Investing in Small Cap or Micro Cap Stocks: Potential Opportunities and Considerations

 Investing in Small Cap or Micro Cap Stocks: Potential Opportunities and Considerations

Introduction:

Investing in stocks can be a rewarding way to grow wealth over time, and small cap and micro cap stocks present unique opportunities for investors. These stocks represent companies with smaller market capitalizations, often considered to be riskier but with the potential for higher returns. In this article, we will explore the potential benefits and considerations of investing in small cap or micro cap stocks.

1. Growth Potential:

Small cap and micro cap stocks are often associated with significant growth potential. These companies are typically in their early stages or have yet to reach their full potential. Investing in such stocks allows investors to potentially benefit from the company's growth as it expands its operations, enters new markets, or develops innovative products or services. The growth potential of small cap and micro cap stocks can result in higher returns compared to larger, more established companies.

2. Undervalued Opportunities:

Small cap and micro cap stocks may be overlooked or undervalued by mainstream investors, creating opportunities for astute investors. The lack of analyst coverage and institutional interest can lead to mispriced stocks, providing a chance to identify hidden gems that are trading below their intrinsic value. By conducting thorough research and analysis, investors may discover companies with strong fundamentals and growth prospects that the market has yet to fully recognize.

3. Agility and Innovation:

Smaller companies often possess greater agility and flexibility compared to their larger counterparts. They can quickly adapt to market changes, implement innovative strategies, and capitalize on emerging trends. Investing in small cap and micro cap stocks allows investors to be part of dynamic and potentially disruptive industries, where innovation and nimbleness can drive rapid growth and generate significant returns.

4. Higher Risk:

It's important to note that investing in small cap and micro cap stocks carries higher inherent risks compared to investing in larger, more established companies. These stocks are more susceptible to market volatility, economic downturns, and regulatory changes. Smaller companies may also face challenges such as limited financial resources, higher debt levels, and less established track records. Investors must carefully assess the risks and conduct thorough due diligence before investing in small cap or micro cap stocks.

5. Diversification and Risk Management:

Investing in small cap and micro cap stocks should be approached with a well-diversified portfolio strategy. Due to their higher risk profile, it's advisable to allocate a smaller portion of your overall investment portfolio to these stocks. Diversification across different sectors and geographies can help mitigate risks and balance potential returns. Additionally, closely monitoring and regularly reviewing your small cap and micro cap holdings is essential to manage risk effectively.

Conclusion:

Investing in small cap and micro cap stocks can offer unique opportunities for growth-oriented investors. The potential for significant returns, undervalued opportunities, agility, and innovation are all attractive aspects of investing in these stocks. However, it's important to acknowledge the higher risks associated with smaller companies and exercise due diligence in research and risk management. By carefully evaluating individual companies, diversifying investments, and staying informed about market conditions, investors can potentially benefit from the growth potential of small cap and micro cap stocks while managing risk effectively.

Introducing the 12% App: A Reliable Solution for Fixed Income Investments

 Introducing the 12% App: A Reliable Solution for Fixed Income Investments

Introduction:

Investors seeking stable returns and fixed income opportunities often face the challenge of finding reliable investment options. However, a new app called "12%" aims to provide a convenient and secure platform for individuals looking to earn a consistent 12% annual return on their investments. In this article, we will explore the features and benefits of the 12% App and how it can be a promising avenue for fixed income investors.

1. High-Yield Fixed Income:

The 12% App offers a unique opportunity to earn a fixed 12% annual return on your investment. This competitive interest rate is significantly higher than traditional fixed income options such as savings accounts, government bonds, or certificates of deposit (CDs). The app provides a transparent and straightforward investment model that allows you to generate stable income over time.

2. Diverse Investment Portfolio:

The 12% App offers a diversified investment portfolio to minimize risk and maximize returns. It strategically allocates funds across different asset classes, including real estate, small business loans, peer-to-peer lending, and other high-yield investment opportunities. This diversification helps mitigate the impact of any potential market fluctuations or economic downturns, providing investors with a more secure investment environment.

3. User-Friendly Interface:

The 12% App features a user-friendly interface, making it accessible to investors of all levels of experience. The intuitive design allows you to easily navigate through investment options, monitor your portfolio performance, and track your earnings. The app provides comprehensive investment information, enabling you to make informed decisions about where to allocate your funds.

4. Automated Investing:

Investing through the 12% App is hassle-free, thanks to its automated investment feature. Once you set your preferences and risk tolerance, the app's algorithm takes care of the rest. It automatically diversifies your investment across multiple opportunities, saves you time, and ensures optimal returns. The automation feature eliminates the need for constant monitoring and active management, making it a convenient solution for busy investors.

5. Risk Management and Security:

The 12% App prioritizes risk management and security to protect investors' funds. Rigorous due diligence is conducted on each investment opportunity, including comprehensive risk assessments. Additionally, the app employs robust security measures, such as encryption and secure payment gateways, to safeguard your personal and financial information.

6. Regular Income and Withdrawal Flexibility:

One of the key advantages of the 12% App is the ability to earn regular income. The 12% annual return is distributed on a monthly or quarterly basis, providing a consistent stream of earnings. Moreover, the app allows for flexible withdrawal options, giving you the freedom to access your funds when needed.

Conclusion:

The 12% App presents a promising solution for individuals seeking fixed income investments with attractive returns. Through its high-yield fixed income model, diverse investment portfolio, user-friendly interface, automated investing, risk management, and regular income distribution, the app offers an accessible and secure platform for investors. While investing always carries some degree of risk, the 12% App strives to provide a reliable and transparent avenue for individuals looking to generate stable income from their investments.

The Pitfalls of Multilevel Marketing (MLM): Why It's Not a Good Bet

 "The Pitfalls of Multilevel Marketing (MLM): Why It's Not a Good Bet"

Introduction:

Multilevel marketing (MLM) companies have gained popularity in recent years as a way to earn income and potentially achieve financial freedom. However, it's essential to approach MLM opportunities with caution and critical thinking. In this article, we explore the reasons why MLM is often considered a risky and unreliable business model, highlighting its inherent flaws and the potential pitfalls that participants may encounter.

1. Pyramid Structure:

One of the primary concerns with MLM is its pyramid-like structure, where participants earn income not only through sales but also by recruiting others into the network. This structure places heavy emphasis on recruitment, often leading to a saturated market and fierce competition among members. The vast majority of MLM participants struggle to build profitable businesses due to the inherent limitations of this structure.

2. Emphasis on Recruitment over Product Quality:

MLM companies often prioritize recruitment over the quality and value of their products or services. The focus becomes more on bringing in new members rather than offering a genuinely desirable product to consumers. This approach raises ethical questions and can lead to products being overpriced or of questionable value, making it challenging to generate consistent sales and build a sustainable customer base.

3. High Attrition Rates:

MLM companies typically experience high attrition rates, with a significant percentage of participants leaving the business within a short period. Many individuals join MLMs with unrealistic expectations of quick and easy financial success but become disillusioned when they encounter difficulties in recruiting and generating sales. The lack of proper training, support, and realistic income projections contributes to this high attrition rate.

4. Income Disparity:

While MLMs often highlight success stories of individuals who have achieved significant financial gains, the reality is that only a small fraction of participants actually earn substantial income. The compensation structure of MLMs typically rewards those at the top of the pyramid, leaving the majority of participants with minimal earnings. This income disparity creates a highly competitive and challenging environment, making it difficult for newcomers to succeed.

5. Potential for Exploitation:

MLM systems can be exploitative, particularly when participants are encouraged to invest significant amounts of money upfront for product inventory, training materials, and event fees. This financial burden falls on individuals who may already be financially vulnerable, leading to significant financial losses if they are unable to recoup their investments. The pressure to constantly recruit and sell can also strain personal relationships and create a sense of isolation.

6. Legal and Regulatory Concerns:

MLM companies have faced numerous legal and regulatory challenges globally due to concerns about their business practices. Some MLMs have been accused of operating as pyramid schemes, which are illegal in many jurisdictions. The complex compensation plans and questionable marketing tactics employed by certain MLMs can attract scrutiny from consumer protection agencies and result in legal consequences.

Conclusion:

While MLMs may promise financial freedom and entrepreneurial opportunities, they come with inherent risks and limitations. The pyramid-like structure, focus on recruitment, lack of emphasis on product quality, high attrition rates, income disparities, potential for exploitation, and legal concerns all contribute to the argument that MLM is not a good bet. It is crucial to thoroughly research and evaluate any MLM opportunity, considering factors such as product value, compensation structure, company reputation, and the potential for long-term success. Exploring alternative business models that prioritize transparency, fair compensation, and sustainable growth may be a more reliable path to financial success and personal fulfillment.

Investing Wisely: Strategies for Building a Strong Financial Future

"Investing Wisely: Strategies for Building a Strong Financial Future"

Introduction:

Investing wisely is a key component of building long-term financial security and achieving your financial goals. Making informed investment decisions requires careful planning, understanding risk and return, and adopting a disciplined approach. In this article, we explore essential strategies for investing wisely to help you maximize returns, mitigate risks, and set yourself on a path to financial success.

1. Set Clear Financial Goals:

Before investing, it is crucial to define your financial goals. Whether you're saving for retirement, buying a home, funding your child's education, or achieving financial independence, having clear goals provides direction and purpose to your investment strategy. Determine your time horizon, risk tolerance, and desired returns for each goal to guide your investment decisions.

2. Educate Yourself:

Investing wisely requires knowledge and understanding of the financial markets. Take the time to educate yourself about different investment vehicles, such as stocks, bonds, mutual funds, real estate, and other investment options. Understand basic financial concepts, market trends, and factors that influence investment performance. Stay informed through books, articles, reputable financial websites, and consider seeking advice from financial professionals if needed.

3. Diversify Your Portfolio:

Diversification is a fundamental principle of wise investing. Spreading your investments across different asset classes, sectors, and geographic regions helps mitigate risk and potentially enhance returns. A diversified portfolio reduces exposure to the volatility of any single investment and increases the chances of capturing positive returns from different areas of the market.

4. Understand Risk and Return:

Investing involves a trade-off between risk and return. Higher potential returns usually come with higher risks. It is important to understand your risk tolerance and align your investments accordingly. Conservative investors may opt for lower-risk investments like bonds or fixed deposits, while more aggressive investors may be comfortable with higher-risk options like stocks or real estate. Striking a balance between risk and return is essential to build a well-suited investment portfolio.

5. Invest for the Long Term:

Investing is a long-term endeavor. While short-term market fluctuations are inevitable, historically, the stock market and other investment classes have shown long-term growth. Stay focused on your financial goals and avoid making impulsive decisions based on short-term market trends. Regularly review and rebalance your portfolio to align with your goals and risk tolerance, but resist the temptation to make drastic changes based on short-term market fluctuations.

6. Practice Dollar-Cost Averaging:

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of market conditions. This approach allows you to buy more shares when prices are low and fewer shares when prices are high, potentially reducing the impact of market volatility. Over time, this disciplined approach can help smooth out the effects of market fluctuations and build wealth.

7. Monitor and Reassess Your Investments:

Regularly monitor your investments and stay updated on market trends. Review your portfolio's performance and make adjustments as necessary to align with your goals and changing market conditions. Stay informed about economic factors, geopolitical events, and other factors that can impact your investments. Consider seeking professional advice when needed to ensure your investments are on track.

Conclusion:

Investing wisely is a journey that requires careful planning, knowledge, and discipline. By setting clear financial goals, educating yourself, diversifying your portfolio, understanding risk and return, investing for the long term, practicing dollar-cost averaging, and monitoring your investments, you can build a strong financial future. Remember, investing involves risks, and it's important to make informed decisions based on your unique financial situation and goals. Seek professional guidance if needed and stay committed to your long-term investment strategy to reap the rewards of your wise investment choices.

Secure your child’s future

Secure your child’s future

Children’s insurance plans provide a security blanket for your child’s future. Lead a worry-free life with it…

Ruchi Saxena

    Consider this: One morning you drop your child off to school on your way to work, and, you meet with a premature death. What will happen? Aside from the emotional trauma, your child’s future is now in someone else’s hand. How will he complete his education and reach all the milestones that both of you had dreamt of without financial support?
Worried? Well, you can heave a sigh of relief as you have the option to purchase child insurance, which enables you to secure your child’s future even if something untoward were to happen to you.
Why? Children’s life insurance plans are tailor-made to meet a parent’s financial responsibilities towards his or her children. These policies are ideal for meeting future education and marriage expenses as they deliver lump sums of money at pre-specified intervals. These intervals could be chosen to coincide with your child’s requirements.
Common plan options There are two popular options that are usually available under children’s insurance plans. Plain vanilla plans provide the sum assured on maturity or in case of your unfortunate demise during the term of the plan. The second option is unit linked insurance plans in which a part of the premium paid is invested on your behalf by the insurance company in a fund of your choice from their bouquet of fund offerings. Each fund offers different levels of exposure to instruments such as bank deposits, government securities, equities, etc. Based on the policy features on maturity, your child will receive the accumulated value of your fund or the sum assured or both.
Making the right choice With the plethora of children’s plans available, it has become a daunting task to choose one that is most suitable. Some aspects that you may consider while making the selection include:
    Insure the earning member of the
    family with the maturity/claim
    benefits used for the benefit of the
    child.
    Policy should continue even after
    the demise of the insured.
    There should be a premium waver
    for all the future payments after the death of the insured. The benefits receivable should take into account inflation. The plan should clearly earmark the fund for the use of the child at a target date for a particular purpose. Riders that can enhance the coverage at a marginal cost.
End Note Although no insurance plan can compensate for the loss of your life, children’s plans can enable your child to fulfil his/her dreams.
SUMMING UP Children’s insurance plans empower you to provide financial security to your child. Based on your requirements you can choose a plain vanilla plan or a unit linked plan. Consider various aspects before making the plan choice.

This article sourced from times of India :-http://timesofindia.indiatimes.com/

Six provident fund secrets you did not know

1) Your PF entitles you to pension too

Despite the popularity of the EPF as a saving tool, not many people are enthused by or even aware of the Employees’ Pension Scheme. Introduced in 1995, it is funded by diverting 8.3%, or a little more than a third of your PF contribution. The pension on retirement is linked to the number of years in service and the average salary drawn in the year before retirement.

However, the scheme has failed to draw the EPFO’s 5 crore members because of the measly payouts associated with it. The reason is that since most employers pay PF only on the mandatory salary cap of Rs 6,500 per month, the pension income for a majority of workers is abysmally low, at times, less than Rs 1,000 a month.

It is, however, possible to get a higher pension income. “Good employers like Infosys pay Provident Fund contributions on the entire basic salaries,” says SC Chatterjee, the Central PF Commissioner. “If your basic pay is Rs 30,000 a month, employers can invest 24% of this amount into your PF account. “You will be entitled to a pension on the basis of your actual basic pay rather than Rs 6,500,” he adds.

For salaries up to Rs 6,500, the government also chips in with a subsidy of Rs 75. This added up to Rs 994 crore for all EPF members in 2009-10. Another way smart employers help boost the pension is by raising the worker’s salary in the last year of employment.

“Suppose I earn Rs 25,000 and contribute 8.33% towards EPS. However, on my 57th birthday, my employer can raise my salary to Rs 1 lakh. Since my salary for the last one year will be Rs 1 lakh, I can get a pension of around Rs 50,000. So you can get twice your original salary as pension,” says Chatterjee.

However, for this to happen, the employer should have contributed his share to the Provident Fund on the actual basic salary, not the mandated limit of Rs 6,500 for the entire service period. Though this is not fair to other workers who are part of the pension pool, the pension scheme’s design makes this manipulation possible.

If you don’t want a pension from EPF, you can get the EPS money as a lump sum along with your PF balance. The benefit will not be linked to the actual contributions made, but to your last year’s average salary and the number of years in service.

What if: You retire early, die in harness, change jobs...

If you retire before the age of 58

Even if you stop working before reaching the age of superannuation, you can avail of pension benefits. However, you shouldn’t be less than 50 years of age. Also, the pension amount will be reduced by 2% for every year. So, if after working for 25 years, you take retirement at 50, your pension amount should be Rs 2,321 per month. But as you left service eight years before the age of superannuation, your pension will be reduced by 16%—it will be Rs 1,950. 

If you have worked for less than 10 years

If you have completed less than 10 years of service, you can avail of the pension as a lump sum by opting for the withdrawal benefit. This amount will be provided to you on the basis of your annual contribution to the pension fund multiplied by the number of years that you have completed in service. You will also be entitled to a small interest on this amount, again depending on the number of years that you have been in service.

If you die before retiring

If you die while you are employed with an organisation, your pension benefit is not lost. Your legal heirs will be entitled to a pension, which is a maximum of Rs 1,000 per month (Rs 750 for spouse and Rs 250 for two children till they turn 25). However, you should have put in a minimum of one month’s service to avail of this benefit. Also, the widow will not be entitled to a pension if she marries again, while dependent parents will be if the employee has no eligible family or has made no nomination.

If you change jobs

When you change jobs, and shift you PF account, your pension doesn’t automatically get transferred. You need to apply for a scheme certificate through Form 10C and route it through the new employer. The certificate has details of the previous employer and years of pension contribution. “The PF account is linked to an individual, but the EPS scheme is pool-based and can’t be started all over again. So when you change jobs, your earlier service is not considered and it reduces the pension amount,” says Chatterjee.

2) Insurance benefits

Besides a monthly stream of income, the EPF subscription entitles you to an insurance cover on your life through the Employees’ Deposit Linked Insurance (EDLI) scheme. For this, your organisation contributes 0.5% of your monthly basic pay, capped at Rs 6,500, as premium. Till recently the insurance amount was entirely linked to the balance in your PF. According to the new rules, your cover amount is higher of the two: 20 times the average wages of the past 12 months (up to Rs 6,500 per month), that is Rs 1,30,000, or the full amount in your PF account up to Rs 50,000 and 40% of the balance amount.

3) Claim interest on withdrawn amount

The EPF rate has to be declared at the beginning of every financial year so that all members withdrawing or retiring from the system through the year get the interest that is due to them. But in recent years, the EPF rate has become a matter of prolonged political debate and is often declared and notified much after the end of the financial year.

Till the rate is notified for a particular year, workers’ withdrawals are credited at the previous year’s rate. For instance, in 2010-11, the Labour Ministry announced a rate of 9.5%, but it is yet to be notified. So, lakhs of workers, whose PF claims have been settled so far, have lost out on the 1% increase over last year’s rate of 8.5%.

The Central PF Commissioner admits this is a problem, but has promised that his department will pay the difference to all the affected members. “If you have withdrawn your PF balance during this year while the government hasn’t notified the PF rate, you can approach your PF office later to pay you the higher interest rate on the balance,” says Chatterjee. 

If, on the other hand, your claim is not settled within 30 days of applying, you can move the court. If it is established that the delay was due to ‘inadequate reasons’, you will be entitled to an interest on the balance at the rate of 1% for every month of delay.

4) Use EPF to fund the following

Have you finally zeroed in on your dream house but are running short of funds? Or perhaps your child’s education cost is more than you had planned for? At such times, it’s easy to fall back on your EPF savings. While you cannot withdraw the entire corpus to fund such needs, you can do so partially for specific occasions, such as children’s education, marriages, or for buying a house or a plot of land. Go through the following list to find out when you can avail of this facility, the amount you can withdraw and the conditions you need to fulfill.

Marriage or education of self, children or siblings

--> You should have completed a minimum of seven years of service.

--> The maximum amount you can draw is 50% of your contribution (12% of the basic salary).

--> You can avail of it three times in your working life.

--> You will have to submit the wedding invite or a certified copy of the fee payable to the educational institution.

Medical treatment for Self or family (spouse, children, dependent parents)

--> You can avail of it for major surgical operations in a hospital or by those suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailments.

--> The maximum amount you can draw is six times your salary or the entire contribution made by you till date, whichever is less.

--> You must show proof of hospitalisation for one month or more with leave certificate for that period from your employer. You must also prove that you are not a member of the Employees’ State Insurance Corporation or are unable to use its facilities for surgery/treatment.

Repay a housing loan for a house in the name of self, spouse or owned jointly

--> You should have completed at least 10 years of service.

--> You are eligible to withdraw an amount that is up to 36 times your wages.

Alterations/repairs to an existing home for house in the name of self, spouse or jointly

--> You need a minimum service of five years (10 years for repairs) after the house was built/bought.

--> You can draw up to 12 times the wages, only once.

Damage due to natural calamity

--> You can withdraw up to Rs 5,000 or 50% of your contribution to the provident fund.

--> You have to apply within four months of the calamity.

--> As proof, you need a certificate of damage from the requisite authority and a calamity declaration by the state government.

Construction or purchase of house or flat/site or plot for self or spouse or joint ownership

--> You should have completed at least five years of service.

--> The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary.

--> Can be avail of it just once during the entire service. 

Equipment purchased by physically handicapped employees

--> You can draw up to six months’ basic salary and dearness allowance, or your share of PF contribution with interest, or the cost of equipment.

--> You will have to submit a medical certificate.

5) Premature withdrawal

Under the EPF Act, you cannot withdraw the full amount in your provident fund account before the age of superannuation. However, if you suffer permanent and complete disability or are moving abroad to settle, you can withdraw this amount. It is also possible to do so in case of mass retrenchment by the employer. If, however, you retire voluntarily before you are 55 years old, you cannot withdraw the full amount. Under normal circumstances, you can withdraw up to 90% of the fund amount after you turn 54 or within one year of actual retirement or superannuation, whichever is earlier.

6) Have your grievances addressed

The EPF Organisation has a grievance redressal mechanism in place and it is covered under the Consumer Protection Act. The process of registering your grievance is simple. All you have to do is log on to http://epfigms.gov.in/. Since late last year, the EPFO has become a part of the Centralised Public Grievances Redressal and Monitoring System, which allows you to register the grievances and track their status online. It’s a centralised system, so all your complaints are also monitored by the head office. “We reply to all the grievance within 30 days of their receipt. If someone is not satisfied with the response, he/she can come and meet me,” says Chatterjee. 

This article sourced from times of India :-http://timesofindia.indiatimes.com/

Insurance and the Direct Tax Code

Insurance and the Direct Tax Code

The DTC, which will become effective from April 1, 2012, has a number of implications for the insurance sector – both life and non-life. Here’s a look at the proposals that will affect policy holders and companies…

Chirag Vajani (CA) & Tulsi Vajani (CA)

IMPLICATIONS FOR
POLICYHOLDERS
    Deductions under Section 80C - Presently, deductions under Section 80C are available, up to ‘1 lakh, for various investment instruments including premium paid for life insurance, provident fund, etc. Under the DTC, only sums paid to towards a contract for an annuity plan of any insurer (subject to it being an approved plan) is eligible for a deduction of up to an aggregate limit of ‘1 lakh (along with other approved funds).
    Deduction of LIC premiums: It is also proposed that premiums paid to LIC should be included in the additional deduction of ‘ 50,000, which is currently available to other payments such as health insurance and education of children. An important condition, however, is that only those insurance policies where the premium does not exceed 5 per cent of the capital sum assured in any year during the term of the policy would be eligible for this deduction.
    Tax free investments: As the EEE (Exempt-Exempt-Exempt) system of taxation (i.e. contributions are tax free, accretions are tax free and withdrawals are also tax free) will continue, long-term savings instruments such as contributions to provident funds, approved superannuation funds, life insurance, gratuity funds, etc. will continue to be tax free.
    Tax on maturity proceeds - DTC provides that proceeds on maturity of life insurance policies (in cases other than the death of the policyholder) will be taxable in the policyholder’s hands. The exception, however, is in the case of polices where the premium paid does not exceed 5 per cent of the sum assured or the insurer has paid distribution tax. In such cases, the life insurance company would have to withhold tax at specified rates from these proceeds being paid to policy holders. In the case the policy holder is an individual or has HUF status the tax withheld will be at the rate of 10 per cent, in the case of any other deductee, the withholding would be at the rate of 20 per cent, where payment exceeds ‘10,000.
IMPLICATIONS FOR COMPANIES Life Insurance Companies
    Higher corporate tax - Presently, life insurance companies are subject to a concessional tax rate of 12.5 per cent (plus surcharge and education cess) on the surplus disclosed by the actuarial valuation, as per the Insurance Act, 1938, less the opening surplus disclosed by that valuation. Now, DTC proposes to do away with this taxation scheme and proposes to tax the profits in the shareholders’ account at the normal corporate tax rate of 30 per cent, leaving policyholders’ funds to be taxed in the hands of shareholders.
    Distribution tax - In addition to corporate tax, insurers will have to pay a 5 per cent distribution tax on the income distributed or paid to policyholders, in case of ‘approved equityoriented life insurance schemes’. These are life insurance schemes where more than 65 per cent of the total premiums received are invested in equity shares of domestic companies.
General Insurance Company
    No significant change - The taxation scheme remains more or less the same as existing presently. The profits, as per the profit and loss account submitted to the insurance regulator IRDA, continue to be the basis of computing the taxable income.
Other provisions which impact the insurance sector
    Any insurance premium, including re-insurance premiums accrued from or payable by any resident or non-resident, in respect of insurance covering any risk in India, is deemed to accrue or arise in India and is subject to tax in India. Such payments are subject to withholding tax at the rate of 20 per cent on a gross basis, without any deduction for expenses.
    Apart from the above change, the definition of ‘Permanent establishment’ has been expanded to include the person acting in India on behalf of a non-resident engaged in the business of insurance, through whom the non-resident collects premiums in India/ insures risk situated in India. However, if a tax treaty provides a definition narrower than what has been prescribed under the DTC, then that definition would apply.
    Under the DTC, an important departure from the present position is that a provision for loss in the diminution of the value of investments held should be allowed and unrealised gains on revaluation, if any, on revaluation could become taxable, if routed through the Profit and Loss Account statement.
    MAT would be charged on both the companies at the rate of 20 per cent.
This article sourced from times of India :-http://timesofindia.indiatimes.com/