Income Tax Return season

Finally ITR season is once again back and most of you must have filled the return by now. Though I never understood why government need this process when they boast of having a PAN card for all your financial transaction with government. But a process is a process and by virtue of being a process, it at times can be slowing barrier. Still, as we all live by law of land, this is a mandatory process for us all to furnish.

One strange thing I observed with online filing of return is that, you still need to waste paper and whats more, pay stamp ticket for dispatching ACK form to bangalore. Whoops.. thats crazy.. Are they really promoting e-filing or discouraging individuals? One possible reason I could think for this nonsense looking process is that they require physical signature to establish a proof later, if needed, that its YOU who filled return.

Donot make mistake of filling wrong ITR form. Its as wrong as writing an examination for class XIII when you were supposed to appear in IX. Few tips on choosing correct ITR for people in s/w community.

Which ITR to FILL?

1. Only Salary/Pension/FamilyPension and Bank interest: ITR1

2. Salary/Pension/FamilyPension, Bank interest, Stock delivery gains(capital gains) and House property (loan rebate also) : ITR 2

3. Salary, Bank interest, stock intraday gains, delivery gains, house loan : ITR 4 (MUST)

ITR1 is not for you if:

You are filing on behalf of a Hindu Undivided Family (HUF)

You have sold shares / mutual funds in the past year (FY 07-08)

You have sold house / land in the past year (FY 07-08)

You have paid EMI for your house to repay your home loan

You have rented out your house

You have income from your business or profession

ITR2 is not for you if:

You have income from your business or profession [stock intraday trading, delivatives (futures options)]

ITR4 is not for you if:

You or your HUF do not have a proprietary business

Donot be surprised, when you buy and sell shares on same day, it is considered speculative gain/loss and not short term capital gain. So, ITR4 is a must for all those who indulge in intraday trades.

What if you have made only losses? You might question, I have only losses, why should i fill itr4. Well, legally it can go against you as IT officials might claim that you tried to hide informations and doing something incorrect.

Donot be afraid of ITR 4, it only looks big. if you have made only losses, you can still show them in ITR and get it rebated if you gain in future years.

By the way, in case you have not finished the ITR and need help in furnishing it, you can contact me at prasant.agarwal@gmail.com and I would be glad to help you. I encourage e-filing free of cost (only stamp and envelope cost for a post to bangalore) at https://incometaxindiaefiling.gov.in/

UPA in power

Finally UPA has come back to power and markets have welcome Dr Manmohan with thump. Historic golden monday for markets are they hit Upper Circuits and ended 17+% above. The ULIPs were so wary of redepmtion, they announced that Monday's NAVs will not be applicable and all redemption will be made on Tuesday's NAV. But no respite for them as NAV on both days were similar.

The big question remains, the market gave thumbs up for stability of a non-left government. But with allies as DMK, TMC, is it reasonable to expect long lasting government?? Time will tell that.. But the great India story likely to return to path and we may see a good 2010 if this govt doesnt do anything silly to loose power.. I say so because they are too vocal about support from their old allies, RJD, SP etc...

Too much outside support can spoil the party.. but nevertheless.. it was soothing to see green marks on markets after such a long time..

-Prasant

Is it end of great Indian equity Dream

Last year around same time, we were dreaming(and our analysts were predicting) of 25000 level on sensex, a year later it turned out to be completely right, just 2 slipped somewhere in 2008 and left us hoping that we don't go to stone age of 5000 sensex level.

We must thankfully say good by to 2008 for being kind to leave us in the end after creating havoc worldwide. Everyone on Financial sectors looks happy that the year of distrust, fall, sadness, 2008 is going down the drain. 

After biggest financial crisis of present world i.e. year 1929-30, this year leaves financials worldwide left wounded. But there is a message to all of us. 'DO NOT BE TOO GREEDY'. Always know limits.  When 2008 begun, everyone was looking at 25000 sensex, dream run to continue. But we forgot that,

- What we were seeing was due to Foreign inflows

- There was no reason for them to continue coming to India when their own houses were put to fire. 

As per a data extracted from leading broker, FIIs pull out Rs 53500Cr while Domestic Investors invested Rs. 15500 Cr. If I take this figure ahead, Rs 38000 Cr (pull out can leave us wounded and markets down more than 50% YoY. These wounds are going to take years and years to heal and see markets on fresh high.

We also forgot that ours GDP is rising due to foreign investments and our own savings are not sufficient to keep India moving. That's why you see many perks being given to foreign firms to come to India and invest, latest being in Insurance sector (with FDI limit going up to 49% with recent bill in parliament). 

Our annual GDP is less than USA's money lost in this financial crisis.  Are we confident of what we are doing?  I am no expert to answer that, perhaps the great expert of generations, the time, will answer that. My prediction is that, at the end of 2009, we would be somewhere 20% up from here (i.e. 12000 on sensex and 3700 on nifty) with seeing lot of volatile sessions.

Bye 2008!!  (No reason to add 'good' before bye!!)

Market staging smart upmove

With Domestic Trader deciding market pace inabsence of foreign rich fund managers, market are heading up. I would again cautious, stay away or book profits on ur holding if u bought recently before 5th Jan, whenbig boys arrives and decide market movement.

Today, market is seen up. But may loose ground in evening. IT Stocks will continue to tumble.

History repeats..

With markets showing year end rally, history repeats. As volumes are low (Fund managers are on vacation), small trades are pulling markets. This trend may show up for a day or two before a final call will be taken on markets.
Generally, from past trends, markets continue to rally or subdued until mid January and after which there are steep cuts (Remember Jan 21-22, 2008 cuts). Its probability in 2009 becomes high with the fact that by mid-Jan we will have corporate earnings coming out for Oct-Dec 2008 quarter which are expected to go down by about 15-20% at least.
So, play this rally to cleanupyour non performing stocks, even if that means loosing some money. It becomes a case, if your entire portfolio contains midcaps and small caps. So, clean them up and get into some good large cap stocks as they are first movers when markets stablise.
For today, I suspect, it will be another volatile session with markets going up during early trade.

Stay cautious

So, market conquered 2900 but are we really out of woods??

Not really. This week is a period of very low activity as most fund managers worldwide are on holiday. So a small trading amount can take stocks to a higher/lower levels. So stay cautious and donot buy in this smart looking upmoves. Wait for real money boys to return and then take a call on what should be done..

 

Markets stumbles

The fear that I expressed in my last post has started to come up the bourse. The markets have taken a dip on poor advanced tax numbers reported by IT department. The tax figures are down by 22% causing a dip in markets.

Since markets are off recent highs of 3100 by 250 points (8% slide), I think markets will stay new 2800-2900 for some time before taking directions. But if 2800 is broken on downside, it would leave gates open for bigger cut in market, may be up to 2500. And if earning season is worse than market expectations, you can see a level of 2200. But that's very pessimistic view of looking at things.

So, for now, dont have anything big in your portfolio and prefer to stay cash rich. Equity as an asset class has taken a hit and likely to be subdued for some time now. For next two quarters, my bet is gold which can appreciate up to Rs. 15000 per 10 gm if equity markets continue to slide.

Perhaps a time to re-look at your portfolio from short term perspective.