Top Online Share Trading Sites

Ever since the dematerialization of shares happened in India, stock trading has shifted its base to the internet world. It made share trading a lot easier for people and more of them started buying and selling shares through various websites, which provided equity investors with facilities to do online trading. Online trading became so much popular so that today websites not only provide facilities to do share trading but also for Futures and Options trading, Commodities trading, Overseas trading, IPO application, Mutual Funds etc. and more.

Here is a non-comprehensive list of websites through which you can do online share trading in India, on BSE and NSE, the leading stock exchanges of India. The websites are neither arranged in any particular order nor are they ranked here. And all of them provide more or less the same set of services. There could be a difference in customer service though!

ICICI Direct
ICICI Direct is owned by ICICI bank. They have one of the highest brokerage fees in India but also have a plethora of stock research information and trading tips available with them.

Sharekhan
Sharekhan is an old hand broker with a lot of experience in Indian stock markets.

Reliance Money
Reliance Money is owned by Anil Dhirubhai Ambani Group.

5paisa
5paisa.com is an IndiaInfoline owned online equity trading portal.

Geojit
Geojit, as a company, is in operation since 1987. As on today, it is the only company in which a government entity (Kerala State Industrial Development Corporation) has a stake.

Indiabulls
Indiabulls is a leading Financial Services and Real Estate company of India. They have over 640 branches across India.

There are other online equity trading brokers as well; like Motilal Oswal, Kotak Securities, Angeltrade, SMC etc.

Average Quartely Balance

In India, most of the private sector banks charge a hefty fine on their customers for not maintaining the required Average Quarterly Balance (AQB) amount in their savings accounts. When the AQB itself is quite high at 10,000 rupees for most of the private banks, the fine comes to more than 800 rupees (including surcharge) and is not a small amount by any means.

Average Quarterly balance ( AQB ) is calculated as mentioned below :

AQB = ( The sum of the end of the day balances in the quarter ) / ( Total number of days in the quarter ) must be equal to Rs.10,000.

Banks calculate the balance of the days in the three months what it is at the end of the day. Supposedly you have 1 lakh rupees in the morning and you take out 99000 rupees during the day time, your day balance would be 1000, not 1 lakh.

To have a comparison with other countries, in Singapore, the amount banks generally charge for not maintaining the monthly average balance is 2 Singapore Dollars, which comes to around 65 Indian Rupees. And that means the AQB fine banks charge in India is 12 times that of in Singapore!!

With the AQB amount made double that of what it was previously, the probability of a person defaulting on it also increases. And when the fine is levied on a huge number of customers, it results in tremendous income for the banks, probably what they are eying at.

I guess it’s high time that the Reserve Bank of India intervenes and put an end to this day time robbery, like it put a cap on ATM withdrawal fee a year back.

In the mean time, what we can do is,

1. Have less number of savings accounts as possible with private banks
2. Move your savings accounts to nationalized banks, that have lower AQB and charge less default fee

SEBI Mandates Rs/Share Dividend Declaration

In a good move, the Securities and Exchange Board of India, SEBI, has asked listed companies to declare dividends on a per share basis rather than on a percentage basis.

In order to bring about uniformity in the manner of declaring dividend among listed companies, Sebi has made it mandatory for companies to declare their dividend on a per share basis only. This means that irrespective of the face value of the share, the company will have to mention the dividend on an absolute basis.

For instance, a company having shares of face value Rs 2, and declaring a dividend of Rs 2, will have to say that it has declared a dividend of Rs 2 per share and not a dividend of 100%.

This is meant to bring more clarity to an average investor who sometimes gets caught up in the jugglery of percentages and values when companies declare dividends. Thus, it will bring uniformity in the declaration of dividends by listed companies.

The move will clear the confusion among share holders whether the dividend declared was a percentage of the face value or the market price. It also becomes relevant when companies reduce the face value of shares over a period of time, which some investors might not be able to track.

Also, the calculation of actual returns in terms of Rupees becomes much easier, when the dividend information is available on a per share basis. Share holders will just have to multiply the number of shares they own by the dividend per share amount that the company declares. And for the mathematically inclined, they can just go ahead and calculate the dividend percentage if they want.

The change will be with immediate effect.

How to check employer/financial institution have deposited your TDS?

Most of the new age companies deduct income tax before giving salary to the employees (Tax Deduction at Source or TDS). TDS is also done by banks and other financial institutions for returns on fixed deposits, short term gains on equities etc. How do you check whether the tax deducted from you through TDS have been paid to the exchequer by your company or the financial institution?

Tax Information Network (TIN) of Income Tax department, Government of India facilitates a PAN holder to view annual tax statement (Form 26AS) online.

It’s very straight forward involving few simple steps

1. You have to register your PAN number online
2. Get it verified by TIN
3. Start checking tax credit online

The verification can be done by either going to the nearest TIN-Facilitation Centre or asking them to visit your address. There is a small fee for the one time authorization. Rs 15 + service tax if the PAN holder visits the TIN-Facilitation Centre in person or Rs. 100 + service tax if the PAN holder opts for the TIN employee to visit him and do the verification.

What is Core Banking?

Core Banking System or Core Banking Solution is a term that we hear very often these days. For IT and Banking folks, this term doesn’t need any explanation but for those who want to know a bit, here’s a brief overview of what it means.

Core banking is a general term used to describe the services provided by a group of networked bank branches. Bank customers may access their funds and other simple transactions from any of the member branch offices.

Previously a bank’s core operations such as keeping a ledger of various transactions, maintaining customer information, interest calculation of loans and deposits, adjustments to accounts on withdrawal and deposits of funds etc. were done manually. With the advent of ICT (Information & Communications Technology), efforts were done to automate various banking processes using software applications so as to make them simple, efficient, effortless and cost effective. Thus, the platform where ICT is used to perform the core operations of a bank, like those mentioned above, is known as Core Banking System.

In Core Banking System, software applications record transactions, maintain customer information, calculate interest on loans and deposits etc. The data, instead of huge ledgers, are stored in backend databases in digital form. Now, the same software can be installed in various branches of a bank and can be interconnected through the internet or telephone lines to form a core banking network of the bank. The advantage, a customer can operate on his account from any branch of the bank and if the bank owns Internet Banking or ATM facilities, then the customer can operate on his account from virtually anywhere.

Thus, Core Banking System has radically changed the way in which banks function. The greatest advantage of having a Core Bank System is that new features and functionalities can be easily added to the system that customers will have a whole lot of services that they can use. Electronic funds transfer between banks, online trading in the stock markets etc. are examples of this, which were unheard of in banks pre Core Banking System era.

Core Banking solutions are banking applications on a platform enabling a phased, strategic approach that lets people improve operations, reduce costs, and prepare for growth. Implementing a modular, component-based enterprise solution ensures strong integration with your existing technologies. An overall service-oriented-architecture (SOA) helps banks reduce the risk that can result from multiple data entries and out-of-date information, increase management approval, and avoid the potential disruption to business caused by replacing entire systems.

Tips for Filling Income Tax Return

Under Indian Income Tax Act, 1961 filing of income tax returns is compulsory if your total taxable income before allowing any deductions under section 80 exceeds the basic exemption limit. Thus it is our duty and responsibility to pay our taxes honestly and file the returns diligently. Here are some useful tips for hassle free filing of tax returns.

Taxes, after all, are dues that we pay for the privileges of membership in an organized society”– Franklin D. Roosevelt

1. Remember due dates

In case of individuals due date is 31st July. But if the accounts of the individual are to be audited or if he is a working partner in a firm whose accounts are to be audited, the return can be filed by September 30.

If you don’t file your return before the prescribed date, following consequences arise:

a) In case taxes already paid and return filed before the end of the assessment year (i.e., 31st March), nothing to be worried about.

b) In case taxes also not paid by due date, then simple interest @ 1% per month is levied u/s 234A.

c) If you file the return after the end of the assessment year (i.e., after 31st March), then a penalty of Rs 5,000 may be imposed upon you.

Furthermore, in all the above cases, you lose the benefit to carry forward your losses (business losses and capital losses), if any. Also, you cannot revise the return in future because belated return cannot be revised.

2. Organize your papers

Get hold of all the relevant information and documents (including Form 16, rent receipts, evidence of all the tax saving investments, loan certificate in case of house loan, saving account statements, copy of mutual funds and share investments and credit card statements) and put them in a separate file.

You will require them for detailed tax calculations and also for mentioning the details of exempted income and specified high value transactions in the return. These documents can also help you in future to substantiate the income and exemptions/deductions claimed, in case the return is picked up for scrutiny assessment.

3. Deposit self assessment tax, if any

Before you start filling up the form, make a detailed computation of all your taxable income and calculate your tax liability. In case any taxes are due for payment, deposit the money in an authorized bank along with self-assessment challan (Challan No. ITNS 280). Alternatively, pay through internet banking. You have to quote the receipt number of challan in your return.

4. Always fill the correct ITR form

Out of the eight forms, only first four are relevant for individuals and HUFs

ITR1 Individuals having only salary and interest income

ITR2 Individuals and HUFs having income from any source except business or profession

ITR3 Individuals and HUFs who are partners in a firm but who do not have their own proprietary business or profession

ITR4 Individuals and HUFs who have their own proprietary business or profession.

It is quite possible that ITR1 is applicable to you because you are having taxable income only from salary and interest. But please carefully note that, if you have any exempt income other than agriculture and interest income (in addition to taxable salary and interest income) you cannot file ITR1. In that case, go for ITR2.

Please also note that in case clubbing provisions are applicable to you (for example clubbing of spouse/minor child income with your income), then also you will have to file ITR2 instead of ITR1.

5. Show Exempted Income

It is binding upon you to show the exempted income also, if asked for in ITR form, or else your return can be treated as defective. For example, schedule EI of ITR2 specifically asks you to mention your exempt income like interest, dividends, long term capital gains etc.

6. Mention details of specified transactions

Don’t forget to furnish details of following high-value transactions in ITR:

a) Cash deposits of Rs 10 lakh or more in the savings account

b) Credit card payments exceeding Rs 2 lakh

c) Investments of over Rs 2 lakh in mutual funds

d) Investments of over Rs 5 lakh in bonds or debentures (other than RBI bonds)

e) Investments of over Rs 5 lakh in RBI Bonds

f) Investments of over Rs 1 lakh in shares

g) Purchase or sale of immovable property valued at Rs 30 lakh or more

Although it has not been specified, you should consider the aggregate payments/investments for the above mentioned limits (e.g., credit card limit of Rs 2 lakh is not be taken for a individual card, but all the cards put together) because it’s always better to err on the side of caution.

7. Show other income
Ensure that you show all your taxable income.

No doubt, it is very difficult to keep track of interest credited in your savings account deposit, but disclosing it is mandatory, even though the amount may be small.

Besides, also don’t forget to consider your other incomes like interest on FDs, interest on NSCs, notional rental income of your second home (even if, it is not let out), capital gains etc.

8. Don’t attach any annexure

No documents – including challans, TDS certificates, proof of tax-saving investments, computation sheets – are to be attached.

However, don’t throw them away. Keep all the supporting documents in your income tax file along with the return copy and acknowledgement slip for future reference.

9. Take help of TRPs

If you face difficulty in filling up the forms yourself, you can take the help of certified tax return preparers (TRPs) by paying a nominal fee. But remember that they are not authorized to give tax saving advice. Alternatively, you can approach tax advisors/consultants.

10. Sign the ITR

Finally, you have to sign the return yourself. In case you have gone abroad, than any other person having power of attorney from you can sign it on your behalf.

But, before signing re-check and ensure that the form is filled in completely and correctly – in particular, your personal details, the PAN, bank account details (in case of refund).

11. Get it xeroxed before submitting

Earlier, ITR was used to be filled in duplicate so that one copy was returned to the taxpayer after fixing the acknowledgement stamp. Now, as there is separate acknowledgement sheet, you need to ensure - before submitting the return - that you keep a photostat copy for your records.

12. E-filing

At present, e-filing is optional for individuals. Go for it only if you have got the digital signatures, which avoids paper work and visit to the ITO. Otherwise, it is better to follow the conventional route of manually filling up the form and submitting it physically to the ITO because e-filling without digital signatures is not much different from filing returns offline.

Finally, it is not only your obligation to file return of income under tax laws, but it is also required for obtaining various loans, overseas travel visas etc.

To conclude, as the old saying goes, “Prevention is better than cure,” it is better to pay taxes and file return properly so that you don’t face any problem at a later stage, in case your return is selected for scrutiny.

How To File Income Tax Online

I had always wanted to file my income tax returns but the plethora of paperwork always discouraged me. Finding an agent who could stand in long queues at the income tax office – of course, for a fee – to file my returns was also not me.

But then friends also scared me saying not filing tax returns will put me in banks' bad books as and when I'd apply for a home loan. That was a real shocker for I am planning to buy a house and I need to put this tax record straight.

Not that I don't pay my taxes. It's only that I don't file my tax returns (Remember paying taxes and filing returns is not the same thing). Our company's accounts department very religiously deducts tax at source – which they fondly call TDS and which also finds a mention on my salary slip. It's only that that I hate paperwork. Online banking, online news, online mutual fund investments is what I love. Internet, it seems, has made (or will make) an entire generation lazy. But then if I can also file my income tax returns online I am not complaining at all.

Welcome to the e-AGE. You can file your income tax returns online... J

Income Tax Department of India facilitates a tax payer to file his Income Tax returns online through their website. It is an easy process and following are the steps involved according to IT department website:

1. Select appropriate type of Return Form from the website (ITR-1/ITR-2/ITR-3/ITR-4)
2. Download and install Return Preparation Software for the selected Return Form
3. Fill return offline and generate XML file
4. Register and create a user id (PAN) and password at the website
5. Login and click on relevant form on left panel and select "Submit Return"
6. Browse to select XML file and click on "Upload" button
7. On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form
8. Incase the return is digitally signed; on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record
9. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns

Here is the link to IT Department's eFiling website.

The Concept Behind Tax Rates

What’s your tax bracket? You must have heard this question quite often. But has anyone ever asked you about your effective tax burden? Did you ever thought about your effective rate of tax? Have you ever tried to calculate it?

We keep on carping about the high taxes by keeping in view only maximum marginal tax rates, without ever giving a thought to the exemptions and deductions we avail.

Taxes are determined based on your taxable income. Taxable income is broken down into different brackets or slabs, each to which a different tax rate applies. The highest tax slab rate relative to a taxable income is called marginal tax rate. Put simply, the highest rate of tax applicable on your marginal or additional income is called marginal rate of tax and is the rate you pay on your last rupee of income.

Marginal vs. Effective Tax Rate

Marginal tax rate is important because while making investment decisions, you need to consider your marginal tax rate. However, marginal tax rates do not fully describe the impact of taxation.

The effective tax rate refers to the actual rate of tax borne by you. It is the average rate of tax which you actually pay on your total earnings / income (i.e., both taxable plus non-taxable income). It is obtained by dividing the total amount of tax paid by you by your total earnings expressed as a percentage and indicates your effective tax burden which is always lower than your maximum marginal rate.

Two basic reasons for substantial difference between your marginal tax rate and your effective tax rate are:

1. Your entire income doesn’t get taxed. For example, you are entitled for various exemptions (e.g. HRA, long term capital gains on sale of equity shares, dividends etc) and deductions (such as section 80C and 80d) due to which your taxable income is much lower than your actual total earnings during a particular year.

2. Further, unlike corporate tax rates, your total taxable income doesn’t get taxed at a flat rate. There are different slab rates of tax applicable to individuals. Right now, the lowest tax slab rate is 10% and the highest is 30% (plus surcharge and education cess). Besides, there are certain other incomes which are taxed at concessional rate of tax. For example, short term capital gains under section 111A are taxed at a flat rate of 15% (plus surcharge, if applicable and education cess).

Furthermore, ‘Effective rate of tax’ is also different from ‘Average rate of tax’ which is average rate levied on your ‘Taxable Income’ and is calculated by dividing ‘total tax obligation’ with ‘Taxable income’. Your ‘effective rate of tax’, on the other hand, reveals the average rate of tax for all your income (taxable as well as non-taxable).

Let’s clarify the difference with the help of an example. Suppose that you’re having a total annual income of Rs 17 lakh out of which Rs 4 lakh is exempt (i.e., not taxable) from income tax. Further, let’s say that you are entitled to deductions amounting to Rs 1.6 lakh under various sections of income tax such as section 24(b) and section 80. Thus, your taxable income comes to Rs. 11.4 lakh (which includes short term capital gains of Rs 2,30,000 taxable u/s 111A @ 15%). Based on the tax rates applicable to ‘other individual’ (i.e., neither women nor senior-citizen) for the assessment year 2009-10 (PY 2008-09), the total tax liability works out to be Rs 2,40,760. So, we arrive at an effective tax rate of 14.16 per cent, which is less than half of marginal tax rate and almost two-third of average tax rate (marginal tax rate of 33.99% and average rate of tax of 21.12% ).

Now, finally calculate your effective tax rate.. :)

How to Best Manage Credit Cards

A credit card is a useful tool, when managed judiciously but a lurking danger if you mismanage it.

One of the first things you need to keep in mind is to read the term and conditions, when you apply for a credit card. It could be a laborious process but something that has to be dealt with, to protect yourself from any rude surprises that might be in store for you in times like this.

One hears stories of money being taken from the savings account of a person who has a credit card with that particular bank! Well, banks are allowed to do so, when a default occurs, the clause is covered in the terms and conditions.

Banks also have an auto debit facility to claim a minimum payment on credit borrowed, if in case your account does not have enough funds, banks are allowed to levy a fine, which varies from bank to bank. So ensure you always have sufficient funds, when you opt for the auto debit facility to cover your minimum payment due. But there's more to credit cards.

Profit from your credit card: Credit cards can be useful when you make a profit out of it! Now, how is that possible? Well, it all depends on the kind of card you purchase.

It is best to opt for a lifetime free credit card that does not have an annual fee attached. Also get a card that matches your lifestyle. If you shop a lot, see that your card offers a lot of discounts and cash back rewards for all the shopping you do with your card. If your job allows you to make frequent trips, get a card that gives you several travel friendly schemes on eating out, hotel stays and airline ticket discounts.

High interest rates: Though the whole point of having a credit card is to provide you with cashless convenience, it makes money sense to decide, when, how and why you should use it.

Never get tangled in the web of debt, especially when it comes to credit cards. Although it is an ideal resource to tap into, when you need to ramp up funds quickly, the interest rates charged on a credit card are much higher than even those charged on personal loans.

Remember that cash withdrawals from an ATM with your credit card will be charged a processing fee of around 2 per cent and an even higher rate of interest than your regular purchases on the card.

Taking a loan on your credit card: Most credit cards do offer an EMI (equated monthly instalment) facility to pay any loan you take on your credit limit. It normally takes just one or two business days to obtain this loan and this can even be arranged over the phone with no documentation.

However, the difference lies in the high interest rate charged, which can be an annualized interest rate of around 30-42 per cent. The cards that offer a comparatively lower interest rate in the range of 22-26 per cent most often do not have an EMI facility for repayments.

Though a credit card seem like a good bet for short-term fund requirements refrain from using it unless you can make the credit card usage count for some kind of benefit.

Using your credit card purchases for an interest-free period is fine, but remember the bank can do away with interest-free periods anytime it chooses to and can also hike the interest rates, according to its free will. Hence, be wary of a credit card and use it sensibly. Another important aspect in managing your credit card is to keep a careful tab on your credit card statement that should reach you on a monthly basis.

Understanding your credit card statement: Scrutinize your credit card statement to understand your spending pattern. If a bill does not arrive on time for you to pay your dues, report this to the bank immediately. Also keep track of the credit card bill through your online banking account.

The first detail you need to clarify is your name, billing address, card number et al to make sure it’s correct. The second aspect is the total outstanding balance and current due date for payment. This column will also have the previous month's transaction using the card. Here is an example:

Previous balance	Current outstanding amount	Total amount outstanding	Minimum payment due	Payment due date
Rs 5,000	Rs 3,000	Rs 8,000	Rs 320	25-3-09

Minimum Payment Due: The date for the minimum payment due allows you to pay up a small amount upfront and this is usually in place to protect your credit score.

However, as a practice ensure that you pay the total amount due before the minimum payment due date to maintain an impeccable credit score else you will be levied interest on the balance amount pending if you continue to pay the actual amount due in full only after this due date. If you fail to pay even the minimum amount due you will incur a late payment fee as well.

Transaction Details: The second aspect to be scrutinized is the list of purchases or transactions done throughout that particular billing cycle. Go through each particular of this list to see if they match your expense records.

Usually your statement will have a reference number that can be quoted if you feel any charge specified needs to be clarified. Utilizing your reference number for billing errors and unauthorized charges

Always commit in writing within 60 days (this time period varies from bank to bank) of the receipt of your statement the complaint regarding the billing error or unauthorized charges. Include all the following particulars in your complaint:

· Your name, address, account number and reference number

· Error description

· The date and amount of the charge

· Reason cited for the dispute of charge

Check your credit card statement if there is a specific address to which the complaint has to be sent to. This might be at the end of the statement or as part of the fine print, behind the statement.

Your credit card statement also has the other particulars like:

• Credit Limit: This is the maximum limit up to which you can make purchases or withdraw cash on your card. This credit limit can be revised by your credit card company depending on your credit score and your repayment track record.
• Available credit limit: This will be the amount you can still avail after you have made a bunch of transactions using the card. For instance, if you have a credit limit of Rs. 1 L and you have made purchases worth Rs 25,000, then your current available credit limit would be the balance, Rs.75,000.
• Cash limit: This is the actual cash limit up to which you can withdraw on your card, which is included in your credit limit.
• Statement Date: The billing cycle ends on a particular date after which the statement is printed, the interest rates applicable for your card transactions are calculated using this statement date as the starting point.
• Total outstanding Amount Due: This includes past and present credit expenses and other charges levied to your account.
• Reward Points Summary: This provides you cash discounts and other benefits on purchases made when accumulated over a period of time. This column contains all the past points earned and utilized by you till that particular billing cycle.
• Grace Period: A grace period is the number of days you might get as relief before the high interest rates start kicking in for the remainder of the amount that is due. This can be anywhere between 20 and 25 days.