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Can cyber insurance help secure business?


I am an entrepreneur and engage in online transactions on a daily basis. I want to protect my data and secure my business. Does a cyber insurance policy help mitigate financial losses in case of any cyber attacks?

—Name withheld on request



In today’s digitally interconnected world, our reliance on online transactions for personal and business purposes exposes us to increasing cyber threats. As an entrepreneur dealing with multiple online transactions, your concerns are valid. Safeguarding this private and sensitive data is imperative. A cyber insurance policy will help mitigate financial losses as it’s an effective risk management strategy in case of a security breach.


Cyber insurance is tailored for both individuals and businesses, provided through distinct policies to safeguard against the financial consequences of cyber incidents. Individual policies cover threats like identity theft, cyber stalking, phishing, and extortion, among many others. For your business needs, cyber insurance coverage includes third-party liability for privacy and data breaches, media liability claims, regulatory fines and penalties, and first-party losses like business interruption and cyber extortion.


Legal expenses that may arise and data restoration costs may also be covered, with some policies extending coverage to crisis communication and IT consultant fees. Hence, I would recommend taking a comprehensive cyber insurance policy for businesses, ensuring financial protection against potential data breaches and related incidents. You will be interested to know, that in scenarios involving cyber extortion or ransomware, a cyber insurance policy is invaluable, covering expenses for negotiators, investigators, ransom payments, and system restoration. Also, comprehensive cyber insurance for businesses compensates for third-party damage, covers legal expenses, and compensates for compromised intellectual property, privacy breaches, and harm to reputation, making it indispensable for navigating the aftermath of a cyber incident.


However, while purchasing a cyber insurance policy, it’s crucial to understand the coverage limits and exclusions. So, make sure you thoroughly review the policy terms and conditions, to ensure adequate coverage for potential risks and alignment with business needs.


Amid the growing cyber threat landscape, a robust cyber insurance policy ensures financial protection and swift recovery, crucial for modern business resilience.


Source- Livemint

SBI forecasts 15% growth in deposits for FY25; expects RBI rate cut only in Q3FY25


The State Bank of India (SBI) has unveiled expectations of substantial growth in both deposits and credit for the fiscal year 2025. SBI forecasted deposits to grow at a rate of 14.5 per cent-15 per cent and credit to expand between 16.0 per cent-16.5 per cent in FY25, anticipating a surge in economic activity, in a report released on Tuesday.


RBI’s Monetary Policy Committee (MPC) meeting is scheduled from April 3-April 5.


This outlook comes amidst a backdrop of sustained momentum in credit growth, particularly across agriculture, MSME, and services sectors, as revealed by the latest credit growth numbers.


On the banking front, while deposit growth has rebounded, the sustained momentum in credit growth has led to a widening gap between deposits and credit growth.


Data as of March 8 indicates that All Scheduled Commercial Banks’ (ASCBs) credit grew by an impressive 20.41 per cent, up from 15.7 per cent the previous year, while deposits increased by 13.7 per cent, compared to 10.3 per cent in the preceding year.


India’s robust economic performance has also attracted foreign investment inflows, surpassing other Asian markets in March.


Despite geopolitical tensions and concerns over the continuity of a higher interest rate regime, India has emerged as a magnet for foreign funds, defying market expectations.


However, amidst these positive indicators, India stands out as a notable exception in the global economic landscape.


While strong evidence suggests that emerging economy central bank rate actions are typically influenced by advanced economy central bank rate actions, India’s monetary policy trajectory diverges from this trend.


In the United States, structural shifts in the labour market are evident, with the coexistence of low unemployment rates alongside elevated job vacancy rates.


Inflationary pressures, primarily driven by food price dynamics, present additional challenges in the US markets.


Looking ahead, SBI anticipates that the Reserve Bank of India (RBI) might initiate a rate cut cycle in the third quarter of FY25.


However, unlike in other emerging economies where rate cut cycles may be influenced by advanced economy central bank actions, India’s rate cut cycle is expected to be shallow, reflecting the unique economic conditions prevailing in the country.


As stakeholders prepare for the evolving economic landscape, SBI’s projections provide valuable insights into the trajectory of India’s banking sector and monetary policy decisions.


With expectations of robust growth in deposits and credit, coupled with potential rate cuts on the horizon, India remains poised for continued economic resilience and growth in the coming fiscal year.


Source- Economictimes

Has your income tax slab changed from today? Finance Ministry says this


The Finance Ministry has issued a clarification amidst the dissemination of misleading information on social media platforms regarding the new tax regime. It emphasizes that there are no new changes taking effect from April 1, 2024. Taxpayers have the flexibility to choose between the old and new tax regimes based on their preferences and financial circumstances, with the option to opt out of the new regime until filing their return for Assessment Year 2024-25. Eligible individuals without business income can alternate between the old and new regimes for each financial year.


On the social media platform, the Finance Ministry posted: “It has come to notice that misleading information related to the new income tax regime is being spread on some social media platforms. It is therefore clarified that:


1)There is no new change which is coming in from 01.04.2024.


2)The new tax regime under section 115BAC(1A) was introduced in the Finance Act 2023, as compared to the existing old regime (without exemptions) (SEE TABLE BELOW)


3)The new tax regime is applicable for persons other than companies and firms, is applicable as a default regime from the Financial Year 2023-24 and the Assessment Year corresponding to this is AY 2024-25.


4)Under the new tax regime, the tax rates are significantly lower, though the benefit of various exemptions and deductions (other than the standard deduction of Rs. 50,000 from salary and Rs. 15,000 from family pension) is not available, as in the old regime.


5)The new tax regime is the default tax regime, however, taxpayers can choose the tax regime (old or new) that they think is beneficial to them.


6)The option for opting out from the new tax regime is available till the filing of return for the AY 2024-25. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose a new tax regime in one financial year and an old tax regime in another year and vice versa.



Income tax slabs as per the new tax regime are as follows


Income from 0 to 3,00,000: 0% tax rate

Income from 3,00,001 to 6,00,000: 5%

Income from 6,00,001 to 9,00,000: 10%

Income from 9,00,001 to 12,00,000: 15%

Income from 12,00,001 to 15,00,001: 20%

Income above 15,00,000: 30%



Old regime tax slabs


1) Income up to 2.5 is exempt from taxation under the old tax regime.

2) Income between 2.5 to 5 lakh is taxed at the rate of 5 per cent under the old tax regime.

3) Personal income from 5 lakh to 10 lakh is taxed at a rate of 20 per cent in the old regime

4) Under the old regime personal income above 10 lakh is taxed at a rate of 30 per cent.


Source- Livemint

India’s retail inflation to remain above 5% till May: SBI Research report


India’s retail inflation gauged by the Consumer Price Index (CPI) is expected to remain slightly above 5 per cent till May before declining towards 3 per cent in July, according to SBI Research. The retail inflation print is expected to stay below 5 per cent beginning November till the end of the financial year 2024-25.


Retail inflation in India eased a tad in February to 5.09 per cent from 5.10 per cent the prior month, due to the deceleration of prices in all categories except food.


Within food inflation, protein items (meat, egg) inflation increased exorbitantly (in the range of 400-500 basis points) in February month as compared to January.


Vegetable prices also increased month-on-month by 300 basis points to 30.2 per cent. Core CPI declined to 3.37% – a 52-month low and reached the level of Oct-19.


The retail inflation was at a four-month high of 5.69 per cent in December.


The retail inflation in India though is in RBI’s 2-6 per cent comfort level but is above the ideal 4 per cent scenario.


Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.


At the latest monetary policy meeting, the RBI pegged India’s retail inflation projections for 2024-25 at 4.5 per cent, with Q1 at 5.0 per cent, Q2 at 4.0 per cent, Q3 at 4.6 per cent, and Q4 at 4.7 per cent, with risks evenly balanced.


SBI Research said spatial heatmap shows that the largest weighted contribution to the current reading of retail inflation came from Maharashtra and Uttar Pradesh.


“With moderate fuel prices, inflation is currently being driven by food price dynamics. Looking ahead evolving food prices will determine domestic inflation,” said SBI Research said in its Ecowrap report.


The report suggested Department of Consumer Affairs publish a detailed list of vegetable prices other than only TOP (tomato, onion, potato).


“This will make it easier to fathom the direction of vegetable price impact on CPI (retail inflation,” it said.


In recent months, vegetable prices in CPI have been driven mostly by prices of other vegetables in the basket apart from TOP, the Ecowrap report noted.


“Based on all the scenarios, the current repo rate at 6.5 per cent, looks ideal. We can expect the first rate cut only in Q2FY25,” it added.


Source- Economictimes

Update your nominee or get frozen out


Securities and Exchange Board of India’s (SEBI) recent consultation paper on nominations has revealed some shocking facts. A startling 73 per cent of individually-held demat accounts either lack a nominee or have consciously opted out from choosing one. Though not as bad, 14 per cent of individually-held mutual fund investments also lack a designated nominee. In the case of jointly-held investments, this number stands at 34 per cent for mutual funds and 37 per cent for demat accounts.


Why you must have a nominee


Having a designated nominee enables passing the investments to loved ones in case of your absence. Because if you don’t, its absence can throw the beneficiaries in a vortex of legal formalities before they can claim the money. Even worse, the money may remain unclaimed in some cases.


Considering its importance, the SEBI in July 2021 published a circular asking demat or trading account holders to either nominate a beneficiary or opt out of it by filling up a declaration form. A similar circular was released for mutual fund investors in June 2022.


While the initial deadline was set at March 31, 2022 for demat accounts and March 31, 2023 for mutual funds, it has been extended multiple times. Currently, it is June 30, 2024. Failing which, your investment folios and demat accounts will be frozen. This will prevent you from making withdrawals or fresh investments until the necessary details are provided.


The data above also underlines a significant disparity in nomination rates between joint and single holders of mutual fund folios, with 34 per cent of joint holders opting out or having no nomination compared to 14 per cent of individually-held mutual fund folios. While the surviving joint holder gains rights to the account or units in the event of one holder’s death, it’s prudent to nominate a beneficiary for an ease in transition of assets in cases where both holders pass away simultaneously.


73 per cent of demat accounts don’t have a nominee!


So, we recommend you to choose a nominee before starting or continuing with your investment journey. To add or update your nominee(s) as an existing investor, follow the steps outlined below.


Steps to add or update a nominee (Mutual fund investments)


There are multiple ways to add or update a nominee. One way is that you can directly contact your fund house. But, instead of visiting multiple mutual fund sites, you can visit the MFCentral platform to add or make changes to your nominations in one go. To learn how to add or update a nominee in MFCentral, click here.


Steps to add or update a nominee (Demat account)


There are two methods to add or update nominees in your demat account. The first option is to access your demat account through your broker’s platform. Once logged in, you can easily locate the option to manage your nominee details. Alternatively, you can directly visit either the CDSL or NSDL portal, depending on the depository participant associated with your broker. To update your nominee in CDSL, you’ll require the Beneficial Owner Identification Number (BO ID), while for NSDL, you’ll need the DP (depository participant) ID and client ID.


Apart from this, the procedure for both of them is broadly similar. Here’s how:



  • On the NSDL homepage, locate the ‘Nominate Online’ option. For CDSL, you can access the nomination feature by selecting it from the dropdown menu under ‘Quick Links’.


  • Enter the DP ID and Client ID in case of NSDL or BO ID in case of CDSL. You can find them in the profile section of your demat accounts. After that, enter your PAN (Permanent Account Number). You will receive an OTP (one-time password) on the mobile number registered with your demat account.


  • After logging in, you’ll find two options: ‘I wish to Nominate’ and ‘I do not wish to nominate’


  • Opt for ‘I wish to nominate’ and add or update your nominee(s).


  • E-sign using Aadhaar. You will receive the OTP on your mobile number registered with Aadhaar.


That’s pretty much it. Follow these steps and ensure your demat account isn’t frozen. More importantly, it will be easier for your beneficiaries to get access to your investments in your absence.

Source- Valeresearchonline

The Demand For CFP Professionals On The Rise As More Indians Look For Professional Financial Advice


According to the Financial Planning Standards Board Ltd. (FPSB) press statement issued on February 15, the global count of Certified Financial Planner professionals (CFPS) has increased by 5.1 per cent compared to the prior year, as more than half of individuals who have never received financial planning guidance plan to seek it within the next three years.


Meanwhile, in India, The CFP professional community has reached a record high of 2,731, a surge of 8.5 per cent. The increase is attributed to the escalating demand for professional financial planning guidance in the country.


“The surge in the number of Certified CFPs in India reflects a growing awareness among individuals regarding the importance of professional financial planning. Factors such as increasing financial literacy, a complex financial landscape, changing demographics, and regulatory changes have contributed to this rise,” says Nita Menezes, Founder and CEO, Financially Smart & MoneyPrastha.


Hrishikesh Palve, director & deputy head, product, Anand Rathi Wealth, elaborates on the reasons why there is an increase in demand for professional finance advice and CFPs.


Rising Disposable Income:


The number of ITRs filed by people earning between Rs 10 lakh and Rs 25 lakh has increased by 291 per cent. Further, in the range of gross total income up to Rs 5 lakh, 2.62 crore returns were filed in AY 2013–14 and 3.47 crore forms in AY 2021–22, representing a 32 per cent rise. The country’s growing economy and higher disposable incomes have empowered individuals to invest and seek guidance for effective wealth management,” says Palve.


Increased Financial Product Complexity: Complex financial products require expert guidance for informed decisions. There is a vast range of products to pick from for example in equity we have mutual funds, direct equity, portfolio management services (PMS), etc and under debt as a category, we have fixed deposit (FD), bonds, debt mutual funds, etc. Apart from these we also have asset classes such as real estate, gold, commodities, etc, and picking the right of these asset classes can get overwhelming for the investors.


Demographic Shift:


With a young and aspirational population seeking financial security and early retirement planning, the demand for Certified Financial Planners (CFPs) has surged. The consistent increase in SIP numbers depicts how the investors are focusing on planning for the long term,” adds Palve.


Lack Of Financial Literacy: A significant portion of the population lacks sufficient financial knowledge and skills, leading them to seek professional assistance from CFPs.


Who Typically Seeks Financial Advice From CFPs?


Individuals with growing incomes and complex financial needs are one of the segments who seek financial planning advice. People approaching retirement who need investment and estate planning. Individuals facing major life events like inheritance or career changes, also feel the need for a financial planner. Finally, high-net-worth individuals seeking asset management and tax planning.


What To Look For When Selecting A Financial Planner


“While selecting a financial planner you should consider that he is comprehensive – not just talking about investment but also cover insurance, taxation, estate planning and also focus on your goals,” says Hemant Beniwal, certified financial planner and director at Ark Primary Advisors, a financial planning firm.


Further, the planner should be independent,  having his own firm or working for a trusted small firm. “People who are working with banks or bigger institutions are sometimes forced to do things that are not in the best interest of clients. Finally, he should be competent – a CFP is a great validation of competency,” says Beniwal.


It is even more important to make the right decision when choosing a financial planner because nowadays there are a lot of finfluencers dishing out financial advice, something without being adequately qualified to do so.


A few days ago Securities and Exchange Board of India (Sebi) took action against Zee Business guest experts who were allegedly making gains by taking opposite positions in the market compared to their on-air recommendations, which shows that financial advice may not always be unbiased.


In the context of financial planners, CFPs must act as fiduciaries, which means that they must act in the best interest of the client.


“Information and content is available in plenty. Recognizing the true essence of unbiased, unfiltered financial literacy done in the right manner and then having media share the information in the right manner is crucial to investor decision-making, protection, and growth of the industry,” says Dilshad Billimoria, a Sebi-registered investment advisor (RIA) and Managing Director and principal officer, Dilzer Consultants, a financial planning firm.


Hence it is crucial to exercise caution when it comes to finfluencers.” While they may offer financial advice, they often lack the expertise and regulatory oversight that CFPs adhere to. It’s important to verify their credibility and seek personalized advice from qualified financial planners,” says Menezes.


Source- Outlookindia

Key budget announcements in Modi 2.0’s last financial document you can’t miss


The interim budget for 2024-25 is being seen as an economic manifesto for Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP) and will give cues to the market on its plans for fiscal consolidation, borrowings and future taxation policy.


What India’s common man gets in Budget


Finance Minister Sitharaman outlined initiatives for the next five years, including increased housing, expanded access to free electricity, and enhanced medical care, especially for women. Sitharaman pledged support for key sectors targeted by Modi, such as farmers, youth, women, and the impoverished, as the country looks towards ‘unprecedented development’ in the next five years.


The government has this time decided to widen the horizon of housing scheme. It will be launching the ‘Housing for Middle Class’ scheme to encourage middle-class individuals to purchase or construct their own homes. Over two crore additional houses have been added to the existing target of three crore under PM Awas Yojana.


The government has also decided to accelerate Saksham Anganwadi and Poshan 2.0 programs to enhance nutrition delivery, early childhood care, and development, said Sitharaman.


Sitharaman said that the government has enabling one crore households for rooftop solarization, providing up to 300 units of free electricity per month.


What Indian industries received


Sitharaman’s interim budget unfolded a series of impactful measures set to provide a robust impetus to various sectors, fostering economic growth and development across the nation.


Giving a thrust to the Production-Linked Incentive (PLI) scheme, the government allocated Rs 6,200 crore to incentivize manufacturing and boost industrial output. To stimulate the tourism sector, projects for port connectivity, infrastructure, and amenities on India’s islands, including Lakshadweep, are in the pipeline. Budget 2024 also focused on expanding railway corridors and increasing the number of Vande Bharat trains in India.


A comprehensive program for supporting dairy farmers is on the horizon, building on the success of existing schemes. Efforts to control foot and mouth disease and increase the productivity of milch-animals align with the goal of fortifying India’s position as the world’s largest milk producer.


The agriculture sector witnessed a strategy for self-reliance in oilseeds production. The adoption and expansion of Nano Urea and Nano DAP applications on crops was also announced.


In the defence sector, a new scheme will be launched for strengthening deep-tech technology. Allocation for defence in the interim budget has been increased to Rs 6.21 lakh crores for the financial year 2024-25 from Rs 5.94 lakh crores allocated for the last year. The increase is over 4.5 per cent from last year.


Expanding healthcare coverage under the Ayushman Bharat scheme to ASHA workers, Anganwadi Workers, and Helpers is a significant step towards ensuring a more inclusive and comprehensive healthcare system. The vaccination initiative for cervical cancer has also been announced.


The extension of the RoSCTL scheme for the apparel industry until March 31, 2026, provides stability and incentive for long-term planning.


With a remarkable increase in the capital expenditure outlay, the focus on infrastructure development is evident. The capex allocation stood at Rs 11.11 lakh crore for the next year.


Taxes and more


The interim budget had no significant announcements regarding the income tax slabs for the upcoming financial year, 2024-25.


Under the income tax laws, an individual (not having any business income) is required to choose between the new and old tax regimes every year. Hence, an individual can choose the new tax regime one year and the old tax regime the next.


Contrary to this year, a large number of changes were made in Budget 2023 in the new tax regime. The income tax slab changes announced in Budget 2023 are effective for the financial year between April 1, 2023, and March 31, 2024, and are set to remain unchanged for FY 2024-25 (April 1, 2024 and March 31, 2025).


The budget has provided insights into the party’s strategies for fiscal consolidation, borrowing, and forthcoming taxation policies, offering valuable clues to the market.


However, the Sitharaman has announced an income tax amnesty for taxpayers having outstanding direct tax demand disputes with the income tax department. As per the announcement, outstanding direct tax demands up to Rs 25,000 till financial year (FY) 2009-10 and up to Rs 10,000 between FY 2010-11 and FY 2014-15 will be withdrawn.


In layman terms, this means that taxpayers having pending tax demand disputes up to the limit announced for the specified financial years would be eligible for this benefit.


Allocations to major schemes



  • Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGA): Allocation hiked to Rs 86,000 crore for FY25 from Rs 60,000 in FY24, a 43.33 per cent increase.


  • Ayushman Bharat-PMJAY: Allocation hiked to Rs 7,500 crore for FY25 from Rs 7,200 crore in FY24, a 4.2 per cent increase.


  • Production Linked Incentive Scheme (PLI): Allocation hiked to Rs 6,200 crore for FY25 from Rs 4,645 crore in FY24, a 33.48 per cent increase.


  • Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem: FY25 allocation hiked to Rs 6,903 crore from Rs 3,000 crore in FY24, a 130 per cent hike.


  • Solar power (GRID): FY25 budget estimate hiked to Rs 8,500 crore from Rs 4,970 crore in FY24, a 71 per cent increase.


  • National Green Hydrogen Mission: Allocation for FY25 hiked to Rs 600 crore from Rs 297 crore in FY24, an increase of 102 per cent increase


Source- Economictimes

Budget 2024: How can Modi govt further give filip to tax administration using digital initiatives?


A steady transformation has been happening at India’s tax administration over the last 10 years, preparing India for its ‘Amrit Kaal’. This is best reflected through the broadening tax base and increasing collection. For direct taxes, the number of income tax returns filed (including revised returns) has increased by ~105% between FY 2013-14 and FY 2022-23 and the net direct tax collection is set to breach Rs 19 lakh crore in FY 2023-24 (~3 times the value in FY 2013-14). On the indirect tax front, over the last 6 years the number of entities registered to pay GST have doubled to 1.4 crore, while GST collections have been steadily improving with the highest collection for a month being recorded in April 2023 at INR 1.87 lakh crore.


Digital Initiatives: Core of the reforms


While several legislative and administrative initiatives have spearheaded this dynamic transformation exercise, the aggressive use of digital technologies to improve transparency, simplify processes to boost efficiency and citizen experiences, cannot be understated. Pivoted on critical national digital infrastructures, including the improved income tax portal (TIN 2.0, pre-filling of ITRs, and updated returns, PAN-Aadhaar interoperability etc.), Goods and Services Tax Network (GSTN: GST Portal, E-way bill system, E-Invoice System, TINXSYS etc.) Indian Customs Electronic Gateway (ICEGATE 2.0) etc., the Government of India has rolled out several state-of-the-art digital services and communication channels to enable a tax administrative culture and ecosystem that is taxpayer centric.


The success of the initiatives is a modern day ode to the adage, “the numbers speak for themselves”. For instance, since its inception, more than 425 crore e-way bills have been generated by the E-Way bill system; close to 5 lakh GSTINs have been generating Invoice Reference Numbers (IRN) through the e-invoice system with the number of IRNs crossing 18 lakh in May 2023. In case of direct taxes, the new income tax portal processed ~23% of ITRs for AY 2023-24 in a single day and the average processing time has been reduced to 10 days.


What’s next?


It is beyond doubt that sustained efforts towards digitisation have created a mature digital ecosystem which now begs the question, what’s next?


To assess and define the digital maturity required for tax administration in the age of rapid digitisation, OECD has laid down a possible vision for the future state of tax administration as “Tax Administration 3.0”. It identifies six core building blocks with the potential to remove structural limitations of current systems and move into integrating taxation into natural/native systems used by taxpayers, thereby ensuring compliance by design, seamless citizen experience and removing single points of failures. In other words, the OECD prescription for the future of tax administration is to design systems for a “world of driverless cars, from the current world of human-driven cars”.


A cursory mapping of the digital initiatives undertaken by the Government of India, to the six core building blocks prescribed by the OECD, indicates that most of the building blocks have generally already been laid down in India, other than distribution of tax laws in administrable formats to allow taxpayers to integrate tax rules with their own systems. Having most of the core building blocks, it is imperative to design and roll out digital systems and initiatives to move towards the future. While the transition will have multiple initiatives, there are two that have the potential to kick-start such a transformation roadmap.


SAT-F: Improved efficiency


A system of taxation through natural/native systems and compliance by design, requires standardisation and automation of data sharing by taxpayers with tax administrators. At present, data extraction from business systems for assessments by taxpayers and its validation by tax administrators, is often manual which opens up possibilities for inadvertent errors, and delays/inconsistencies in reporting and data verification. It may be feasible to consider introduction of Standard Audit File for Tax (SAF-T), an OECD standard that has been adopted by many European countries, for both, direct and indirect taxes. SAF-T involves creating a data file containing business accounting transactions in a standardised format. This benefits taxpayers as the process of data submission to tax authorities can be automated. From the tax administration perspective, a SAF-T file could significantly enhance and automate the tax audit process on a near real-time basis, with least interference for taxpayers.


Unified Digital Infrastructure for One-Stop Filing


Also, mandated by different legislations viz., company law, foreign exchange regulations, direct and indirect taxation laws, taxpayers have to do multiple filings that carry similar type of data. For instance, financial data (balance sheet and profit and loss statements) is required for filings under company law as well as for ITR Forms; GST data is available in GST returns but is also required to be reported in clause 44 of Form 3CD (Tax Audit Report). Apart from creating duplicity of efforts for taxpayers, this also prevents effective interoperability between tax administration and regulatory enforcement which needs to be removed for a seamless and delightful citizen experience. Hence, a unified digital infrastructure that can enable automated filings can bring down the compliance burden and dismantle information silos within the administrative ecosystem.


Timely roll-out of these two initiatives can speed up the pace of digitisation and pave the way for the next generation of tax administration.


Source- Economictimes

HDFC Bank share crash and the perils of equity funds that hug their benchmarks


The sharp 11 percent fall in the share price of HDFC Bank over the last two days has again raised questions over actively managed mutual funds mirroring their respective benchmarks in the Indian asset management industry.


HDFC Bank is among the most-owned stocks in the Indian equity markets. To put things in perspective, there were 539 mutual fund schemes, including active and passive, with a total investment of Rs 2.17 lakh crore in the private sector lender as of December end.


Of this, 420 schemes are actively managed with assets under management (AUM) of Rs 1.36 lakh crore, as per data available with Value Research.


This is probably because HDFC Bank has the highest weightage in the Nifty 50 index among all the stocks, at 13.52 percent. These weightages can change with different benchmarks. For example, HDFC Bank has 11.31 percent weightage in the Nifty 100 index and 29.39 percent in the Nifty Bank index.


While passive schemes such as exchange-traded funds (ETFs) and index funds have to adhere to the assigned weightages while constructing portfolios, active funds can alter their allocations based on fund managers’ judgement.


These weightages can then, in turn, have a proportionate impact in terms of returns.


Schemes with biggest impact

On January 17 and January 18, shares of HDFC Bank slumped more than 11 percent in total, eroding nearly Rs 1.5 trillion of investors’ wealth.


Returns-wise, passive sectoral funds based on the banking and financial services theme took the biggest hit on January 17 due to their large exposure to HDFC Bank. Schemes such as ICICI Prudential Nifty Bank ETF, Kotak Nifty Bank ETF, SBI Nifty Bank ETF, HDFC Nifty Bank ETF, and Axis Nifty Bank ETF slumped more than 4 percent, as per data available with ACE MF.


In terms of exposure, SBI Mutual Fund has the biggest investment in HDFC Bank, both via active and passive schemes, at Rs 62,416 crore, or 7.04 percent of the overall portfolio. To be sure, its largest scheme, the SBI Nifty ETF, is where the Employees’ Provident Fund Organisation’s (EPFO) incremental corpus gets invested. This is followed by HDFC MF at Rs 24,432 crore, or 4.19 percent of the portfolio, and UTI MF at Rs 21,626 crore, or 7.64 percent.

It has been seen that many actively managed funds choose to align their scheme portfolios with the respective benchmarks. But is that a good strategy?


Perils of benchmark hugging


Actively managed schemes such as Baroda BNP Paribas Banking and Financial Services, LIC MF Banking & Financial Services, Kotak Banking & Financial Services, and HDFC Banking & Financial Services took major hits on January 17.


Even when it comes to diversified schemes, those such as Tata Large Cap, SBI Bluechip Fund, and Bandhan Large Cap Fund, with their holdings of around 10 percent in HDFC Bank, fell up to 2 percent each on the day.


According to Nirav Karkera, Head of Research at Fisdom, most actively managed mutual funds have kept a mandate that they will not be completely divergent from the benchmarks.


“From a risk standpoint, even if funds don’t see value in a stock, they don’t want to completely avoid exposure to something that is heavily represented on the index,” he said.


“However, (we should) understand that many fund managers target relative performance. Managers need to generate alpha, which is outperformance over the benchmark. In such a case, it is difficult to deviate significantly from the benchmark through exclusions. However, many have historically delivered superior returns through active management. So, constituent overlap with benchmarks and deviations through weightages are also practices that have worked for many,” Karkera said.


Some funds have less exposure to HDFC Bank in their portfolios. For example, schemes such as ICICI Prudential Balanced Advantage, Kotak Flexicap, and HDFC Balanced Advantage have exposure in the range of 4-6 percent to the private sector lender.


Though rare, some mutual funds, such as Quant Mutual Fund, don’t have any allocations to HDFC Bank.


To be sure, mirroring or diverging from the benchmark doesn’t guarantee better returns, as mutual funds generate returns via stock selection and then timing the entry and exit.


Kirtan Shah, Founder of Credence Wealth Advisors, says that in the active mutual fund space, there are two types of fund managers: one, who are largely index-hugging with a little change here and there, and two, those who take very bold calls. “In the active space, you really want to be with somebody who takes active strategies, actively,” Shah said.


Can funds ignore benchmarks?


Fund managers try to align their portfolio weightages to the respective benchmarks, as a mutual fund is a relative-return product and performance is relative to the benchmark.


“Funds cannot entirely eliminate a stock (that is, not invest anything in it), especially a stock like HDFC Bank, which has delivered consistently over the last 25 years. They have very little reason to do so. At best, they can tweak the allocation based on their preferences. HDFC and HDFC Ltd (erstwhile), have been bellwether stocks, belonging to a sector that was consistently growing and tightly tied to the India growth story. The merger between the two would have led to an increase in overall exposure,” said Deepak Chhabria, Chief Executive Officer & Director of Axiom Financial Services.


How should you react?


The answer: No.


While investing in mutual funds, reacting to the day-to-day performance of underlying stocks can be counterproductive. There are thousands of stocks on the exchanges, and they trade for around 250 days a year.


“Judging a mutual fund scheme based on a single month-end portfolio is also difficult. A scheme may hold a stock for 29 days and sell it on the last day, which would not reflect in the factsheet. So, you cannot look purely at the stock weightages and make a decision. The whole idea is that such events (the HDFC Bank stock fall) will keep happening; investors just need to stay the course and stay wiser,” said Amol Joshi, Founder, PlanRupee Investment Services.


To achieve a diversified portfolio, it’s advisable to include both active and passive funds. For successful mutual fund investments, knowledge about asset allocation and market timing is essential.


And the next time a bellwether stock falls on a given day, just stay invested. Keep monitoring, though.

Source- Moneycontrol

Piyush Goyal says US fund house looking to invest $50 billion in India


US-based fund house is looking to invest about $50 billion in India in the next 10 years, a reflection of the country’s strong macroeconomic fundamentals, commerce and industry minister Piyush Goyal said Friday.


“They said we have invested about $13 billion so far, we expect it to double it in the next four years and then double the figure… in the next four years… just one fund,” Goyal said at the ET NOW Leaders of Tomorrow Awards. He termed the firm “one of the most prominent” investment houses of the US but didn’t disclose its name.


Goyal said it shows the excitement of global investors over India, which is the fifth largest economy and no more part of the Fragile Five. Forex reserves have soared to over $600 billion and the government is focusing on modernising India’s infrastructure–rail, roads, ports and airports. The comment followed his post on X earlier in the day: “Discussed the ‘India opportunity’ in my meeting with Mr. Henry R Kravis, Co-Founder and Co-Executive Chairman of KKR, a leading global investment firm from New York.” Goyal emphasised that the world today wants to engage with the country on the trade front and negotiate free trade agreements as India is emerging as a large and trusted partner.


“That is the excitement about India today,” he stated. “The fact that today we are the fifth largest economy of the world, no more counted as a Fragile Five economy, solid foreign exchange reserves, $623 billion at the last count, management of inflation appreciated across the globe.”


From 100 startups 10 years ago, Goyal said India is now supporting 115,000 registered startups. The country is poised for high growth in the next two or three decades, taking the economy to $35 trillion.

Source- Economictimes