ExpertDabbler

Sujatha aka S Rangarajan, the ever reliable creative/information bank to mainstream media and tamil cinema fraternity is no more.
I’ve had my own opinions on his non-fiction writngs. But there’s no denying the fact that he epitomized ‘versatility’ , ‘multi-faceted’ and ‘prolific’ like no other among the writers of Tamil Nadu. He was a giant in his own right. Salutes to Sujatha and condolences to his family.

I think it’s only appropriate that i publish something on taxes just two nights before the Union Budget

The Income tax in India wiki has the following.

Interest on Housing Loans

For self occupied properties, interest paid on a housing loan up to Rs 150,000 per year is exempt from tax. However, this is only applicable for a residence constructed within three financial years after the loan is taken and also the loan if taken after April 1, 1999.

For let out properties, the entire interest paid is deductible under section 24 of the Income Tax act.

If the house is not occupied due to employment, the house will be considered self occupied.

worst practice happening:
Our ‘kepmaari’ makkals build a house for 35 lakhs, for which they would be paying an EMI of about 33000 per month. Out of this, about Rs.30,000 would be for the interest component.
But if only the assessee declares the house as self-occupied, his maximum deductible amount will be Rs.1,50,000.

So our killadi kepmaaris declare the newly bought house as ‘let out’ for a princely sum of Rs. 3000 per month.
The result?His entire 3,60,000(30,000 x12) is fully deductible.

On the other hand, he is going to add Rs. 36000 as annual value of such let out house property.

Income From House property

Income from House property is computed by taking what is called Annual Value. The annual value (in the case of a let out property or a deemed let out property) may be maximum of the following:

* Rent received
* Municipal Valuation
* Market Value

Annual value in case of a self occupied house is to be taken as NIL. From this, deduct Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value, deduct :

* 30% of Net value as repair cost (This is mandatory deduction)
* Interest paid or payable on a housing loan against this house

In the case of a self occupied house interest paid or payable is subject to a maximum limit of Rs,1,50,000 (if loan is taken on or after 1st April 1999) and Rs.30,000 (if the loan is taken before 1st April 1999)

The balance is added to taxable income.

I dont think one needs to show any proof for declaring such low amounts as rental value.

What’s more, he will show another fake receipt which stipulates he is giving out monthly rent for his accommodation of , say, Rs 6000 and claim HRA as well.

Idhu epdi iukku?

If this can happen with salaried professionals, imagine tax collection among business men.

What happens when a 24 year old, 3 years experienced software pro gets a CTC of 8 lakhs plus?
She has no precedent in her family who can guide her on how to handle all the new money. Nor is she taught about the importance of financial prudence in school or college. While a fat pay cheque is a good thing, it does come with its own perils.

As the economy sees GDP growth rates of 8% for the nth consecutive year,and with the industry facing acute shortage of manpower, more and more young people are earning a lot more per annum than their fathers and forefathers ever did in a decade. Where does this lead to? As is always the case with most youngsters, they end up learning things the hard way.

Almost always, the jobs that most of these MNCs dish out just plain sucks or is too demanding. This is not to say that work with lesser pay packets are revolutionary. What I am stressing here is, a crappy work can make you more cynical, and more frustrated in the long run, and a fat salary can just make more people enter into quirksmode. Typically, people would respond by trying to compensate their dull day life with exciting things in life that money can buy - fun nights or weekends, lavish lifestyle etc. just to went out their frustration.

Soon this 8 lakhs per annum CTC leads to parties, buying expensive clothes, a car on EMI scheme, new mobile phone every few months, LCD television, monthly mobile bills big enough to can get a mobile phone, move to ridiculously expensive apartments - purchase or for rent. The term ‘compensation’ is more in line with the compensation for loss of happiness than for the time spent and knowledge gained.

Let’s see the less glamorous facts.

First, 25% of that CTC is what i call ‘God money’. You know it’s there but you can never see it - e.g., Variable Pay, PF etc.

Second, 33% of the balance will go to the tax man (or to the Home loan lender - essentially the money will go out of your hand and will be taxed again if and when it returns to you).

Third, your job was secure only till your last payslip, in other words, not any more. You never know when USD will go below 35 rupees, how much loss can your investment banking employer/client can absorb on sub-prime crises before axing you, and when your boss can get so cranky that you cannot stand.

Fourth and very importantly, the opportunity cost incurred is enormous. For one, not many can move to less paying but more potentially rewarding vocations in future (higher studies) because of societal and financial/lifestyle pressures.

If X wants to pursue a full time MBA in a good B school, he knows that he cannot because he absolutely needs the paycheck NOW to pay his home loans, car dues, credit card bills, mobile bills etc. This leads to even more frustration and consequently he requires more exciting things to keep him happy. All these are classic illustrations of ’salary trap’. Unfortunately, i find more and more fellow MNC folks falling into this trap. And it looks like there is no way out.

Frankly, i bet almost all of the salaried class would’ve, at some point or the other, felt trapped by their monthly pay checks. At least I’ve felt the same now and then. And this is true indeed, only the degree of entrapment varies.

So what’s the way out? Well, the way out will depend to a large extent on the degree of entrapment. And that can be deduced by a simple method. If you think you’ve been trapped as well, imagine a doomsday scenario. Just think you will be out of your job by EOD today. How long do you think you can survive with your own resources? An honest answer to this question will show you the dire straits or financial paradise you are in. If you are financial paradise material, then you do not belong to salaried class.

Once you know where you stand, just accept that as a fact. Realize that it’s gonna take sometime for you to come out of the mess - a year or two. Remember you did not get into the mess overnight.

Here are some common TO DO items which i sincerely think that you can do to help yourself:

Make sure you close at least 10% of your outstanding credit card dues every month. I know many jithan’s who dodge with balance transfers, but hey, a debt is a debt. Just because it’s interest free does not mean you will ever be worry free. The sooner you make it to zero, the better off you are. Credit card interest rates in India can be as high as 36% per annum - legal kandhu vatti.

Make sure you save at least 10% of your salary per month.

No matter what the tax benefits on your home loans are, target to close at least 10% of your outstanding principal every year.

Develop interests or hobbies which are engrossing but which does not cost a bomb. There are tons of hobbies and pursuits satisfying this criteria.

Never, never trade in stocks using margin funding. Avoid day trading in stocks per se. Day trading in stocks is not investing.

Get a decent health insurance cover for your family members.

All the above gyaan is not to prevent you from enjoying your hard earned income. My only concern is, know what you are getting into. Balance and moderation works well in most of the situations in life, but it works best in these aspects.

It’s great to live king size today, but make sure you and your family do not end up living pauper size tomorrow.

Info-1:via my friend jeysh

Income Tax Department has put on its website the list of income tax refunds of all salary tax payers which could not be sent to the concerned persons for want of correct address.
Salary taxpayers who have not received refunds for assessment years 2003\04 to 2006\07 can click on the link below and query using the PAN number and assessment year whether any refund due to them has been returned undelivered from the menu `undelivered salary refund management system’.
If any refund has been returned undelivered due to change in address, then the taxpayer can enter the present address and the refund will be sent to the taxpayer at the new address.

The link to the website is as under:
http://www.incometaxindia.gov.in/CCIT/refundsearch.asp

Info-2
Folks who commute in their own two-wheelers in OMR are strongly advised not to take the Pallavaram Bye-pass during evening, night times. At the bare minimum, you may have to endure a million insects ramming into your face in the stretch between Thoraipakkam and Kamakshi Memorial Hospital. Not worth it.

Info-3
I still see a few folks having their helmets in their fuel tanks. Not sure if their fuel tanks are so precious, fuel prices notwithstanding. The common complaint against wearing helmet is losing one’s hair.
‘Mairey pochu!’. If its a choice, would you rather lose your hair or your head? Its a no-brainer, honestly. Think about it this way, even your hair tries to protect your head. So it will only be too happy to sacrifice its life for the sake of protecting your head.
My friends’ friends’ father passed away in a tragic accident y’day. This is not the first, this is not the last. If you still wager your head to protect your hair, you’ve lost you brains anyway, what’s the difference?

Thanks to Arun for making me read my own old posts:)
Adhaagapattadhu, i am supposed to do a tag which lists some of my old posts into different categories.

Family:
Amma, Appa. I don’t think i will ever write like this again. I was going through a whole range of emotions when i wrote this and still go through strong emotions when i read it now.

Friends:
I am not the quickest to make friends but i manage to nurture friendships for long and i’m proud of it. I’ve written about my friends here and i am in touch with 3 of them - Mani, Priyums and Satya. Two of ‘em moved away from me for their own reasons. But hey, letting them go and moving on is part of friendship too.

My Love:
I am not intent on spoiling family peace elsewhere. And some of my friends are eager to pull words outta my mouth on my past crushes
So let me just say writing is my love. closely followed by photography and design. Ennoda oru interview questiona ye blog post a potta perumai enakku undu

Things i like:
Books - From Chomsky to Kalki via Seth Godin, Tom Peters, Gladwell etc.
I also like the fact that i could make total strangers smile or laugh at some of my older posts when i come across as more intense in person.

Myself:
Not many people know that i am a quitter. I’ve quit college, my professional accounting courses, my first job domain (accounts guy), not to mention a few companies along the way to what i am now. I get bored very soon.
Trying to become more focused and disciplined in general.

Recent plans and activities include:
Learning French,
Trying to understand the whims and fancies of the stock market,
Writing a script for my next podcast,
Writing a situation or scene a day for a planned novel.

Is there a connection between any of those activities? Now you know i am called indisciplined

PS:
Wordpress really played cranky here. i published this morning, even had BNB (sorry thalai) comment on it and mysteriously its all gone. Luckily i had some in the draft, the rest i rewrote the post from memory, which leads to one more thing about me - i have a decent memory and specialize in numbers

Who do i tag? - Ramyanisha, Balaji Rajan, Gopi, Deepak, and Chakra

Let me modify the rules slightly, if at all you ave not written much on the aforementioned topics in your earlier posts, please do it now

எட்டு வயதில் கிரிக்கெட் கனவு
பதினெட்டில் காதல் கனவு
இருபத்தெட்டில் நல்ல மனைவி மற்றும் சொந்த வீடு கனவு
முப்பத்தெட்டில் குழந்தையின் எதிர்காலம் கனவு
நாற்ப்பத்தெட்டில் பொருளாதார மேன்மை கனவு
ஐம்பத்தெட்டில் பிள்ளைகளின் கல்யாணக் கனவு
அறுபத்தெட்டில் பேரன் பேத்தி கனவு
தோழா உன் அத்தனை கனவும் நனவானதாய் நான் கண்டேன் கனவு

PS:
A tamil post after eons. kutram kurai iruppin mannikavum

Take Canara Bank, when compared with some of the valuations of other stocks, Canara Bank’s numbers and the present price sounds too good to be true.

# Been in the business for long
# Sells for something as low as 1.5 times the book value
# has a decent, infact a good EPS
# has a pretty good YoY growth in profits
# atrociously low PE ratio

and the people were dying to get hold of the likes of Reliance Power, Unitech etc

Onnume puriyalai!!

I think the toughest thing to do in stock markets is keeping our own counsel.

Disclaimer:
I am no expert in stocks and i hold Canara Bank shares.

Dear Mr. Kalam

In 2020 - I dream of my country with no need for a revenue stamp for getting my own money.

I simply don’t get the need to stick a revenue stamp for collecting my own PF. If the stupid govt. wants to suck one rupee out of me, they can do so through less cruel means, without wasting my time.

No one knows where its available. Its almost always unavailable at the post offices.
I have to spend 1 hour, making a handful of phone calls to locate that one potti kadai in some corner of the city which sells these revenue stamps at a higher price. Chances are those revenue stamps sold in black are fake.

If only you can make it happen quicker, we can dream of bigger things in 2020. Till then, things like revenue stamps bug us a lot more than you can imagine.

I was doing some random reading of THE INTELLIGENT INVESTOR (The only book strongly endorsed by Warren Buffet) and i found some guidelines for the defensive investor to pick a stock. Defensive Investor can be defined as who do not want to lose their shirts, pants etc in a hurry.

#1 Exclude small companies

#2.a Current assets/Current liabilities >=2
#2.b Long term debt should not exceed net current assets

#3 Some earnings in each of the past 10 years - not sure what exactly he means here.

#4 Uninterrupted dividend payments for the last 20 years.

#5. Earnings Growth
A minimum increase of at least one third in EPS earnings in the past ten years using three-year averages at the beginning and end.

#6 Moderate Price / Earnings Ratio ubiquitously known as the PE ratio - should be 15 or less.

#7 Moderate Ratio of Price to Assets
Current market price should not be more than 1.5 times of the book value.
OR
the product of PE and CMP/Book value should always be less than or equal to 22.5.

I know there are stocks satisfying #1, #6 and #7. Not sure about #4.

I am not sure an average investor thinks about all these factors before buying a stock.
A cursory look in moneycontrol.com reveals comments like ‘This will touch Rs. 700 in 2 months’.
No wonder people lose when there is a market crash.

On the other hand, i am not sure if there is a stock in BSE/NSE which will satisfy all of these criteria.

Forget Warren buffet, i am wondering if i can make enough money to buy myself a buffet lunch through this

Here is a list of interesting names from Madurai and South of Madurai.
I am not making anything up here

Here is a sample:

‘kazhutharuthaan’ palani - is it kaarana peyar??
This guy was an accused who in turn was murdered the first day he was out on bail in the last few days.
Not sure if his neck suffered the same fate. But what a standout name!

Eppodum vendraan
A place near tuticorin -takes positive thinking and optimism to new places

Koothiyaar gundu
Sathiyama this is the name of a place near Madurai. And no i am not talking bad of anybody here.

Thideer Nagar
Name of a police station in Madurai Thank god they did not name it Thiruttu nagar police station.

Thangachi Madam
You will hear this place as you near Rameshwaram.

And last but not the least,
MATTUTHAVANI - the place which hosts the (in)famous Madurai bus terminus.