GST
GST stands for Goods and Services Tax. It is an Indirect tax which
introduced to replacing a host of other Indirect taxes such as value
added tax, service tax,
goods and services in India.
During the pre-GST regime, every purchaser, including the final consumer paid tax
on tax. This condition of tax on tax is known as the cascading effect of taxes.
The indirect tax system under GST will integrate the country with a uniform tax
rate. It will improve the collection of taxes as well as boost the development of the
Indian economy by removing the indirect tax barriers between states.
Implementation –
1st July , 2017
Financial literacy is the ability to understand and effectively use
various financial skills, including personal financial
management, budgeting, and investing. The meaning of financial
literacy is the foundation of your relationship with money, and it is a
lifelong journey of learning.
It is important for us to know more about money and finance as it
will help us in future to manage our requirements/needs and
wants/desires . It will help us to focus on our needs than our
wants .It is better to start this early as this will help us in future .
History of Taxation
History of Taxation in India
Income is the money that an individual or business receives in exchange
for providing a good or services. A formal tax system was in existence in
India since the time of Maurya dynasty. The higher class of citizens
contributed 1/6th of their income as tax. It is said that even before the
Mauryas, tax was mentioned in Manu Smruti, one of the most ancient
scriptures of India. The subsequent Mughal invaders brought with them
their own taxation system. The infamous Jezia was a tax imposed on the
non-Islamic people of the land. In India, it was abolished by Akbar.
The income tax as we know today was first introduced in India in 1860 by
the British. It was introduced to compensate for the losses sustained by
the government due to the rebellion of 1857. Income tax is defined as the
annual charge levied on both earned income (wages, salaries or
commission) and unearned income like dividends, interest or rent. In
addition to financing a government’s operations, progressive income
taxation is designed to distribute wealth creation more evenly in a
population and to serve as buffer in case of fluctuations in the economic
cycle. There are two basic types of income tax: personal income tax and
corporation income tax.
The Income Tax Act was passed in India in 1886, and there have been
constant revisions and refinements in the Act since then. After the first
World War, a new Income Tax Act was passed, in 1918, again to counter
the residual effects of economic devastation caused by the war. This
income tax Act was in place till 1922, when it was replaced by another
Act. After 40 years, and 15 years after India gained freedom from the
British, the income tax Act was modified again. The current Income Tax
Act has been adopted in 1961, and bought into force with effect from April
1, 1962. It encompasses the whole of India, including Sikkim, Jammu and
Kashmir. The Central Board of Revenue bifurcated and created a separate
Board for Direct Taxes called as the Central Board of Direct Taxes under
the aegis of Central Board of Revenue Act, 1963.
CGST=1/2 .SGST
Mutual Funds – Advantages
Diversification and risk mitigation
Another advantage of Mutual Fund investments is that you can access several asset
classes in a single scheme. This feature gives you access to a basket of high-
returns-generating equity securities, low-risk fixed-income debt instruments and
balanced funds. This permutation and combination of assets lower your overall risk
and assists with portfolio diversification.
Managed By Professionals
The primary benefit of Mutual Fund investments is that they are
managed by experienced Fund Managers, who time the market and
allocate funds in debt, equities, and other money market instruments,
based on their in-depth knowledge of market movements.
Diversification and risk mitigation
Another advantage of Mutual Fund investments is that you can access
several asset classes in a single scheme. This feature gives you
access to a basket of high-returns-generating equity securities, low-risk
fixed-income debt instruments and balanced funds. This permutation
and combination of assets lower your overall risk and assists with
portfolio diversification.
Liquidity
Mutual Fund investments generally demand a longer investment
horizon. Nevertheless, you can buy and sell Mutual Fund units at the
prevailing Net Asset Value (NAV) of the day. For instance, Debt Funds
like Liquid Funds have a shorter redemption time than most funds.
However, ELSS Funds come with a mandatory 3-year lock-in period
and are not as liquifiable.
Choice of Investment
Another advantage of Mutual Funds in India is that you can choose
your preferred investment method. You can invest a lump sum amount
in a fund or start investing via Systematic Investment Plans. With SIP,
you can invest a sum as low as INR 100 per instalment at regular
intervals – weekly, monthly, quarterly, etc.
Cost Efficient
Mutual Funds are largely considered cost-efficient, especially if you
choose long-term schemes. This way, you can grow your corpus
significantly while having to pay a one-time fund management fee, exit
load, and other common expenses ratios, which differ from one fund
house to another.
Smart investment optionWhen you invest in an investment tool
which invests in one specific sector there is a risk of losing money in
one go. If the industry where you have invested fails, then you
might lose all your money. However, this is not the case with mutual
fund investments. When you invest in a mutual fund the associated
risk is relatively low as most of the mutual fund schemes spread the
investment in multiple assets and sectors for reducing the risk.
Hence, if any one of the sectors faces a loss then the gains from the
other sectors will compensate the amount that you have lost. This
risk mitigation benefit makes mutual fund investments a smart
investment option compared to other investments.
Low-cost investmentThis is a very interesting feature of mutual
funds. Since mutual funds get money from multiple investors, the
asset management services provided by the company come at a
comparatively low cost or charge since the amount is equally
divided between all the investors.
TYPES OF GST
Integrated Goods and Services Tax (IGST)
State Goods and Services Tax (SGST)
Central Goods and Services Tax (CGST)
Union Territory Goods and Services Tax (UTGST)