Photo Feature pg 28 Predictions 2017 pg 70

December 2016, `50

o u t lo o k m o ne y.c o m

The besT

savers
2016-17
 th

wi

00
a s little as `5

THE RIGHT TIME TO SAVE TAX

IS RIGHT NOW.
Since you work so hard to earn your money, shouldnt you be looking for a smart way to save
tax? Which leads to one big question.

So what do I do with my money?

Consider Equity Linked Savings Schemes (ELSS), as they give you the dual benefit of tax
saving along with the potential to earn capital appreciation.

TAX SAVER FUND

TAX SAVINGS: Up to Rs 51,912* can be saved in
a financial year

SHORTEST LOCK IN PERIOD AMONG TAX SAVING

INSTRUMENTS: Lock in period of only 3 years

GROWTH POTENTIAL: High caliber stocks with the

potential to outperform#

To know more, speak to your investment advisor or

visit dspblackrock.com/tax

THIS OPEN ENDED EQUITY LINKED SAVINGS SCHEME IS SUITABLE FOR INVESTORS WHO ARE SEEKING^ RISKOMETER
Long-term capital growth with a three-year lock-in
Investment in equity and equity-related securities to form a diversified portfolio

^Investors should consult their financial advisors if in doubt about whether the product is suitable for them. Investors are
advised to consult with their tax advisor before investing.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

*Assuming Tax rate of 34.61% (comprising of 30% income tax, 12% surcharge, 2% education cess and 1% secondary and higher education cess). The above tax exemption is
as per Section 80 C of the Income Tax Act, 1961. The tax benefits are as per the current income tax laws and rules. #As per Scheme Information Document of the Scheme, high
caliber stocks mean stocks having both value and growth potential.
 Contents December 2016 Volume 15 Issue 12

pg 38
Top Tax savers
for 2016-17
Smart strategies for every taxpayer as
you enter the new year

Regulars
6 Letter 12 Queries 16 News roll 82 smart Money

Cover Design: vinay dominic

Head Office AB-10, S.J. Enclave, New Delhi 110 029; Tel: (011) 33505500, Fax: (011) 26191420 OtHer Offices Bangalore: (080) 45236100,
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Published for the month of December 2016; Release on 1 December, 2016. Total no. of pages 84.
Outlook Money does not accept responsibility for any investment decision taken by readers on the basis of information provided herein. The objective is to keep readers better
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www.outlookmoney.com December 2016 Outlook Money 3

Contents
24 Investment
Destination
The whole of Varanasi is
booming with comprehensive
development in all the sectors,
making it a new haunt of
investors
27 Life Insurance
wMade Easy
Life Insurance Policies have
many other important facets,
tax benefits being one of them
28 Photo Feature
The repercussions of the
demonetisation of 500 and
1000 rupee notes
pg 79 33 MF Made Easy
ELSS and balanced funds:
Best of both worlds
Gadgets 34 Fund watch
This extensive comparison between Pixel SBI Magnum Multiplier Funds
XL and iPhone 7 Plus gives us pros and performance has improved
cons of both the products manifolds in the recent years
4 Outlook Money December 2016 www.outlookmoney.com
pg 76
the
World of
God
This
unforgettable
journey in the land
of spectacular
Spiti
51 GI Made Easy
Health insurance comes with
tax benefits but that should
not be the sole reason to go
for it
60 Column
Dilshad Billimoria stresses on
the need of a timely Will to
avoid any unfortunate events
66 My Plan
We list out few simple and
easy steps towards achieving
your financial goals
68 Book Review
Building an Innovative
Learning Organization by
Russell Sarder; The Simplest
Way to Inspire Change by Nick
Tasler
70 Predictions
Numerology Forecast by
Farzana Suri for your financial
well-being in 2017
Money Talks
Black, white or grey
Tilted in your favour
We have more faith in information that
agrees with what we already know
Narayan Krishnamurthy
nk@outlookindia.com
6 Outlook Money December 2016 www.outlookmoney.com
I
ts been a few weeks since the
demonetisation happened and
inconvenience set in. Yet, chances
of finding more people favouring
the move, irrespective of its final
outcome, are plenty. Never mind the
inconvenience or the `10,861 crore
printing cost that one will incur to
maintain currency flow immediately.
Freedom of speech, a constitutional
right and by extension of the same,
having a view on anything and
everything is a national pastime. So, in
the absence of any data which can
clearly indicate the benefit of the
move, every person has formed an
opinion on the demonetisation move
without understanding the
implications. The rhetoric among those
for the move being that it is good for
the nation and for the future
generations, based on the same bias
that they carry.
One must read Richard Thalers
recent book, Misbehaving: The Making
of Behavioral Economics, a book that
has some very interesting examples of
how the majority carry a strong
acceptance of their beliefs due to
confirmation bias. Confirmation bias is
the tendency that influences all of us to
put more faith in information that
agrees with what we already believe,
and discount opinions and data that
disagree with our beliefs. Thalers book
is about how people have a tendency
to search for confirming rather
disconfirming evidence owing to the
confirmation bias that they have.
Laced with several examples from
everyday life, the book can provide a
fair degree of amusement.
As someone who meets and interacts
with several people who like everyone
else grapple with day-to-day life and
finances, I am amazed at the
confidence with which several well-
read people will argue why their
fixed deposit is the best because it
guarantees returns compared to
market-linked products that are
risky because of no guarantees.
Confirmation bias explains in part
why its nearly impossible to present
enough factual evidence to
convince a staunch guaranteed
return favouring person that their
choice has serious financial flaws.
Data, information and how it is
communicated play a big role in the
success of public policy and actions
taken by governments. The GST
(goods and service tax) stood for a
one nation, one tax. However, that is
not so, yet people who will be
impacted by paying this tax on
almost everything that they
consumegoods and services, will
end up paying tax at differential
rates, including cess on certain items
like aerated drinks and jewellery.
The government has taken several
measures to end black money, and
its efforts are commendable and the
thought is something that everyone
agrees with.
Theres a lesson here for all of
usto avoid making bad decisions
about investments or any other
aspect of life, we must do two
things: be aware of the danger of
confirmation bias, and
acknowledge that our judgment
can be clouded by it. Second,
aggressively seek out and
understand information that
disagrees with our existing belief.
The second step may involve
talking to people who dont share
our opinion, and listening to their
reasoning rather than arguing our
own point.
 Talk Back

Cover Story EdItor

Narayan Krishnamurthy
Your story was well distributed into ASSIStANt EdItorS
sections which did justice to every Anagh Pal, Vivek Malik, Preeti Kulkarni
aspect of insurance that one faces. SENIor SuB-EdItor
Sabari Saran
I did not realise the options that
SENIor CorrESPoNdENt
exist to increase the scope of life Himali Patel
insurance. I had taken an accident CorrESPoNdENtS
death rider with a life policy four Anjali Adlakha, Khushboo Rajput,
Shipra Sharma, Sai Akhilesh
years ago but did not realise its trAINEES
benefits then, which I was able to Devanjana Nag, Taenaz Shakir
appreciate now. Although I do feel Art
Praveen Kumar. G (Senior Designer)
that there was no need for me to Vinay Dominic (Designer)
go with that rider and instead I Girish Chand (Operator)
Anil Ahuja (Consultant)
could have taken waiver of premium as I think it is more useful.
PhotogrAPhy
We all learn from mistakes but Outlook Money covers aspects of Gireesh. GV (Picture Editor),
finances which ensure that we need not ourselves make mistakes Soumik Kar, R.A. Chandroo (Photographers)
and learn and could take a leaf from the mistakes committed by tECh tEAM
Raman Awasthi, Suraj Wadhwa
others or get ideas from what others have done smartly.
Business Office
Rajesh Trikha, Chandigarh
ExECutIvE dIrECtor
Indranil Roy
ASSoCIAtE PuBlIShEr
Johnson Dsilva

First step of a long journey is cheaper in comparison to

Systematic investments of SIPs
have been in vogue for some
time, but I did not realise there
are so many intricacies to SIPs. Of
immense use was the point to keep
in mind when investing through
SIPs. Overall I liked the approach
of explaining a concept clearly,
which I did not think had so
much to it than the discipline and
regularity of putting money into
investments.
Y.V.S. Rao, Hyderabad
vICE PrESIdENtS
Prashant Kapoor (New Initiatives),
Ahmedabad but it has its own Meenakshi Akash (Events)
limitations in terms of uptake of Advertisements
new projects. I made preliminary NAtIoNAl hEAd
Santosh Nair
enquiries about the Godrej
Deputy GenerAl MAnAGer: Sudhir Shukla
Garden city project and feel it Chief MAnAGer: Suchitra Vaidya
is a promising venture. Thanks MAnAGer: Vivek Jadhav
Deputy MAnAGer: Vivek Singh
for carrying such an informative
article, which will help people like Digital team
Suhail Tak, Amit Mishra, Chirag Patnaik
me to explore real estate investing
options. Circulation
Suresh Rasiklal Shah, Baroda NAtIoNAl hEAd
Anindya Banerjee
ASSIStANt gENErAl MANAgErS
New look: Fund Watch Vinod Kumar (North), G Ramesh (South)
The new design of your Fund ZoNAl SAlES MANAgEr

Manchester of India Watch section is very appealing.

Arun Kumar Jha (East)
MANAgErS
I am a resident of Baroda and have Of particular interest is the graph Vinod Joshi, Shekhar Suvarna
been considering investing in a which gives a very tempting production
property in Ahmedabad, especially picture of the performance of the gENErAl MANAgEr
Shashank Dixit
because of the development in fund when investing by way of
ChIEF MANAgEr
the city, which will bring in more SIPs. The accompanying page with Shekhar Kumar Pandey
people from other places to live. the fund managers interview adds MANAgEr
Sudha Sharma
The proximity to GIFT city is an to the flavour where the specifics
dEPuty MANAgEr
added advantage, which I think of what went into the superior Ganesh Sah
will also herald the entry of high- performance of the fund are laid, ASSIStANt MANAgEr
Gaurav Shrivas
end real estate construction and reassuring readers like me.
consumption. Of course Baroda Pandian Govindaraj, Bengaluru Accounts
ASSIStANt gENErAl MANAgEr
Diwan Singh Bisht
Letters must be addressed to: The Editor, Outlook Money, AB-5, 3rd floor, Safdarjung Enclave, CoMPANy SECrEtAry & lAW oFFICEr
New Delhi 110029, or letters@outlookmoney.com. Please mention your full name and residential address. Ankit Mangal

8 Outlook Money December 2016 www.outlookmoney.com

 Talk Back
Sound bet
The role of a fund manager is
challenging and it was very
interesting to note how Roshi Jain
manages this fund. For a long time
I thought fund management was
science as the stated objective and
rules are pretty much stated upfront;
but while analysing the performance
of a fund, I started valuing the role of
the fund manager much more. It is
more like the captain of a ship, who
knows when to step in and when
to let the crew manage the show.
After all, when a fund fares poorly,
it is the fund manager who is in the
firing line. You should explore the
different approaches taken by fund
managers to investing and educate
your readers on how despite the
variations, the outcomes could be
sameprofits and growth.
Radheshyam Mishra, Noida
My plan
I am a regular reader of this section
and I have always found the advice
useful. I am impressed by Uday
Dhoots candid advice to Amitesh,
informing him to focus on the
present and not be too intimidated
with some goals that are far way. I
read this section in your magazine
regularly as it always manages to
strike a chord with some instance or
the other that I face. Recently I was
in doubt about planning for a second
house 15 years from now, when I will
be closer to 50, which I have deferred
after reading this plan as I feel it is
a goal which has a long way to go. It
will be in the interest of readers like
me if you take up cases that cover
different facets of ones finances
at different stages in life to create
a storehouse of ideas to deal with
different financial situations in life.
Sandeep Shekhar, Jaipur
What a delight
The travel section in your magazine
is commendable for the details and
easy language that provides the
travellers experience in a manner
10 Outlook Money December 2016 www.outlookmoney.com
that I have started to plan some
of my vacations based on your
coverage. I had been to Bhutan
six months ago and really loved
the experience of not having prior
bookings, which actually left my wife
worried, but we managed to have
a wonderful experience. Keep the
good work with some breathtaking
pictures and destinations to keep
travel bugs like me supplied with a
long list of destinations to plan for
the future.
Piali Gupta, New delhi
Build a healthy foundation
The table on healthcare menu was
very informative and useful. I was
not aware that there is so much
to choose from in case of health
insurance. The snapshot view to
health insurance made the story
very interesting, without getting
overly technical. I would have
liked to come across some costs on
premiums, but I guess that will vary
from individual to individual and
can be checked from the several
price comparison sites. You should
consider a feature to navigate the
plethora of comparison sites and
how one should traverse through
it to find what suits one than be
pushed to select what may work well
for the seller.
Anurag Suden, gurgaon
Eye opener
So true when you mention about
spending lakhs to do up ones
house, but we ignore to get it
insured for contingencies. I had
family and friends who lost their
lifes possessions in the Chennai
floods last year. They were well
to do, but the financial impact
they faced has left them scarred.
Thankfully, one of them had
insured his flat and was able to pick
the threads, especially with the
gadgets and furniture in his house,
besides the civil works he had to
undertake. There is an urgent need
to educate and spread awareness
of the lesser known insurance
policies, which are actually very
important in ones life.
Rupa Saxena, Allahabad
Financial cusion
Financial cushion is something that
we all need, but many a times forget
till we make a crash landing. Many
of us consider life insurance only
as a tax saver and not a life saver. It
will be very much in our interests to
improve our knowledge of insurance
and use it to serve our best interests
than wither away the financial
cushion that it can act as. Please do
more such hard-hitting stories as
these open our otherwise shut eyes.
Ravi Trivedi, lucknow
Queries

interest applicable for that fractional

period. In this case, practices vary in
terms of what rate will apply on the
deposit. Your penalty is not explicit,
but only implicit to the extent of the
interest that you have not earned.

SureSh Gopi, Trivandrum

i am building my dream home
and was wondering if i should
Deepak krishnan, Chennai
buy a house insurance for it
at this time?
What is the difference between regular and direct Yes, you should buy a construction
plans of mutual funds? all risk (CAR) policy for an under-
When it comes to investment objective, fund managers, construction house. As the name
portfolios and approach to investingthere is no difference suggests, it is a comprehensive
between the regular and direct plan of a mutual fund policy to cover several risks that
scheme. In case of a direct plan, charges like annual can cause material damage to your
expenses are lower because it does not pay the distributor house. A CAR policy has specified
a fee or commission. This is because in case of direct exclusions such as wilful damage,
plan, you invest the money directly with the fund house, design defects and faulty material.
without going through a broker or agent. Thus, the direct Other than the specified exclusions,
plans of equity funds can be cheaper by as much as 1 all risks that can lead to physical
per cent in their annual expense ratios. This makes them damage are covered. These include:
suitable for investors who can manage their investments fire, flood, earthquake, burglary and
on their own. However, if you are new to mutual fund malicious damage by third party.
investing, it may not be a bad idea to take the services of Further, the policy has a provision
a distributor and therefore, invest in regular plans. Over to cover property damage or bodily
time, as you gain more knowledge and feel confident injury to a third party due to an
about managing your investments independently, you may accident in the insureds premises.
consider switching to the more economical direct plans.
SarveSh Kumar, Chennai
i am confused between
meenal Dubey, e-mail SiDDharTha ShrivaSTava, debt funds and liquid funds.
is accessing banking details lucknow are they same and taxed
through the mobile safe? What kind of penalty will i similarly?
Given the technological advances, have to pay for premature Liquid funds are type of debt funds
it is possible to safely access bank withdrawal from my bank FD which invest in very short term debt
accounts through the mobile and in case of an emergency? instruments with a maturity period
internet. However, it is of utmost The policy can vary across banks. of less than 91 days. Generally, liquid
importance that the user is aware Essentially there are two choices. funds do not have any exit load. As
of the proper procedures for safe One, you can keep the deposit intact for taxation, capital gains on liquid
operations. The risks do not come and take a loan against the deposit funds is applicable just like any other
from the systems themselves, but to meet your requirement. The rate type of debt fund. If you redeem
mostly from the user exposing at which the loan will be offered will units within three years, you will
the accounts to risks. Passwords be higher by one to two per cent have to pay tax on the short term
must be tough to guess, changed than the interest rate on the deposit. capital gains. The gains will be added
frequently, and system log in and There will be a lien on the deposit till to your income and taxed as per the
log out processes must always be you return the loan. income tax slab applicable to you. In
completed. The PINs must be not Two, you can opt for premature case you hold the units for more than
disclosed to outsiders. Following closure of deposit, in which case the three years, the gains will qualify for
security procedures as prescribed bank will treat your deposit as having long-term capital gains tax of 20 per
by the banks is adequate to use been held only for the fractional cent with indexation benefit on your
these technologies without fear. period and you will earn only the original investment.

12 Outlook Money December 2016 www.outlookmoney.com

arjun SinGh, Dehradun
is there any health cover
which covers medical tests
as well, or is it only for
hospitalisation? i need to do
medical tests on a regular
basis as i am diabetic.
A typical health insurance plan does
not cover for outpatient incidents.
However, these days there are health
insurance policies that provide
outpatient (OPD) cover. Under OPD
extension, medical expenses not
linked to hospitalisation are payable.
This includes diagnostic expenses,
doctor consultations and cost of
medicines. If you want to get similar
expenses covered, you should look
for a plan with OPD cover. Medical
equipment such as portable dialysis
machines or test strips may not be
covered by most plans.
The cost of such a policy is high
as you land up paying a higher
premium. Typically, insurers
charge an extra premium equal to
the extent of OPD cover provided.
The underlying assumption is
that the insured will claim his
full OPD limit every year. If you
consider the extra administrative
task of submitting bills and getting
reimbursements, it is not much of
a benefit. The major advantage of
an OPD cover is that the increased
premium can be claimed as a
deduction under Section 80D of the
Income-tax Act, 1961.
SaviTri Kumar, bengaluru
i am single and have no
dependants. What kind of life
insurance would you suggest
for a person like me?
The basic purpose of life insurance is
to provide a financial security for the
dependents of the insured, in case
of the death of the policyholder. In
case you are single and do not have
any dependents you should rather
go for a personal accident policy
with all benefits including temporary
total disablement and a basic health
insurance policy.
Mona kwatra, Gurgaon
i bought a maruti brezza car during the festive season
last month and the very next day, two of the tyres were
stolen. how much will my insurer pay for this loss and
how soon can i expect it?
It is unfortunate that someone stole your new cars tyres
a day after you bought it. Although the car insurance
you would have taken is effective as soon as you move
out of the car dealership, there are restrictions on what
is covered by the insurance policy. For instance, under
the comprehensive motor policy, in the event of a loss,
compensation for all the rubber and plastic parts is limited
to 50 per cent of the replacement costs.
This means that irrespective of how old your car is,
depreciation will be deducted to the tune of 50 per cent
of the cost of the new tyres and tubes. However, as the
car is less than six months old, there will be no deduction
whatsoever when it comes to replacing other parts like
the wheel rims. Likewise, the labour charges for fixing
new tyres will be payable in full. Therefore, the amount of
compensation in your case will be limited to the cost of
the other parts, 50 per cent of the cost of the tyres, and
the labour charges. More importantly, since this is a case
of theft, to be eligible to stake a claim with your insurers,
you must report the incident to the police and lodge an
FIR. Likewise, in case you have taken a zero depreciation
cover, which is available when taking insurance on new
cars, the loss of tyres will not be paid by the policy. The
zero depreciation insurance only covers for damage to
the vehicle, including tyres, due to accidents. Your case
involves the loss of tyres, which were stolen and hence
outside the coverage are of the policy, which is why it will
not be paid for by the insurer.
www.outlookmoney.com December 2016 Outlook Money 13
Queries

rameSh Kumar jha, Gurgaon the dues. As long as you hold the tax liability (after tax deducted at
a bank in which i have an card, you will not be able to access source) on the estimated income
FD is offering me a credit the deposit or draw from it. If you is likely to be `10,000 or more
card with my FD certificate return the card, the lien will be during the relevant FY. But resident
surrendered as lien. What is lifted and you will be able to access senior citizens who do not have any
the risk such a lien carries? the account. income from business or profession
A lien simply provides the bank the are exempted from payment of
right to deny the borrower access bala naThan, bengaluru advance tax, irrespective of tax
to the asset in question. Such a lien i am about to retire in a liability quantum. As you will retire
is usually marked on assets against couple of months. Do i still later this year, and assuming you
which loans are given so that on need to pay the advance are over 60 years old then, you will
default of the loan the asset can tax? most of my income qualify as a senior citizen for this
be liquidated to realise the dues. post retirement will be in financial year for tax purposes.
A credit card is also a form of loan the form of interest from my Effectively, you need not pay
from the bank to you. If you do not investments. advance tax instalments. If in
pay the credit card dues, the bank Generally, advance tax is payable the future you earn income from
will be able to exercise the lien by an individual as per the business or profession, you would
and use the FD proceeds to clear prescribed instalments if the total be required to pay advance tax on
that income.
surenDra pratap singh, Lucknow
amriT Sharma, noida
my employer made me
withdraw my pF before i
moved to Singapore. is it
necessary to do so?
Ideally you have to be a member
of the EPFO to avail the PF facility.
If there is no contribution to the
EPF account and it remains idle for
36 months, the account becomes
inoperative and no interest is paid
on such accounts after 36 months.
For employers, it is mandatory
to ask employees who quit their
i have investments in iCiCi prudential value Discovery organisations to apply transfer of
Fund, Franklin india prima plus and Sundaram Select PF and to also notify the EPFO so
midcap Fund. are these good funds to invest in? that the government doesnt have
The funds in which you are investing are good, with a to pay interest to non-members
significant track record and history to indicate that they of the PF. This could be the only
have fared well over different market cycles. There are risks reason why your employer asked
when investing in each of these funds, which you should you to withdraw your PF before you
be aware of. Moreover, to ensure that your investments left for Singapore.
achieve what your goal is, review the performance of these
schemes once a year to ascertain if they are on track. This naina joShua, Kochi
way you have the opportunity to make changes to your i bought a term plan in july
selection if need be. 2016 and wish to add a
critical illness rider to it now.
Returns (%) is it possible to do so?
Fund name No, you cannot opt for the critical
1-year 3-year 5-year
illness rider, or any other rider for
ICICI Prudential Value Discovery 3.29 26.93 23.06
that matter, once the policy is in
Franklin India Prima Plus 3.92 21,50 17.74 force. The riders must be selected
Sundaram Select Midcap 10.98 32.90 23.34 at the outset, that is, while buying
Returns as on Nov 24, 2016 the policy.

14 Outlook Money December 2016 www.outlookmoney.com

News Roll
Investor
alert
Its still early days for effects of demonetisation to come to force,
think before you do something in haste
T
he consequences of
sucking up cash from the
system cannot be
comprehended easily and in a
short time. Yes, there are benefits
of reducing cash in the system
and increasing the usage of
digital money. One thing is clear
though, there will be an impact
on our finances and definitely so
with our investments. The no
cash-only credit scenario will
impact the economy in the near
term, which is why you should sit
up and take note of sectors that
will get impacted to play your
investments accordingly.
The impact on the markets can
be attributed to multiple
factorsthe US election results,
the approaching year end as well
16 Outlook Money December 2016 www.outlookmoney.com
as the currency demonetisation
drive. The sector which is likely
to be most impacted is real
estate, which is already facing
difficulties due to the downward
economic cycle. The impact will
not be just on the construction
and construction material
segment, it will also be on
Housing Finance Companies
(HFCs).
Another sector which will be
impacted adversely is the
jewellery segment, though
jewellers welcomed the move as
reduction in cash will create a
demand for gold, which is
favourable to them. The NBFC
sector too will face the heat, as it
is the lifeline for small and
medium businesses. There could
be default in repayment of loans,
especially in cases of loans
against property, which is
popular among the MSME
segment of borrowers. At the
same time, banking stocks are
likely to do better with the
increase in deposits.
As an investor, you should not
make any irrational move by
shifting your investments in
haste because of the impact of the
demonetisation. As money is
generally deployed keeping a few
years timeframe in mind, one
should give some time before
taking any drastic steps. Be clued
into the changes around you and
track the market movements
more regularly to understand the
changes as they occur.
Things to note after note ban
Sector Impact Analysis
Impact Duration

Automobile
2 wheelers Moderate 2-3 quarters High share of purchase of motorcycles on cash (30-35%),
especially in rural economy will be impacted.
The demand of small cars is likely to be less affected
4 wheelers Modest 2-3 quarters
compared to large cars.
Commercial Weak freight demand and implementation of GST will
Meaningful 3-5 quarters postpone purchase decisions of commercial vehicles.
Vehicles
Banks and NBFCs
Banks Modest 2-4 quarters Likely slowdown in credit growth in auto, CV, Loan Against
Property (LAP), personal and SME loans in the short term.
Consumer Meaningful Indefinite Also, there will be an increase in savings and term deposits in
finance NBFCs the medium term as a large part of the informal and cash-
Consumer Meaningful 2-4 quarters
based economy will shift to the banking system for savings and
Vehicle NBFCs transactions
A section of buyers may postpone their purchase decisions as
they reassess their finances and reprioritise in the short term.
Transporters will postpone purchase decisions and review
their business models and make attempts to become part of
the formal economy.
Mortgage NBFCs Varied 2-4 quarters Residential real estate demand will slow down as (1)
potential buyers in the salaried class postpone purchase
decisions in anticipation of fall in real estate prices and interest
rates and (2) others fix their finances given the hit on wealth
and future income

Consumer products
Staples Negligible Informal credit from retailers (neighborhood grocery stores)
may support demand. Also, companies will extend credit to the
Durables Meaningful 2-4 quarters distribution chain given low flow of cash in the system.

Real estate and related sectors

Real estate Meaningful 4-6 quarters Residential real estate demand will slow down as (1)
potential buyers in the salaried class postpone purchase
Building Meaningful 3-4 quarters decisions in anticipation of fall in real estate prices and interest
materials rates and (2) others fix their finances given the hit on wealth
Construction and future income
Meaningful 3-4 quarters Large portion of payment is by cash and will be impacted by
materials
delay in demand from new construction, may take longer to
Paints Moderate 2-3 quarters recover. Will also impact the fittings industry.

Source: Extracted from Kotak Institutional report

www.outlookmoney.com December 2016 Outlook Money 17

News Roll

Instant redemption
In a move that could actually
equate your mutual fund
investments with a savings
account, investment in liquid

A Death funds could be redeemed

instantly. At the moment if your

knell for redemption request is made

before 3PM on a working day, the

Small redemption reflects in your bank

account the next morning. In a

Savings meeting of SEBIs Mutual Fund

Advisory Committee (MFAC), the
regulator has asked AMCs to
consider the redeeming
investments up to `2 lakh in
liquid funds for retail investors.

T
he surplus cash deposits have struck its first targetsmall savers Some AMCs are already
and depositors. The State Bank of India has cut its deposit rates for providing investors with a card-
different tenures by 1.251.9 per cent, effectively reducing the 5-year linked access to their holdings in
deposit to less than 7 per cent. The impact of the cut of 0.10 per cent in
popular small savings instrumentsPPF, Sukanya Samridhi Scheme and the
Senior Citizens schemeshave brought their interest levels to about 8 per
cent and lower in some cases like the Kisan Vikas Patra (KVP), which is 7.7
per cent at the moment.
Retirement friendly?
Interest
Instrument
Returns (%)
Public Provident Fund (PPF) 8.1

Sukanya Samriddhi Yojana 8.6* liquid funds with limits that are
National Savings Certificates (NSC) 5-year 8.1 much less than that proposed by
SEBI. The move will definitely
5-year Bank Fixed Deposits (FD) 7.0^ have the necessary teeth to
directly give competition to the
Senior Citizen Savings Scheme (SCSS) 8.5 traditional savings bank account
As on Nov 24, 2016; *for 2016-17; ^for senior citizens if this move comes through solely
because liquid funds are more tax
Not only are the options dwindling for small savings, the guarantees they efficient than the interest earned
provide when compared to the prevailing inflation rates, which is just a by the savings bank balance.
shade under 6 per cent, leaves very little to feel happy about. The pain is
compounded in case of those who end up paying tax on the interest earned Non-agent salesmen
through some of these options. Imagine at 7 per cent interest on a bank fixed Insurance selling has for long
deposit, at 20 per cent tax bracket, the effective rate is 5.6 per cent, which, been the job of an agent.
at best, may match inflation, eroding any real purchasing power that one However, the insurance regulator
expected after earning the interest. has made some concession and
Demonetisation or not, there is very little to cheer for small savers who will is now allowing sales
now have to necessarily look for tax efficient options to park their savings or representatives to distribute life
start investing. For those who fear the risk of investing in equities, the writing insurance policies. As of now,
on the wall is clearthe biggest risk they will be taking is in trying to not sales representative appointed by
invest in equities, which has the potential to meet and beat inflation. agents were allowed to sell health
insurance and some other non-

18 Outlook Money December 2016 www.outlookmoney.com

News Roll
Changing tax matrix
T
he much-anticipated Goods
and Services Tax (GST) Council Additional cess on
and the one nation, one tax is four items
not how it has turned out to bethere
will be four tax slabs, with the lowest
rate at 5 per cent and the peak rate of
40 % Aerated drinks
28 per cent. Then there will be several
40
items that will attract cessaerated
drinks, tobacco products, luxury cars % Pan masala
and pan masala.
There is respite for the common
man as 50 per cent of items in the
Consumer Price Index (CPI) basket, 40 % Luxury cars
along with food grains, will not be
impacted from the proposed GST.
However, these will not be classified
as exempt list as the GST council 65 % Tobacco products
seems to have
the view to
reconsider taxing these items on a later date. It is
for this reason that white goods that currently have
Peak Rate: an effective tax rate of 30-31 per cent will be in
28 %
the lower tax slab, because of wide usage by the
middle class.
The fallout of the GST has been estimated by
the GST Council to cost the Central government
`50,000 crore in the first year to make good
Standard rates: the losses of states. The Constitutional
12 18
Amendment Bill for GST has provided for
% & % compensation of losses in the first five years
of GST implementation. The unified tax
rate will come into effect from April 1,
2017, once the government gets two
pieces of legislationCentral GST
Lowest rate:
(GCST) and Integrated
5 %
GST (IGST)passed
in the winter session
of parliament, which
seems bleak going by
the fallout in parliament over
demonetisation.
Like the demonetisation, the
impact of GST is also too early to
emerge clearly. But, what is clear is
that even the GST will have differential
rates, which could be changed with
time, making it much difficult to
predict what lies ahead.
20 Outlook Money December 2016 www.outlookmoney.com
life products, but
after this move they
will be able to sell
even life insurance
policies which do
not come with
predefined risk
cover and costs. As
life insurance
premiums depend
on factors like age,
sum assured and
even the profession,
this new move will
help uplift the
profile of the
salesman. To start
with, these
representatives will sell pure term
insurance plans with sum assured
of up to `25 lakh, endowment
products with sum assured of up to
`10 lakh, and immediate annuity
products.
Fancy investments
If you have an NPS account and are
not part of the government-run
scheme under the NPS, you will
have the option to invest a
component of your contribution in a
slightly adventurous asset class. The
PFRDA has created a separate asset
class under which subscribers to the
private sector NPS can invest up to 5
per cent in Alternative Investment
Funds (AIF) and Real Estate
Investment Trusts (REITs). This new
asset class is in addition to the
existing equity, corporate bond and
government debt category.
Other than this new option, the
PFRDA has also introduced two new
Life Cycle Funds for private sector
subscribers to provide a pre-
programmed diversification of assets
in various asset classes as per the
age and risk profile of the subscriber.
These are Aggressive Life Cycle Fund
(ALCF) and Conservative Life Cycle
Fund (CLCF). In ALCF, the
maximum investment in equity is
restricted to 75 per cent whereas the
News Roll

Chasing
unaccounted
cash
` `
Equity Debt
same has been restricted to 25 per
cent in case of the CLCF. This is a
welcome change compared to the
existing 50 per cent restriction in the
current life cycle fund, which will
now be known as moderate life cycle

T
he rush to deposit cash in bank accounts has resulted in the tax fund (MLCF).
department working towards reining in any black money that
may be deposited. Cash deposits in banks and post offices RuPay Power
above certain limits between November 9 and December 30, 2016, will The RuPay debit cards, linked to Jan
be reported to the income tax department. Dhan accounts are getting a push in
As per Section 285BA of the Income Tax Act, 1961 (as substituted by current times. The lower fee on
Finance Act, 2014 w.e.f 01-04-2015), specified entities (filers) are usage of RuPay cards compared to
required to furnish a statement of financial transaction or reportable debit cards on the Visa or
account (statement) in respect of specified financial transactions or MasterCard network is drawing
any reportable account registered or recorded or maintained by them scores of account holders to activate
during the financial year to the income-tax authority or such other their cards as well as make the
prescribed authority. The list of high value transactions is mentioned transition from cash to
in rule 114E of the act. digital
With change in rules each passing day, there has been an addition to money. As of
the rule 114E list, which was amended with effect from November 15 to now, a little
the effect that cash deposits during the period November 9, to over 50 per
December 30, 2016, aggregating to `2.5 lakh or more, in one or more cent of the Jan
accounts (other than a current account) of a person, shall be reported Dhan account
by a bank and post office. holders are
using the card, with the rest
What should you do? being activated. Account holders are
Taxpayers who can account for higher cash deposits need not worry, also being taught how to use the
as any aggregated deposit over `50,000 in this demonetisation phase card so that they can adapt to a
will need to be furnished with PAN details. For those without PAN, the cashless and digital way to transact,
new amendment will be a cause of concern if they are unable provide reducing the dependence on cash
any details. for their routine transactions. To
Some may receive a notice asking to explain the transaction for push the usage of the card, the State
scrutiny assessment under section 143 (2) of the Actto be present on Bank of India has waived the
a certain date himself or through a professionalfor verification of merchant discount rate (MDR) on
records and seeking clarifications and opportunity to present this RuPay cards for the time being to
case. In case you are unable to clarify the source of the deposits, the facilitate and encourage digital
tax department can levy tax along with interest and penalty on transactions.
under-reported income if it could be established that such income
pertains to previous years (prior to financial year 2016-17) and was not By Preeti Kulkarni and Narayan
reported by the depositor while filing the tax return. Krishnamurthy

22 Outlook Money December 2016 www.outlookmoney.com

Investment Destination
Spiritual capital of India
The time has come for this city to rise from its slumber and
experience an all-round development
F
amously known for its
mesmerising view of Ghats at
dusk and dawn, Varanasi is
a pilgrimage spot for Hindus
from all over the world. This exuberant
and spectacular city has existed since
the inception of time. The city that has
witnessed generations of flora and
fauna come and go for many centuries
is now on the verge of a major
metamorphosis.
Varanasi, also called Banaras,
was in limelight during the General
Elections 2014. Varanasi is on the
latest list of Smart Cities Project. PM
Narendra Modi launched seven new
projects worth `5,000 crore on his last
visit. Hence, the developers and the
investors have high hopes from this
city rising from its state of slumber.
Booming regions
The main concern is to improve
the connectivity with suburbs like
Bhagwanpur, Ashapur, Chunar,
24 Outlook Money December 2016 www.outlookmoney.com
etc. The Varanasi Bypass Ring Road
project worth `261 crore will further
improve the infrastructure thereby
boosting the growth opportunities.
With a rapid increase in the number
of residential projects launched in
and around Varanasi, areas such as
Sigra, Mahmurganj, Maldhiya, etc.,
have seen tremendous growth in the
property value.
Recently, a metro project has been
proposed from BHU to Sarnath and
from Lanka, Cantt, Shivpur, Babatpur
and that is further going to improve
the connectivity within the city.
In second phase, the metro line is
proposed to be stretched till Ramnagar
and Mugalsarai resulting in lesser
commuting time. Areas such as Pindra,
Badagaon, Harahua, etc., lying within
the close proximity of international
airport in Babatpur, are witnessing
growth at massive levels.
Several bottlenecks within the city
like traffic congestion and age-old
drainage system are are going to be
replaced with new and improved
strategies.
The city is connected via four
national highways along with one
international airport at Babatpur.
Recently, transportation through
waterways has also begun which will
result in opening of small ports and its
peripheral infrastructure development
that will be a game changer for
Varanasis economy.
Upcoming projects
Banaras which takes pride in
displaying its pompous way of life,
received several other highway
projects such as four-lane Ghagra
Bridge-Varanasi section of NH 233,
six-lane Varanasi-Aurangabad section
of NH 2, etc., which is further going to
improve the citys connectivity with
neighbouring areas. The development
of waterways between Varanasi-Haldia
stretch is expected to create more
 employment opportunities.
With operationalisation of Kyoto-
Varanasi Collaboration Agreement,
Rapidly Shivpur
where survey work is soon to
complete, the government will initiate

growing many new projects in order to improve

liquid and solid waste management

regions Shri kashi

Ganges
and other civic issues, further boosting
the infrastructure of the city.
The city hosts Indias biggest trauma
Varanasi is Vishwanath Temple
centre and many other super specialty
witnessing a hospitals, making it favourable for
major boom in Varanasi
medical tourism. It also has good
infrastructure, educational institutes including the
Ramnagar
resulting in a eminent Banaras Hindu University.
substantial rise in The city is home to many Small and
Medium Enterprises including huge
housing demands
Banaras land banks for textile and handicraft
Hindu industries. The city also has various
University
heavy industries such as DLW, Coca
Cola, BHEL, Hindustan Uniliver, etc.,
employing a large number of local
people.
Varanasi is one of the oldest cities in

Booming Development the world and despite that it has not

Varanasi regions
Metro project proposed from BHU
to Sarnath and from Lanka-Cantt-
Shivpur-Babatpur which is going to
improve the connectivity within the
ancient city
The development of waterways
between Varanasi-Haldia stretch
to improve connectivity
The city hosts Indias biggest
trauma centre and many other
super specialty hospitals
Home to many SMSE industries
including huge land banks for
textile and handicraft industries
Affordable housing in Varanasi
Developers Name
Roma builders & Promoters
Shree Sai Baba Infra Projects
Tirupati Group
Awadh Constructions
Ridham builder
received much importance resulting
indicators in inadequate infrastructure. It has
several small cottage industries
Several road transport and involved in the production of Banarasi
highway projects such as four- sarees, betel leaves, rugs, handicrafts,
laning of Ghaghra Bridge to etc. The central government has
Varanasi section of NH 233 announced additional funds to the
With the coming of Varanasi city under Heritage City Development
Bypass Ring Road places like Scheme. Further, a new flyover is
Bhagwanpur, Ashapur, Chunar, etc, being made within the city along
to witness further growth. with widening of existing roads in
Several bottlenecks within the order to reduce traffic congestion.
city like traffic congestion and age- The citys population is rising because
old drainage system are going to of migration from adjoining areas,
be replaced increasing the demand for affordable
Six laning of VaranasiAurangabad housing. With infrastructure and
section of NH 2 launched in business opportunities growing, the
January 2015 city will transform in the long term and
witness all-round development.
Location Price range (`)
Ramnagar 21.70 lakh
Kaazi Sarai 13.60 lakh
Chandmari 17.62 lakh IFAN (Independent Financial
Harahua 15 lakh Associates Network) is a web-
enabled distribution platform of
Shivpur 20 lakh
IFAN Finserv Pvt. Ltd. (ifan.co.in)

26 Outlook Money December 2016 www.outlookmoney.com

Life Insurance Made Easy

Ways to save tax with insurance

Life insurance policies not only give you benefits in the long run; they
also enable tax benefits for every year

T
here are many
facets of life
insurance
protection,
savings and investments.
Then there are policies
to help you achieve your
financial goals or to save for
your retirement. There are a
few plans like endowment
and Ulips that can help you
earn returns.
The peace of mind
with insurance stems
from its basic protection
orientation which ensures
that your dependents do
not suffer financially if
something were to happen
to you. Premiums paid
towards life insurance are
covered under Section
80C of the Income Tax
Act up to a maximum of
`1.5 lakh. Likewise, the
proceeds in case of death
of the policyholder or
maturity of the policy are
subjected to no taxation
under Section 10(10) D.
The benefits under Section
80C exist only if the policy
has been in force for at
least five years, because
if the policy is terminated
or surrendered within five
years, the deductions are
added to income and taxed
accordingly.
In case of Ulips, the
condition to claim tax
benefits is that the sum
assured has to be at least 10
times the annual premium There are also tax benefits citizens and `15,000 for
being paid. For instance, if to be claimed through others are eligible for tax
the sum assured is `15 lakh health riders like critical benefit. Remember that
and the annual premium illness when attached to regardless of its nature,
paid is less than `1.5 lakh, your base life insurance. life insurance offers tax
then the entire amount can Health insurance offers benefits, a trait that makes
be claimed as deduction tax benefits under Section it useful to align financial
under Section 80C. If the 80D, wherein premiums goals and tax savings.
premium is more than 10 up to `20,000 for senior olmdesk@outlookindia.com
per cent, say, `2 lakh for
the same sum assured,
then the deduction
amount is capped at `1
lakh. However, for policies
purchased before April 1,
2012, the premium to sum
assured should not exceed
20 per cent for the proceeds
to be tax free.

Tax Advantage
Premiums paid towards servicing a life insurance
policy qualify for tax deductions under Section
80C of the Income Tax Act
The maximum deduction that can be claimed
under Section 80C is `1.5 lakh
Tax-free proceeds on maturity/death under
Section 10(D)
Premiums towards health riders like critical
illness qualify for tax deductions under Section
80D
Premiums up to `20,000 for senior citizens and
`15,000 for others are eligible for tax benefit.

www.outlookmoney.com December 2016 Outlook Money 27

Photo Feature

The year would be remembered by generations of Indians

as one where they had to stand in long queues to deposit
demonetised `500 and `1,000 denomination notes or wait at
an ATM for the new notes
2

Photo: tribhuvan tiwari

28 Outlook Money December 2016 www.outlookmoney.com

 E
very year brings with it a historic event which
goes down in the history books to be discussed
in later years. Without doubt, long queues at
banks, and numerous caricatures of the impact
of demonetisation will mark any future reference of 2016.
Money was a major concern for every Indian this year
for the rich and the poor; for the urban and the rural.
For those tracking the financial services, it was a year
marked with several changes that provided many new
opportunities to explore. One of the biggest changes that
one will witness in the coming years will be transition in
taxes with the passage of the GST Bill.
On the policy level, inflation was the key focus area for
the central bank, which also witnessed a change at the
top with the tenure of Dr. Raghuram Rajan coming to an
end and Dr. Urjit R. Patel taking charge from September 4,
2016. The RBI target for retail inflation is expected to be 5
per cent by March 2017. To achieve this level, the central
bank has been reducing the repo rate with successive
cuts of 25 basis points since its June policy review when
it stood at 7.25 per cent, and which now stands at 6.25
per cent. The repo rate is the rate at which the RBI lends
money to commercial banks in the event of any shortfall
of funds and is used by the RBI to control inflation.
For investors, the stock returns were rather insipid
as the returns were pretty flat for the benchmark BSE
Sensex. Yet, a lot transpired in the financial services to
1
Photo: jitender guPta excite a bystander. Retail investors lapped up mutual
fund investments with the number of folios crossing the 5
3
crore mark this year. Another factor to cheer was the flow

1. National pastime: standing in seemingly never-ending queues in

front of ATMs; 2. Another painfully long wait in order to enter a bank;
3. This is how I manage inflation; former RBI Governor, Dr. Raghuram
Rajan; 4. Age no bar when it comes to demonetisation woes

Photo: tribhuvan tiwari Photo: jitender guPta

www.outlookmoney.com December 2016 Outlook Money 29

Photo Feature

1
Photo: tribhuvan tiwari

2 3

Photo: tribhuvan tiwari

Photo: narendra bisht Photo: nirala triPathi

30 Outlook Money December 2016 www.outlookmoney.com


6 catalyst to make India less cash-dependent.
Photo: sanjay rawat
7
Photo: jitender guPta
1. A glum RBI Governor, Dr. Urjit
Patel watches Economic Affairs
Secretary, Shaktikanta Das, present
the new currency notes; 2. In case
of no change, traffic defaulters are
being asked to settle the fine at the
court; 3. Midnight rush at the
airport as passengers wait for their
turn at the ATM; 4. Now, when was
the last time I filled a form to
collect my own money from the
bank?; 5. Gender-bender: women
form a separate queue to get their
way to the bank; 6. For those
cribbing, a few months ago people
flocked to lay their hands on a SIM
for free data connection; 7. Our
first brush with the pink note
worth every minute in the queue
of funds into equity mutual funds all throughout
the year with SIP contributions that crossed the
1 crore active SIP accounts mark as well. The
change in the mutual fund consolidated account
statement (CAS), which started reporting the gross
commission paid to the distributor, has so far not
impacted the investors much, but could shift the
route taken by investors to the direct model.
One cannot stop singing paeans of the Pradhan
Mantri Jan-Dhan Yojana, which resulted in the
opening of bank accounts for over 200 million
Indians. The naysayers will sing a different tune
as they start seeing activity in these accounts with
the demonetisation drive, which in future, aided
with the direct benefit transfer, could become the
The much needed Know Your Customer (KYC)
procedure got easier and uniform with the
functioning of the Central KYC Registry (CKYCR)
platform, which paved way for the inter-usability
of KYC records across the entire financial sector.
For avid investors, the move removes the hassle
of multiple KYC processes, and for those in the
financial services business there is tremendous cost
savings and convenience.
On the real estate frontthe long awaited real
estate regulation saw light of the day with the
passage of the The Real Estate (Regulation and
Development) Bill, which will help establish state-
level real estate regulatory authorities (RERA) and
appellate tribunals to regulate transactions relating
to both residential and commercial projects and
ensure their timely completion and handover.
RERA should be in place from 2017, and provide
greater certainty to buyers.
Some bold steps by the EPFO will benefit
subscribers to one of the oldest provident fund
schemes in the country to get a greater benefit from
investing in equities. The EPFO investment of about
`7,000 crore in the stock markets in 2015 will go
up this year. The Minister of State for Labour and
Employment, Bandaru Dattatreya, told us: While
we are creating awareness amongst workers, we
believe that seeing the positive returns generated
by investments in capital markets, the workers
themselves will agree.
The IPO party continued from 2015 with about a
dozen big IPOs testing the markets in the first half
of the year, raising over `8,100 crore. Big names like
L&T Infotech IPO and the first private life insurer
ICICI Prudential Life opened the doors for investors
to take part in primary markets.
www.outlookmoney.com December 2016 Outlook Money 31
Photo Feature

1. A wholesaler
wondering when will it be
Acche Din; 2. Fuel pumps
are having a roaring
business as they continue
to accept old notes; 3. Fill
it, shut it, forget it seems
to be in the minds of the
car owners on the night of
announcement; 4. Both
caution sign and money
speak the same language
1 everywhere
Photo: nirala triPathi
2 3

Photo: tribhuvan tiwari Photo: jitender guPta

4
At the same time, the government gold bonds opened the
doors for traditional investors to move from investing in
physical gold to paper gold through this scheme. The demat
form of the bonds ensured safety and convenience for people
who otherwise fear losing the bond certificate or damaging it.
A total of 10,155 kg worth of gold with investments of `3,060
crore flowed through first five tranches alone in this scheme.
The insurance sector was also impacted with the
e-insurance accounts coming into play which allow
policyholders to manage their policies online. With this
move, policyholders benefit from the e-insurance account as
it will help them consolidate all their insurance policies like
life, health, motor and other forms through a single account.
The year saw an overall exciting and active development on a
lot of fronts. With the implementation of GST and the rippling
effects of demonetisation, there is no doubt that 2017 is going
to be an interesting year.

32 Outlook Money December 2016 www.outlookmoney.com

Mutual Funds Made Easy

Best of both worlds

Dont be intimidated by the choices on offer; there are options
for smooth initiation into investing

A
s an investor, you face
the dilemma of mak-
ing a choice from the
plethora of fund schemes
that exist. More often, for someone
new to investing, the experience of
selecting a fund to start with is too
intimidating that they procrastinate
than make a decision on choosing a
fund scheme to invest in.
To address the needs of the unini-
tiated, especially those looking to
invest in equity funds, there are two
variants that could be considered.
The equity linked savings scheme
(ELSS) or a balanced fund. Both redeemed sum from this fund is defined frequency, when the equity
these have all the necessary compo- tax free. The combination of equity allocation goes above a band, the
nents which will address a first time and tax-saving makes ELSS an ideal fund manager will exit equity pro-
investors concerns. gateway to equity. portionately and invest the pro-
ceeds into debt to maintain the bal-
ELSS Balanced funds ance and vice-verse. In this manner,
This fund is a boon for every tax As the name suggests, balanced the asset allocation is maintained,
payer, as investments in this fund funds maintain a pre-determined which has proved to be the factor to
qualifies for tax deductions under ratio between equity and debt assets. make investing a success.
Section 80C up to `1.5 lakh in a Depending on the tilt towards equity You have the choice to invest
financial year. Investments in this or debt, the fund may be termed eq- systematically in both these funds,
fund come with a three year lock- uity-oriented or debt-oriented. What though when investing through a
in, which is the least among other you need to keep in mind is that the monthly SIP in ELSS, you will need
instruments in which savings and equity-oriented type fund invests at to be cautious of the fact that each
investments qualify for tax deduc- least 65 per cent in equities, while SIP instalment will need to stay
tions. The lock-in instills discipline the debt-oriented fund invest about invested for the three year lock-in,
among new investors to wait before that much in debt assets. which is not a problem with the
reacting to the performance of the This type of fund scores with the balanced funds. Make a beginning,
fund scheme to exit. Moreover, discipline they maintain towards start investing in mutual funds.
on completion of the lock-in, the asset balance, which means at a olmdesk@outlookindia.com

www.outlookmoney.com December 2016 Outlook Money 33

 Fund Watch: SBI Magnum Multiplier Fund

Magnum opus
Deftness in changing asset allocation and
moving across sectors has helped this fund

U
ntil a few years ago this year return is about 23 per cent,
fund was an average which is way ahead of its peers. It
performer but, its has repeatedly outperformed its
performance underwent benchmark, consistency making it a
a spectacular transformation top performer.
the moment it shifted focus The portfolio is made of quality
towards large-caps. The large- stocks such as HDFC Bank, UPL,
cap allocation is as high as 65 Britannia Industries and Axis Bank,
SBI Magnum
per cent in stocks of companies among others. The performance has Multiplier Fund
with sound management. It also been consistent over both bear and
invests in companies where it sees Assets managed: `1,704 crore
opportunities for growth, which is (As on September 30, 2016)
in-line with its own growth style. Past performance (%) Fund manager: Saurabh Pant
The fund follows the Benchmark The fund has consistently outperformed Min investment: `500
S&P BSE 200 by limiting its deviation the S&P BSE 200 benchmark
to sectors and stocks within Expense ratio: 2.12%
levels. Cash position is also rarely (As on September 30, 2016)
YTD 3-year 5-year
above 7 per cent, giving it ample Exit load: 1% for redemption
leeway to handle redemptions and Fund return -0.18 21.10 18.36 within 365 days
opportunities. All these factors have S&P BSE 200 1.88 12.81 12.28 Benchmark: S&P BSE 200
played a huge role in its blockbuster All returns are absolute; YTD returns as on
performance since 2014. Its three- November 24, 2016

Earning curve Top 5 stocks (%)

Value of `1,000 SIP over past 10 years The top HDFC Bank
5 stocks
7.71
%
`1,000 SIP over past 10 years
account Hindustan Petroleum Corp.
for over
5.47 4.54
% %
26.22% Tata Motors
3
`2.68 lakh of assets or
4.02 4.48
% %
`446.78 Bajaj Finance
2.5
crore
Infosys
Figures in ` (lakh)

1.5
Top 5 Banks 7.45
1
Sectors* Petroleum Products 5.28
Auto 4.40
0.5
`1.2 lakh Finance 4.34
0
01-Dec-06 01-Nov-16
*All figures in % Software 3.89
As on October 31, 2016; Source: Fund Factsheet

34 Outlook Money December 2016 www.outlookmoney.com

 Saurabh Pant
Fund Manager,
SBI Magnum Multiplier Fund
We avoid companies with
corporate governance issues
x What is the investment
objective of this fund?
This is your typical multi-cap
fund. The large-cap to mid-
and small-cap proportion is
around 60:40. We have no
reason to believe this will change
significantly. The size allocation
is typically a function of sector
allocation and stock selection.
We do not consciously run a pre-
determined allocation strategy
on size. The objective of the fund
is like any otheroutperform its
benchmark consistently (3-year
rolling returns) and outperform
the average of a relevant multi-cap
peer set.
x How do you identify stocks that
enter this fund?
We use two parameters to identify
stocksa) stocks which are below
intrinsic value, or said another
way, where implied growth is
below potential growth and b)
Positive change in fundamental
variables. Large-caps are typically
evaluated based on one-year
outlook. We also leverage on our
quant skills which helps us factor
in non-fundamental variables for
bull phases of the market, which is
a good test for investors to consider
investing in this fund. The fund
managers deftness in changing asset
allocation and moving across sectors
to benefit from market movements
has augured well in its performance.
For instance, the funds positions
36 Outlook Money December 2016 www.outlookmoney.com
large-caps. Mid- and small-caps
are evaluated from a three-year
horizon and are purely based on
fundamental research.
x What kind of stocks or
companies never make the
portfolio cut?
All stocks or companies are
eligible to enter. But as a rule, we
avoid companies with serious
corporate governance issues.
x What is the investment universe
for this fund?
The fund can potentially invest
in any listed stock. Having said
that, the template ensures the
risk is reduced by setting limits
on stock, sector and market-cap.
Stock limits are 5 per cent, sector
limits are 8 per cent vis--vis the
benchmark. For market cap, we
operate in the following bands:
0-10 per cent for small caps, 20-50
per cent for mid-caps and 30-
80 per cent for large-caps. The
benchmark for the fund is BSE 200.
x What should an investor expect
when investing through SIPs in
this fund?
in Ahluwalia Contracts and
Aurobindo Pharma have proved
valuable. It does take calls to
be in sync with cyclical sectors,
but is also cautious to increase
exposure to defensive sectors
such as pharma and consumer
non-durables when the markets
BSE 200 index has about 87
per cent of its weight in large-
caps and the balance is from
mid-caps. Suffice to say that its
performance is largely aligned
to large-cap category. For the
fund, our target is to better the
benchmark performance which
we try and achieve through
superior stock selection in
large-caps and by identifying
opportunities down the market
capitalisation curve.
x What has aided the
performance of this scheme in
the past one year?
Bajaj Finance, Hindustan
Petroleum and UPL have been the
top stock attributors and among
the sectors, being underweight
in IT and overweight in energy
and fertilizer has helped over the
last one year. Higher allocation
to mid- and small-caps has also
helped the fund outperform the
benchmark over the past one
year. Allocation to mid- and
small-caps is largely a derivative
of bottom up stock selection and
some of these picks have done
well for the fund.
are volatile. The over two-decade
history, consistency, and pedigree
of the fund house are all factors
that make this a suitable fund to
consider investing in. Make SIP
investments in this fund with a 3-5
year timeframe to benefit the most.
editor@outlookmoney.com
HealthCheck
Get more for less
A
pure vanilla health insurance is a pass, there are options
that will help you customise your policy at optimal costs,
without compromising the scope of insurance cover.
I have a health insurance
provided by my employer. Is it
enough?
Health insurance provided by
employers are most often limiting
as the scope of cover is a measure
of your level in the company and
your salary. Ideally, you should
take a personal health insurance.
Most often costs are the reason
to not go for an individual health
insurance; so, you could explore
the top-up health insurance plan to
supplement the insurance provided
by your employer. This is like a pizza
topping, by paying a marginal sum
you get a higher sum assured, which
kicks-in above the sum assured on
the basic health insurance provided
by your employer. The importance
of this policy can be realised when
you leave the job and the new
employer may not offer a similar
policy or offer a reduced cover.
Can you explain how do top
up plans work?
Unlike a standard health insurance
policy, which settles your hospital
bills within the limits of the sum
assured under the cover, the top-up
comes into play when the claim
surpasses a threshold.
For instance, with every top-up,
there is a threshold known as
deductible, which is a must. So, in
case you take a `5 lakh top-up with
`2 lakh deductible, the top-up will
pay for claims that surpass the `2
lakh deductible. So, if a claim for
`3 lakh rises, the top-up will pay `1
lakh. Which is why, it is suggested
that one should take a standard
health insurance for `2 lakh and
add a top-up to it. This way, the top-
up comes into play only selectively
when the sum assured is surpassed. policies or those who can spend the Is it possible to later convert
So, the top-up plan is beneficial first few lakhs from their pocket. my top-up plan into a full-
when you want to increase the fledged health insurance plan?
cover while paying low premium. Is it necessary to have a base Yes it is. Apollo Munichs Optima
cover to buy a top up plan? Will I Super comes with the unique
Who should buy a top-up? get tax exemption? SWITCH benefit where the
Top up health insurance policies are No, a top up plan can be bought customers have an option of
one of the most economical ways without a base cover but in doing so; converting their Optima Super
to increase the scope of your health you will be funding the deductible into a full-fledged nil deductible
insurance cover. For instance, the sum, with the top-up paying for the plan without any underwriting or
premium in case of `5 lakh Optima rest. When going in for a top-up, look consideration of your current health
Restore policy is `8,216 including for a plan that is on an aggregate status at two occasions. One
tax and if you buy `5 lakh Optima basis, which means it will club many when a customer is due for his 5th
Super top up plan with `2 lakh instances of hospitalisation in a year consecutive renewal. Two - when
deductible limit, you will pay just and not just a single one to calculate a customer is 55-60 years old, has
`2,363 including tax. Such plans the deductible limit. Yes, you will get availed the policy before the age
are best suited for individuals with tax exemption under section 80D of 50 years and has been renewing
group cover or low sum insured of I-T Act. his/her policy regularly.
www.outlookmoney.com December 2016 Outlook Money 37
 Cover Story

Befriending income tax

Smart tax planning strategies can help you not only optimise
your tax liability but could also help you achieve your financial
goals, says Shipra Sharma

Mohnish Panchal comes across like

any average taxpayer till he informs
AVI
S about having exhausted his tax

N
SA
savings limit under Section 80C. I

GS
used the limit by putting money into
E U R V
INGS

PPF and insurance and am satisfied,
M
A
he says. Nothing wrong but if he had
N S
L

N C
given some thought he could have
H O

done a lot better.

O

E
A Year-long exercise
Accept the fact that you cannot

I T I
N avoid income tax. And the sooner
you start accepting that money
will be deducted from your salary
O
T U

towards tax deductions, the better

it is. Not only will it make you use
N

tax savings meaningfully, it will also

help you with your overall finances.
F E E You should refrain from buying life

I R E
M E
E T
R

N
T

Hemant
Beniwal

I
f you fear income tax, rest
assured, the Prime Minister is
well aware of your concerns. A
few months ago, PM Narendra
Modi asked tax officials to remove
fear of harassment from the minds
of taxpayers and focus on five
pillars of administrationrevenue,
accountability, probity, information
and digitisation (RAPID).
Taxpayers should be proud that
their contributions go into nation
building, yet, most treat tax savings
FINANCIAL PLANNER
as a chore. The last quarter JFM (Jan-
Feb-Mar) syndrome is used smartly Your tax saving should
by financial services companies that be result of your
have products in which you can save investment planning
and invest to claim tax deductions. and not vice versa.
Sadly, the diligence shown by Make your goals,
taxpayers in choosing a smartphone
or a year-end travel plan by endlessly
make a plan for them
trawling the net is something that
and then choose an
they never use when it comes to appropriate tax saver.
their annual tax planning. At 26,

38 Outlook Money December 2016 www.outlookmoney.com


insurance, which seems to be the
most sought-after tax saving option,
without understanding its use.
The window to save tax is the same
whether you earn `2.5 lakh a year or
`2.5 lakh a month. All taxpayers can
save taxes up to `1.5 lakh annually
under Section 80C, which allows one
to claim deduction on savings, select
expenses and also investments.
The first step towards befriending
income tax is to use this wide range
of instruments by parking your
money to suit your needs.
Salaried taxpayers wake up to
tax savings sometime between
November and January, when the
office accounts department starts
asking for proof of tax savings, lest
they start deducting it from their
salary. You should think about
saving tax at the beginning of the
financial year. You cannot act in
a haste and buy a few random
products to fulfil the Section 80C
deductions, says Hemant Beniwal,
financial planner. If planned well,
rajat Yadav, 32,
along with my wife, we have a joint home loan, which has helped
us in building an asset early in our lives and also save on taxes.
your income tax planning can be
very effective, if not, it could turn out
to be a mess.
For entrepreneur couple Moksh
anuj
matHur
CEO, CANARA HSBC OBC
LIFE INSURANCE
While Life Insurance
solution is a must
and a first step to
financial planning, the
collateral benefit that
one gets by buying a
life insurance policy is
tax benefits.
www.outlookmoney.com December 2016 Outlook Money
GurGaOn
Photo: gireesh. gv
Juneja and Aditi Juneja, the annual
tax planning exercises starts and
ends with PPF, life insurance and
medical insurance. Right now,
saving tax is not a priority. I prefer
parking my money where I can get
maximum returns, says Moksh.
His choice of instruments to save
taxes tells a very different story in
comparison to what he has stated.
The penchant for fixed return
instruments is well known, which
could be due to the tilt towards
such products within the tax
saving basket. The savings options,
which earn a fixed return, include
contributions to the mandatory
Provident Fund (PF), PPF, savings
in five-year fixed deposits, five-year
post office term deposits, National
Savings Certificate (NSC), Sukanya
Samriddhi Yojana and the Senior
Citizens Savings Scheme.
Many taxpayers tend to ignore
the available options towards
investments like those in unit-linked
insurance plans (Ulips), equity-
39
Cover Story
avenues to save tax
Maximum
Section Limit (`) Comment
Includes a wide net of instruments
Section 80C 1.5 lakh in which savings and investments
qualify for tax deductions
25,000 Premiums paid towards medical
Section 80D (35,000 for insurance qualify for deductions
senior citizens)
The interest component of home
loans is allowed as deduction under
2 lakh Section 24B for up to `2 lakh in
Section 24B (self occupied case of a self-occupied house. If
property) your property is a let-out one then
the entire interest amount can be
claimed as tax deduction.
Effective Budget 2016-17, first time
home buyers can claim an additional
tax deduction of up to `50,000
on home loan interest payments.
The home loan should have been
Section 80EEE 50,000 sanctioned in FY 2016-17 and the
loan amount should be less than
`35 lakh, with the value of the house
no more than `50 Lakh. The home
buyer should have no other existing
residential house in his name.
applicable for all those individuals
Section 80GG 60,000 who do not own a residential house
and do not receive Hra
If you are earning below `5 lakh,
you can save an additional `3,000
in taxes. In case if your tax liability is
Section 87A 50,000 less than `5,000 for FY 2016-17, the
rebate u/s 87a will be restricted up
to income tax liability only
Employees contribution in nPS is
Section
80CCD(1B) 50,000 eligible for additional tax deduction
outside the Section 80C limit
Deduction from gross total income
of an individual up to a maximum
of `10,000 in respect of interest on
Section 80TTA 10,000 deposits in savings account with a
bank, co-operative society or post
office can be claimed under this
section.
40 Outlook Money December 2016 www.outlookmoney.com
linked savings scheme (ELSS),
contributions to the National
Pension System (NPS) which has an
additional window of `50,000 to be
claimed as tax deduction, and home
loan principal repayment which also
qualify for deductions.
the best option
When you have plenty to choose
from, the chances of bias setting in
selection are high. In her book The
Art of Choosing, Sheena Iyengar
writes: An abundance of choice
doesnt always benefit us...The
expansion of choice has become
the explosion of choice, and while
there is something beautiful and
immensely satisfying about having
all this variety at our fingertips, we
also find ourselves beset by it. The
choice when it comes to using the
mandated `1.5 lakh towards tax
savings cannot be better described.
It also does not come as a surprise
why people predominantly opt for
life insurance even if not for the right
reasonsrisk mitigation (Read story
on page 56 for more).
Like most other things in personal
finance, the answer to the best
tax plan will vary from person to
person (Read story on page 48 for
more). There is also a role that each
tax saving option can play in your
financial life. Life insurance is a
sound long term financial solution.
The simple advice that we would
give isplease start early. This most
critical solution for your needs
demands a disciplined approach
much early in your life so that over
the years you build a good corpus,
stresses Anuj Mathur, CEO, Canara
HSBC OBC Life Insurance.
The opportunity to create wealth
and at the same time save taxes is a
potent combination that taxpayers
can smartly deploy. A financial
instrument that provides this
feature is the ELSS. ELSS is among
the few eligible equity-based tax
saving product which also comes
 MokSh juNeja
(34) & aditi
juNeja (31)
MuMBaI
We have mostly used PPF
and mediclaim which
takes care of our tax
planning needs within
the prescribed limits.

Photo: soumik kar

NPS verSuS ePF

T he debate over the national Pension System
(nPS) being better than the age-old Employees
provident fund scheme (EPF) can be never-ending,
retirement contributions by way of putting money into
the nPS adds up to `2 lakh in a financial year instead of
the `1.5 lakh limit in case of the EPF. Further, the nPS,
depending which of the two you are contributing to. unlike the EPF, is flexibleyou do not need to invest each
One aspect that is clearly emerging is that month, you can skip contributions for a few
the government is pushing for more people months as long as you make the once-a-
to opt for the nPS, given the tax benefits year minimum contribution. The additional
available to an nPS subscriber over the EPF. `50,000 tax rebate available when putting
although the EPF is mandatory for money in the nPS has got many takers to
employees earning up to `15,000 a month the scheme.
in the organised sector, many employers Says Delhi-based Manu agarwal: I
insist on EPF contributions for all their fall under the nPS as a Government
employees. as your employer matches CV GanesH of India employee. I was unhappy with
the statutory EPF contributions, many the contributions initially, but with the
COO & BUSINESS HEAD
employees assume this sum is in addition DIGITAL CHANNELS, HDFC additional tax benefit, I have increased my
to their salary, which is not the case. In SECURITIES contribution, which is earning well. The
these times of cost-to-company (CTC), Post the tax benefit additional tax benefits have increased the
contributions by both employers and of `50,000, retail number of takers to this scheme. Post
employees are clubbed in the CTC. customers in the NPS the additional tax benefit of `50,000, the
In comparison, the nPS is voluntary but have approximately number of retail customers in the nPS have
several employers are finding merit in the quadrupled on a approximately quadrupled on a cumulative
scheme and offering it to employees as a cumulative basis. basis, says CV Ganesh, COO & business
choice over the EPF. The tax benefit through headdigital channels, HDFC Securities.

www.outlookmoney.com December 2016 Outlook Money 41

 Cover Story
sandeep
patel
MD & CEO, CIGNA TTK HEALTH
INSURANCE
Health insurance
should be an integral
part of your financial
plan; tax benefit is
a motivator and should
not be the only reason
to buy it.
with a lower lock-in period of three
years vis--vis five years for most
others in the Section 80 list, says
Sanjay Sapre, president, Franklin
Templeton InvestmentsIndia.
There are several ELSSs to choose
from, and each adopts a different
investment approach, providing
taxpayers to select a fund that suits
their risk profile. The shortest lock-in
compared to other tax saving options
makes it an automatic first choice
investment vehicle for tax savers
(Read story on page 52 for more).
Making tax savings work
It is one thing to save tax and
another to make it work for you. Tax
savings that you get on the EMIs
repayment on a housing loan is one
way to not only build a financial
asset but also make tax savings work
for you (See: Joint loan advantage).
Impetus to affordable housing
through tax benefits announced in
the 2016 Budget is making it possible
for several taxpayers to own a house,
says Sanjaya Gupta, MD, PNB
Housing Finance.
Another route that can help you
44 Outlook Money December 2016 www.outlookmoney.com
tax Shelter
O wning a house is every Indians topmost
desire and dream. That it is becoming
affordable with a push by the government is
evident by the additional tax benefits that
are available to first time home buyers in the
affordable housing space. I took a home loan
in 2010 and have used both the tax savings
available on principal repayment and the
interest component, says rajat Yadav. sanjaya
The banking background gave him the Gupta
MD, PNB HOUSING
necessary edge to understand what he was to
FINANCE
gain by going in for a home loan. His `25 lakh
loan costs him `24,00 in EMIs and he is already One way to
6 years into the loan, with another 9 years to go maximise tax benefit
before it comes to an end. is by availing loan
as the home loan repayment has two in joint name, this
components principal and interestthere are way both owners will
tax rebates to be claimed under both heads. be eligible for tax
You get a deduction of home loan interest rebates.
repayment under Section 24 of the Income Tax
act and a deduction of the principal amount under Section 80C. as my
wife is also employed, we went in for a joint home loan, we both are able
to claim the tax benefits, Yadav explains.
joint loan advantage
Suppose Mr X and his wife take a joint home loan of `50 lakh with
equal shareholding and both are in the highest tax bracket of 30 per
cent. assuming the loan is for 20 years, at 9.25 per cent interest, their
combined tax exemption is `5.49 lakh each year. If only Mr X had taken
the loan, he would have got an exemption of only `3.5 lakh (`1.5 lakh
under Section 80C and `2 lakh under Section 24). However, by going
for a joint loan, they are able to get an additional benefit of `1.95 lakh.
Details Amount (`)
Home Loan Amount 50 lakh
EMI Principal + Interest payable
(`2.32 lakh + `3.17 lakh)
5.49 lakh
Amount payable by each 2.74 lakh
Combined Tax Deduction under
Section 80C in the first year within
2.32 lakh or
the `1.5 lakh cap
1.16 lakh each
Combined Tax Deduction under
Section 24 in the first year within the
3.17 lakh or
`2 lakh cap
1.58 lakh each
total tax deduction 5.49 lakh
 Cover Story
create a corpus for your golden
years is the National Pension
System (NPS). The fund options
within the NPS and the additional
sanjay
sapre
PRESIDENT, FRANKLIN
TEMPLETON INVESTMENTS
INDIA
There are two key
aspects one must
consider before
investing in ELSS
risk appetite and
investment horizon.
46 Outlook Money December 2016 www.outlookmoney.com
tax deductions available on
contributions to this instrument
make it a strong retirement planning
tool (Read: NPS versus EPF).
Savvy tax savers use every rule
in the book to make every rupee
that they pay as tax work for them,
without avoiding taxes (See page
55 for ways to claim tax benefits).
A simple way to do so is to create
an HUF (Hindu undivided family)
account, which allows them to save
additional sums. With the HUF, you
basically create one more entity
within the family which can benefit
from the money deployed towards
tax savings in them. The HUF as a
concept is easy, but venture into it
only if you see merit in it and can
manage the compliance element of
filing tax returns under the HUF.
Instead of getting bogged down
by the many choices that stare at
you when planning taxes, sit back
and think of your financial needs
and how you could use tax savings
to achieve them. Not only will you
aNita verMa
29, GurGaOn
My tax savings are
in PF, PPF and life
insurance policies for
the wealth protection
and flexibility they offer
besides tax savings.
Photo: gireesh. gv
be able to reduce your tax liability,
you will be able to benefit from the
dual advantage of tax savings and
realising your financial goals. More
choice is not always better, but
neither is less, according to Iyengar.
So, choose tax saving instruments
that you understand than getting
myopic with blindly tax savings.
The optimal amount of choice
lies somewhere in between infinity
and very little, and that optimum
depends on context and culture.
In practice, people can cope with
larger assortments than research
on our basic cognitive limitations
might suggest, Iyengar writes. As a
taxpayer, make sure you maximise
the opportunity that comes your way
towards meeting your long-term
financial needs than get obsessed
with utilising the `1.5 lakh you need
to save and invest to reduce your tax
liability. This approach creates the
smart taxpayer who tastes the best
of both the worlds: tax savings and
meeting financial goals.
Cover Story

Mix n Match
Adopt smart ways to align tax planning to financial goals and benefit
from best of both worlds, says Shipra Sharma

T
wo heads are better than
one. Teams tend to perform
A X better than individuals
T and by the same logic, by
aligning your financial goals with the
available tax saving options, you are
likely to benefit the most. For most

NCI

S
S A

of us, income tax is the first exposure

G
to financial decision making even
V I N
A

before one can start writing down

FINA

financial goals. Although both these

L

aspects of our personal finances

S

could be treated independently, you

will be much better off by combining
the two.

At 26, Mumbai-based Mohnish

L

G O A Panchal demonstrates the maturity

of a veteran financial expert by
matching his tax savings choice with
his financial goals to make the most
of the tax savings. I am using the tax
Mapping goals to tax savings
Financial
Goal Tax Planning option

Life Insurance (premiums qualify for tax

deduction under Section 80C)

Health insurance (premiums qualify for tax

deduction under Section 80D) Nimesh
shah
EPF, NPS, Pension policy (contributions MD AND CEO, ICICI
qualify for tax deductions under Section PRUDENTIAL AMC
80C and variants) Traditional instruments
offer assured returns
Tuition fee under Section 80C and education loan that may be unable to
under Section 80EEE beat inflation over the
long-term, unlike ELSS
Home loan repayment rebate under that has the potential
Section 24 towards principal and Section to beat inflation and
80C toward interest create wealth.

48 Outlook Money December 2016 www.outlookmoney.com


ReNu
maheshwaRi
CEO, FINSCHOLARZ
Goal financing should
be the primary
criterion around which
tax saving products
should be chosen, but
the first step should be
asset allocation as per
financial goals.
offer for you. Both these products
serve the purpose of saving for your
retirement needs.
The NPS was the mandatory
retirement saving for me, which I
did not appreciate in the beginning.
However, over time and with the
additional tax benefits it attracts,
I find it to be the best retirement
savings option that I could have
got into, says Delhi-based Manu
Agarwal. Several taxpayers are
finding favour with opting for the
NPS, which has a stringent long lock-
in period and ensures one is able
to save towards retirement without
having the flexibility and liquidity to
exit at the slightest of provocation.
Early start
If you are in your 20s, you have
many years ahead of you, which
should automatically stop you from
Mohnish Panchal,
26, MuMbai
i am using the tax concessions
available towards my financial
needs of insurance and
healthcare, which are working
adequately.

saving windows to meet my financial

needs, which allows me to align the
two effectively, he says. The choice
of financial instruments to save taxes
is plenty, but to derive more than just
tax savings you need to match their
benefits with your financial goals.

Building a foundation
At the base of every financial plan
rests the aspect of protection and risk
mitigation. The two most important
insurance policies that one should
have are health insurance and life
insurance, especially term plans.
As premium payments towards life
insurance qualify for tax deduction,
one should first opt for adequate life
insurance cover. The life insurance
cover will take care of future
financial needs of your dependents if
you were not to wake up tomorrow.
You should next go for an adequate
health insurance plan so that you
are geared to face the financial
implications of healthcare risks
that you are exposed to. The other
tax saving instrument which the
salaried can benefit from is the EPF
or the NPS, depending on what is on
Photo: soumik kar

www.outlookmoney.com December 2016 Outlook Money 49

 Cover Story
putting money in fixed return tax
saving options like the NSC, 5-year
bank deposits and even the PPF. Tax
saving instruments like the NPS and
ELSS which have equity exposure
should be your first choice. The
reason to opt for these over other
fixed return instruments is two
prongedyou gain from the long-
term equity exposure and also the
power of compounding.
For first time investors, the equity
linked savings scheme (ELSS) is a
good choice to experience equity
investments, says Nimesh Shah,
MD and CEO, ICICI Prudential
AMC. According to him, ELSS, which
comes with a three-year lock-in,
offers an investor twin benefits of
wealth creation and tax efficiency.
Those with over 10-15 years left
in the workforce, the NPS is an
excellent product to invest in to
save taxes and also build retirement
corpus. The choice of funds that one
can invest within the NPS further
allows you to manage the investment
risk and still have equity exposure
which is the only asset class which in
the long run beats inflation.
50 Outlook Money December 2016 www.outlookmoney.com
Manu aGarwal, 45,
New Delhi
i have increased the mandatory
contributions to the NPS because of
the additional tax benefits, which will
help me create a bigger corpus for my
retirement.
that you could imagine. Says Adhil
Shetty, CEO, Bank Bazaar: You
can claim deduction of up to `2
lakh on your home loan interest
if you or your family reside in the
house property or if the property
is vacant. And, if you have rented
out your property on which the
loan is running, the entire interest
on the home loan is allowed as a
deduction.
The rising cost of education can
Photo: gireesh. gv
take a toll on your finances, which
special situations is where the Section 80C benefit
Today, buying a house without comes to your rescue under which
taking a home loan is rare. Now, if you can claim tax deduction
you can borrow to buy a house and towards the sum you pay towards
also use the repayment to gain tax tuition fee for up to two children.
benefits, it is a move which puts you This is beneficial for those too who
in a much better financial situation wish to pursue higher education.
A loan to fund your higher studies
is easily available these days and
most students opt for this. To
provide incentives to students to
pursue higher education in India,
the government offers tax benefits
for education loan takers under
Section 80E. With this deduction,
an education loan not only funds
your higher studies but also helps
adhil save tax as the interest paid on the
shetty education loan can be claimed as
CEO, BANK BAZAAR deduction under Section 80E.
To make the most of tax savings,
If you are a first- examine your tax liabilities and
time homeowner finances before selecting tax-saving
and looking for a instruments. The choice would
house that costs less largely depend on several factors
than `50 lakh, you like product lock-in, risks involved
can make use of the with the instrument and the returns
additional tax benefits they earn. To make the most of the
under Section 80EE. options you need to fit the two to
meet your overall financial goals.
General Insurance Made Easy
Beyond health
Health insurance comes with a feature that should not become
the driver for going in for ittax benefits
R
ise in healthcare
risks and
incidents of
lifestyle diseases
have made it practically
impossible for most of
us to be without health
insurance to address the
financial implications of
hospitalisation. There is
no way one can hold the
premium that one pays
towards a health insurance
policy to be an avoidable
expense. The fallacy
that health insurance is
expensive is busted the
moment one experiences
hospitalisation even for
a few days resulting into
a sizeable bill. In fact, for
most people, even before
taking up life insurance,
one should take a health
insurance policy.
There are several types of
existing health insurance
policies. Depending on
ones needs, one can select
a combination that best
addresses their needs. But
a standard basic health
insurance policy is a must
which covers expenses
incurred from an accident
or hospitalisation. There
exists another inherent
benefit of taking a health
insurance; premiums paid
towards the policy come
with tax benefits.
Premiums paid towards
health insurance policies
are eligible for tax benefits
under Section 80D as the
health insurance premium
Overall deductions under Section 80D
Health Check-
Total
People covered Exemption Limit (`) Up Exemption
(`)
(`)
Self and family 25,000 5,000 30,000
Self and family + parents (25,000 + 25,000) = 50,000 5,000 55,000
Self and family + senior citizen
(25,000 + 30,000) = 55,000 5,000 60,000
parents
Self (senior citizen) and family
(30,000 + 30,000) = 60,000 5,000 65,000
+ senior citizen parents
Under Section 80D, a taxpayer can claim deductions on health insurance premiums paid for self/family and parents, apart from
deductions on expenses related to health check-ups.
paid for self, spouse, policy that meets your of your resolution. But,
children and parents all needs. With the New Year do not treat it like several
qualify for tax deductions. round the corner, it may resolutions that never tend
In fact, even the Hindu be a good idea to include to be followed.
Undivided Families (HUF) health insurance as part olmdesk@outlookindia.com
can claim deductions
under this section.
Premium payments of any
member in a HUF can be
used for tax deduction
subject to upper limit as
per the Act.
Further, the income tax
rules allow for deduction
under Section 80D for even
preventive health check-
up. The aggregate amount
you can claim as deduction
in a year is `5,000. The
health check-up could
be done for either the
individual or her family,
including parents, spouse
and children. The scope of
health insurance definitely
goes up even for those who
are sceptical about the
benefits of the policy.
However, do not go in
for a policy just because
of tax benefits. It is best
to zero down on a health
www.outlookmoney.com December 2016 Outlook Money 51
Cover Story

Extra edge
with equities
Equity-linked saving schemes (ELSS) are mutual funds in which
investments qualify for tax deductions; make them your first choice of
tax savings, says Preeti Kulkarni

T
here are several financial
instruments in which you
can park money to claim
tax deductions under
Section 80C of the Income Tax Act.
The nature of tax savings could be
by way of saving, investing and in
certain cases even spending money,
with the combined limit of `1.5 lakh.
Although the advantages of long-
term investing cannot be emphasised
more, there is one financial
SAVING instrument that could be the first
investment vehicle for scores of
TAX

taxpayersthe equity-linked saving

schemes (ELSS). The ELSS comes

TA

X
SS SAVING

L TI
ON
CK-IN

C
E
SE

8 0 L Mahesh
3

YE
O

Patil
A S R CO-CIO, BIRLA SUN LIFE AMC
The lock-in plays an
important role in the
investment style of
the fund, allowing us
to take a medium to
long-term view on
stocks of emerging
quality companies.

52 Outlook Money December 2016 www.outlookmoney.com

with a three-year lock-in, which is
the shortest compared to other tax
Options to pick from
savings avenues. Assets Returns (%)
The ELSS is an open-end equity
Tax Saver Managed (`crore) 3-year 5-year 7-year
mutual fund that doesnt just help
Birla Sun Life
you save tax but also lets your money
grow. The three-year lock-in works to Tax Plan 422 21.61 18.88 12.35

the advantage of both the taxpayer as

well as the fund manager as both get DSP BlackRock
the necessary time to counter market Tax Saver 1,496 23.57 20.9 13.5

volatility. The taxpayer has the added

advantage of being in a fund where
only other taxpayers are investors,
making them fairly homogenous in
their construct. Further, the exposure
to equities gives the investor the edge
to earn higher returns, which have
the potential to beat inflation.
Investment strategy
Although the investment objectives
of all ELSS are the same, the way
the funds are managed and how the
investment strategy is adopted differ.
So there is ELSS which may have a
large-cap orientation or one which
could adopt a multi-cap approach.
The varying strategy adopted also
gives an opportunity to select a
fund that is managed in a manner
that it suits their risk appetite. Says
Mahesh Patil, co-CIO, Birla Sun
Life AMC: Quality orientation
involves selecting companies run by
professional managements backed
by strong promoters when building
the funds portfolio.
Then there are fund managers
who swear by the benefits of
diversification to spread risks and
optimise returns. Invesco India Tax
Plans portfolio has a healthy blend
of growth and value, but is growth-
biased. We invest across market
capitalisation with a blend of both
large-caps as well as mid-caps with a
long-term view. Hence the portfolio
is managed with a very low turnover,
explains Vinay Paharia, fund
manager, Invesco Mutual Fund.
Says Lakshmikanth Reddy, VP
and portfolio manager, Franklin
Templeton InvestmentsIndia: We
Franklin India
Taxshield 2,442 21.76 18.11 14.26
Invesco India
Tax Plan 340 21.61 18.46 14
Principal Tax
Savings 294 20.46 19.61 11.19
Returns as on Nov 23, 2016; Assets as on Oct 31, 2016
agnostic with prudent limits on
exposure to any single stock.
My strategy is guided by a pure
stock-determined approach. I look at
corporate earnings for the next two
years and how the cash flow profile
of the company is going to improve;
if a company is delivering an X
Vinay ROE, what will lead to growth in the
coming days, says Rohit Singhania,
Paharia VP and fund manager, DSP
FUND MANAGER, BlackRock Investment Managers. In
INVESCO MUTUAL FUND
case of small- or mid-cap companies,
We invest about 50 he looks at the scalability and its
per cent of the assets plans for capacity expansion.
in attractive mid-cap
stocks because of the The lock-in advantage
three-year lock-in, One advantage for fund managers
when managing ELSS is the three-
which allows us the year lock-in. As much as the lock-in
flexibility to invest in forces an investor to stay invested
this manner. for a fixed period, it also gives the
freedom to manage the fund without
the fear of redemption pressure
follow a bottom-up approach, and during market swings. The lock-in
invest across market-cap. The idea is allows investment decisions to be
to have a mix of large and mid/small- taken with a longer term outlook
cap stocks that can help the fund as there would not be fears of
deliver superior risk-adjusted returns redemption. We, however, do build a
across market cycles. Franklin India significant part of our portfolio with
Taxshield is designed to be sector- a 2-3 year view, says PVK Mohan,

www.outlookmoney.com December 2016 Outlook Money 53

 Cover Story
rohit
singhania
VP AND FUND MANAGER,
DSP BLACKROCK INVESTMENT
MANAGERS
Benchmark for my fund
doesnt solely guide my
stock selection. A stock
that is heavyweight in
the benchmark need
not necessarily be in
the portfolio.
headequity, Principal PNB AMC.
Fund managers have the flexibility
to invest in companies that can
deliver. The lock-in plays an
important role. It helps in taking
medium- to long-term view on stocks
of emerging quality companies and
helps us to invest in early stages,
says Patil. The lock-in also helps fund
managers stick to their mandate and
stay invested even in times of crisis.
So the fund takes the best advantage
of staying invested in equities during
times of panic, helped by a three-year
lock-in and tries to generate superior
risk-adjusted returns over the long
term, adds Patil.
We typically stay fully invested and
the cash exposure is only to meet
liquidity needs. This is because our
product portfolio comprises long
only productsa product structure
that by design forbids managers from
taking cash calls, says Reddy.
Our fund typically invests about 50
per cent of the assets in a portfolio of
attractive mid-caps. This is possible
because the three-year lock-in
provides us with the flexibility to do
so, thereby enhancing the prospects
54 Outlook Money December 2016 www.outlookmoney.com
P.V.k.
Mohan
HEADEQUITY,
PRINCIPAL MUTUAL FUND
The three-year lock-
in allows investment
decisions to be taken
with a longer term
outlook as there
would not be fears of
redemption.
Look at returns over the long-term
period instead of being dazzled
solely by their recent performance.
of the fund, says Paharia. The flipside
of this approach, of course, is market
risk and lack of liquidity for three
years. Taxpayers who are willing to
stomach the risk in the short term are
likely to choose this option.
Mix n match
The decision to choose an ELSS
from over 40 available schemes is
a daunting task. As an investor, you
need to take into account several
factors while identifying the scheme
that fits your needs. Performance
history of the fund manager as well
as the scheme is the most critical
parameter. Market outperformance is
important as is consistency of returns.
Look at returns over the long-term
period instead of being dazzled solely
by their recent performance.
More importantly, do not get taken
in by their returns during a bull run.
Their performance in down markets
should be understood as you do not
lakshMikanth
reddy
VP AND PORTFOLIO MANAGER,
FRANKLIN TEMPLETON
INVESTMENTS INDIA
We invest across
market-cap, with a
mix of large and mid/
small-cap stocks that
can help the fund
deliver superior risk-
adjusted returns.
want your tax-saving money to go
down south in bear markets, advises
Vidya Bala, headmutual fund
research, Fundsindia.com. Analyse
the funds risk profile, its track record
and consistency in performancethe
wide choice allows you to pick a fund
that meets your needs than blindly
invest in tax savings options.
As for exiting the fund, unlike other
tax saving options where the tenure
of the instrument most often results
in exit, there is no such compulsion
to exit an ELSS once the lock-in ends.
Once your lock-in is over, you could
stay invested in the scheme.
The three-year return on all ELSS
ranges from 12.22 per cent to 28.66
per cent as on November 24, 2016.
What it means is that even the worst
performing ELSS earns higher than
any of the guaranteed return tax
savings options, making ELSS an
automatic first choice investment and
tax saving option.
Ways to
claim tax
benefits
up to
`4.44 lakh
`2 lakh
deduction towards
interest payment on
`46,350
lakh
home loan under
Section 24 `1.5 saved under
Section 80C at the
deductions under
Section 80C highest tax bracket

`19,200 `10,815
exempt towards saved on contribution
conveyance allowance of under Section 80D

`50,000
additional deductions
`4,44,200
under Section 80CCD
towards NPS contribution Total tax savings

www.outlookmoney.com December 2016 Outlook Money 55

 Cover Story

Limitations of having
too many options
The cap of `1.5 lakh leaves too little to choose from Section 80C, say
Shipra Sharma and Narayan Krishnamurthy

V E
S A

INV

E
TIO

ST
E

I N
V
S A EST
V
N
SEC

D
N

N D
P E

E
S

S P
C

8 0

T
he maximum tax savings
of up to `46,350 under
Section 80C basket easily
catches everyones eye. It
is a different thing that this sum is
for those at the highest tax bracket
and not for those in the lower tax
brackets. For taxpayers to optimise
their tax liabilities there are several
windows to save, invest and spend
money and claim the tax rebate.
The most popular is the Section
80C limit of `1.5 lakh which offers
plenty of choices to claim tax rebate.
For scores of taxpayers, the choice
of instruments available under this
section becomes the only savings
and investment avenue.
There are at least 14 instruments
through which you can claim
tax deductions under Section
80C. Some of the instruments
that offer this benefit include the
EPF, PPF, NSC, payment towards
childrens tuition fees, ELSS, NPS,
life insurance policy premiums,
deposit in the Sukanya Samriddhi
Yojana, and many others. That
these can be categorised as savings,
spending and investing alternatives
can help taxpayers proportion
their contributions accordingly to
maximise their tax gains.
Confusing
Its a case of problem of plenty when
it comes to Section 80C. Not only
is there a lot to choose from, the
end result of each of the instrument

56 Outlook Money December 2016 www.outlookmoney.com

 Amit SenguptA and
mouSumi SenguptA,
KOlKata
When it comes to saving taxes, we
want to play safe and opt mostly
for insurance policies for future
needs of our child and to mitigate
healthcare risks.

varies with varying lock-in of

monies. The shortest lock-in of three
years is with the ELSS investments,
whereas the longest is the NPS
contribution, which can puzzle the
smartest minds. It is common for
many taxpayers to make the wrong
choice of instruments to claim tax
benefits under this section, resulting
in difficulties with liquidity as well as
a meaningful usage of the available
tax benefits to their advantage in
achieving financial goals.
Kolkata-based Amit Sengupta
says: My wife and I both have
put money in safe and reliable
financial instruments like PPF and
NSC besides life insurance policies
to save taxes. The inherent bias
towards safety most often than not
leads to taxpayers ignoring larger
benefits they can derive from other
available options. The penchant to
take life insurance policy to save
taxes has resulted in life insurance
being used for tax savings more
than being a financial instrument to
mitigate risk to ones life.
Photo: sandiPan chatterjee
Constraints
There is practical constraint when total to maximise the Section 80C would not be fully utilising even
it comes to using the Section 80C benefits. However, routine expenses the Section 80C benefits and
benefits, especially for the salaried, towards the education of two instead be willing to pay taxes,
who are part of the EPFO or children would more or less wipe as that costs them less. Gurgaon-
contributions to the NPS. After the out the remaining sum to benefit based Prakhar Porwal says: Saving
mandatory contributions, especially from any of the other available tax taxes is priority, but there is
for those in the higher tax bracket, saving option. hardly anything left to utilise after
there is little left from the `1.5 The pain can be more for those the mandatory provident fund
lakh-cap to utilise effectively. Take in the lower tax bracket, where contribution and premiums that I
for instance, someone with a gross the fight will be to save taxes or pay for life insurance.
`11.75 lakh annual salary will end manage ones regular household For instance, someone in the 10
up contributing `96,000 towards the expenses. Chances are many per cent tax bracket earning gross
mandatory PF, and have `54,000 in taxpayers in the lower tax bracket `4.7 lakh annual salary may find

www.outlookmoney.com December 2016 Outlook Money 57

 Cover Story

prAkhAr
porWAL
Gurgaon
after the mandatory
provident fund
contribution and
premiums that I pay
for life insurance, there
is hardly anything left
to utilise.

Photo: gireesh. gV

the mandatory PF contribution of `48,000 on a basic
`4 lakh income too draining. And, although there is a
window to save and invest `1.02 lakh to maximise the
Section 80C limit, many a time, they may not have that
much left after meeting routine expenses. Suppose this
person manages to use an additional `30,000 by way
of tax savings and defers contributing the remaining
`72,000 for optimal tax gains. In his case, he would be
staring at a tax liability of about `10,000. Paying this
C ON
ONT
O Y
E PF
tax is far better than wiping out ones earnings only to
optimise tax savings.
What can you do?
To overcome this drawback, several taxpayers prefer
taking a home loan to make the best use of tax savings
under the Section 80C umbrella. The rebate that
one can claim towards the repayment of interest
on the loan is significant in the early years of the
loan repayment, which does not burden with any
additional tax savings. As the loan is used towards
asset building by way of ownership of a house, it is
a move that should be explored and used especially
when there are additional tax benefits available on

L
TR IB
E

C
M P

7%
3 .6
R

home loans for affordable housing.

R

O Y
E
N

U
L
T I O
As a taxpayer, it is in your interest to explore all
IBUT
E

the avenues through which you can deploy money

EPF
M P

12%
E

N T R
to save tax under Section 80C and then select those
O instruments that will work for you. The other way is to
E

L O
IB
C

IO also evaluate how much money you will lose by way

M P

E R

8.33%
U T

N
P S

of paying tax were you not to be bogged by locking in

E

`1.5 lakh. At the highest tax bracket, `46,350 is what

I
O N E
you save when you maximise the Section 80C benefit.
The other way to interpret this detailyou lose if you
EPF: Employees provident fund
do not put a single rupee into tax savings under Section
EPS: Employees pension scheme 80C window. At lower levels, the tax liability will be
relatively much lower.

58 Outlook Money December 2016 www.outlookmoney.com

Expert Speak

Make it easy for your legal heirs

Writing a will is considered a taboo in India as it is regarded as a bad omen,
but not doing so will only spell more trouble for your family
called a Testator. The person who
executes or helps in division of
assets on the death of the testator
is called the Executor and the
claimants are the beneficiaries of
a will. A Witness validates or
authenticates the will written and
states that the person writing the
will is in sound mind.
Dilshad Billimoria One must consider writing a will
Director, Dilzer Consultants for the following reasons:
Bringing financial affairs in
is bequeathed in accordance with
Muslim personal laws.
A will can be challenged on the
following grounds: sanity, under
coercion and authenticity.
A nominee is only a trustee and
therefore, a will supersedes such
nominations and having a will in
place is mandatory in spite of
nominations made. Following are
the areas that clients should
consider for creating a will, and to

T
he passing away of a order, i.e. review the mode of ensure smooth transmission of
loved one always creates holding assets: House, bank accounts,
an emotional and Having nominations for each mutual funds, insurance
financial trauma, financial assets and property. companies and retirement
especially if they have suffered a Removing conflict by giving benefits.
lot. It may be difficult to draft a clear instructions In the following cases,
will when someone has a serious Deciding beneficiaries to nomination supersedes a will and
illness like last stage of cancer, or whom you wish to leave your hence, making nominations for
if there is a sudden accidental wealth all categories of assets, and more
death and the only survivors are Anyone can make a will so for demat account, physical
the children who are minors, or if irrespective of their religion, shares and corporate bonds and
a patient becomes brain dead and anyone over the age of 21 years debentures.
is incapacitated. can make a will. However, In the last one month, we have
Sometimes, even in old age, Muslims, not married under received two cases of death
grandparents and parents Special Marriages Act, are among our clients and thought of
consider writing a will as taboo, allowed to bequeath only one- mentioning some important
since it is considered a bad omen third of their assets while the rest pointers for individuals making
if one were to write about
distribution of assets.
We recommend that our clients
make a will the moment they have
dependents to look after.
Dependents could be a
homemaker, or children, or
ageing parents that are being
looked after. When the family is
dependent on a sole bread earner,
it is very important that a will is
created to ensure smooth
transition of assets. Another
important time when will
creation is important is if people
have a large family and are living
in the joint family set up.
The person who makes a will is

60 Outlook Money December 2016 www.outlookmoney.com

Expert Speak
nominations.
All mutual fund investments
should be held in anyone or
survivor mode. This makes the
transmission the easiest and
fastest.
Nominees created while
investing in a mutual fund can be
one, two or three. However, the
process for distribution of
investments to nominees is
cumbersome and requires more
paper work; besides the basic
documentation on transmission
of assets.
In addition to KYC documents
(PAN copies and address proof) of
nominee and original/notarised
copy of death certificates, the
nominee bank account details
with bank manager attestation is
required.
In some cases where the will
does not clearly mention the
nature of investment for division
of assets, an indemnity bond
executed by the nominee on
stamp paper is required,
indemnyfying the asset
management company against
any claims, losses, risks charges,
and expenses which the company
may suffer at the time of transfer
of ownership of the asset to the
nominee account.
For company deposits, an
affidavit on stamp paper
(notarised) is required,
mentioning details of legal heirs
62 Outlook Money December 2016 www.outlookmoney.com
All mutual fund investments should be held
in anyone or survivor mode. This makes the
transmission the easiest and fastest.
and an NOC from other legal heirs
stating that they have no
objection to the amount being
distributed to the nominee.
All above documents are
needed in case of nomination
only (mostly).Therefore, having a
joint or anyone or survivor
account as mode of holding for
mutual funds, bank accounts,
company FDs, shares, demat
accounts and for immovable
assets like property makes the
paper work less cumbersome and
the transmission smooth.
Also, the phase of losing
someone to death is called a
transition phase. Therefore,
discussing such issues with the
nominee sometimes creates
resentment and emotional
breakdown and therefore has to
be dealt with professionally and
in an unbiased manner.
Clients have shown resentment
in distribution of disproportionate
assets among siblings and
sometimes feel advisors are
taking sides. Some clients are in a
hurry to transfer assets in their
name and then redeem and make
good of the money, while others
prefer only transfer of assets to
hold for the long term for future
growth and create an estate for
the family.
Its important that advisors look
at the situation objectively and
follow the formalities and
procedures laid down in the will.
If needed, consultation with
lawyers, property and tax
consultants is also needed for
execution of the will.
If the family has a differently-
abled child, creating a trust for
the lifelong benefits of the child
with trustees who are younger in
age ensures continuity and
division in assets for beneficiaries.
In the 20th century, property
division was said to be among
generation of people in the family,
level 1, 2 and 3 heirs, and created
a lot of confusion, legal formalities
and tax queries in distribution of
assets; especially when there are
grandparents, parents and
siblings that are apportioned
small parts of the same asset.
In conclusion, what would you
want from your family in your
absence? Peace of mind and
equitable distribution of assets
that you have created over the
years. Why not enable that for
your family and make your will
today?
 Swotroryipng

Your Tax and Financial

Planning Roadmap
Are you paying too much tax?
Why insurance is not an investment?
Ways to integrate your taxes with
your financial goals
Take advantage of setting
financial goals

Indias No.1 Personal Finance Magazine

Financial Empowerment
Workshop
For more details
suchitra@outlookindia.com +91-22-33545019; +91-9930820790
shipra@outlookindia.com +91-11-33505691; +91-8860910788
 The
greatest
risk is not
taking one!
The Outlook Money Awards, an unmatched honour, recognizes
excellence in the financial services sector. The 15th edition of the
Awards will recognize those organizations and individuals, who not only
embraced risks but dominated them and reached the top.
 PRESENTS

THE AWARD CATEGORIES

ASSET MANAGEMENT
Equity | Debt | Overall

BANKS
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CAPITAL MARKET
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CREDIT SERVICES
Home Loan - Overall & Low Income Group
| Education Loan | Retail NBFC
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THE OUTLOOK MONEY AWARDS 2016 JURY

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Prashant Kapoor Jyoti Ahuja
prashant@outlookindia.com jyoti.ahuja@outlookindia.com
M: +91 9320405610 M: +91 9819183802
http://awards.outlookmoney.com
My Plan
Cracking the code
Financial planning is a simple 6-step process, which is simple
to follow and easy to implement to achieve all your financial
goals, says Narayan Krishnamurthy
I
n recent times, several readers
have posted queries on the
approach they need to adopt to
set their financial goals and work
towards achieving them. Typically,
financial goals depend on the life stage
one is in. For instance, over ones life
one will have goals like buying a house,
buying a car, go on a family vacation,
save for childrens education and ones
own retirement. Although these needs
are fairly universal, yet, each
individuals goals would vary based on
the money needed to achieve them
and the time needed to reach each
goal. Whatever is the stage of your life
or circumstances, the process to
achieve any financial goal is the same.
Step 1
Your current situation
Make a start by writing down your
current financial situation. This could
be by way of listing all your current
assets and its monetary value and any
liabilities that you may have by way of
loans and outstanding sums you may
be owing to anyone. This is the most
important step and if you have a
budget, it would be a cakewalk to get it
66 Outlook Money December 2016 www.outlookmoney.com
all on paper. Write down your income,
expenses, existing savings and existing
investments with a value to each of
these heads.
Steps 2
Chalk your goals
You should state all your financial
goals and assign them a value and
timeline by which you wish for it to
materialise. Once you have the list, you
can bucket them under different
headsshort, medium or long-term.
For instance, goals like purchasing an
LED TV in three months is short term;
family vacation that is three years later
is a medium-term goal and your childs
education and your own retirement
are long-term goals.
Step 3
Action plan
You need to now ascertain your
comfort to risk, which is nothing but
how much risk you can take when it
comes to investing. For instance, if you
are comfortable with 20 per cent
erosion in value of your portfolio, you
are a risk-taker. However, if you have
sleepless nights when the value of your
portfolio takes even a small dip, you
are not a risk taker. The kind of risk
that you can take will determine the
type of financial instruments in which
you can put money.
Step 4
Evaluating options
Link a savings and investment option
for each of your financial goals. Doing
so will ensure you do not mix your
investments and are unable to
prioritise funds for the many financial
goals that you may have. This will also
help in the selection of the appropriate
financial instrument in suitable asset
classes. Choose investments based on
their tax efficiency and not be blinded
by returns. For instance, you can
deploy money in equity-oriented
instruments to achieve goals that are
over 5-7 years from now. Alternately, if
the goals are between 2-3 years from
now, you could look at parking money
into debt instruments.
Step 5
Plan implementation
The next stage is to fix a regular sum to
invest to achieve your financial goals,
Six-step process to personal finance planning

Start

Assess your current

1
financial situation

2 Develop your personal

financial goals
Determine what actions
to take like budgeting, 3
spending and tracking
cashflow Evaluate the alternatives
4 by identifying your needs
Create your financial plan and wants
by selecting suitable
5
financial products and
services Review and revise your
6 financial plan based on
life-changing situations End

which will make goal-based investing a
habit. Being regular with investments
also gives you the convenience of
achieving your financial goals
smoothly.
Step 6
Review and revision
Investing for a financial goal is not a
one-time exercise. To be on top of your
finances, you should evaluate the
progress made by your investments to
achieve your financial goals at least
once a year. This approach will help
you understand how your investments
are faring, with the opportunity to
make any changes to them or
restructure your plan if need be.
Last, as you approach closer to each
of your financial goals, you should start
moving money from equities to more
stable debt-type of instruments. This
way, you will not be impacted by any
major impact to the stock markets,
which are far more volatile and can
upset your best laid plans.
nk@outlookindia.com

www.outlookmoney.com December 2016 Outlook Money 67

Book Review
Building an innovative
learning organization
How to enHance tHe culture of life long learning in organizations
I
f you are looking for a book that will
inspire you to sow the seeds of a new
thought process, this ones for you.
The essence of this book rests on the
core premise that lifelong learning is the
key to success for everyone and should be
adapted as quickly as possible so that the
growth trail is in line with your potential and
desire. You believe it when it comes from
Russel Sarder, the CEO of NetCom Learning.
According to Sarder, learning occurs when
people become attentive of opposing
ideas. Recognising the value of alternative
worldviews increases motivation, sparks
fresh thinking, and prevents lassitude and
drift. The book constantly guides you on
how to create a culture of lifelong learning
in your organization for personal and
professional development, with detailed
explanations, practical examples, and
domino: tHe simplest
way to inspire cHange
get inspired and alter your ways of execution
I
f you are looking to change the way
things are around you, here is a book
to get the inspiration from. Simple and
easy to understand, the book highlights
a new approach for executing change
and inspiring dexterity in the workplace.
Whether you are a in a corporate setup
or functioning on your own, who is trying
out ways to improve the working ways
around you, Domino will provide you with
immediate and practical solutions.
Tasler has done a wonderful job in
bringing in experience with research to
demonstrate ways to accomplish to inspire
change. There are simple offers of ways to
conquer uncertainty in the workplace and
deliver consistent results in any business
environment. This engaging resource gives
new managers in all industries a concrete
68 Outlook Money December 2016 www.outlookmoney.com
step-by-step instructions so you can get
started right away. He simply describes
how companies can rid themselves of
the learning afflictions that threaten their
productivity and success by adopting the
strategies of learning organizations.
This book is a practical and working
guide on how to enhance and improve
performance, and innovate more swiftly.
A key learning is that culture of an
organisation can be changed fast, provided
blockages are tackled, peoples capabilities
and potentials are renewed, and processes
and systems get constantly reviewed and
challenged internally. The book is strewn
with practical and motivating principles
coupled with the authors personal
experiences and expertise from leading
practitioners that make for an interesting
Publisher
read.
Author John Wiley
Russel saRdeR Price
`499
set of principles for effective leadership
that they can use in their everyday tasks to
execute change and inspire agility in their
teams.
Elegantly simple, the book is a great read
for anyone, even those who do not have
anyone to report to or anyone reporting to
them. The ideas in the book are explained
in a manner that it naturally builds
curiosity and interest to know how to go
about effecting a change. Like his earlier
books, this one too will equip you with the
necessary knowledge to make the changes
around you. The book is also entertaining
to read and will transform the way you see Publisher
yourself, the decisions you make (or don't Author Wiley
make), and the effect they have on leading nick TasleR Price
the change you desire. Domino will change
the way you approach change.
`189
Predictions

2017
The Year of New Beginnings
2017 Numerology Forecast by Farzana Suri
Isnt it nice to think that tomorrow is a new day with no mistakes in it yet?
L.M. Montgomery

T
he year 2016 marked the year of change at many levels. Arriving at your PY 2017
It was all about transformations, transitions and realistic
manifestations. On a global level, the transformation saw As the dust settles in 2016,
changing power paradigms. European equity prices have been on 2017 adds up to number 1
a downward trend. The Brexit issue, the slowdown of the Chinese (2+0+1+7 = 10 =1) which
economy, Wells Fargo financial scandal, the impact of the US displays a ray of hope.
Presidential elections remain a cause of concern. Closer home, the
financial mismanagement leading to early demise of noteworthy How to determine
start-ups has questioned the new age investors. Family-owned your Personal
corporates are facing the heat and the inflation is being kept almost in Year for 2017
check. The economy seems robust despite the global shift.
Add the numbers of your birth
The Universal Year 1 demonstrates the need to shrug off the
month, your birth day and the
remnants of last year and usher in the dawn of new beginnings
number 1 (the number of the
and opportunities with renewed focus and zest. This is the time to
universal year 2017).
decide what to do with the opportunities that confront you. The
canvas is clean, so plan your long-term future goals smartly. The
foundation you lay in 2017 will set the tone for the coming nine For e.g
years. Mindfulness is needed while spending or increasing debt out March 1 is 1+3+1=5 Personal Year.
of sheer vanity and ego. Experimentation, initiation, self-reflection, Or October 12 is 1+2+1+0+1=5
introspection and leadership are keywords for 2017. Learn, adapt and Personal Year.
move according to the direction of the wind in the financial market. Or December 25 is
It would be wise to take calculated risks. 2017 is the year of personal 2+5+1+2+1=11=1+1=2
victories. I wish you all the joy of success in financial freedom.

1
Leadership | Independence | Creativity
Jan

The struggles of the past year fade away, marking a new phase of your life. Situations
may drive you towards a whole new approach in the way you perceive your financial
preparedness. Your determination, willpower and creativity in your outlook towards money
management is likely to yield success. Go easy on that need to charge impulsive spends on
your credit card. Calculated risks would be more gainful. You will discover a new you this
2017 year. Opportunities that were invisible suddenly appear to flash all around you. It will be
a great time to begin your own business or change your job or commit to a relationship.
Dream big and invest the next nine years towards achieving it.

70 Outlook Money December 2016 www.outlookmoney.com

 2
Co-operation | Partnership | Mediator
This is a year to nurture your plans and stay focused on your financial and other goals.
Feb
Opportunities of collaboration and partnership will present themselves to you at work and
in business. You make new friends and build new relationships that are beneficial. Money
may seem scarce and your emotional sensitivity will magnify that thought into worry.
Relax, it isnt all that bad. The year may seem slower, be patient. Keep a check on those
mood swings and avoid confrontations. Tact is the keyword. Be a catalyst to someone elses
growth and learn to listen to others. Unconventional sources of income may just wind their
way to you. Tune into your intuition to guide you.
Mar

3
Humour | Creativity | Spontaneity
Your approach to situations this year is to be optimistic. The closing of one door may open
up a bigger gate into greener pastures. Opportunities bedazzle you with frequent surprises
introducing you to lifestyles that could bowl you over. Go with the counsel of your financial
advisor lest you get carried away and splurge. You will spend more than is necessary
though. A socially active year, you may even find all that partying adding kilos to your
Apr

weight. A super year for self-expression. Give that talk or teach or write to express yourself.
Learn to push away those feelings of lethargy, impulsive behaviour and mood fluctuations.
A windfall may add surprise to your year, so be in the receiving.

4
Organised | Practical | Dependable
This year you focus on re-evaluating your financial goals to build the foundation of your
business/job as a stepping stone for the future. It spells hard work where the efforts may
May

not commensurate with the result immediately. You may find yourself doing things several
times until you get them right. Patience is the name of the game. Expect dramatic changes
in your work and life. Clinging to a job or project that is not beneficial may force you to
leave it or result in your exit. Property matters will yield benefits if you toe the line. Its a
profitable year for selling and trading. Expect added financial responsibilities. Theres hope.
All the hard work will bear fruits beyond your expectation, closer to September, so chin up
and smile.
Jun

5
Change | Freedom | Learning
Change, adventure, breakthroughs signify this year. You will experience freedom from
old conditions of delays and frustrations. Old relationships make way for new ones.
Embrace the change. The choices you make will help you break free and charge ahead
with confidence. Your inventiveness will have you seeking unconventional investments.
Take a few risks, get out of your comfort zone. Opportunities flood you towards a new
direction. Expand your network, promote yourself. Its time for growth, however, avoid
Jul

overcommitting and curb that lavish expenditure. Let your new venture or project wait till
September. Spontaneous travel opportunities will take you on an adventure filled with joy.

6
Responsibility | Harmony | Advisor
Home and family take precedence this year. Matters of health will be a concern and with
the added responsibility you may experience a slight financial crunch. This, however,
is a great year for finances with unexpected opportunities walking to you on a platter.
Aug

Reunions and meetups will be a source of delight. Investment in a home or renovating it

is likely. Personal growth through a new job or promotion may see your hard work being
recognised. You feel nurtured and supported more than you have experienced in a long
time. You create an environment of harmony if youre able to balance your giving and
receiving. Dont resist falling in love as this could be an interesting year.

www.outlookmoney.com December 2016 Outlook Money 71

Predictions

7
Perceptive | Spiritual | Analytical
Move away from old patterns and attitudes and open up to a new perspective, awareness
Sep
and journey life is placing before you. The situations that seemed challenging are all in
your perception. You attract money even if you dont pursue it actively. This year is about
introspection, spirituality and the need to tune in to yourself. Focus on your goal and be
steadfast. Specialise in what you hold close to your heart. A great time to invest in that
bike or car youve been promising yourself. Recognition comes to you, dont go seeking it.
Things may seem slow but the wheels of progress are moving and will accelerate next year.
You may find yourself being a catalyst of growth for others. Dont be surprised if you are
given a chance to share centerstage and have encounters with brilliant minds.

8
Oct

Success | Structure | Inner Strength

This year, let your inner voice be your guide while handling money and taking monetary
decisions. Dont go with the herd. The efforts of the past eight years pay off as dividends,
depending on your karmic balance of scales. Unconventional sources of investment can
be rewarding, but caution is urged with respect to speculation. Focus on restoring balance
and justice to unsettled issues. You may undergo an internal conflict between your material
needs and spirituality. New experiences pull you out of your comfort zone for it is time to
learn from the past. Structure is needed in all you do. A good time to buy or sell property.
The legal system may cause some strain, so toe the line. You may find yourself placed in a
Nov

position of influence and authority, so take charge. The possibility of going solo in a new
venture is high.

9
Progressive | Willpower | Humanity
The year is all about endings and beginnings. It calls for closure of situations and issues that
are not helping you move forward. Let go and let God. Its a good time for financial growth
and progress in business. You feel an increased sense of social responsibility and find
yourself involved in charitable work. If you have been in business, you may find yourself
drawn towards the arts. The possibility of success and recognition are high. Travel in order
Dec

to learn and grow. Donate, detox, declutter and disassociate. The inefficiencies of others
may bog you down, momentarily. Money finds its way to you mysteriously. You have the
determination to get what you desire. Manifest wisely.
2017 holds the promise of manifestation. If you can think it, you can create it. Raise
your energy and recalibrate your life and financial blueprint. The positive highlights are
inventiveness, confidence, optimism, new opportunities and long-term commitments.
2017 Wish you a victorious 2017!

Ways to leverage the Universal Years No. 1 energy:

x A great time for new ventures or shift in career choices
x Start that health and fitness regime now for a higher success

x Investing in property or redecoration of an existing one

x Get a lot of restspas and massages would be excellent

x New learning and upgradation would be fruitful

x Pack those bags and chart a travel plan

Note: This is a broad analysis. On a personal level, your experiences may differ based
on your numerological Pinnacle and Challenge numbers. The writer is
Victory CoachNumerologist

72 Outlook Money December 2016 www.outlookmoney.com

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Travel

The
World of
God
That is how Rudyard Kipling described
Spiti in Kim and that is what I experienced
when travelling to this mountain valley,
says Rajan Pathak

D
ozing in the desolated
region of Himachal
Pradesh, far away from
hustle and bustle of
city life, Spiti Valley is less heard by
the majority. Situated near the
Indo-China border, the region has
natures blessing in abundance
as rivers, valleys, apple orchards,
lakes and mountains envelop it. It is
breathtaking a view.
When I visited Kalpa in 2015, I
could not succeed in my attempt
to visit Spiti Valley due to time
constraints. I am glad that I made
up for it this time. I had heard a lot
about the Worlds Most Dangerous
Road from Pooh to Kaza and now it
was time to take the roughest terrain.
It was the most adventurous and
exciting journey for me as well as for
my 10-year-old son. The road was
very narrow, which meant only one
vehicle could pass at a time, even as
the Satluj river flowed along the road.
The terrain is such that landslides
are common. The role played by the
Border Roads Organisation and the
ITBP jawans is commendable to clear
the traffic and ruble in quick time.
We could have been stuck for a long
time but the jawans were a blessing
in disguise. You feel the nature every
moment and no matter how much
I write, you need to experience it to
feel what it is all about.
Tabo and beyond
We reached Nako Village, which was
situated at the top of the mountain
with no more than 150 people
living with a small lake. There was a
camping site and I could spot a group
of bikers, who were already settled
there. We decided to take our lunch
break here and more towards Tabo
post lunch. To be adventurous, we
did not book a place to stay, which
meant it took a while to find a place
in Tabo to stay. Tired after a gruelling
day, we decided to call in early.
We woke up early the next morning
to catch the early lightsTabo
looked stunning from the hotels
balcony and I could hear the Spiti

76 Outlook Money December 2016 www.outlookmoney.com

 How To rEacH SPiTi
Nearest airport is in Kullu which is approx. 240km away.

Nearest railway station is in Shimla which is approx 440km away.

There are two ways to reach Spiti by road:

From Shimla-Kinnaur route: Spiti is almost 440km away

from Shimla. The road is open in all seasons. It takes two days to
reach Spiti with a night stay in Kalpa.
From Manali: Distance between Spiti and Manali is approx
200km but the road is open only from June-October. It takes 12-14
hours to reach Spiti, depending on the road condition.

Places to visit: Keylong, Kaza, Tabo monasteries, Kibber, Batal

Expense: `20,000/person for 7 days.
Best Season: May to September

Travel

Anticlockwise: Mesmerising view of

Chandra Taal Lake; Halt at Worlds Most
Dangerous Road; View of Kibber village

river singing along like a song. The

first rays of the sun enveloped Tabo
and the over 1,000-year-old Tabo
Monastery was shining like a golden
star. It was all so serene that I did not
realise the trail of monks who were
heading out of the monastery.
The plan for the day was to visit
the monastery, which retains its
ethnic appearance. We visited old
caves and admired the paintings
on them, which were so colourful
and appealing. While taking a walk
around Tabo, I also came across a
small premises with 12-15 toddlers
singing nursery rhymes with their

www.outlookmoney.com December 2016 Outlook Money 77

Travel
Anticlockwise: Picturesque Kunzum La;
Dankar village at 12,774 ft.
cheeks fully red and full of zest. I
started talking to the man running
it who was all of 28 and was keen to
provide the best. So the school had
free mid-day meals for these kids,
even though it had no funding and
the school is yet to get any affiliation
for government support.
We next ventured towards Dankar
Monastery, before heading for Kaza,
which is a small place, with one or
two home-stay facilities. This being
the district headquarters of Spiti
Valley had a small market place, a
petrol pump, and an SBI ATM. We
figured that this place was used by
trekkers as their base, which was
evident given the number of hotel
options available to suit different
budgets. We decided to stay the night
here.
The next day we drove towards
Chandra Taal and some smaller
lakes on the way. On our way we
discovered Kibberthe worlds
highest motorable village which rests
at 14,200 feet. Kibber is a U-shaped
village with less than 100 people.
The Key Monastery is nearby which
meant we had to visit it. This was
yet another marvellous monastery
78 Outlook Money December 2016 www.outlookmoney.com
which is surrounded by yellow leaf
trees, giving it a pearl-in-a-golden
cone feel. We stopped at Losar before
we reached Chandra Taal to camp.
Kunzum Pass
Kunzum Pass connects Kullu and
Lahaul with the Spiti valley, which
are all very close to the snow-
capped mountains. The second
longest glacierBara Shigriwas in
front of us and it looked fascinating.
The winds were very strong, causing
the temperature to dip but the
oxygen level was comfortable. We
decided to stop there for 10-15
minutes and enjoy the breathtaking
view. This entire area is surrounded
by Chandra Bhaga (CB) range and
origins of Chandra and Bhaga
Rivers merge at Tandi near Kylong
and known with near name
Chenab later.
We reached Chandra Taal when
we reached Tenzing campsite. This
camping site was very spacious
and had more than 50 tents. The
camp organiser explained about the
surrounding areas and suggested
we acclimatise to the altitude.
Chandra Taal is surrounded by
snow-cap mountains which are so
mesmerising that I had to really push
myself to return. The experience
left us captivated and I am looking
forward to the next summer break to
make a trip back to the hills.
The writer is President &
Head of Business at
IFAN Finserv
Gadgets
With the Pixel range, Google has finally launched its first ever own-brand
Android smartphone; Tushar Kanwar deconstructs the Pixel XL versus
iPhone 7 Plus for you
Y
oud think that with the untimely and
rather explosive exit of the Samsung
Galaxy Note 7, the Apple iPhone 7 and
7 Plus would have a clear run at the premium
smartphone segment for next couple of months,
right? Not if Google has its way. With the launch
of the Pixel range, the Internet giant enters
the fragmented Android market with its own
brand. Is the best from Google enough to topple
the best from Apple, or is it merely a glossy
wannabe?
Design
With the iPhone 7 Plus, Apple skipped the aesthetic overhaul
that it usually reserves for major version number changes,
opting to kit the iPhone in two new colorsa glossy Jet
Black and a classy matte finish Blackwithout deviating
from the familiar form factor. Well, almostthere is the
Pixel XL
vs iPhone
7 Plus
much bandied-about matter of the headphone jack (or
lack thereof) and a new home button that vibrates instead
of actually depressing in response to being clicked. The
upside? Proper water resistance, something that the Pixel
XL lacks, despite it taking a number of heavily inspired
design cues from Apple. The Pixel offers a generic, almost
underwhelming design, and the only saving grace is the neat
two-tone finish on the rear. Compared to the iPhones stereo
speaker setup, the Pixel has a single mono speaker, but it
does pack in a headphone jack.
Display
The Pixel XL has the upper hand in this department thanks
to its quad-HD (2560 x 1440 pixel) OLED panel, which edges
ahead of the full-HD (1920x1080) LCD panel on the iPhone
by the slimmest of margins. If you like punchy eye-catching
colours, youll prefer the Pixelelse, you wont notice a
significant difference between the two on a day-to-day basis.
Also, bear in mind, the iPhone also packs in 3D Touch, Apples
www.outlookmoney.com December 2016 Outlook Money 79
Gadgets
implementation of a pressure sensitive display which gives
you access to different features and functions based on how
hard you press the screen.
Hardware
Both phones back top-of-the-shelf hardware (iPhones A10
Fusion processor with 3GB memory vs the Pixels Snapdragon
821 chip with 4GB of memory) for the price, so there isnt a
lot you can do to tax either phone past its limits. For everyday
tasks, the Pixel XL and the iPhone 7 Plus will handle your
apps, media and games without breaking a sweat. Where the
Pixel noses ahead is courtesy the Android 7.1 Nougat software
running on the phone. Google has optimised Android to run
blisteringly fast on the Pixel, and the sheer speed and fluidity
of the platform on the Pixel hardware sets a benchmark not
only for Android phones but for the iPhone as well. Battery
performance is comparable on both, with the Pixel having to
power a higher resolution screen from its marginally beefier
80 Outlook Money December 2016 www.outlookmoney.com
3,450 mAh battery, while the iPhone with iOS 10 is rather
efficient with its 2,900 mAh battery. While both phones lack
wireless charging, the Pixel XL gets fast charging, so you can
add about seven hours of life with just a 15-minute splash-
and-dash-charge. And as far as storage is concerned, both
lack expandable storage but offer plenty of space with a
128GB model, with the iPhone going one step further with a
256GB variant.
Camera
The dual 12-megapixel lenses camera setup on the iPhone
7 Plus allows for some neat tricks, including actual optical
zooma rarity on smartphone camerasand a Portrait mode
that delivers DSLR-like results of human subjects, slightly
blurred backdrops and all. Coupled with the f/1.9 aperture
lens and the optical image stabilisation, the 7 Plus stands
abreast the Samsung S7 as one of the best snappers this
year. Now, the Pixel XL camera seems weak on paper with
no image stabilisation, but take it for a spin, particularly
with its auto HDR+ mode turned on, and youll turn into a
believer. Outdoor exposure and colour reproduction is brilliant
on the Pixel XL, and the electronic software-based image
stabilisation on video turns out slick, jitter-free video every
single time. In low light, the Pixel turns out brighter images
than the iPhone, but at the expense of graininess that creeps
into the occasional shot. No matter where your shooting
preferences lie, the camera performance on both phones is
top-notch, and you couldnt go too wrong with either.
Software
iOS and Android 7.1 are both incredibly mature mobile
platforms, and of course, if youre a long-term Google/Gmail
user, the Pixel XL seamlessly fits into your life, whereas if
youre surrounded by Macs and iPads, the iPhone joins the
family just nicely, thank you. That said, Google Assistant
is the Pixels secret weapon, as its the only phone to ship
with Googles voice assistant built-in. Once you get down to
using it frequently, Assistant is incredibly useful, responding
intelligently to your questions and bringing up relevant
contextual information, such as movie times if youre looking
up information about a film. The conversational aspect of
Assistant really stands outsay, if youve asked about the
weather in your city, you can follow it up with a and what
about next week? and it will intelligently understand youre
still talking about the weather! Its also much better at
actually finding answers for questions I posed to it, rather than
merely directing me to a web search as Apples Siris wont is.
As a bonus, Google is offering unlimited free full resolution
backups for all your photos and video for all Pixel owners, a big
step up from the anaemic 5GB of free storage you get when
you sign up for a free iCloud account from Apple.
 Verdict
For a first-generation product, the Pixel XL is a remarkably
sorted and well thought-through product, even if the design
is entirely ho-hum. It packs in a great hardware-software
experience, a snappy camera and even offers fast charging,
a feature that is fast becoming a table stake for most
buyers. Theres even a headphone jack for those of you
slighted by Apples decision to drop the audio port from
their latest phones. iPhone, on the other hand, maintains
the edge in terms of overall polish and quality of apps, and
lets be honest, weve been far more conditioned to spend
big bucks on Apple products than on Android devices,
be it due to resale value or the inherent longevity of an
iPhone. This is where the Pixel falters, in a sense, and the
pricing`67,000 for the 32GB variant and `76,000 for the
128GB variantis significantly more expensive than the
extremely well-regarded Samsung S7 Edge with none of the
bells and whistles that Samsung packs ina curved screen,
sleek waterproof design, best in class displays and cameras.
It almost feels like Googles Pixel team decided to make a
Google iPhone in every sense, pricing included, and priced
itself out of contention as a result.

A refreshingly
different
monthly dose
of personal
finance in
Ad
find answers to

Monthly money worries | Indians money concerns | The impact of news

Make a be t ter decision with your Mone y

www.outlookmoney.com December 2016 Outlook Money 81

 Smart Money

Reboot
Hard facts about demonetisation of high-denomination currency

Printing cost In circulaton (million pieces) Number crunching

0 10,000 20,000 30,000 `15.3
`5 lakh crore
Worth of high-
`10 denomination notes due
to be exchanged
`20
`15.34
`50 lakh crore
Value of `500 and `1,000
`100
96
paise for `10
notes in circulation

`500
`16.98
`1.8 for `2.5 for `3.17 for `1000 lakh crore
`100 `500 `1,000 currency with public
on October 14, 2016

`17.74
As on June 30 lakh crore
A strong balance sheet for the RBI 2015 2016 Value of notes in circulation
as of November 4, 2016
Currency and Gold Revaluation Account (CGRA) 5,592 6,375
Contingency Fund (CF) 2,216 2,202 86%
Investment Revaluation Account (IRA) 32 524 Currency in circulation
in `500 and `1,000
Asset Development Fund (ADF) 218 228 denomination
Gratuity and Superannuation Fund 140 158
Provision for Payables 17 32
Provision for Forward Contracts Valuation Account 0 15
(PFCVA)
Bills payable and (FCVA)* 0 0
Miscellaneous 31 28
Surplus Transferable to the Government of India 659 659
Total 8,905 10,221
Source: RBI Annual Report, Kotak Economic Research; *Forward Contracts Valuation Account (FCVA); all
figures in `(billion)
Source: RBI

82 Outlook Money December 2016 www.outlookmoney.com

RNI NO. DELENG/2002/08292
 Disclaimer
As part of its Investor Education and Awareness
Initiative, Invesco Mutual Fund has sponsored this
booklet. The contents of this booklet, views, opinions
and recommendations are of the publication and do not
necessarily state or reflect views of Invesco Mutual Fund.
The various tax saving instruments and their benefits
mentioned in this booklet are for the purpose of explaining
the concept of several tax savings and should not be
construed as an advice to any party. The actual results
and performance may differ from those expressed in such
instruments. Investors should be aware that the fiscal rules/
tax laws may change and there can be no guarantee that
the current tax position may continue indefinitely. In view
of individual nature of tax consequences, each investor is
advised to consult his/ her own professional tax advisor.
Invesco Mutual Fund does not accept any liability arising out
of the use of this information.

Mutual Fund investments are subject

to market risks, read all scheme related
documents carefully.
Contents
Saving Taxes ........................................................................ 2

Long term savings schemes ............................................... 4

Mutual fund way to tax savings .......................................... 8

ELSS benefit........................................................................ 11

Easy and straightforward .................................................. 12

How they stack up ............................................................. 13

December 2016
Design: Vinay Dominic

Copyright Outlook Publishing (India) Private Limited, New Delhi.

All Rights Reserved
No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or
means electronic, mechanical, photocopying, recording or otherwise, without prior permission of
Outlook Publishing (India) Private Limited.
Printed and published by Indranil Roy on behalf of Outlook Publishing (India) Pvt. Ltd
Editor: Narayan Krishnamurthy. Published from Outlook Money, AB 5, 3rd Floor, Safdarjung Enclave, New Delhi-29
Outlook Money does not accept responsibility for any investment decision taken by readers on the basis of
information provided herein. The objective is to keep readers better informed and help them decide for themselves.

The information provided herein is solely for creating awareness and educating investors/potential
investors about rules of investment and for their general understanding. Readers are advised not
to act purely on the basis of information provided herein but also to seek professional advice from
experts before taking any investment decisions. Outlook Money does not accept responsibility for any
investment decision taken by readers on the basis of information provided herein. The objective is to
keep readers better informed and help them decide for themselves.
 Saving taxeS
Paying tax is an obligation we all have to fulfill and it is important that we
are aware of all the avenues that can help us save tax and at the same
time build wealth over time. There are multiple investment avenues
available these days that automatically take care of your tax liabilities and
at the same time secure your life and health. These tax savers cover a
wide ambit, from the tuition fee you pay for your childrens school to the
preventive health checkup you go for. Most of us wait till the year end
to hastily plan our tax savers but it should rather be a year-round affair.
Just like your Provident Fund (PF) gets deducted every month from salary,
your tax planning too should move regularly. Remember, investing too
is a form of saving. National Pension System (NPS), home loan, pension
funds, insurance, ELSS, etc, are all investments that secure your future.
By taking up a good health and life policy, the gain is not just in terms of
taxes; your dependents have it easy even when you are not around. Read
on to find out how some simple decisions can have a far reaching impact.

Spreading the Section 80C

benefits with `1.5 lakh limit

ePF Childrens tuition fee

PPF Medical expenses
nSC insurance premiums
nPS 5-year tax saving FD
Ulips equity-linked savings scheme
Lta Senior citizens saving scheme
Sukanya Samriddhi Yojana
Home loan principal repayment

2
OtHer tax SaverS
income tax What can Maximum
Section you do? investment

Claim tax
deductions on
Section contributions
`1.5 lakh in conjunction with Section
80CCC to annuity plans
80C benefit in a financial year
from insurers
Purchase
Self and family: `25,000
medical
Senior citizen: `30,000
Section insurance
Self and family +
80D* policies for parents: `50,000
self, family and Self and family +
parents senior citizen parents: `55,000
Employee and/or employer
contribution up to 10% of basic salary
and DA** is eligible up to `1.5 lakh
for tax deduction in conjunction with
Contribute to
Section 80C benefits under Section
Section the National
80CCD(1&2) as applicable.
80CCD Pension System
Additional exemption up to
(NPS)
`50,000 in NPS is eligible for
income tax deduction outside the
Section 80C limit and can be claimed
as a deduction under Section 80CCE
Deduction available on 50% of the sum
Rajiv Gandhi invested or `25,000, whichever is
Section Equity Savings less. Deductions can be claimed for
80CCg Scheme 3 successive years, over and above
(RGESS) the Section 80C limit subject to
complying with other requirements.

*Additional deduction of `5,000 on expenses related to health check-up. ** Dearness allowance;

By exhausting the investment options under Section 80C one can save tax up to `46,350 for the
financial year 2016-17, provided one falls under the highest tax bracket.
LOng terM SavingS
SCHeMeS
1. Public Provident Fund (PPF): An old and trusted
instrument and meant for long term investors.
All individuals, including minors, are eligible
for it. The PPF comes with a 15-year lock-in
period that currently earns interest at 8.1 per
cent p.a. (for 2016-17) calculated on the
minimum balance between fifth and the last day
of the month. It has the status of EEE in terms of
tax benefits. EEE means that subscription amount, interest earned and
the withdrawal amount are all exempt from tax. One can make premature
withdrawal which is allowed to only those subscribers whose account has
completed five years.

2. Sukanya Samriddhi Yojana: This scheme was one of the highlights

of Budget 2015. It is effectively a savings account aimed at the welfare of
the girl child, particularly her higher education and marriage. It also has
the status of EEE in terms of tax benefits. Under the scheme, a parent or
guardian can open an account with
a post office or any of the designated
banks. Similar to the popularly known
PPF, this scheme is currently offering
8.6 per cent annual return for 2016-17
(notified by ministry of Finance), which
will be revised every year. A minimum
amount of `1,000 and maximum
amount of `1.5 lakh can be deposited
in the account in a financial year. Like
the PPF, it also comes with a degree of
liquidity by way of partial withdrawal.

4
One can withdraw 50 per cent of the account balance prematurely if the
need arises after the girl turns 18. Deposits will have to be made till 15 years
from the date of the opening of the account and the account will remain
operative for 21 years from the date of opening or till marriage of the girl
child, whichever is earlier

3. Life Insurance: You get tax rebate for securing

your life by taking up a life insurance under
Section 80C. Premium can be in the name of self,
spouse or dependent children, up to `1.5 lakh in
a financial year. In case of unit-linked insurance
plans (ULIPs), deduction is available provided
the sum assured is at least 10 times the annual
premium and the policy is in force for at least
five years. If the ULIP is discontinued before two
years, tax benefits under Section 80C will not be
allowed. Any deduction allowed in the previous
years will be added back to your income in the
year in which ULIP is closed.

4. Housing Loan: The principal component of Equated Monthly

Instalments (EMI) that you pay for your home loan qualifies for deduction
under Section 80C, up to `1.5 lakh in a financial year. The interest
component up to a maximum of `2 lakh in case of self-occupied property
is allowed as deduction annually under Section 24 of the Income Tax Act.
Where the property has been let out, whole of interest on housing loan is
allowed as deduction on accrual basis.

5. Education Loan: You can claim the benefit of tax deduction on the
interest paid on an education loan for higher studies in India or abroad for
a full-time course from an educational institution or an approved charitable
institution under Section 80E. The maximum period for which you get
deduction is eight years (starting when you begin repaying the loan), or till
the entire loan is repaid, whichever is earlier. No such benefit is given for
repayment of the principal amount.

6. Pension Funds: Under Section

80CCC, an investment in pension funds
of any insurance company is eligible for
deduction from your income, clubbed
within the limit under Section 80C.

7. National Pension System (NPS): Under

Section 80CCD(1) and Section 80CCD(2)
contributions by the employee and
employer, within stipulated limits, qualify
for tax deduction up to `1.5 lakh on contributions to the NPS Tier 1 account.
Additional exemption up to `50,000 is eligible for income tax deduction
outside the Section 80 limit of `1.5 lakh and can be claimed as a deduction
under Section 80CCE

8. Employees Provident Fund (EPF): Contributions made by you to the

EPF qualify for deduction under Section 80C. The investment in PF is risk-
free as the scheme works like a deposit on which the annual rate of return
is fixed for each financial year. At the moment the EPF earns interest at 8.6
per cent p.a. for 2016-17. You cannot withdraw money from your account
until you retire or opt out of the job market. However, withdrawals are
permitted for specific purposes only and within prescribed limits.

9. National Savings Certificates (NSCs): These are available in two variants

of 5- and 10-year tenure; savings in the NSC qualify for tax deduction
under Section 80C. Interest is compounded half-yearly, but deemed to be
reinvested and will also qualify for tax benefit. Current interest on 5-year
scheme is 8.1 per cent p.a. and 8.8 per cent p.a. for 10 years.

6
 SHOrt terM
SavingS SCHeMeS
1. Five-year tax saving FD: 5-year
deposit in post office and banks
qualifies for tax savings under
Section 80C.
2. Senior Citizens Savings
Scheme (SCSS): Individuals who
are 60 years or older, or are 55
years old and have retired under
VRS, are eligible. SCSS has a lock-in
of five years and TDS is deducted
if the interest exceeds `10,000
annually.
3. Health insurance: Premium
paid towards health insurance
qualifies for tax deduction under
Section 80D. Maximum deduction
allowed is `25,000 (`30,000 in
case of senior citizens, aged over
60). Under Section 80DDB, you
can claim a deduction of up to
`40,000, or `60,000 in case of
senior citizens and `80,000 in case
of super senior citizens (those over
80 years old), for the treatment of
specified ailments in cases where
a family member such as a spouse,
parent or sibling are dependent.
OtHer SavingS
avenUeS
1. Tuition Fee: Tuition fees to any
university, college, school or other
educational institution in India
for full-time education of any two
children of the taxpayer is allowed
as a deduction under Section 80C
within the `1.5 lakh limit.
2. Leave Travel Allowance: LTA
is the remuneration paid by an
employer for employees travel in
the country, when he is on leave
with the family or alone. The LTA
amount is tax free and is exempt
from taxes. The exemption is on
the fare only (subject to conditions)
and does not include the cost of
stay or any other expenses.
The tax rules provide for an
exemption only in respect of two
journeys in a block of four calendar
years. The current block runs from
2014-2017. If you do not use your
exemption during any block on
any one or on both occasions, the
exemption can be carried over
to the next block and used in the
immediate calendar year.
MUtUaL FUnD WaY tO
tax SavingS (eLSS)

T
ax planning for each financial
year is an annual chore. And
sometimes most tax payers
end up buying wrong investment
instruments. This is where Equity
Linked Savings Scheme (ELSS)
comes in handy. Not only does
investment in this product save
taxes, it also has the potential to
earn returns.

WHat iS it?
E LSS is nothing but a type of mutual fund which invests in equities.
So investments in this fund qualify for tax deduction under
Section 80C of the Income Tax Act. The mutual fund structure ensures
that these funds come with the dual advantage of potential capital
appreciation and tax benefits. Considering these are market linked
and have a considerable equity exposure, these schemes have the
potential to beat inflation and give returns, which
are tax free, subject to Securities Transaction Tax
(STT). Effectively, investing in ELSS comes with
tax savings and at the same time allows you to
experience the potential of equity investments
through a mutual fund. With so much going for it,
and these schemes being open to retail investors,
there is stability in the corpus managed by the
fund manager, allowing them to invest with little
worry of short-term redemptions.

8
SMart WaYS tO USe eLSS

T
axpayers can take advantage of the lock-
in period of three years that comes with
ELSS and use the same towards realising
long-term financial goals. For instance, one could
invest in an ELSS for the tax savings it offers and
then let the accumulated money stay in the fund
for the long run. So, one could create a corpus for
financial goals that are over three years ahead like
money for childs education or even towards ones
own retirement and save tax at the same time.

WeaLtH CreatiOn

A
s tax savings is an ongoing process, so, by
investing in an ELSS each year, you get to
reduce your income tax liability. That
aside, you also get to build wealth for the
long term, such as for your retirement
needs. The fact that the redemption
from ELSS also happens to be tax-free
only aids in wealth building over
the long term.
DiverSiFiCatiOn

B
eing an equity fund, the fund is well diversified,
making it a suitable option for every investor
looking to save tax and also invest in equities.
The diversification
that these funds
offer is across
sectors and market
capitalisation,
allowing your
investments to
benefit from the
stock markets.

eqUitY exPOSUre

C
ompared to other
fixed-return options,
ELSS is the only
option with significant
equity orientation as a tax
saving option. Though NPS
and even ULIPs have equity
exposure, they are never as
high as what ELSS tends to
have. Its a well-known fact
that in the long run, equity is
an asset class that has the potential to beat inflation, which makes ELSS an
option worth considering by every taxpayer.

10
 eLSS

FLexiBiLitY
You can invest in this scheme just the way one invests in other
mutual funds through SIPs or in lump sum. If investing systematically,
remember that each SIP needs to fulfil the three-year lock-in criteria
before you can redeem the units.
tax Free
There is no ceiling for investments in ELSS, which means you can
invest beyond the `1.5 lakh limit that is applicable to save tax under
Section 80C if you wish to. Further, securities transaction tax, or STT
at 0.001% will be deducted at the time of redemption of units and
not on their purchase.
LOCK-in
Equity Linked Savings Scheme (ELSS) has a three-year lock-in
period, which makes it the most liquid of all available options
under Section 80C.
tranSParent
Investments in ELSS are open in the sense that each month the AMC
releases the portfolio in which the fund has invested for one to know
the type of stocks in which their investments are in, the sectors, and
the exposure in debt and cash. Mutual funds are regulated by the
stock market regulator SEBI (Securities and Exchange Board of India),
which mandates the release of daily NAVs of the fund, indicating the
value of ones investments each day. While the lock-in is applicable
for three years, one can still track the performance of their
investments in these funds regularly.
eaSY anD
StraigHtFOrWarD

A
simple way to compare ELSS with the other available options
to save tax under Section 80C is to evaluate them across
parameters that matter the most. For instance, most important
factors for taxpayers arethe tenure of the product, the minimum
investment to make, and the risk involved when investing in the product,
and the potential returns that are on offer. While every taxpayer would
have a different appetite for risk, what makes ELSS stand out is the return
potential. And, with ELSS having the lock-in period of three years, it
stands out compared to the rest.

tax PLanning CHeCKLiSt

Earmark the sum to be invested
Select the tax savings option that best suits
you
ELSS has a lock-in of three years
Check the performance of the fund
Understand the risk associated with the
scheme
Select a fund based on your financial goal and
not just tax savings

12
HOW tHeY StaCK UP
Compare that with other traditional tax saving instrument, and
youll know exactly why this could be your good bet

investment Lock-in returns tax Status

Cagr per of
Option Period annum returns

Public
Provident 15 Years 8.10% Tax Free
Fund

national
Saving 5 Years 8.10% Taxable
Certificate

5-year
tax saving
5 Years 7.0%^ Taxable
deposits
with banks

equity
Linked
Savings 3 Years 19.68%^^ tax Free
Scheme
Past performance may or may not be sustained in future.
Partial PPF withdrawals are allowed after every 5th financial year. All data for 2016-17;
^for senior citizen (6.5% for others); ^^3-year ELSS category average as on Nov 24, 2016 (from Nov
25, 2013 to Nov 24, 2016; Value Research). Source: Indiapost, State Bank of India