2nd S..Systematic Transfer Plan

Most of the people wants to invest lump sum amount in mutual funds (Like Bonus, Arrears in salary, or any other income received from other sources..)but they are scared to put all of it in one go because the markets are at an all-time high.so to reduce the risk involved in investing there is 1 method or strategy which is known as Systematic Transfer Plan .So Let’s see

What is STP?

STP is a variant of SIP. STP is essentially transferring investment from one asset or asset type into another asset or asset type. In STP, a fund house allows investors to invest a lump sum amount in 0ne scheme (Debt Mf) and transfer regularly a pre-defined amount into another scheme.(Equity or Balance Mf) The transfer happens gradually over a period.

How STP Works?

Suppose you want to invest 1 Lakh in Equity Mf. Your 1st step will be

  • Choose the liquid or ultra-short term mutual fund.(If its other debt fund make sure there is no exit load )
  • Choose the Equity or Balance Mutual Fund which you want to transfer money.
  • Decide the amount to be transferred and frequency of the transfer (Daily, weekly ,monthly or quarterly )

For example you can decide to transfer 10000 every month on 10th of every month for 10 months or if 5000 than 20 months.

Benefits of STP

  • STP helps to keep a balance of Risk & Returns
  • Money invested in liquid fund earns interest till the time it is transferred to equity fund. The returns of liquid fund is usually higher than saving bank account.
  • Your money is invested in liquid fund this mean you can sell it at any time if you want. Hence it works like a Emergency Fund.
  • Since it is similar to Systematic Investment Plan (SIP),STP also helps in averaging out the cost of investors by purchasing fewer units at a higher NAV and more at a lower price.

Types Of STP

Fixed STP: – In Fixed STP, amount of transfer (from one mutual fund to other) is fixed.

Flexi STP: – Under Flexi STP amount of transfer is variable. The fixed amount will be minimum amount and variable amount depends on volatility in market. For E.g If Nav of the fund decrease you can invest more amount and if NAV of the fund increase you can invest less amount.

Capital Appreciation:-Under this type, the investor takes the profit part out of one investment and invest in other.

Key Points to remember.

  • Typically, a minimum of 6 such transfers are to be agreed n by investors in STP.
  • STP attracts short term capital gain tax because every transfer is considered as redemption in the liquid mutual fund. If debt funds are sold before 3 years, the gains are treated as short term capital gains and taxed according to income tax slab applicable to investor.
  • You can bring down tax liability marginally by opting for the dividend reinvestment option in the liquid mutual fund. Dividends are tax free for investors but mutual fund pay a dividend distribution tax of 28.84% on dividend declared.
  • If you want to invest in ELSS schemes and have lump sum money ,better put it in a liquid mutual fund and do


Next Article will be on 3rd S…Systematic Withdrawal Plan (SWP)


Do you know 3s of Financial Planning?

Today I want to explain 3 very common terms used in mutual fund investing which is also called 3 S of Financial Planning.

  1. Systematic Investment Plan (SIP)
  2. Systematic Transfer Plan (STP)
  3. Systematic Withdrawal Plan (SWP)

These are methods of Systematic investing and withdrawal in mutual funds. While most people know what is SIP is, majority are not aware of what STP & SWP is. These are important element of financial planning. So let’s understands how these 3 S works.

Systematic Investment Plan (SIP) 

What is SIP & How it works?

This option is similar to like Recurring Deposit in bank or post office.. Under this option you can invest fixed amount in mutual funds on particular date of the month. You can fix the amount according to your financial goals as well as you can select date also and invest it regularly. When you invest for the first time in mutual funds you would get folio number like your bank account number. Your money is auto debited (ECS) from bank account or you can give postdated cheques .After purchase in particular scheme you will get certain number of units based on the ongoing market rate which is called NAV of the day. Every time you invest money, additional units of the schemes added to your account. Whenever you make an investment in mutual fund scheme, the fund house has to send you an account statement providing details of holding.

Advantage of Systematic Investment Plan

  • It help to develop saving habits.
  • One can start investing in SIP with very low amount of Rs.500 or Rs. 1000
  • While Starting SIP, you have to choose date and no of installments-you can choose whatever is convenient for you.
  • There is no fixed tenor for running SIP ,Once the SIP tenure is fixed ,it can stopped in between or could be continued even after the tenor by placing the request with respective mutual fund company.
  • Full and Partial withdrawal is possible during or after the SIP tenor .Only ELSS mutual funds have 3 years lock in period and there is some exit load in some mutual fund schemes depending upon type of the scheme.
  • Simple, Convenient and easy to monitor. You do not have to take time from your schedule to make your investments. With a completed application form, one can just submit post-dated cheques or avail the Easy Pay (auto debit) ** facility and relax. You can monitor your progress of investment through periodic statement of accounts.
  • Rupee cost averaging: Investors investing fixed amount of money every month towards any investment vehicle allow them to buy more units or stocks when the price of the units (investment) is lower. This reduces the average cost of purchasing of the financial asset over time.Considaring a long term investment approach ,rupee cost averaging can even out any market ups and down in the long term, allowing investor to gain maximum benefits on his on her investments over time.


Month Investment Amount             NAV     No.Of Units
JAN           2000             15          133.33
FEB           2000             13          153.84
MAR           2000             16          125.00
APR           2000             14          142.85
MAY           2000             17          117.64
JUNE           2000             19          105.26

Total Units                                                                                                                        777.92

From above table we can see at every market correction an investor would end up buying more number of units. When the unit price goes up, he tends to gain.

What are documents required for SIP investment?

You need to provide KYC documents along with SIP application form .KYC documents include PAN card, address proof and identity proof.


 Mutual Fund Investments are subject to market risk ,read all scheme related documents carefully.  

Next Article will be on 2nd S …Systematic Transfer Plan

All about Financial Planning In India


Financial Decisions are critical decisions, which decide how monetarily comfortable we stay in life. Poorly planned financial decisions can cause, at best, great anxiety and at worst lead to insolvency, whereas well thought out decisions can lead to prosperous lifestyle.

Becoming a successful investor doesn’t happen by magic or in a day – it happens by setting goals and working to achieve them. The question then is how to go to about it. How to achieve the financial goals in life? What should be the 1st step towards it? How should I plan the available resources to achieve the goals?

Initially people don’t realize they need of financial planner or nobody knows there is thing (concept) like of financial planning. For some people financial planning simply means short term Cash Flow Planning or buying an insurance or investing in few mutual funds or fixed deposit or for some it may be restricted to Tax Planning. So what is financial planning & how it is helpful to achieve your financial goals? Let’s understand……

What is Financial Planning?

Financial Planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, savings for your child’s education, planning for your retirement or estate planning. In other words financial planning is not just investing, it is process which helps you to manage your finances in such a way that you link it to your life goals.

Who is Financial Planner?

As discussed earlier some people feels their insurance agent or mutual fund advisor is financial planner & they blindly trust & buy product suggested by them for some their neighbor or friend Or in some cases people want product (Mutual fund & Insurance ) just because their friend or neighbor buy or invested in that product. They don’t even bother to understand the product (mutual fund or insurance) which is suitable for him because his risk appetite, time horizon or goals are different from his friend.

A financial planner is someone who uses the Financial Planning process to help you figure out how to meet your life goals .The planner can take a big picture view of your financial situations and make financial planning recommendations that are suitable for you. Planner can look at all your needs including budgeting and saving, taxes, investments, insurance and retirement planning. Or, the Planner may work with you on a single financial issue but within the context of your overall situation. This big picture approach to your financial goals sets the Planner apart from other Financial Advisors, who may have been trained to focus on a particular area of your financial life.   — Source FPSB
In India Financial Planning Standard Board India is the authorized board to award CFP certification to an individual. CFP Is exactly like how doctors or CAs will get after going through desired skill in their respective filed. This process of awarding certificate involves education, examination, experience and ethics set by the board. Also there exists the condition that one must have a continuing education requirement. This makes a professional to be up to date in knowledge about personal finance.

Benefits of Financial Planning:

There are many advantages of following structured financial planning process which can have far reaching positive effects on one’s life. Creating financial plan helps you see big picture and set a short term and long term life goals, a crucial step in mapping your financial future.

It Provides direction and meaning to your financial decisions:- Financial Planning allows you understand how each financial decision you make affects other areas of your finances. It help you to understand Where are you today ,that is your current financial position ,where you want to be tomorrow ,that is finances linked to your goals and what must do to get there, that is asset allocation and investment strategy.

Family Security: – Providing for your family’s financial security is an important part of financial planning process. Financial Planning helps to provide protection for you and your family by having right insurance in place if something goes wrong.

Helps in Tax Savings:- Financial planning helps you to invest smartly as certain funds provide dual benefit. One, getting good returns & secondly, helping you in savings taxes where you can save up to Rs 1.5 lakh under section 80C of the I-T Act. Various options like ELSS mutual funds, PPF, tax-free bonds, etc provide both tax benefit and capital appreciation.

Standard of Living: The savings created from good planning can prove beneficial in difficult times. For example, you can make sure there is enough insurance coverage to replace any lost income should a family bread winner become unable to work.

Discipline in managing money: Financial planning brings in discipline. Also, there are subtle behavioural changes when you undergo financial planning. For example, when you run a systematic investment plan (SIP), your expenses are automatically curtailed and this goes t owards investments. Similarly, when you do financial planning, you become aware if your lifestyle expenses are above or below what you can afford. If it is the former, you can take necessary steps to cut back on unnecessary expenses.

6 Steps of Financial Planning

Financial Planning is a comprehensive and ongoing process that can help you to achieve your financial goals. Financial Planning Standard Board India has developed 6 steps that is widely use by Financial Advisor when meeting with client. The FPSB develops education programs for financial planners.

Below the six-step process is set out in brief.

Establish & define the relationship with client.

This is where the financial advisor will introduce him or herself and typically explains about what financial planning is, its process, information about company and services provided as well as fees & charges .Advisor may also ask questions like your family background as well as check your knowledge about financial products & market.

The purpose of establishing the goal or relationship is to form the foundation or purpose of planning itself–to begin the financial journey with the clarification of a financial destination.

Gather the client’s relative data.

During the second step of the process, the advisor will collect the client’s qualitative as well as quantitative information.

Qualitative provides general information like your financial goals, lifestyle, family’s medical history or health, and investment-risk tolerance level.

Quantitative provide basic but specific identifying information concerning details of current financial status. Examples include info about your total family income, expenses, investments, insurance coverage’s, and present liabilities or other obligations.

Analyze the Client’s data:

In this step financial planner analyzed all the information collected in 2nd step. He will analyses clients current financial status, his investment, insurance policies, and liabilities to determine the strength and weaknesses. He also analysis the clients objectives, needs and priorities.

Develop the Financial Planning recommendations and present them to the client.

The financial planner offers financial planning recommendations that address the client’s goals, based on the information the client provided. The planner reviews the recommendations with client to allow the client to make informed decision. The planner listens to clients concerns and revises recommendations as appropriate.

Implement the Financial Planning Recommendation.

Once client agreed to recommendation, next step is put plan into action. Based on the scope of the engagement, the financial planner identifies and presents appropriate products and services that are consistent with the financial planning recommendations accepted by client. Financial Planner also guides you what needs to be done, complete any relevant paperwork. Also if needs to be coordinate with meeting with other specialist.

Review the client’s situation.

Financial Planning is ongoing process.  The client and financial planner agree upon terms of reviewing and revaluating the client’s situation, including goals risk profile, lifestyle and other relevant changes. If there is any change the financial planner adjust recommendations as needed.




Goods & Service Tax is an indirect tax applicable throughout India which replaced multiple cascading taxes levied by the central and state government.  It is applied on services and goods at national level with purpose of achieving overall economic growth. So let’s see GST in detail.

It replaces

  1. State VAT
  2. Central Sales Tax
  3. Excise Duty
  4. Special Additional Custom Duty
  5. Service Tax
  6. Octroi
  7. Entry Tax
  8. Luxury Tax
  9. Entertainment Tax

However, following taxes will continue

  1. Basic Customs Duty
  2. Professional Tax
  3. Stamp Duty
  4. Motor Vehicle Tax
  5. Electricity Duty
  6. VAT on Petroleum Products
  7.  Toll Taxes

GST Council is the apex body created by Parliament for governance of this Act.  It includes Finance Secretaries of Central as well as various State Governments

GST Rates – 5%, 12%, 18% & 28%

GST Exempt goods / services – 0%

Old VAT / Excise TIN will go and new PAN based Registration Number for GST is essential.  Structure of this number is as under:


Out of which first two digits are state code (in which Registration is taken) – ’27’ is for Maharashtra.Next 10 digits (AAAAA0000A) are PAN number of the assesse and last 3 digits are serial number

Incidence of GST is on following:

  1. Supply of Goods / Services
  2. Agreed to Supply Goods / Services for Consideration (either in cash or kind)
  1. ‘Destination based’ Tax is charged (If source & destination are in same state, it is Transaction within state, if Source & Destination are in different states, then it is Interstate Transaction)
  2. Branch Transfer / Stock Transfer will attract GST

GST Registration is MANDATORY if Annual Turnover of Goods or Services or both is Rs.20 Lacs or above.

Three types of GST are there:

  1. Central Goods & Service Tax (CGST)
  2. State Goods & Service Tax (SGST)
  3. Integrated Goods & Service Tax (IGST)

Rates under GST

  1. Rates of CGST & SGST shall be equal and will be 50% of the rates stipulated for those specific Goods or specific Services. g. if the goods under transaction attract 18%, then CGST for them is 9% and SGST for them is 9%.
  2. In case of Local Invoice or Within State Invoice, CGST and SGST both need to be charged SEPARATELY and to be mentioned in the Return accordingly.
  3. Rates of IGST are equal to sum of rate under CGST and rate under SGST. Thus in above example, rate under IGST is 18% (9 + 9).
  4. Tax Credit (or set-off, as was said in earlier days), shall be available for all these three taxes viz. CGST, SGST & IGST.
  5. Earlier, in spite of ‘C’ or ‘H’ or ‘F’ forms, 2% Tax was a cost to the assessee. Now since these forms are done away with, this 2% cost is avoided, since full set-off or ITC of all Interstate Transactions is allowed now.
  6. There will be GST chargeable on FREE Items such as Medical Samples, Buy 1 get 1 Free etc. Valuation of such Free Items will have to be made, at par with sale of these items.  Thus if your are giving 1 free for purchase of 10,  You will have to Invoice for 11, levy GST and then you may give credit for the basic value of 1 being Free Item.  Thus GST needs to be paid on all items, being delivered to the customer.
  7. Invoice is allowed to be cancelled ONLY by way of issuing Credit Note and that too within a period of 6 months from the dateuch invoice.

Composite Scheme:

  1. It is available for all assessees having Turnover < Rs.75 lacs
  2. Under this scheme, 2.5% tax is applicable for Manufacturing Companies and 1% tax is applicable for all others.
  3. No Set-off or Tax Credit shall be available under this scheme.
  4. This is optional
  5. Assessee has to apply for this and then GST Official’s permission is required to opt for this.
  6. If this scheme is availed, GST cannot be charged in the Invoices raised by the Assessee and thus the cost of GST has to be borned by the Seller / supplier of goods/service.
  7. If this is availed in one year and for next year you intend to do away with this, you can apply to GST officials and take permission for the same i.e. either to Opt-in or Opt-out of the scheme.

Immovable Property is NOT Taxable under GST:

Thus, if the flat is booked before Completion Certificate, it is TAXABLE under GST, whereas, if the flat is purchased after Completion Certificate (Ready-possession flat), it is NOT Taxable under GST

GST is applicable on Advance from Customer, as and when it is received from the customer, before raising invoice for the same.  It needs to be declared in the Output GST Return (GSTR-1)

URD Purchases (Purchases from Unregistered Dealers / Suppliers)

If the Assessee has purchases from Unregistered Dealers, Assessee has to ACTUALLY pay GST on the same Reverse Charges).  Assessee can take set-off (credit) of the same in next month.

No Revised Return is allowed under GST

Input Tax Credit (ITC)  (similar to set-off under old system)

  1. Assessee has to be in possession of Tax Invoice, or Debit Note or Credit Note.
  2. Payment has to be made to the Supplier within 180 days. If the payment is not made to the supplier within this period the ITC has to be reversed by the Assessee.  It can later be availed, as and when actual payment of this is made to the Supplier.
  3. ITC for Reverse charges (GST paid on URD purchase or other specific services), can be availed in the next month, of the month of their actual payment

GST Rating:

  1. There will be GST Rating (just like CIBIL Credit Ratings) in respect of Assessee, in consideration of timely filing of Returns, timely GST payment and other discipline followed by the Assessee.
  2. This can be viewed by the Assessee, as also by others.
  3. Thus while selecting the Supplier, his GST Rating can be viewed beforehand.
  4. It will also be viewed by bankers, financial institutions while lending money to the Assessee.


Set-off (ITC) under GST

ITC under GST shall be available under GST in following order


      CGST                                            1.CGST




   SGST                                               1.SGST




           IGST                                               1.IGST



RETURN Filing Due Dates

  1. 10th of Next Month – Output GST (including Advance from Suppliers) i.e. Sale Return (GSTR-1)
  2. 11th to 15th – system will be closed / blocked for any entry, but entries can be viewed during this period, including Entries of your suppliers. View Supplier’s sales entries, and ensure if they match with your purchase entries in your books.
  3. 17th of Next Month – Input GST i.e. Purchase Return (GSTR-2) These entries HAVE TO MATCH with the entries made by your suppliers in their Sales Return.
  4. 21st if Next Month – Monthly Return in GSTR-3, alongwith payment. Liability of Payment shall be calculated by the System itself, after filing of GSTR-1 & 2 as mentioned above.
  5. 31st December of Next Financial Year – Annual Return (GSTR-9), alongwith Audit Report. Audit is compulsory for Assessees having Turnover of Rs.1 Crore and more.

If the Assessee is caarying out business at more than one places, he has to obtain GST Registration at each of such place and has to file Returns for each of such place of business.

Reverse Charges – GST to be paid on Self-Invoicing

  1. URD Purchases (with Names & Addresses of such suppliers)
  2. Services such as a. Goods Transport, b. Advocates Fees, c. Sponsorship, d. Rent a Cab.

TRANSITION PROVISIONS (For the period of switching over from present Tax System to GST)

  1. Transit-1 Return to be filed within 90 days. Set-off or ITC for these items shall be pending till this is filed.

2. June 29 – Reverse Charges to be paid


Income Tax Deductions F.Y. 2016-17


Section 80 C, 80CCC, 80CCD:-Maximum Deduction Rs.150000

The maximum tax exemption limit under this section is Rs.1.5 lakh only. This 1.5 lakh is aggregate amount. It means if the total of all investments is Rs. 2 Lakh the tax deduction would be available only on 1.5 lakhs. Both individuals and Hindu undivided families (HUF) eligible for these deductions. There are many instruments in which investments can be made are as follows.

  •  Life Insurance,ULIP,Pension Plan
  • Home Loan Principal,Stamp Duty & Registration charges for home purchase agreement
  • Employee Provident Fund/Public Provident Fund
  • Mutual Funds
  • Tuition Fees
  • Subscription in Any notified bonds in NABARD
  • Deposit in Senior Citizen Scheme
  • 5 year Time Deposit under post office
  • Fixed Deposit of 5 year
  • National Saving Certificate

Section 80 D : Deduction for Premium paid for Medical Insurance.


    Health Insurance Premium Paid



Total Deduction under Section 80D

Self, Spouse & Dependent Children   Parents (whether dependent or not)
Tax Payer & his family member has not attained 60 years of age  Up to Rs 25000    Up to Rs 25000  Rs.50000
The eldest member in family (yourself, spouse & Dependent children is less than 60 years & your parents are above 60 years of age     Up to Rs 25000      Up to Rs 30000 Rs.55000
The eldest member in family (yourself, spouse & Dependent children has attained  60 years & your parents are above 60 years of age Up to Rs 30000  Up to Rs 30000 Rs 60000

   Deduction U/s 80 U person with disability & severe disability

              Taxpayer       Dependents Maximum Amount of             Deduction
          Individual Less than 60 years                40000
          Individual Senior Citizens                60000
          Individual Very Senior Citizen                80000

Deduction U/s 80 U person with disability & severe disability

     Taxpayer         Disability Maximum Amount of       Deduction
     Individual Normal disability              75000
     Individual Severe disability            125000

Other Deductions

           Section Criteria/Conditions Maximum Deduction
        Section 24 (B ) Tax benefit on loan repayment of second house

Unclaimed loss if any will be carry forward to be set off against house property income of subsequent 8 years

        Section 80E Education Loan for higher secondary studies for you, spouse and children. Principal repayment cannot be claimed No limit on the amount of interest & deduction is available for maximum 8 years or till interest is paid whichever is earlier.
        Section 80G Contributions made to certain relief funds and charitable institutions .Only claim

When contribution has been made via cheque or draft.



Deduction is not applicable in case donations is done in form of cash for amount more than Rs.10000/-
        Section 80GG This section is applicable for those individuals who do not own residential house & do not receive HRA          Rs.60000
        Section 80TTA In respect of Saving Bank account interest         Rs.10000