The Disrupted Journey

The Disrupted Journey

1) Some passengers were on a beautiful journey in a luxury bus headed to a beautiful hill station. 

2) They were going up a hill and were looking forward to reach the top of the hill.

3) The bus was full of passengers all so very excited.

4) All of a sudden there was a landslide and the road got blocked. (The Pandemic Struck the Market)

5) The bus could go no further. 

6) Some passengers alighted and moved on while some young lads entered the bus and drove it down to the plains. 

7) These young guys bought themselves  Hang Gliding gears and drove the bus to the same point of landslide 

8) From that point they would Hang Glide down to the plains while the bus would be driven down with the balance original passengers in it.

9) The Hang Gliders would now again take the bus to the same point for another round of Hang Gliding experience 

10) As a result the Hang Gliders were having a Great time and Experiencing Fun while the original passengers were moving up and down the hill aimlessly. 

11) The travel company when contacted told the original passengers to have patience and assured them that in the long term the road would get cleared. 

12) The travel company could have otherwise suggested the passengers alight from the bus, take some rest in a hotel and then take a new bus to a new nearby destination even though the new destination was a little less exciting than the original destination.

13) But they just kept saying to the original passengers to have patience.

NOW LET US GET INTRODUCED TO THE CHARACTERS OF THIS STORY

A) The Hang Gliders in are "Traders" who love the volatity of the Market

B) The original passengers in the bus are the long term investors struck by the market fall due to Pandemic 

C) The Travel Company is the Advisor 

D) The other less exciting hill station is Debt Fund Returns & the new bus is Debt Investing 

E) The original Bus is an Equity Fund going up and down  because of the Traders' and Speculators' interest and excitement.

F) They are driving it up and down and making the best of the opportunity of the market while the original investors are having a meaningless ride of notional profits and real losses. 

G) This is the market scenario today. 

A Great Advisor is not one who keeps telling his investors to have long term patience but the one who advises action by helping them to restructure and rebalance their portfolio.

The Investors need to have a decent  experience despite the market correction and severe volatity period just like the passengers deserved a better experience of another destination even as the road was getting cleared.

Taxation for Stock Market Transactions (Speculation)

Here we will discuss on all aspects of taxation when trading is declared as a business income, which can be categorized either as:

1. Speculative business income – Income from intraday equity trading is considered as speculative. It is considered as speculative as you would be trading without the intention of taking delivery of the contract.
2. Non-speculative business income – Income from trading F&O (both intraday and overnight) on all the exchanges is considered as non-speculative business income as it has been specifically defined this way. F&O is also considered as non-speculative as these instruments are used for hedging and also for taking/giving delivery of underlying contract. Even though currently almost all equity, currency, & commodity contracts in India are cash settled, but by definition they give rise to giving/taking delivery (there are a few commodity future contracts like gold and almost all agri-commodity contracts with delivery option to it).Income from shorter term equity delivery based trades (held for between 1 day to 1 year) are also best to be considered as non-speculative business income if frequency of such trades executed by you is high or if investing/trading in the markets is your main source of income.

Taxation of trading/business income

Unlike capital gains there is no fixed taxation rate when you have a business income. Speculative and non-speculative business income has to be added to all your other income (salary, other business income, bank interest, rental income, and others), and taxes paid according to the tax slab you fall in. You can refer to chapter 1 for tax slabs as applicable for FY 2015-16.

Let me explain this with an example:

• My salary – Rs.1,000,000/-
• Short term capital gains from deliver based equity – Rs.100,000/-
• Profits from F&O trading – Rs.100,000/-
• Intraday equity trading – Rs.100,000/-

Gives these incomes for the year, what is my tax liability?

In order to find out my tax liability, I need to calculate my total income by summing up salary, and all business income (speculative and non-speculative). The reason capital gains is not added is because capital gains have fixed taxation rates unlike salary, or business income.

Total income (salary + business) = Rs.1,000,000 (salary income) + Rs.100,000 (Profits from F&O trading) + Rs.100,000 (Intraday equity trading)  = Rs 1,200,000/-

I now have to pay tax on Rs 12,00,000/- based on the tax slab –

• 0 – Rs.250,000 : 0% – Nil
• 250,000 – Rs.500,000 : 10% – Rs.25,000/-
• 500,000 – Rs.1,000,000 : 20% – Rs.100,000/-,
• 1,000,000 – 1,200,000: 30% – Rs.60,000/-
• Hence total tax : 25,000 + Rs.100,000 + Rs.60,000 = Rs.185,000/-

Now, I also have an additional income of Rs.100,000/- classified under short term capital gains from deliver based equity. The tax rate on this is flat 15%.

STCG: Rs 100,000/-, so at 15%, tax liability is Rs.15,000/-

Total tax = Rs.185,000 + Rs.15,000 = Rs.200,000/-

I hope this example gives you a basic orientation of how to treat your income and evaluate your tax liability.

We will now proceed to find a list of important factors that have to be kept in mind when declaring trading as a business income for taxation.

Carry forward business loss

If you file your income tax returns on time July 31st for non-audit case and Sept 30th for audit case, you can carry forward any business loss that is incurred.

Speculative losses can be carried forward for 4 years, and can be set-off only against any speculative gains you make in that period.

Non-speculative losses can be set-off against any other business income except salary income the same year. So they can be set-off against bank interest income, rental income, capital gains, but only in the same year.

You carry forward non-speculative losses to the next 8 years; however do remember carried forward non-speculative losses can be set-off only against any non-speculative gains made in that period.

For example consider this – my hotel business income is Rs 1,500,000/-, my interest income for the year is Rs.200,000/-, and  I make a non-speculative loss of Rs 700,000. In such case my tax liability for the year would be –

My gain is Rs 1,500,000/ from business and Rs.200,000/- from interest, so total of Rs.1,700,000/-.

I have a non speculative business loss of Rs.700,000/-, which I can use to offset my business gains, and therefore lower my tax liability. Hence

Tax liability = Rs.1,700,000 – 700,000 = Rs.1,000,000/-

So I pay tax on Rs.1,000,000/- as per the tax slab I belong to, which would be –

• 0 – Rs.250,000 : 0% – Nil
• 250,000 – Rs.500,000 : 10% – Rs.25,000/-
• 500,000 – Rs.1,000,000 : 20% – Rs.100,000/-,

Hence, Rs.125,000/- goes out as tax.

Offsetting Speculative and non-speculative business income

Speculative (Intraday equity) loss can’t be offset with non-speculative (F&O) gains, but speculative gains can be offset with non-speculative losses.

If you incur speculative (intraday equity) loss of Rs.100,000/- for a year, and non-speculative profit of Rs 100,000/-, then you cannot net-off each other and say zero profits. You would still have to pay taxes on Rs 100,000/- from non-speculative profit, and carry forward the speculative loss.

For example consider this –

• Income from Salary = Rs.500,000/-
• Non Speculative profit = Rs.100,000/-
• Speculative loss = Rs.100,000/-

I calculate my tax liability as –

Total income = Income from Salary + Gains from Non Speculative Business income

= Rs.500,000 + Rs.100,000 = Rs.600,000/-

I’m required to pay the tax on Rs.600,000 as per the slab rates –

• 0 – Rs.250,000 : 0% – Nil
• 250,000 – Rs.500,000 : 10% – Rs.25,000/-
• 500,000 – Rs.600,000 : 20% – Rs.20,000/-,

Hence total tax = Rs.25,000 + Rs.20,000 = Rs.45,000/-

I can carry forward speculative loss of Rs.100,000/-, which I can set-off against any future (upto 4 years) speculative gains. Also to reiterate, speculative business losses can be set-off only against other speculative gains either the same year or when carried forward. Speculative losses can’t be set-off against other business gains.

But if I had speculative gain of Rs 100,000/- and non-speculative loss of Rs 100,000/- they can offset each other, and hence tax in the above example would be only on the salary of Rs 500,000/-.

What is tax loss harvesting?

Towards the end of a financial year you might have realized profits and unrealized losses. If you let it be, you will end up paying taxes on realized profits, and carrying forward your unrealized losses to next year. This would mean a higher tax outgo immediately, and hence any interest that you could have earned on that capital which goes away as taxes.

You can very easily postpone this tax outgo by booking the unrealized loss, and immediately getting back on the same trade. By booking the loss, the tax liability for the financial year would reduce.  We at Zerodha are the only brokerage in India presently giving out a tax loss harvesting report, which will spot all opportunities for you to harvest losses. Click here to learn more.

BTST (ATST) – Is it speculative, non-speculative, or STCG?

BTST (Buy today Sell tomorrow) or ATST (Acquire today sell tomorrow) is quite popular among equity traders. It is called BTST when you buy today and sell tomorrow without taking delivery of the stock.

Since you are not taking delivery, should it be considered as speculative similar to intraday equity trading?

There are both schools of thought, one which considers it to be speculative because no delivery was taken. However I come from the second school, which is to consider it as non-speculative/STCG as the exchange itself charges the security transaction tax (STT) for BTST trades similar to regular delivery based trades. A factor to consider is if such BTST trades are done just a few times in the year show it as STCG, but if done frequently it is best to show it as speculative business income.

Advance tax – business income

Paying advance tax is important when you have a business income. Like we discussed in the previous chapter, advance tax has to be paid every year – 15% by 15th Jun, 45% by 15th Sep, 75% by 15th Dec, and 100% by 15th March. I guess the question that will arise is % of what?

The % of the annual tax that you are likely to pay, yes! When you have a business income you have to pay most of your taxes before the year ends on March 31st. The issue with trading as a business is that you might have a great year until September, but you can’t extrapolate this to say that you will continue to earn at the same rate until the end of the financial year. It could be more or less.

But everything said and done, you are required to pay that advance tax, otherwise the penalty is 12% annualized for the time period it was not paid for. The best way to pay advance tax is by paying tax for that particular time period, so Sept 15th pay for what was earned until then, and by March 15th close to the year end, you can make all balance payments as you would have a fair idea on how you will close the year. You can claim a tax refund if you end up paying more advance tax than what was required to pay for the financial year. Tax refunds are processed in quick time by IT department.

You can make your advance tax payments online by clicking on Challan No./ITNS 280 on https://incometaxindiaefiling.gov.in/

Also, here is an interesting link that helps you calculate your advance tax – http://www.incometaxindia.gov.in/Pages/tools/advance-tax-calculator.aspx. You can also check this link to see how exactly interest or penalty is calculated for non-payment of advance tax.

Balance sheet and P&L statements

When you have trading as a business income, you are required to like any other business create a balance sheet and P&L or income statement for the financial year. Both these financial statements might need an audit based on your turnover and profitability. We will discuss more on this in the next chapter.

Turnover and Tax audit

When is audit required?

An audit is required if you have a business income and if your business turnover is more than Rs 1 crore for a financial year. In case of digital transactions (equity transactions are 100% digital), this turnover limit is Rs 2 crores. For equity traders, an audit is also required as per section 44AD in cases where turnover is less than Rs.2 Crores but profits are lesser than 6% of the turnover and total income is above minimum exemption limit.

We will discuss this in detail in the next chapter.

However let us understand what audit really means.

The dictionary meaning of the term “audit” is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit; cost accounting law requires a cost audit, etc. Likewise the Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law if he meets the above mentioned turnover criteria.

Check this link for FAQ’s on tax audit on the income tax website for more.

Audit can also be defined as having an accountant verify if you have prepared all your accounts right. In this case it is getting an accountant check if you have created a correct balance sheet and P&L statement for the year. Ideally this audit should be done by the IT department itself, but considering the number of balance sheets out there it is surely impossible for IT department to audit each one of them. Hence we need a Chartered accountant (CA), who is a qualified professional and authorized by Income tax department to perform audits on balance sheet and P&L statements. You the tax payer can use any CA of your choice.

What role should a CA play?

Ideally a CA is required to only audit and sign on the balance sheets and P&L statements. But a CA also typically ends up creating your balance sheets and P&L statements and will audit them only if required.  We will in the next chapter briefly explain how a CA typically creates these two statements.

The importance of the audit process by a CA cannot be understated, apart from all the reporting requirements an audit also helps traders/investors know their financial health, ensure it faithfully reflects the income and claims for deduction are correctly made. It also helps lenders evaluate credibility, and act as a check for any fraudulent practices.

Which ITR form to use? – ITR3 (ITR 4 until 2016), we will discuss more on this in the last chapter. I have come across incidents where people have declared both speculative and non-speculative as capital gains to avoid having to declare business income, and not having to use ITR3. Taking a shortcut like this could mean a lot of trouble if called for an IT scrutiny.

Business expenses when trading – Advantage of showing trading as a business is that you can show all expenses incurred as a cost which can then be used to reduce your tax outgo, and if a net loss for the year after all these costs, it can be carried forward as explained above.

Following are some of the expenses that can be shown as a cost when trading

• All charges when trading (STT, Brokerage, Exchange charges, and all other taxes). I hope you remember that STT can’t be shown as a cost when declaring income as capital gains, but it can be in case of business income.
• Internet/phone bills if used for trading (portion proportionate to your usage on the bill)
• Depreciation of computer/other electronics (used for trading)
• Rental expense (if the place used for trading, if a room used – portion of your rent)
• Salary paid to anyone helping you trade
• Advisory fees, cost of books, newspapers, subscriptions and more…

Key takeways from this chapter

1. Speculative business income if trading intraday equity.
2. Non-speculative if trading F&O, or short term equity delivery actively.
3. Speculative losses can’t be set-off against non-speculative gains.
4. Advance tax has to be paid when trading as a business –15% by Jun 15th 45% by Sep 15th, 75% by Dec 15th and 100% by Mar 15th.
5. Can claim all expenses if income from trading shown as a business income.

Impact of RBI moratorium extension on you

The Reserve Bank of India announced measures to further ease financial stress and improve debt management in response to the COVID-19 crisis. The earlier moratorium which was ending on 31st May 2020, has now been extended by three months, i.e. August 31, 2020.

The extension of the moratorium means all financial institutions are now permitted to allow a moratorium of six months on payments of installments of all term loans and credit card dues arising between 1st March 2020 and 31st August 2020

Please note that the moratorium does not apply to interest charges. If you have Rs 1,00,000 due as on 3rd March 2020 and you take advantage of the moratorium till 31st Aug 2020, the dues payable on 3rd Sept 2020 could be as high as Rs 1,30,000 (Rs 1,00,000 (due amount) + Rs 30,000 (interest amount and additional bank charges)).

The moratorium is short-term relief but can result in long-term stress and ballooning interest at 36-42% CAGR. CRED, therefore, urges those who can to continue paying the total due amount, or as much of it as possible, within the due date.

Please read the FAQs below to understand the moratorium well and its implications. FAQs:- What is the moratorium period for Credit Card dues? Given the circumstances of the global pandemic, RBI has allowed banks to push the 'Billed Credit Card dues' falling between 1st March 2020 to 31st August 2020. This is not an exemption from repaying the amount. The payment can only be "deferred" by 6 months as per RBI circulars. If you take advantage of the moratorium, your credit score may not be impacted by non-payment of credit card dues for 6 months till 31st August 2020, but interest fees will continue to be charged at current rates or as specified by your credit card issuing bank. For credit card dues, billing will be restored on 31st August 2020. To avoid late fees and interest charges from 31st August 2020, you will have to pay your total due amount. If you pay your minimum due, you will avoid late fees but will be levied interest charges on the outstanding amount. If I take this option, will interest charges be levied for the deferred period of payment? The RBI notification has clearly specified that interest will continue to be charged on the outstanding amount during the 6-month deferment period. What do I have to pay after 6 months? Opting for 6 months 'deferment' option allows you to delay the payment of your credit card dues till 31st August 2020. As per our understanding of the circular, you will be expected to pay your outstanding amounts and the interest charges on the due date after 31st August 2020 to avoid late fees and impact on credit score. Will taking this option impact my credit score? Exercising this option may not impact your credit score since the banks may not report it as a "default" to RBI recognized credit bureaus.

Imagine you were born in 1900

A very interesting late Saturday evening PERSPECTIVE

For a bit of perspective during these frustrating times, imagine you were born in 1900. 

On your 14th birthday, World War I starts, and ends on your 18th birthday. 22 million people perish in that war. Later in the year, a Spanish Flu epidemic hits the planet and runs until your 20th birthday. 50 million people die from it in those two years. Yes, 50 million. 

On your 29th birthday, the Great Depression begins. Unemployment hits 25%, the World GDP drops 27%. That runs until you are 33. The country nearly collapses along with the world economy. 

When you turn 39, World War II starts. You aren’t even over the hill yet. And don’t try to catch your breath. On your 41st birthday, the United States is fully pulled into WWII. Between your 39th and 45th birthday, 75 million people perish in the war. 

At 50, the Korean War starts. 5 million perish. 

At 55 the Vietnam War begins and doesn’t end for 20 years. 4 million people perish in that conflict. 

On your 62nd birthday you have the Cuban Missile Crisis, a tipping point in the Cold War. 

Life on our planet, as we know it, should have ended. Great leaders prevented that from happening. 

When you turn 75, the Vietnam War finally ends. 

Think of everyone on the planet born in 1900. 

How do you survive all of that?

When you were a younger or even possibly a kid in 1985 and didn’t think your 85 year old grandparent understood how hard school was. And how mean that kid in your class was. 

*Yet they survived everything listed above.*

Perspective is an amazing thing. 

Let’s try and keep things in perspective. 

Let’s be smart, help each other out.

#staysafe #takecare 

#GodBless🙏🏻 

Rs. 50,000/- Crores Special Liquidity Facility for Mutual Funds by RBI

Today as on 27.04.2020

RBI Announces `50,000 crore Special Liquidity Facility for Mutual Funds (SLF-MF)
Heightened volatility in capital markets in reaction to COVID-19 has imposed liquidity strains on mutual funds (MFs), which have intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects therefrom. The stress is, however, confined to the high-risk debt MF segment at this stage; the larger industry remains liquid.

2. The RBI has stated that it remains vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve financial stability. With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of ` 50, 000 crore.

3. Under the SLF-MF, the RBI shall conduct repo operations of 90 days tenor at the fixed repo rate. The SLF-MF is on-tap and open-ended, and banks can submit their bids to avail funding on any day from Monday to Friday (excluding holidays). The scheme is available from today i.e., April 27, 2020 till May 11, 2020 or up to utilization of the allocated amount, whichever is earlier. The Reserve Bank will review the timeline and amount, depending upon market conditions.
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4. Funds availed under the SLF-MF shall be used by banks exclusively for meeting the liquidity requirements of MFs by (1) extending loans, and (2) undertaking outright purchase of and/or repos against the collateral of investment grade corporate bonds, commercial papers (CPs), debentures and certificates of Deposit (CDs) held by MFs.

5. Liquidity support availed under the SLF-MF would be eligible to be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio. Exposures under this facility will not be reckoned under the Large Exposure Framework (LEF). The face value of securities acquired under the SLF-MF and kept in the HTM category will not be reckoned for computation of adjusted non-food bank credit (ANBC) for the purpose of determining priority sector targets/sub-targets. Support extended to MFs under the SLF-MF shall be exempted from banks’ capital market exposure limits.

What RBI’s Rs 50,000 crs boost means for mutual funds..

1. What is this special liquidity facility for mutual funds?

The Reserve Bank of India announced today that it will open a Rs 50,000-crs special liquidity facility for mutual funds (SLF-MF) to ease the liquidity pressure on them.

2. Why were mutual funds facing a liquidity crisis?

Mutual funds were facing a lot of redemption requests after Franklin Templeton Mutual Fund suddenly shut six of its debt mutual fund schemes on Friday. They are unable to sell some of their investments in the debt market due to poor liquidity. In other words, there are no buyers for lower rated instruments. If mutual funds have to sell them, they will be forced to sell it at a steeply lower price. It will result in sharp fall in the net asset values or NAVs of schemes.

3. Why are there no takers for lower rated papers?

Covid-19 crisis is fuelling risk aversion in the markets, especially in the debt market. Everybody wants to play it safe. There are only buyers for top-rated papers and government bonds. Nobody wants to buy lower-rated papers for higher yields because they know they won't be able to sell them if they want to raise money immediately.

4. How will this be solved by RBI SLF-MF?

According to RBI, banks can use funds availed under the SLF-MF exclusively for meeting the liquidity requirements of MFs by(1) extending loans(2) undertaking outright purchase of and/or repos against the collateral of investment grade corporate bonds, commercial papers (CPs), debentures and certificates of Deposit (CDs) held by MFs.This means if mutual funds are unable to sell their bonds in the market, they can use this facility to meet redemption requests from investors.

5. How will it benefit investors?

As said earlier, the special window would ease the pressure on mutual funds to sell their investments at a huge discount to meet redemptions. If they are unable to sell their holdings at a fair price in the market, they can use the special window to meet redemptions.

6. Why are debt fund managers elated?

Debt fund managers believe that the RBI move would soothe the nerves of investors rattled by the Franklin Templeton Mutual Fund episode and stop knee-jerk selling decisions by them. Also, they are taking huge comfort from the RBI commitment. RBI said it is committed to take whatever steps necessary to mitigate the economic impact of Covid-19 and preserve financial stability.

NOW, HOW TO SAVE TDS ON FIXED DEPOSITS

Fixed deposits (FD) are one of the most favored investment instruments in India. Fixed deposit can be defined as a financial investment where money is invested for a fixed tenure at a pre-agreed interest rate.

There are many varieties of FD schemes available in the market today, and an investor can pick one depending on its need and suitability.

Let us take a look at the various types of FDs available today:

Regular FD: In this type of FD scheme, the tenure is fixed for a period ranging 1 week to 10 years. The interest rate of each period is pre-determined, and an investor can choose to stay invested for a suitable period.

Tax saving FD: This type of FD scheme attracts investors who want to invest for saving income tax. There is a compulsory lock-in of five years under this type, and the fund cannot be withdrawn before completion of the period.

Special FD: In special tenure FD schemes, the fund can be invested for a special period like 333, 399 or 555 days, and rate of interest is higher.

Recurring deposit scheme: Recurring deposit (RD) scheme is another popular investment option available to investors today. Under this scheme, an investor can regularly deposit a fixed amount every month for a fixed tenure and at a pre-decided interest rate. The corpus keeps on growing every month towards the maturity period.

Floating FD: Under this scheme, an investor can opt for a market-based interest rate. The rate of interest is renewed automatically with the change in the base rate.

Important points for picking the right FD

Interest calculation: Interest varies, and monthly, quarterly, half-yearly and yearly calculations are available under different conditions.

Interest payout: An investor has the option to reinvest the interest earned and increase the FD corpus or to receive regular payouts every month.

Penalty: Some institutions penalise for breaking an FD before maturity by lowering interest rates. Investors can search for such banks/institutions that have the lowest penalty rates for pre-maturity liquidation of fixed deposits.

Tax deduction on FD interest

The interest earned under an FD is taxable under "income from other sources". The amount invested under 80C of the Income Tax Act is exempt but interest earned under such investments is taxable. If the interest earned under FD exceeds Rs 10,000 in a financial year, it would be eligible for tax deduction at source (TDS) at 10 per cent plus 3 per cent education cess, therefore a total 10.3 per cent of the interest earned.

For example, if an investor has earned Rs 20,000 as interest in one year, the bank would deduct Rs 2,000 and pay only Rs 18,000 as the amount that exceeds the limit of Rs 10,000.

The TDS limit for companies' deposit schemes is at Rs 5,000. It means if the interest earned from a company deposit exceeds Rs 5,000, the investor is liable for a TDS it.

NOW, HOW TO SAVE TDS ON FIXED DEPOSITS

There are multiple ways to achieve this. Here are four easy ways you can follow to save TDS on FDs:

1. By submitting Form 15G/15H

If an investor submits Form 15G stating that he has no taxable income, the bank would not deduct any TDS on the interest earned. For senior citizens, the requisite form to avoid TDS is 15H.

2. Distributing FD investment

Another way to avoid TDS is by splitting the deposit into separate banks in such a way that interest earned from any of the FDs does not exceed the Rs 10,000 limit.

3. Timing the FD

You can also save TDS by timing your FD in such a way that interest for any of the financial years does not exceed Rs 10,000.

For example, a 12-month fixed deposit of Rs 1 lakh at 10.5 per cent could be started in September as financial year closes on 31st March. This way, the interest would split in two financial years, and hence TDS will be avoided.

4. Splitting the FD

An individual can start one fixed deposit under his/her personal bank account and another one under an HUF account, and, so, both will be treated as separate. So an investor with an HUF identity can split the corpus under such two heads.

Fixed deposit is an all-time favorite financial investment instrument. It provides a handsome return as well as liquidity at the time of need to an investor. Looking at the volatility, high associated risk and less assured return by other financial instruments currently, the attractiveness of fixed deposits is set to grow in the future.

Big Idea 2015: Bringing Social Responsibility Back to Business

People are demanding more from the companies they buy from beyond price and convenience. Over the past several years we’ve seen a new wave of fresh thinking on the social responsibilities of business with the emergence of new frameworks like B Corps and Conscious Capitalism that goes much deeper than traditional CSR. The specific frameworks themselves are less important than the core idea behind them: that businesses can and should integrate social responsibility into their business models. The increasing pressure on private enterprise to create social good is only going to grow, and in 2015, the expectation that business will contribute meaningfully to society will become the norm. Companies that just give lip service to integrating their business purpose with social purpose, with no real action behind it or business models that reflect a commitment to social purpose, will be called out and held accountable.

Three forces are coalescing to make this so. The first and most obvious force is a global audience with rising expectations. In a world of transparency and real-time response, people are demanding that companies act ethically and responsibly and they are quick to call companies out when they don't. In fact, according to a recent Edelman goodpurpose study that explores attitudes around social purpose and business, an overwhelming majority of global consumers -- 87% -- believe that society’s interests should be at least as important to business as commercial interests. The cycle of public accountability is faster than ever when companies don’t live up to the social responsibilities expected from their customers.

The second force is the growing clout of millennials as they rise through the workforce. This group is eager to make a difference no matter where they live, and they want to support businesses that share that view. A recent Deloitte survey of 7,800 millennials around the world found that they believe the success of a business "should be measured in terms of more than just its financial performance, with a focus on improving society among the most important things it should seek to achieve." In 2015, we’re going to see more consumers align their hearts with their dollars.

The mindset that business should have a social purpose isn't a radical new concept. It was the norm in the era before mass commerce, when most companies were local and business leaders had a vested interest in helping their communities flourish. Local bankers wanted the shopkeepers they lent to to prosper; they understood the need to literally invest in the community for the benefit of all. Take that mindset to the global, connected world, marry it to the expectations of millennials, and soon every business will need to integrate social impact into what it does day to day.

The third and final force that will change what people expect from the companies they patronize is the desire for a genuine personal connection. After all, the Internet is made up of individuals who want to connect. And the easier it is to connect, the more people crave meaningful contact, a backlash against instant but soulless gratification provided by a faceless corporate entity that you can't interact with.

The principle that companies should have a social purpose that is inherent to their business lies at the heart of Etsy, which enables people around the world to connect offline and online to make, sell and buy unique goods. We help creative entrepreneurs start, scale and enjoy their businesses, and we connect them to buyers who care about where they spend their money. Etsy is a global platform, but the proceeds from these transactions flow locally, largely going back to the communities where our sellers live. We’ve made it easier for sellers to grow responsibly, with an application and approval process we put in place a year ago that helps makers partner with local manufacturers that share their values. With Etsy’s support, sellers like TM1985 in New York and Vespertine in Toronto are partnering with small production facilities nearby to produce custom goods and share the stories of how their items are made with buyers on Etsy’s marketplace. Fostering an ecosystem that empowers and encourages people to create personal connections in the marketplace is baked into our business, and fully aligned with our mission to re-imagine commerce in ways that build a more fulfilling and lasting world. In our Values & Impact report, we detail Etsy’s approach to being a values-led business and our commitment to transparency.

In an era when people are more selective about the businesses they support, Etsy is proud to be a part of what I see as the defining trend of 2015: we're going to see more companies articulate the social purpose of their business. As businesses consider their growth strategies, they should also be asking themselves what they’re doing to maximize their benefit to people and the planet.

The Best Advice I’ve Received: Never Stop Studying

Many students around the world have recently finished their classes before taking a holiday break. I have no doubt they had tests before their classes ended. Those who studied surely did well.

This reminds me of the best advice I ever received came from my favorite college professor – and I was not all that happy to hear it at the time.

“Study your entire life. Study everything.”

This wasn’t what I wanted to hear. I was not a patient student. I was the type who preferred to cram the night before rather than spread my studying over time. I certainly didn’t envision studying over my entire life.

But I have realized my professor was absolutely right. The key to success is to never stop studying.

Think of it in terms of an athlete. Does an athlete stop practicing when he turns professional? Of course not. He continues to practice. The day he stops, he is no longer an athlete.

The same is true in any profession. When you are in school, of course you study. But when you leave school, that is hardly the time to stop studying – just as it would be a terrible time for an athlete to stop practicing. As you enter professional life, you need to study to maintain your position and to advance.

What to I mean by study? Study anything. Everything.

• Study a new language. At Job, we require our employees to learn English. Even when they learn, we require them to improve. We make language study part of the everyday work of our company.

• Study history. I am often inspired by great moments in history – for example, the way in which Mahatma Gandhi was able to inspire and lead the Freedom movement of India. Political community trying to put a country to highest side and the Devotional Teaches 

• Study success. All over the world, new processes are being invented. When we study successful people and companies, we see ways we can improve our own lives today.

Study your entire life, even if it is just an hour a day. The studying you do today will determine the person you will be in five years. What will that person of the future achieve?

Common Mistakes Young Professionals Make

As professionals, we all make mistakes - especially early in our lives. If I were to compile a list of all the mistakes I made early in my career it’d take me the better part of a week, and I’d still fail to include a number of them. As someone who works with a lot of very talented young professionals daily, I have had the opportunity to identify some of the more common mistakes we make early in our careers, here are five:

(1) Viewing a value proposition as Rs. and only Rs. : All too often I encounter young professionals who only have one variable that they account for when determining a value proposition - cash. As an example: young professionals who seek my advice around job offers are almost exclusively focused on the salary - how do they negotiate for more, is it ‘enough’, how will it impact their life-long earning potential...all valid concerns, but not approaching comprehensive in nature. Some variables that significantly impact the value of a job offer include: proximity to home, the benefits package, paid vacation, organizational culture, hours worked, supervisors’ traits, and any unique perks (flex-spending accounts, tuition reimbursement, cash for professional growth, complimentary meals/technology, etc.). This way of gauging value can pollute other professional decisions, such as gauging the value of a potential business partnership; immature professionals will focus on immediate cash rewards, while more seasoned professionals will also account for additional variables such as the projected longevity of that partnership, the potential for growing it, and the amount of time and energy it’ll take to maintain and develop it.

(2) Not negotiating: Almost everything in life is negotiable. Prison sentences, fines, automobiles, divorce settlements, most contracts, job offers, etc. Despite this, negotiation is consistently one of the things I find young professionals most reluctant to engage in AND, when they do engage in it, they typically over or under-sell themselves or their product/service. This isn’t surprising given that the vast majority of us are uncomfortable with any kind of conflict, so we avoid situations in which it may occur (such as negotiations - hence why Lawyers are so overpaid). Some really simple facts that can help people overcome their fears/inadequacies around negotiation: (a) an offer is an offer - not an ultimatum - and the other party is making it (or should be making it) with the expectation that you’ll negotiate; (b) a businessnegotiation should never become personal or be taken personally, so don’t allow yourself to fall into that trap (some people will vehemently disagree with this, which is their personal opinion and prerogative); (c) the person you’re negotiating with is flexible but only to a point - everyone has a ceiling, don’t forget that; and (d) you can’t negotiate if you don’t have any understanding of what the market value is for what you’re negotiation is centered around, so know your stuff going into it.

(3) Establishing SMART goals: Young professionals often have goals like: “get rich”, or “become a CEO”, or “own a business”, but they’re rarely SMART goals (Specific, Measurable, Achievable, Realistic, and Time-Bound - or some version of that). This seriously hinders the deliberateness of their early career decisions and professional growth efforts (understandably), because they don’t know what they’re working towards. It’s like trying to navigate without a specific destination, no waypoints, and no compass. As a young professional you should be thinking of your goals in the following contexts, and they should all be SMART in nature: career and life goals (what you hope to achieve over the course of your life and career - your destination), five year goals (what you need to achieve in five year increments to make your ultimate goals a reality - your waypoints), annual goals (what you need to achieve this year to ensure you’re on-track to achieve your five year goals - more waypoints), and weekly goals (what do you need to get done this week to ensure that you’re on track to achieve your annual goals - your compass).

(4) Procrastinating: I don’t know if it’s because there are more distractions in today’s world than ever in our history, more open-office floor plans, or if it’s because jobs today are typically less specialized and require us to operate in a more fluid environment than the past - whatever the reason, young professionals seem to be becoming more prone to procrastination. As a species we have a propensity to procrastinate (if you haven’t read the Procrastination Equation by Piers Steel, you should), but it’s starting to get taken to an entirely new level by smartphone toting professionals who are addicted to Instagram, Facebook, Twitter, Youtube, LinkedIn (guilty), et al. Obviously this advice isn’t universal to every context, but if people simply focused earnestly on one task at a time in a logically prioritized order, moving through them methodically, I think a lot of folks would be surprised at how productive and efficient they could be. The problem is that our brain hasn’t evolved to function effectively with our habits (texting while watching a Youtube video, and working on a quarterly report). We have a dual-core processor attempting to do the work of a quad-core.

(5) Not having a contingency plan: nine out of every ten young adults I speak with about goals have exactly one plan for achieving them...one. Any strategist worth their salt knows - and lives by the mantra that - a plan isn’t a good plan if it doesn’t include a contingency plan. In fact, good strategists expect things not to go completely according to plan, and they plan for that! Parents, supervisors, instructors, mentors, and advisors - please start asking those that depend on you for guidance the ‘what if’ questions, when presented with their plans. Young professionals, you should navigate the world knowing this - plan B’s are like emergency parachutes when jumping out of a plane, if you need one and don’t have one things can get really messy.

Follow These Steps To Get Your Next Job

The best way to get a new job is to apply for lots of jobs, and not to get emotionally attached to any of the opportunities. Plant a few seeds every day. Some of them will grow. Some will wither. You only care about the ones that bear fruit!

That doesn't mean mindlessly lobbing applications and resumes into automated recruiting portals. That's a waste of time. The best way to apply for a job is to zero in on the employer and beyond that, on the specific hiring manager who's getting ready to hire someone. Before you say "But it's so hard to find the hiring manager!"read this.

It isn't hard at all, ninety-five percent of the time. We know this because we find hiring managers and help other people find them every day.

I understand if you don't want to take the time to do that research, but in that case, what's the point of job-hunting at all? You know you won't get a job filling out endless forms online.

I write these columns because I hate to see brilliant people unemployed or working in the wrong job, running into brick walls on their job hunts and getting desperate. We can take a lot more control of our job hunts than most job-seekers do. We can run a job search like a business. After all, your job search IS a business! It's your financial future.

As kids we were taught to follow rules. Unfortunately the old rules for job-hunting don't work. You can pitch applications into Black Hole recruiting portals all day long. That doesn't pay you anything. You have to take matters into your own hands and conduct your own research.

Read your local business paper. Who just got promoted, or just got appointed to a new position? Send that person a Pain Letter. Before you send the letter, read up on the employer.

What's going on in its industry?

Why did they hire or promote this person? Why did they tell the world about it?

Get behind the job ad. You don't even need to focus your job search on posted job ads. Most new jobs are never posted.

There is the easy way to job-hunt, which only satisfies the people at the unemployment office when you tell them about the employers you contacted this week. The easy way is a waste of time. There's a more in-depth, painstaking way to job-hunt, and that is the way that will actually get you a job.

Here's how it works:

Step One: Choose Your Direction

Decide what you want to do next in your career. That could be exactly what you've been doing thus far, if there is a need for the services you've been providing and if you still like the work.

It could be something very different from your past job assignments. It's up to you! You can reinvent and rebrand yourself at any age. The key is to choose your direction.

Otherwise, your message to employers will be "You guys look at my resume and decide what I'm supposed to be doing." No way, baby! Your career direction is your decision, and as a self-directed job-seeker your story will be a lot more compelling.

Step Two: Brand Yourself for the Job You Want

When you brand yourself in your resume and your LinkedIn profile, your emphasis is not on the job titles you've held or the tasks you completed. Rather, you'll highlight the problems you've solved for your past employers.

Organizations hire people because they have pain and they need relief. The pain is your focus, whether you're a job-seeker or a consultant. Forget your skills - no one cares. Tell us what problems you solve, instead.

Step Three: Create a Target Employer List and Research Your Targets

Make a list of employers you're interested in contacting. Research each of them, starting with their own website and then moving on to Google (web, news and images), LinkedIn and Glassdoor.

When you've spent a couple of hours researching a target employer, you'll know a lot. Your mojo will grow. You'll have formulated questions you want to ask your hiring manager at an interview. Knowledge is power!

Step Four: Find Your Hiring Manager

Now, start looking for your individual hiring manager at each firm. Your hiring manager isn't an HR person, unless you want to work in HR. It's the department manager of the group you want to work in. Here are step-by-step instructions.

Step Five: Write a Pain Letter and Send It

Compose a pithy Pain Letter to each manager you want to approach. Send your Pain Letter in an envelope together with your Human-Voiced Resume.

Step Six: Build a Tracking System

Create a spreadsheet that lists the employers you've contacted, so that you can 'drip' additional messages on them over the next few weeks.

Step Seven: Network!

If you haven't networked much before, start networking now! One-on-one networking is the best way to dig into the specifics of your job-search (and whatever is going on in your friend or networking contact's life) and generate great ideas, introductions and moral support.

Step Eight: Promote Yourself!

Lastly, get a job-search business card at vistaprint or your local office supply store. Include your name, email address, customized LinkedIn profile url, phone number and a couple of lines about what you do professionally. Hurrah - you're a consultant now!

What Now?

Once you've written each Pain Letter/Human-Voiced Resume Combo and put it in the mail, and once you've logged the packet on your spreadsheet, go on to the next name on your list.

Don't pin your hopes on any particular job. That's the best way to keep your mojo level high!

Only the people who get you, deserve you. The rest are free to jump in the nearest lake or live a long and bountiful life without benefit of knowing you. It's their loss. Any stress or anxiety you feel as you wait for people to get back to you is a drain on your precious fuel tank.

You can't afford that when you are job-hunting, or any time. You need to keep all your mojo for yourself and your family!

If you're not working, you can easily send out ten Pain Letters with Human-Voiced Resumes every week. From our experience that should net you about three callbacks. Be ready for those calls!

When a hiring manager calls you or sends you an email message, it's because you nailed the pain point and he or she wants to pick your brain. Be ready to get on the phone and NOT solve the hiring manager's problem. Rather, say "Shall we get together for coffee and chat?"

It's a new day. You are not a supplicant or someone who has to bow and scrape and beg to get a job. You bring tremendous assets and talents to your next employer, but that's only true if you believe it yourself!

Following the old, dusty job-search rules will not get you a great job, but stepping into your power will!

A Hiring Story: Thank Goodness Matthew Broke The Rules!

We heard from Matthew, who just got hired as a Production Supervisor. "I didn't want to send a Pain Letter," he said. "Why not?" we asked. "Because the job ad specifically said 'No Calls and No Direct Contact.' That scared me."

"What made you go ahead and do it, in that case?" we asked.

"I sent the Pain Letter because after I'd submitted my application through the recruiting portal I didn't hear anything. I waited two weeks. I was afraid they might have filled the job. I knew I was perfect for the job! I figured, my candidacy with this company is dead right now anyway. If it's dead, I can't kill it. I might as well take a chance and send a Pain Letter! So I did."

"What happened?" we asked.

"I got a call from HR the next day. Remember that the job ad said 'No direct contact,' but I got the call anyway and the HR manager told me 'Come in and meet us tomorrow.' I went to the interview and talked with the HR manager and my hiring manager, the Production Manager. It was a great day. I had a good feeling about it. I got the job offer two days later."

"Hurrah, Matthew!" we said. "What products will you be producing?"

"Biodegradable bandages and sutures," said Matthew. "Hurrah!" we said. "That's magnificent, man! Congratulations!"

"I'm really excited," said Matthew. "When I was sitting in my boss's office and he was making the offer, I said 'Good thing I broke the rules!' Your job ad said 'No direct contact,' but I figured I might as well send you that letter anyway."

My boss said "We have that warning in there because people call us all day and write to us to say 'Got any openings?' We can't handle all those inquiries, and we don't think it's a good use of our time when our job openings are listed right on our website. I'm glad you broke the rules, Matt. You used your good judgment, and that's what you'll do on the job."

Hats off to Matt and all the rule-breaking job seekers - like you!