Taxes

Retirement income: Systematic withdrawals win over dividends

Banking, Governments, Investments, Mutual Fund, RIA, Taxes / By /

Investors often prefer “income” like dividends over withdrawing capital, even when withdrawals are more tax-efficient.
Austin, investing ₹5 crore for retirement, shared this instinct and favoured the dividend option to avoid “touching capital.”
Behavioural research by Shefrin and Statman shows investors treat dividends as safe, approved income, while selling units feels uncomfortable.
This mental accounting bias is widespread and reinforced by the social-media push for “second incomes.”
But relying only on income requires a much larger corpus and can derail retirement planning.
Recognising these biases helps investors accept disciplined SWPs or products that withdraw only from gains.

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Loan rates should mirror unfinished homes higher risk

Advice, Banking, Financial, Governments, Investments, RIA, Taxes, Uncategorized / By /

Rajesh and Seema’s ordeal with a stalled housing project shows how India’s home loan system masks the biggest risk in real estate — that under-construction projects may never be completed. Banks and buyers treat them like ready homes, offering or taking loans at the same rates despite far higher uncertainty. With weak enforcement of RERA safeguards, homebuyers are left exposed. Differential interest rates — lower for completed homes, higher for under-construction ones — would make risks visible, protect buyers, and push the housing finance system toward fairness.

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Instant tax credit: An idea whose time has come

Governments, Taxes / By /

Imagine paying for a movie on an OTT channel but being told to wait a day before watching—just to confirm payment. Sounds absurd, right? Yet, when it comes to taxes, businesses face exactly this problem. Whether it’s TDS or GST input tax credit, parties often don’t get instant credit for the taxes, creating cash flow issues, costly reconciliations, and even write offs. Big players demand full payments upfront, but smaller businesses bear the brunt of delays. What if taxes could be paid directly to the government at the time of payment, with instant credit to both parties? It could transform India’s economy, boost trust in transactions, and level the playing field. But is such a system possible? What are the complications? Read Harsh article in Business standard to find out.

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Is it a step towards “Nyaya”?

Governments, Press, Taxes / By /

The big bang announcement on tax breaks overshadowed other important announcements like the launch of revamped CKYC 2.0 . That could be the UPI moment for the financial sector as financial inclusion and access to financial products will become easier. The move to activate the moribund annuities market is much needed as the absolute number of senior citizens are quite high in the country. The new tax bill to be introduced next week promises ” Nyaya” to the tax payers. Whether it actually delivers on the promise remains to be seen. Harsh’s take on Budget2025 published in the Business Standard.

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IT department´s stock and flow problem

Governments, Press, Taxes / By /

Lakhs of tax payers receive notices from the Income tax dept. regarding their expenses or investments being disproportionate to their taxable income for the same year – implying that the expenses or investments are from unaccounted sources. Most cases have simple explanations – the income was declared in a previous year or it is exempt income – facts already available in the tax dept database. Yet lakhs of tax payers have to duel with the tax authorities to prove their credentials. Most people emerge victorious after a long and arduous ordeal costing time and money. The tax department resources are used up in dealing with the honest tax payers & the tax evaders may escape. Harsh’s article in Business Standard on why the tax departments Data Analysis Package can cross tally more information and thus have more pointed search results more likely to net tax evaders while being bothersome for fewer honest tax payers.

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How to make tax officials accountable

Governments, RIA, Taxes / By /

Individual Tax payers have become more vocal as compliance by them has improved significantly and aggregate taxes paid by individuals has overtaken taxes paid by corporates. With that the demands for the tax department to be held accountable have also increased. Unfair treatment such as indefinite delays by the tax department or very low interest paid by them on delayed refunds are no longer acceptable. Harsh’s article in the Business Standard on how accountability can be infused in the Income Tax department using the model of Public Service Guarantee Act enacted by almost all state governments. comments welcome.

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Exit with indexation should be offered

Press, Taxes / By /

Two friends, Ram and Shyam, were travelling on a train when robbers started looting its passengers. Shyam owed some money to Ram. Before the robbers could reach them, Shyam took the money from his pocket and repaid his loan to Ram. Shyam was technically correct in repaying the loan then. Similarly, the Govt.’s move to do away with indexation is technically not a retroactive amendment but it has retroactive impact and is against tax stability. The removal of indexation follows global practices but its abrupt implementation does not. The govt should allow indexation till 2024 with the reduced rates of 12.50%. Opponents will become supporters & the future capital gain taxation will be as per government wishes. The govt can snatch victory from the jaws of defeat as far as the attempt to project a taxpayer friendly image of India is concerned if they announce incorporation of tax admin changes and an enforceable taxpayers charter into the proposed new code.

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Simpler capital gains tax regime highlight of Budget

Press, Taxes / By /

One of the less discussed impact of the budget is the likely reduction in misselling of life insurance policies. The highlight is the simplification of the capital gains regime (at least as far as assets bought from now on are concerned). The situation in respect of past assets bought till 23rd July 2024 remains a little complicated. Harsh’s article in the Business Standard on the impact of the budget.

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Vigilance Awareness Week 2025 (VAW2025)

Vigilance Awareness Week 2025 is being observed from October 27th to November 2nd, 2025, with the theme:

सतर्कता: हमारी साझा जिम्मेदारी (“Vigilance: Our Shared Responsibility”).

All stakeholders are encouraged to participate in the e-pledge initiative by visiting the CVC portal: https://pledge.cvc.nic.in/.