others it is 31st Oct. (18/n)

Belated return filing would mean non eligibility for carrying forward the short term and long term losses. This is govt's way of rewarding a prompt tax filer. (19/n)

Short and Long term capital loss can be carried forward for 8 assessment years. Again, Long term loss can be carried forward to be used against only long term gains. Whereas, Short term loss can be carried forward to be used against both short and long term gains. (20/n)

Oh, and I almost forgot to add, avoid intraday and trading in derivate market. The losses from these are tagged as ‘Speculation loss’. And this cannot be set offed against the regular short term or long term loss on sale of shares. So, the law makers too demotivate this. (21/n)

So to summarize the thread,
1. Book short term loss before 31st March.
2. Book long term gains to save tax on gains upto Rs. 1 lakh.
3. File the income return on time.
4. Avoid intraday and derivative trading unless you are an expert. (22/n)

This is it for now. I will be writing more on taxes.
Until next time.

Shrenik A Shah
Chartered Accountant