Friday, March 04, 2005
Clarification - Chidambaram Ditches Students!!
Clarification - Chidambaram Ditches Students!!
As it seems now with the current situations (and no clarifications from the CBDT), the upper limit on the deduction (Section 80E - deduction on repayment of education loans) has been removed (it was earlier Rs. 40,000 per month).
So now in case you have a loan of Rs. 7,10,000 (or above), interest @ 10%pa (diminishing balance) & the repayment is done in 7 years (using EMI), then the net deduction will be more than what was allowed earlier.
In this situation (Rs. 7,10,00 loan @ 10%), the total interest deductible over 7 years (max period allowed for deduction) will be Rs. 2,80,088 (as against 2,80,000 earlier) and this deduction will obviously increase with increase in loan amount (coz interest will increase)
However, for loan amounts lower than this (which is the case in majority of the education loans in India), the students will get lower deduction from the earlier one!!!
I guess we'll have to wait from clarifications from the government - specially in regards to the upper limit (as in busget he said that the limit stays)!!!
P.S. - In case of the education loan which I have taken, the deduction will go down to Rs. 1,49,161.00 from Rs. 2,80,000 (marginal tax burden of Rs. 5,600 per annum)
prateek2410 | 06:46 pm
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Thursday, March 03, 2005
Budget Analysis - II - Chidambaram Ditches Students...
Budget Analysis - II - Chidambaram Ditches Students...
Was going through the fineprints of Budget today - but suddenly mention of Section 80E (which deals in deduction on education loans) caught my attention.... in the Finance Bill only those sections are mentioned in which there is any proposed change, but then didn't Chisambaram mentioned in his speech that the deduction on education loan has not been touched....
The earlier version of the deduction allowed to deduct the repayment of principal along with the interest paid thereon from the taxable income of the assessee (of course the pricipal & interest of Education Loan only). This deduction was Rs. 40,000 per year for 7 consecutive years. But now the deduction has been limited to interest component only & the word pricipal has been omitted from the section.
I studied the impact of this change, taking some hypothetical figues - Loan of Rs. 4,00,000 & interest @10%p.a. (reducing balance). So for 7 years repayment, the EMI comes to approx. Rs. 6,640. Using this the deduction earlier would have been Rs. 2,80,000 (spread across seven years) , but now the deduction will be limited to Rs. 1,57,800 only!!!!! This will lead to an additional (marginal) tax burden of approx Rs. 5,300 per year (avegare - @30% - with no surcharge)
What the hell is this supposed to mean??? Mr. Chidambaram very categorically specified in his speech that deduction on education loan stays as is it (though i expected him to raise the amount).... but then when you read the fineprints, you find such gross stupidity & back stabbing from the ministry!!! This clearly potrays the lack of transparency showed by the FM during his speech....
So Mr. Chidambaram - what do we do with our education loans, the effect of which we calculated assuming that the deduction will stay & thus taking loan is more beneficial than shelling out money from other resources???
prateek2410 | 01:28 pm
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Tuesday, March 01, 2005
Indian Budget 2005 - The Showbiz
Indian Budget 2005 - The Showbiz
Union Budget 2005 - one of the most awaited one was unfolded today... Mr. Chidambaram seemed very confident presenting his dream of "Bharat Nirman"
Many people rate this budget more than average, however i beg to disagree here.... no doubt the budget is a decent one, but not what we expect from the so called "dream team" of Mr. Chidambaram, Dr. Singh & Mr. Aahluwalia. Most of the budget was "incremental" only & had nothing fresh in it. The reform measures of previous years are just carried forward, with some minor changes here & there...
Agreed that the economy is going through a good phase, but that does not warrants a stable & non-controvertial budget. Some might argue that when the economy is on a right path, then whats the need of trying paths to higher growth. But then we forget that we are today at this level, mostly because of the unconventional path used in some of the previous budgets, including the budget of 1991. New methods, although risky, can lead us to a better economy & what gains are made without risks???
The FM talked about reforms in education sector, but then the interest rate subsidy on education loan, announced last year has not reached the borrowers yet. Deduction under section 80E (for payment of education loan) has not been touched, and the deduction is still available at a low level of Rs. 40,000 per year (for 7 years), which should have been raised to atleast Rs. 60,000. Not much was talked about utilisation of funds collected through education cess levied last year. However, proposal to convert a college to the levels of Oxford/ Havard etc was a welcome move.
The FM talked about reforms in Banking sector & also the thrust to enduce public savings. However, the proposal of cash withdrawl tax @ 0.1% (on withdrawls more than Rs. 10,000 on a single day) was a real wash off. This proposal introduced as "Anti tax evasion measure", although seems to be small, can have cascading effects - firstly, it will effect only those people who wish to withdraw money for genuine reasons, as for person who wants to withdrwn cash to convert his money into black money, a sum of Rs. 10 for every Rs. 10,000 is a small price for such conversion & it will hardly stop him from doing so. Secondly, this will certainly stop people from keeping their liquid cash in banks, rather they'll prefer to have hard cash below their beds. Thirdly, this will end up people opening more & more accounts to distribute the cash & thus avoid the tax. This will lead to unnecessary over burdening of the banks, with no additional deposits. And lastly, it will certainly increase the paperwork of the banks, in order to keep track of such transactions & document the same.
During the whole budget, the FM talked about reduction in taxes, duties etc - but he also promised to increase the revenue collection by 50% over the next two years. However, the source of such increase has not been talked in details.
The companies were lured by decreasing the tax rate from 35% to 30%, however the real reduction is far less than it seems to be. The additinal surcharge of 10% will take it to the levels of 33% & add to it the reduced rate of depreciations (which obviously will reduce the levels of capital investments by the companies).
One of my major concern here is the biased budget against the salaried people. The basic logic behind Standard Deduction was to bring salaries at par with the profits of business class people (Businessmen get to deduct expenses, which were incurred to earn the profit, from their profits & pay tax on that, similarly standard deduction was the notional expense incurred by salaried people to earn that salary). However, after raising the slab rates of individual taxation, the FM has done away with standard deductions, but then the deduction of expenses for businessmen still remains the same. On the top of it, many more "fringe benefits" have become taxable in the hand of employers (which were earlier exempt)... so why salaried people should always bear the burder more than others???
P.S. There were many good points in the budget also, but they were very generic to talk about, except for long awaited increase in tax slabs & simplification of tax laws.
prateek2410 | 02:26 am
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Sunday, February 27, 2005
Rechristened!!!
prateek2410 | 05:40 pm
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Wednesday, February 23, 2005
Chalk Fights...
Chalk Fights...
My batch - rather my section revisited the childhood in the classes today... many of them indulged in the funniest fight ever - the chalk fight!!! I know it seems to be kiddish to be doing post graduation & doing this kinda stuff - but then being in post graduation does not mean that we cannot let the child within us to wake up at times (specially during the 15 mins. break)... so as it happened - some of my peeps started targetting some of the sleeping junta (obviously during the break) using the most advance weapon available their - the chalks!!! Add to it - we generally have two boxes of chalks - one having only white ones & one having colours ones... i quickly took out my camera to capture some moments (was carrying it to class also!!!).... but then was caught guarding myself from those dangerous missiles!!!
Neways clicked some of the pics in class today --
The repercussions of this chalk fight were cleary evident in the mail we received from the administartion office - asking us to refrain from such activities!!! But then - even by not being part of the whole game - enjoyed just watching & saving myself!!
In the evening we had a guest lecture by Professor Philip Nemo, from ESCP-EAP (France)... dunno what all i learnt from it coz most of it was over head transmission... but yes a good experience - specially one incidence which shook our Pg-Rep (cant discuss that here - will need his permission)!!!
prateek2410 | 02:59 am
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Tuesday, February 22, 2005
Seriously Joking!!!
Seriously Joking!!!
Recently one of our very learned prof. was probably very pissed off from our class - so pissed off that he just wanted to cut short the way he took attendance - so his next sentence was "Those who are absent - please raise your hands"!!! And believe me the whole class was thumping their desks...
This incident took me 6 years back - when i was in school!! We had our beloved P.T. instructor - who had a great english & i guess equally great sense of humour... here are two of his favourite dialogues...
- I have two daughters & both are girls!!!
- Both of you three come here!!!
And believe me - he always said these very seriously!! dunno it was deliberate or...........
prateek2410 | 07:58 pm
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Monday, February 21, 2005
Lucknow bleeding again.....
prateek2410 | 05:15 pm
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Friday, February 18, 2005
Mid Term Exams - Term III
Mid Term Exams - Term III
Our Mid Term exams for 3rd Term starts tomorrow... really feeling bad as i am not at all prepared for even a single subject.... God knows what will happen this time!!!
Here is the tight schedule we have :-
19th Feb. - Corporate Finance (10:!5 am) & Research Methods in Business (2 pm)
20th Feb. - Organisation Design & Change (10:15 am) & Economics - II(2 pm)
21st Feb. - Operations - II (10:15 am) & Management Information Systems (2pm)
22nd Feb. - Strategic Management (8 am)
I need loads of luck this time....
prateek2410 | 03:33 pm
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Thursday, February 17, 2005
Spam Archive...
Spam Archive...
I dunno how - i guess accidently came across a blog on blogspot... maintained by our very own Praful (incidenly he sits right next to me in class - his roll no. being one less than mine)....
We have a golden history of spams in our college. Every batch has its own set of spammers who keeps on sending arbit mails to the batch - and adding to our woes, the capacity of our internal mailbox is only 13 MB per person (after this outgoing mails are barred)....
prateek2410 | 11:01 pm
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Wednesday, February 16, 2005
MDI Final Placements 2005
prateek2410 | 07:59 pm
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about
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About me ... in bullet points (as we say in MDI)
Name - Prateek Agarwal
Qualification - MBA (Finance), C.A., B.Com.(Hons)
Work-ex - 17 months
Location - Lucknow/ New Delhi
Hobbies - Poetry writing, swimming
Date of Birth - 24th October
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