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Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Sunday, May 3, 2020

What is the best financial advice you can give a newlywed couple?


The honeymoon period is officially over when newlyweds start talking about finances. Jokes apart, there are a few tips that I would like to share for newly married couples. These are-
a) Discuss your financial status: Discuss finances with your spouse as soon as possible. You’ll need to go over what accounts you have and how many loans you have to payback. You’ll also want to be clear on how you expect money to be handled. What you have, what you owe, what you spend, and how you feel about investing should all be part of the conversation. In other words, avoid financial secrets.
b) Understand financial goals: After you have determined your baseline financial status, discuss your long-term financial goals in-depth. Set some common goals, whether you’re buying a home, taking a yearly vacation, or planning for retirement. Work together to figure out what you can realistically afford. Make sure to write all of your goals down and review them periodically. You’ll have a much better chance at success if you do. Remember, though, this isn’t a one-time thing. Your goals and priorities will change, both individually and mutually. Revisit this conversation occasionally and make sure that you continue to be focused on your shared goals.
c) Build an emergency fund: An emergency fund is money that is set aside in case something expensive happens unexpectedly, such as a lost job, family illness, natural disaster, or a major home repair. Your aim should be to save at least 6 months' worth of household expenses for the emergency fund. Building an emergency fund should be a priority because it will bring financial security if and when disaster strikes.
The honeymoon period is officially over when newlyweds start talking about finances. Jokes apart, there are a few tips that I would like to share for newly married couples. These are- **a) Discuss your financial status:** Discuss finances with your spouse as soon as possible. You’ll need to go over what accounts you have and how many loans you have to payback. You’ll also want to be clear on how you expect money to be handled. What you have, what you owe, what you spend, and how you feel about investing should all be part of the conversation. In other words, avoid financial secrets. **b) Understand financial goals:** After you have determined your baseline financial status, discuss your long-term financial goals in-depth. Set some common goals, whether you’re buying a home, taking a yearly vacation, or planning for retirement. Work together to figure out what you can realistically afford. Make sure to write all of your goals down and review them periodically. You’ll have a much better chance at success if you do. Remember, though, this isn’t a one-time thing. Your goals and priorities will change, both individually and mutually. Revisit this conversation occasionally and make sure that you continue to be focused on your shared goals. **c) Build an emergency fund:** An emergency fund is money that is set aside in case something expensive happens unexpectedly, such as a lost job, family illness, natural disaster, or a major home repair. Your aim should be to save at least 6 months' worth of household expenses for the emergency fund. Building an emergency fund should be a priority because it will bring financial security if and when disaster strikes. **d) Create a budget:** Start by reviewing your joint expenses over the last few months to determine how much you’ve been spending and if you need to bring that amount down. Add your essential costs — housing, transportation, utilities, groceries — and discretionary spending — gym, shopping, entertainment, etc. Then, you could establish limits per category that you create according to your after-tax income. You need to make sure you stay within your spending allotment and adjust accordingly as your situation, expenses, or income changes. **f) Invest in insurance: **When you get married, it is important to review, update, and in some cases purchase different types of insurance, including life insurance, health insurance, etc. Some insurance coverage may be provided by your employer. But if you’re both working, make sure to review your coverage and ensure that there are no areas of overlap. For eg: If you both receive health insurance through your employer, see whether it makes sense to be on the same plan in terms of the best coverage and costs. d) Create a budget: Start by reviewing your joint expenses over the last few months to determine how much you’ve been spending and if you need to bring that amount down. Add your essential costs — housing,

Friday, August 5, 2016

All You need to know about GST

As all of you know that yesterday night, the Rajya Sabha passed a bill to amend the Constitution to facilitate the rollout of the historic GST amid government's assurance that the tax rates would be kept "as low as possible". The Constitution (122nd Amendment) Bill, 2014 was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate during which a rare bonhomie was witnessed among the ruling and the opposition parties. Six official amendments, including the scrapping of one percent additional tax, moved by the government were approved with cent percent votes. 

Earlier, the bill was passed by the Lok Sabha. It will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha. The bill will also have to be approved by 50 percent of all the state assemblies. AIADMK was the only party to oppose the measure and its members staged a walkout from the House to register their unhappiness over the bill which lays the ground for the rollout of uniform Goods and Services Tax (GST) regime that will subsume all indirect taxes including central excise duty and state VAT/sales tax.

So here is a ready reckoner on the issues surrounding the proposed tax reform and it will mean for the Indian economy. But first, let's know more -

What is Goods and Services Tax (GST)?

As the name suggests, it is a tax levied when a consumer buys a good or service. It is meant to be a single, comprehensive tax that will subsume all the other smaller indirect taxes on consumption like service tax, excise duty etc. This is how it is done in most developed countries. It will be a comprehensive nationwide indirect tax on the manufacture, sale, and consumption of goods and services. The aim is to have one indirect tax for the whole nation, which will make India a unified common market. GST will be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method and would make not just manufacturing but also the interstate transportation of goods more efficient.

How will GST work and what all will it subsume?

GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

At the central level, the following taxes will be subsumed: Central Excise Duty, Additional Excise Duty, Service Tax, Countervailing Duty (Additional Customs Duty), and Special Additional Duty of Customs.

At the State level, the following taxes will be subsumed: State Value Added Tax/Sales Tax, Entertainment Tax, Central Sales Tax, Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on the lottery betting and gambling.

How will GST be beneficial?

The benefits of GST can be summarized as under:

• For business and industry

1. Easy compliance

2. Uniformity of tax rates and structures

3. Removal of cascading

4. Improved competitiveness

5. Gain to manufacturers and exporters

• For Central and State Governments

1. Simple and easy to administer

2. Better controls on leakage

3. Higher revenue efficiency

• For the consumer

1. Single and transparent tax proportionate to the value of goods and services

2. Relief in overall tax burden
 

What are the Earlier Opposition’s objections?

The opposition party 'Congress' wants a provision capping the GST rate at 18 percent to be added to the Bill itself. It also wants to scrap the proposed 1 per cent additional levy (over and above the GST) for manufacturing states. This levy was demanded by manufacturing states who argued that they needed to be compensated for the investment they had made in improving their manufacturing capabilities. The Centre had agreed to this demand to encourage the states to support the GST Bill.The next demand by the Congress was to change the composition of the GST council—the body that decides the various nitty-grittys like rates of tax, period of levy of an additional tax, principles of supply, special provisions to certain states, etc. The proposed composition is for the Council to be two-thirds comprised from states and one-third from the Centre.The Congress also wants the Centre’s share to be reduced to one-fourth. This demand, however, was rejected by even the Rajya Sabha Standing Committee.

By when will it be implemented?

Assuming the Constitution Amendment Bill does pass in the Monsoon Session, GST will still not be in force before April 1, 2017. And that is putting it optimistically. Apart from the legislative process mentioned above, the states, India Inc, and industries and service providers big and small, will also have to prepare themselves for a completely new nationwide tax regime.

How would GST be administered in India?

There will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. The tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State.

The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

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