project 2011 report final 13-10-11

8/3/2019 Project 2011 Report Final 13-10-11

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A

PROJECT REPORT

ON

Strategic Analysis of Taxation and

Investment Planning of Individual

Assessee

Submitted

To

Mr. Rishabh Parakh

By

Mr. Jahirabbas U. Chavhan

(Batch 2010-2012)


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MONEY PLANT CONSULTING

B wing, off. No. 55, 2nd Floor, Shreenath Plaza, Dnyaneshwar Paduka Chowk, F.C.Road, Pune (MH)

Email:[email protected] Website:www.moneyplantconsulting.net

Date: 15th August 2011

TO WHOMSOEVER IT MAY CONCERN

This is to certify that, a student of2-year full time MBA Programmes . his

summer training in Finance Management, from 16.

During the training period his code and conduct was excellent.

We wish him all the best for his better future.

For Money Plant Consulting,

CA Rishabh Parakh

Director

Tele Dir: 020 25534003

Tele : 020 66035393
mailto:[email protected]:[email protected]:[email protected]://www.moneyplantconsulting.net/http://www.moneyplantconsulting.net/http://www.moneyplantconsulting.net/http://www.moneyplantconsulting.net/mailto:[email protected]


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Preface

The successful completion of this project report was a unique experience for me

because by visiting many places and interacting various person, I achieved a better

knowledge about finance as well as for marketing. The experience which I gained

by doing this internship was essential at this point .This project is being submitted

which content detailed analysis of the research under taken by me. This internship

provides me an opportunity to devote my skill knowledge and competencies

required during the technical session.


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Acknowledgment

First of all I would like to place on record my gratitude to

all concerned respectable Director of Money Plant Consulting (Mr. Rishabh

Parakh) for giving me this opportunity of internship

which has been a pure learning experience and which have

enlightened my knowledge and skills about the Finance and marketing [livestock]

industry.

I would also like to express my gratitude toward prof. Pramod Jadhaw for giving

me the opportunity to undergo summer internship at

Money Plant Consulting

I am specially thankful to my mentors Sir and money plant consulting director

Mr. Rishabh Parakh for guidance and cooperation

during this internship and in fact without their navigational

assistance life would have been very difficult as far as

structuring the projects are concerned. I would be always

grateful to them for their help and support.

Lastly but not the least I would like to thank the my Institute department

For inducting the module of internship programme at Money Plant Consulting

without which I shouldnt have ever learnt.


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CONTENTS

1. INTRODUCTION

2. SUMMARY ON SUMMER INTERNSHIP AREA

3. INVESTMENTS AVENUES

A)Mutual funds

B) insurance policies

C) ULIP

D)PPF

4. METHODOLOGY

5. RESULTS

6. CASES

7. OBSERVATIONS

8. CONCLUSION

9. BIBLOGRAPHY


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INTRODUCTION

1) ABOUT MONEY PLANT CONSULTING

Money plant Consulting Group facilitates outsourcing the non-core activities and provides

knowledge-driven financial services. Moneyplant Consulting Group is a premier outsourcing & a

financial services provider which aims to offer solutions for financial needs and queries of

individuals. They are a leading wealth management, capital markets and advisory company with

over 100 man years of consulting & investing experience.

Money plant Consulting Group was promoted by Mr. Rishabh Parakh (Director). He holds a

professional degree of CA from the Institute of Chartered Accountants of India. He started

Money Plant Consulting with an aim to outsource the non-core activities of corporate clients and

to offer personal income tax/ financial market related services to individual clients.

Since its Inception they have been successful in providing seamless service and significant

advantage for clients with their extremely competent team of qualified professionals comprising

CA's and MBA's & in house Knowledge pool of financial markets, instruments and products.

Their aim is to ensure that clients benefit from the professional expertise, technical knowledge

and experience. They have been recognized for expertise in the financial arena by highly reputed

institutions and clients. They strive to provide transparent, ethical and research-based

investments and wealth management services.


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1) Organization Hierarchy

The organization is headed by Rishabh Parakh who is the founder and director.

The organization has 3 departmental heads vis--vis HR & Admin

Operations and Products & Services.

The Finance department is headed by the director himself.

The organization is 50 employee strong

Employees are from diverse backgrounds like CAs, MBAs and Software professionals

2) CORE FUNCTIONS OF MONEYPLANT CONSULTING GROUP

1. Fund management

1. Loan syndication & project Appraisal

2. Deployment of surplus funds

3. Decision on short/long term investment planning


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2. Insurance:

The firm has experience in Life & General Insurance advisory, which covers following

types of risks:

1. Online Health & Marine insurance

2. Commercial & Liability insurance, etc

3. Group gratuity & group term insurance

3. Taxation

1. Consultation on income tax & fringe benefit tax

2. Assessment and Appellate proceedings

3.

Transfer pricing

4. Employees Taxation and Investments

1. Conducting seminar, orientation and induction program for the employees

2. Preparation & Submission of income tax returns for corporate employees

3. Tax & Financial planning


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5. Investment Advisory services:

The firm has rich experience in advising clients in:-

1. Mutual fund investments / Financial planning

2. Deployment of surplus funds

3. Decision on short/long term investments

6. PAN Cards proceedings

7. Taxation

1 Expert advice on tax planning and salary structuring

2. Assessment and appellate cases

3. Preparation & submission of Tax returns

8. Loans

Home loans / Personal loans / Car loans / Credit cards


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9. Insurance (Life & General)

1. Health, travel & Car insurance

2. Term insurance / Traditional plans/ ULIP / Pension Plans

10.Share Trading & Portfolio Management Services


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Some of the Corporate Clients with whom Money plant Shares Professional

Relationships with!!!


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SUMMARY ON SUMMER TRAINING AREA

DESK MANAGEMENT

I use to visit various companys like cognizant, TCS, SunGard, Syntel, etc and

arrange desk at their company for investment purpose.

PORTFOLIO MANAGEMENT

After arranging the desk at the company clients use to come and I use to prepare

portfolio.

INSURANCE AGENTS

I was also dealing with various insurance products and according to the needs of the

customer I give him advice.

MUTUAL FUNDS ADVISOR

I also give advises of mutual funds regarding their correct investments.

TAX PLANNING

While preparing their portfolio I was taking into consideration of tax planning andhelp them to make proper tax planning and increase their wealth by correct

investments products.


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MEANING OF PORTFOLIO MANAGEMENT

In finance, a portfolio is an appropriate mix of or collection of investments held by an

institution or a private individual. In building up an investment portfolio a financial

institution will typically conduct its own investment analysis, whilst a private individual

may make use of the services of a financial advisor or a financial institution which offers

portfolio management services. Holding a portfolio is part of an investment and risk-

limiting strategy called diversification. By owning several assets, certain types of risk (in

particular specific risk) can be reduced. The assets in the portfolio could include stocks,

bonds, options, warrants, gold certificates, real estate, futures contracts, production

facilities, or any other item that is expected to retain its value.

PORTFOLIO MANAGEMENT

Portfolio management involves deciding what assets to include in the portfolio, given

the goals of the portfolio owner and changing economic conditions. Selection involves

deciding what assets to purchase, how many to purchase, when to purchase them, and

what assets to divest. These decisions always involve some sort of performance

measurement, most typically expected return on the portfolio, and the risk associated with

this return (i.e. the standard deviation of the return). Typically the expected return from

portfolios of different asset bundles is compared.

The unique goals and circumstances of the investor must also be considered. Some

investors are more risk averse than others.

Mutual funds have developed particular techniques to optimize their portfolio holdings.

See fund management for details.


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A strong portfolio management program should:

Maximize value of Income Tax investments while minimizing risk

Enable planners to use assets more efficiently.

Reduce the number of redundant projects and make it easier to eliminate non-value add projects.

Support an individual approach to Income Tax investments and management

MEANING OF INCOME TAX

Income tax is a tax paid on all non-agricultural income. It is paid by employees and people who

are self-employed and may also be payable if you are not working but you have an income, such

as a retirement pension or an occupational pension. Not all types of income are taxable and it

will seldom be the case that all of your income is taxed. There is no minimum age at which a

person becomes liable to pay income tax. What matters is your income. If this is below a certain

level, no tax is payable.

There is no single definition in tax law of income. Income tax law divides various types of

income into schedules. If an item comes within a schedule it counts as income and income tax

must be paid on it. The way the tax must be paid will depend on which schedule it falls into. The

most common schedules are Schedule E for employees and Schedule D for the self-employed.


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HOW INCOME TAX IS CALCULATED

There are three main steps in calculating income tax:-

Step 1: Add together all your yearly income, including social security benefits, income from

renting out accommodation, wages, occupational pension, and interest from bank and

building society accounts.

Step 2: Take off any income which is exempt from tax. Calculate whether you can claim tax

relief on any of the money you have spent over the year (tax relief usually applies to people

who are self-employed and have to buy items for the business). Deduct this tax relief. This

leaves income on which tax may be payable (taxable income).

Step 3: Work out which tax allowances you are entitled to. You will be entitled to a personal

allowance (plus age related additions if appropriate). These allowances are deducted at this

stage in the calculation.


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Tax Slabs:-

Tax Rate 0% 10% 20% 30%

Individual 01,80,000 1,80,001- 5,00,000 5,00,001- 8,00,000 8,00,001 and above

Women 01,90,000 1,90,001- 5,00,000 5,00,001- 8,00,000 8,00,001 and above

Senior

citizens(age>60)02,50,000 2,50,001- 5,00,000 5,00,001- 8,00,000 8,00,001 and above

Senior citizens

(age>80)05,00,000 - 5,00,001- 8,00,000 8,00,001 and above

A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs

1,000,000.


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WHY A PERSON IS REQUIRED TO FILE INCOME TAX

RETURN

Under the section 139(1) of the Income Tax Act, It is obligatory for any person to File Income

Tax Return before the due date, who has taxable income. If one does not have taxable income,

but fulfill any one of the following six conditions should also file Income Tax Return:

Owner or the lessee of a Motor vehicle

Occupies specified floor area of an immovable property

Electricity Bill more than 50000/- per year

Incurs expenditure for himself or any other person on foreign-travel

Holder of the credit card

Membership of a club

When total income from all sources of any person exceeds its maximum amount, which is not

chargeable to income tax in any previous year ending on 31st March then that person is liable to pay

income tax.
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VARIOUS INVESTMENTS AVENUES

TAX SAVING INSTRUMENTS UNDER INCOME TAX

PROVISION ARE AS FOLLOWS:-

How 80C makes your life better!!!

Options u/s 80C

PF / PPF

NSCs

Mutual Funds ( ELSS )

Insurance Premium / ULIPs

Tuition Fees

Principal repayment of housing loan

Bank deposit for a 5 year period


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1. MUTUAL FUNDS

A mutual fund is a common pool of money for investors', Stocks, bonds, and money market funds are all

examples of the types of investments that may make up a mutual fund.

The mutual fund is managed by a professional investment manager who buys and sells securities for the

most effective growth of the fund. As a mutual fund investor, you become a "shareholder" of the mutual

fund company. When there are profits you will earn dividends. When there are losses, your shares will

decrease in value

Investing in MUTUAL FUNDS

Diversification of risk

Infra FMCG Pharma Oil/Gas Banking I.T

(30) (25) (5) (5) (25) (10)

Invested 100:

30-25+5-5+25-10=120

Profit:120-100=20
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Directly investing in the market :

Sr. No Sector Amount

Invested

Profit / Loss Total

1) Infra. 100 30 130

2) Power 100 -10 90

3) FMCG 100 -25 75

4) Pharma. 100 5 105

Total (400) (0) 400

The above illustration proves that investing in MUTUALFUNDS is much more beneficial and much less

risky, than investing in the MARKET directly

Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments. That

tends to lower your risk (avoiding the old "all of your eggs in one basket" problem). Because someone

else manages them, you don't have to worry about diversifying individual investments yourself or doing

your own record keeping. Since the fund manager's compensation is based on how well the fund

performs, you can be assured they will work diligently to make sure the fund performs well. Managing

their fund is their full-time job!


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Types of Mutual Funds Schemes

1)Open Ended Schemes:

a) No lock in period

b) Liquidity

c) No tax relief

2)Close Ended Schemes

a) Lock In period(3 yrs)

b) Exemption under 80c

c) No liquidity

Types Of Funds:

Types ofFunds

ObjectiveBased

Diversifiedfunds

Income fund

Balancedfund

liquid fund

Gilt fund

Specific

schemes

Index funds

Sector

specific funds


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2. UNIT-LINKED LIFE INSURANCE PRODUCTS (ULIP)

Most insurers in the year 2004 had started offering at least a few unit-linked plans. Unit-linked life

insurance products are those where the benefits are expressed in terms of number of units and unit price.

They can be viewed as a combination of insurance and mutual funds. The number of units, which the

customer would get, would depend on the unit price when he pays his premium. The daily unit price is

based on the market value of the underlying assets (equities, bonds, government securities etc.) and

computed from the net asset value.

According to the IRDA, a company offering unit linked plans must give the investor an option to chooseamong debt, balanced and equity funds. If you opt for a unit-linked endowment policy, you can choose to

invest your premiums in debt, balanced or equity plans. If you choose a debt plan, the majority of your

premiums will get invested in debt securities like gilts and bonds. If you choose equity, then a major

portion of your premiums will be invested in the equity market. The plan you choose would depend on

your risk profile and your investment need.

In a ULIP, the insurer deducts charges towards life insurance (mortality charges), administration charges

and fund management charges. The rest of the premium is used to invest in a fund that invests money in

stocks or bonds

The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This is

especially so if one also believes that current market values (stock valuations) are relatively low. So if you

are opting for a plan that invests primarily in equity, the buzzing market could lead to windfall returns.

However, should the buzz die down, investors could be left stung.

If one invests in aunit-linked pension planearly on, say 25, one can afford to take the risk associated with

equities, at least in the plan's initial stages. However, as one approaches retirement the quantum of returns

should be subordinated to capital preservation. At this stage, investing in a plan that has an equity tilt may

not be a good idea.
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ADVANTAGES

1) Tax benefits

ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds

well, irrespective of the nature of the plan chosen by the investor. On the other hand in the

mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked

savings schemes) are eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example

diversified equity funds, balanced funds), if the investments are held for a period over 12months, the gains are tax free; conversely investments sold within a 12-month period

attract short-term capital gains tax @ 10%.

Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-

term capital gain is taxed at the investor's marginal tax rate.

2) Flexibility

After 3 years (4 options)

Continuing the policy Stop the Policy Stop paying Partial

completely Premium Withdrawal


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1) Coverage almost free

Allocation:

Returns high as compared to traditional plans

Returns are high as compared to traditional plans as they are linked to the market

100 (INVESTED)

75%-98%

(Mutual funds)

2%-25%

(Cost of Insurance)


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ULIPs vs. Mutual Funds

ULIPs Mutual Funds

Investment amounts

Determined by the investor and can be

modified as well

Minimum investment amounts are

determined by the fund house

Expenses

No upper limits, expenses determined

by the insurance company

Upper limits for expenses chargeable to

investors have been set by the regulator

Portfolio disclosure Not mandatory* Quarterly disclosures are mandatory

Modifying asset

allocation

Generally permitted for free or at a

nominal cost

Entry/exit loads have to be borne by

the investor

Tax benefits

Section 80C benefits are available on

all ULIP investments

Section 80C benefits are available only

on investments in tax-saving funds

Despite the seemingly similar structures evidently both mutual funds and ULIPs have their

unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in

both offerings and make informed decisions.


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3. LIFE INSURANCE PLANS

LIFE INSURANCE

In general, life insurance is a type of coverage that pays benefits upon a person's death or

disability. In exchange for relatively small premiums paid in the present, the policy holder

receives the assurance that a larger amount of money will be available in the future to help

his or her beneficiaries pay debts and other expenses. Some forms of life insurance can also

be used as a tax-deferred investment to provide funds during a person's lifetime for

retirement or everyday living expenses.

A small business might provide life insurance to its workers as a tax-deductible employee

benefitlike health insurance and retirement programsin order to compete with larger

companies in attracting and retaining qualified employees. In addition, there are a number of

specialized life insurance plans that allow small business owners to reduce the impact of

estate taxes on their heirs and protect their businesses against the loss of a key employee,

partner, orstockholder. Group life insurance is generally inexpensive and is often packaged

with health insurance for a small additional fee.

Companies that provide life insurance for their employees candeductthe cost of the policies

for tax purposes, except when the company itself is named as thebeneficiary.
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Life insurance is important for individuals as well, particularly those wholike many

entrepreneursare not covered by a company's group plan. Experts recommend that every

adult purchase a minimum amount of life insurance, at least enough to cover their debts and

other expenses so that these costs do not fall upon their family members. The insurance

industry uses a standard of five times annual income in estimating how much coverage an

individual should purchase. In her book Health Insurance: A Guide for Artists, Consultants,

Entrepreneurs, and Other Self-Employed, Lenore Janecek claims that entrepreneurs should

determine the minimum amount of coverage they need by calculating how much they spend

annually and how much debt they have, then adding the cost of other arrangements and, if

applicable, collegetuitionfor children.

The cost of life insurance policies depends upon the type of policy, the age and gender of the

applicant, and the presence or absence of dangerous life-style habits. Insurance company

actuaries use these statistics to determine an individual's mortality rate, or estimated number

of years that person can be expected to live. Policies for women usually cost less than those

for men, because women tend to live longer on average. This means that the insurance

company will receive premiums and earn interest or income on them longer before it has to

make a payment. Experts recommend that companies or individuals seeking life insurance

coverage choose an insurance agent with a rating of A or better, and compare the costs of

various options before settling on a policy.
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TYPES OF LIFE INSURANCE POLICIES

1) TERM POLICY

A term insurance policy is a pure risk cover for a specified period of time. What this means is

that the sum assured is payable only if the policyholder dies within the policy term. For instance,

if a person buys Rs 02 lakhs policy for 15-years, his family is entitled to the money if he dies

within that 15-year period.

What if he survives the 15-year period? Well, then he is not entitled to any amount back by theinsurance company; the insurance company keeps the entire premium paid during the 15-year

period.

So, there is no element of savings or investment in such a policy. It is a 100 per cent risk cover. It

simply means that a person pays a certain premium to protect his family against his sudden death.

He forfeits the amount if he outlives the period of the policy. This explains why the Term

Insurance Policy comes at the lowest cost.

2) ENDOWMENT POLICY

Combining risk cover with financial savings, endowment policy is one of the most popular policies in the

world of life insurance.

In an Endowment Policy, the sum assured is payable even if the insured survives the policy

term.

If the insured dies during the tenure of the policy, the insurance firm has to pay the sum

assured just as any other pure risk cover.


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A pure endowment policy is also a form of financial saving, whereby if the person covered

remains alive beyond the tenure of the policy; he gets back the sum assured with some other

investment benefits and bonus.

In addition to the basic policy, insurers offer various benefits such as double endowment and marriage/

education endowment plans. The cost of such a policy is slightly higher but worth its value.

3) MONEY BACK POLICY

These policies are structured to provide sums required as anticipated expenses (marriage,

education, etc) over a stipulated period of time. With inflation becoming a big issue, companies

have realized that sometimes the money value of the policy is eroded. That is why with-profit

policies are also being introduced to offset some of the losses incurred on account of inflation.

A portion of the sum assured is payable at regular intervals. On survival the remainder of the sum

assured is payable.

In case of death, the full sum assured is payable to the insured.

The premium is payable for a particular period of time.

RIDERS AND OPTIONS:

Most types of life insurance policies give individuals the opportunity to add optional coverage, or riders.

One popular option is accelerated benefits (also called living benefits), which pays up to 25 percent of the

policy value to the holder prior to their death if they are struck by a serious illness. Another option,

known as a waiver of premium, allows an individual to continue coverage without paying premiums if heor she becomes disabled. Many policies also provide an accidental death and dismemberment option,

which pays twice the amount of the policy if the insured dies or loses the use of limbs as a result of an

accident.
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4. HEALTH INSURANCE

Health insurance is insurance that pays for all or part of a person's health care bills. The

types of health insurance are group health plans, individual plans, workers' compensation,

and government health plans such asMedicare and Medicaid.

Health insurance can be further classified into fee for-service (traditional insurance) and

managed care. Both group and individual insurance plans can be either fee-for-service or

managed care plans.

Purpose

The purpose of health insurance is to help people cover their health care costs. Health

care costs include doctor visits, hospital stays, surgery, procedures, tests, home care, and

other treatments and services.

Description

Health insurance is available to groups as well as individuals. Government plans, such as

Medicare, are offered to people who meet certain criteria.

Group and individual plans can be further classified as either fee-for-service or managed

care. Cancer patients may have specific concerns, such as the freedom to select

specialists that play a factor in choosing a health care plan. Fee-for-service plans

traditionally offer greater freedom when choosing a health care professional. Managed

care often limits a patient to health care professionals listed by the managed care

insurance company.
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Fee-For-Service

Fee-for-service is traditional health insurance in which the insurance company reimburses

the doctor, hospital, or other health care provider for all or part of the fees charged. Fee-

for-service plans may be offered to groups or individuals. This type of plan gives people

the highest level of freedom to choose a doctor, hospital, or other health care provider. A

person may be able to receive medical care anywhere in the United States and, often, in

the world.

Under this type of insurance a premium is paid and there is usually a yearlydeductible,

which means benefits do not begin until this deductible is met. After the person has paid

the deductible (an amount specified by the terms of the insurance policy) the insurance

company pays a portion of covered medical services. For example, the deductible may be

$250 so the patient pays the first $250 of yearly covered medical expenses.

After that he or she may pay 20% of covered services while the insurance company pays

80%. The exact percentages and deductibles will vary with each policy. The person may

have to fill out forms (claims) and send them to the insurance company to have their

claims paid.

People who have cancer may be attracted to the freedom of choice that traditional fee-for-

service plans offer. However, they will most likely have higher out-of-pocket costs than

they would in a managed care plan.
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5. PENSION PLANS

A type of retirement plan, usually tax exempt, wherein an employer makes contributions toward

a pool of funds set aside for an employee's future benefit. The pool of funds is then invested on

the employee's behalf, allowing the employee to receive benefits upon retirement.

In many ways, a pension plan is a method in which an employee transfers part of his or her

current income stream toward retirement income. There are two main types of pension plans:

defined-benefit plans and defined-contribution plans.

In a defined-benefit plan, the employer guarantees that the employee will receive a definite amount of

benefit upon retirement, regardless of the performance of the underlying investment pool.

In a defined-contribution plan the employer makes predefined contributions for the employee, but the

final amount of benefit received by the employee depends on the investment's performance.


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6. PUBLIC PROVIDENT FUND (PPF) :

A PPF account can be opened at any branch of State Bank of India and its subsidiaries or at the head

offices or sub post offices or sub post offices in section grade or at branches of the nationalized banks

engaged in the collection of direct taxes.

PPF is a 15 year scheme, requiring minimum 16 contributions in all. The amount of annual subscription

ranges from Rs 500 to Rs 70,000 payable either in lump sum or convenient installments, not exceeding 12

in a year. The installment should be in multiples of Rs 5.

Any amount deposited in excess of Rs 70,000 in a year, will not be treated as 'subscription' and shall be

returned without any interest.

Deposits in the account earn an interest of 8% per annum compounded annually. Interest is payable on the

lowest balance between the fifth day and the last day of the calendar month. One or more persons can be

nominated.

The normal maturity period is 15 years from the close of the financial year in which the initial

subscription was made. An account, on the expiry of fifteen years, may be extended for a period of five

years at a time.

Depositors can take a loan in the third financial year from the financial year in which the account was

opened. Loan can be taken up to 25% of the amount standing at the end of second preceding financial

year, repayable in 36 installments having the interest rate 1% higher than he receives.

Second, the loan will be given only after the repayment of the first loan. No loan can be obtained after the

end of 5th year following the expiry of the year in which the initial subscription was made. In case of

death of the subscriber, the nominee/legal heir is liable to pay interest on loans availed of by the

subscriber but not paid before his death.

A subscriber is permitted to make one withdrawal every year from the 7th financial year. An amount not

exceeding 50% of the balance to his credit at the end of 4th year immediately preceding the year of

withdrawal or at the end of preceding year, which ever is lower? The withdrawal can be made even every

year.


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In event of death of the subscriber, the amount standing to subscriber's credit will be repaid on demand to

his legal heirs or the nominee. However the un-drawn balance will continue to earn interest till the end of

the month, preceding the month in which the amount is paid to the nominee/legal heir.

In case of no nomination, the scheme now permits payment of balance up to Rs 100,000 to the legal heirson the basis of affidavits. Earlier the heirs had to produce a succession certificate to get back the balance

to the credit of the deceased.

Where no amount is deposited in PPF account in any year the same should be got regularized by

depositing at least Rs 500 per year along with a penalty of Rs 100 per year Continuity after maturity.

At the subscriber's option, the scheme may be continued for another 5 years after maturity. This facility

can be availed for further period of 5 years on the expiry of 20th years and yet another 5 years on the

expiry of 25 years and so on. The option should be exercised within 1 year after expiry of 15 years .

Subscribers who continue their account after 15 years, with fresh subscription, can make one withdrawal

per year subject to the condition that the total of the withdrawals during a block period shall not exceed

60 percent of the balance to their credit at the commencement of the extended period.

Tax benefit

the amount deposited and interest earned on it (including interest during the extension period) is

completely exempted from income tax under Section 10(11) and the entire deposit in the account is

exempted from wealth tax.

The annual contribution up to Rs 70,000 is eligible for tax deduction under Section 80C. Tax deductions

can also be claimed on contributions made during the extended period provided the option to continue is

exercised within one year of expiry of 15 years (or the extended block period).

All the withdrawals or account closure proceedings are fully exempt from Income Tax and Wealth Tax


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METHODOLOGY

Research Methodology refers to search of knowledge .one can also define research methodology

as a scientific and systematic search for required information on a specific topic.

The word research methodology comes from the word advance learner s dictionary meaning

of research as a careful investigation or inquiry especially through research for new facts in my

branch of knowledge for example some author have define research methodology as

systematized effort to gain new knowledge.

In the internship I have to work in Primary data & a secondary data (both) source of data hasbeen used.

Primary sources of data:

In the primary sources of data, Money plant consulting have data of over 1, 00,000 customer. We

used this data for call back and follow-up by visiting at their place. With Observation Method &

Questionnaire method.

Secondary sources of data

In the secondary method we get new client by conducting seminar in respected company. For the

purpose of B2B we suppose to use internet as well as by personally visiting at a company. Ivisited around 15 companies to get the number and other details.


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RESULTS

Career aim.

First exposure to corporate culture through Money Plant Consulting.

Professionalism.

Interpersonal Skill.

Communication according to client response.

Knowledge about corporate culture.

Confidence building in dealing with people, to meeting with people, convincing them.

Networking this part really matters lot for intern which will be useful in enhancingcareers prospect that I experienced through my internship.

Observation of client behavior and also of my colleague and get learning from same.

Like have to deal with client having query. At money plant consulting we got training of mutual

fund, Insurance, de-mat account, portfolio management. During training program I got

opportunity to deal with client which really gear up my confidence level. I also went for schedule

means we have to go in company like TCS, Cognizant, Mphasis, Oracle, SunGard, Syntel, Hex -

aware and lots more where we arrange desk and deal with client. We help them to make their

portfolio and on base of that we advice them to invest in mutual fund, insurance, gold and such

other instrument which will help them to generate income for their future purpose. I learnt at

Money plant Consulting how to become corerpati by 5 ways.


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Cases

1) Mr. X 25yr old unmarried. Professional and works in a BPO. He

lives with his parents and brother And they are not dependent on

him .He has just started his career and has no Liabilities. His total

monthly expense is 8500. His monthly in hand salary is Rs.27000/-

His Current Investments:

1) Savings A/c with the bank

2) Provident fund contribution

3) He has a health insurance and a personal accident cover provided by his employer.

Apart from this he has no other investment

Goals

Short TermBuy a car, a house; build up a corpus for marriage

Long termBuild a corpus for retirement


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Assumptions

1) Inflation is taken at 10% and investment returns 11%

2) He is in a position to make the entire investment. However, later with increase in income

levels, he can channelize his funds for the required amt of investments.3) He is in his early 20s. so he can take a high amount of risk and go for more equities .to beat

inflation.

4) His needs later on can change accordingly.

Restructuring

1) For contingency planning it is advisable to have 3 Months expense parked

in liquid avenues as a Reserve to shield against any unforeseen calamities.

Once the buffer is created other aspects can be taken care of.

2) No dependents so he does not require any Insurance. But if he has or

Going to take any house Loan than he should take an insurance to cover it.

3) For wealth creation he can allocate his income, fixed amount to be

Invested in specific avenues various equity diversified schemes which will

give him desired returns. He can go for 80c deduction (tax deduction)

ELSS scheme

4) He can meet his goal of availing a car by taking 60% of the amount by way of loan and by

accumulating a corpus for the remaining 40%

5) Mr. has not taken any step to save taxes except contributing towards Provident fund

6) In his case he intends to buy a house for self occupation. So he can claim deduction up to

1.5lacs for the interest part and the principal payment under 80c

7) His current Provident fund contribution would provide him a sizeable amount of corpus by 50.


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1) Ms. D is a 22-Yr old single lady i.e. she has no dependents.

She is a salaried individual earning Rs 40,000 per month (pm).

Her investment portfolio comprises only of assured return schemes

i.e. fixed deposits, bonds and small savings schemes.

Observations

The client seemed to be a risk-averse individual, hence the 'equity-free' investmentportfolio.

In turn, she had lost out on the benefits of asset allocation. Her portfolio sorely lacked the

presence of an equity component, among other asset classes.

Finally, Ms D had fallen prey to a common malady. She would invest in a random and

directionless manner i.e. Ms. D was yet to set any concrete investment objectives like

buying a house property or retirement planning.


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The course of action

I started off with a series of discussions with Ms. D to better understand her risk appetite and the

reasons for the 'equity-free' portfolio. I was surprised to learn that she wasn't a risk-averse

investor at all. How did I ascertain that? Well, I asked her one simple question - If she was

investing in the stock markets for the long-term, and the stock markets were to fall 20.0% the

next day, would she panic? Her answers (and should be for any investor who has monies

committed for the long-term to the stock markets) was an emphatic "No"

.

The reason Ms. D had steered clear of equity/mutual fund investments was because she didn't

quite understand what they were and how they functioned. On the other hand, investments in

fixed deposits and small savings schemes were something she was conversant with and had

traditionally invested in. Hence, she chose to stick to the same time-tested investment avenues.

This adds a new aspect to my earlier discussion on risk - wherein one fails to invest in line with

his risk appetite, on account of lack of awareness.

So here I had a client who had a high risk appetite, but was not taking on any risk at all! The

result - a sub-optimal asset allocation, which delivered meager tax-adjusted returns.

My first task was to impress upon her the importance of asset allocation. Simply put, assetallocation entails investing in various asset classes in different proportions, depending on the

investor's risk appetite and investment objectives. The underlying intention is to offset a

downside in one asset class, by the presence of another.


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Also other assets like gold and real estate needed to enter the portfolio in suitable proportions

over time. The aim being to convert the portfolio from an assured return-dominated one to one

that was aptly diversified across asset classes.

Now let's get back to the case and her second problem area i.e. not setting investment objectives.

Ms. D's investment activity was carried out in an "off the cuff" manner. She wasn't aware of the

importance of setting objectives before commencing any investment activity. As a result, she

was yet to decide on any concrete investment objectives. It transpired that Ms. D planned to get

married in about 5 years. So there was an investment objective that merited immediate attention -

accumulating monies for the wedding. As per Ms. D's estimate, she would need (at present cost

levels) a corpus of Rs 500,000 to meet the wedding expenses.

I created an investment plan that would help Ms. D meet the aforementioned investment

objective. My recommendation to Ms. D was that investments be made only in equities. The

reason being she already had enough exposure to debt instruments; so to get the overall asset

allocation right, incremental monies needed to flow into equities.

My view to utilize equities was also based on the fact that I had an adequate time frame to

achieve the target i.e. 5 years. Equities as an asset class are best equipped to deliver over longer

time frames. Finally, Ms. D's appetite for taking on risk also contributed to my decision.

Using my Calculation, I found out that Ms. D could meet her objective by investing

approximately Rs 8,123 per month at 15.0% pa.

The next step, which was very critical, was to educate Mr. D about what equity mutual fundswere all about and how she could benefit by investing in the same. We chose the mutual funds

route (diversified equity funds in particular) over direct equity investing. The reason being

investing directly in equities is akin to a full-time activity. The same would entail researching

various stocks, tracking them closely and making changes in the portfolio, in line with changing

market conditions.


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Ms. Ds wedding corpus

Particulars

Amount to be accumulated Rs 500,000

Tenure to meet the target Yrs 5

Expected inflation % 7.0

Future value of money to be accumulated Rs 701,276

Solution

Monies to be accumulated Rs 701,276

Assumed return (Post-tax) % 15.0

Annual saving required Rs 104,010

Or simply, a monthly investment of Rs 8,123

A retail investor like Ms. D had neither the time nor the competence to do so. Instead, by opting

for the mutual fund route, she could access the equity markets and also benefit from the services

of a qualified and competent fund manager. My recommendation for Ms. D was to start off a

systematic investment plan (SIP) in a few diversified equity funds, which were selected based on

a research process we follow at Money Plant Consulting.


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In conclusion

The striking feature of this case study was the degree of risk that the client was taking on,

without being aware of the same. Her investments in assured return schemes (which on the

surface seem like "safe" investments) meant that she was deprived of a proper asset allocation

and ended up with a portfolio yielding sub-par returns.

Her ad-hoc investment style meant that she was not equipped to provide for any of the future

needs/obligations. Clearly in Ms. D's case, playing safe was a rather risky proposition. This case

only underscores the need for professional and expert advice while investing, lest one errs on the

side of caution!

Finally, while it may appear very simple at the end, I recommend that investors who find

themselves in a similar situation should not simply replicate Ms. D's plan. Rather they must

discuss the situation with their financial planner and let him come up with a tailor-made

investment solution


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OBSERVATIONS

1) Most of the individuals only look into investments because they want to save TAX.

2) People fail to take into consideration the most important factor INFLATION.

3) Mostly all the freshers in a company, do not have any awareness regarding their investments, tax

savings Etc.

4) Todays youth is earning more but their financial literacy is very negligible, While many are

unaware of how to manage their income for best returns , quite a number dont even realize the

importance of savings and investment.

5) People in different localities show different perception towards investments

6) 30% of the individuals do not invest in the market because of many reasons-:

A) Parents decision

B) Lack of awareness

C) Lots of commitments. Hence less appetite for risk


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CONCLUSION

It was my pleasure to work with CA Mr. Rishabh Parakh and a team of 50 people. We all

worked as a team towards the goal of the company. I played a role in meeting people and

making their Portfolio as a portfolio manager which give me immense satisfaction and

impulse amount of knowledge.

I am very thankful to and especially Mr. who worked so hard for getting me

placed for Summer Internship Programme.

I hereby conclude that this summer internship programme proved to be very helpful to me, so

I am thankful to all the people who are directly or indirectly involved in this.


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Bibliography

Websites

1. www.wikipedia.org

2. www.epfindia.com

3. www.indiapost.gov.in

4. www.moneycontrol.com

5. www.taxmann.net

6. www.webindia123.com/finance

7. www.google.com
http://www.wikipedia.org/http://www.wikipedia.org/http://www.epfindia.com/http://www.epfindia.com/http://www.indiapost.gov.in/http://www.indiapost.gov.in/http://www.moneycontrol.com/http://www.moneycontrol.com/http://www.taxmann.net/http://www.taxmann.net/http://www.webindia123.com/financehttp://www.webindia123.com/financehttp://www.google.com/http://www.google.com/http://www.google.com/http://www.webindia123.com/financehttp://www.taxmann.net/http://www.moneycontrol.com/http://www.indiapost.gov.in/http://www.epfindia.com/http://www.wikipedia.org/


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project 2011 report final 13-10-11

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