Tuesday, 3 July 2012


Spiraling Curve of Inflation

Everyone these days is talking about inflation. Its impact, ways to reduce it, etc. Ever wondered what actually this word means and how it impacts you as an individual and the society / country in general. Let me try to explain it in simple words its impact on individual and the country.

High inflation means things getting costlier. You must have experienced that during the periods of high inflation the cost of edible items, commodities, transport, etc go up. As a result you end up paying more for the items of daily consumption causing your budget to go for a toss. This is the direct impact of inflation on an individual, isn't it :)

Now let’s broaden this scenario and see its bigger picture on the country. As sen above as a result of higher costs you start purchasing less. Since the same situation of higher costs is being faced by others in the society, slowly they also start purchasing less. With less purchasing by the society companies making these products start feeling the heat. Due to low demand (read consumption) they tend to decrease their output (production). This decrease in production by companies impacts the purchase of the raw material which they used to procure from the market. Hence we see that the increasing cost, causes the overall decrease in consumption and lesser production. Lower production means the companies need lesser number of people in their factories, plants, marketing teams, etc. So inflation indirectly leads to increased unemployment.

Also due to reduced purchasing by society, cash flow decreases in market, causing liquidity crunch. Banks are forced to increase the interest rates, causing borrowing to become costlier. Due to increased interest rates companies prefer not to borrow or even if they borrow they end paying more interest increasing their cost of production. This leads to lower margin and lesser profit for the companies. Companies then find themselves in a catch 22 situation. If they resort to cost cutting measures like lower salary, lesser appraisals this would lead to decreased purchasing power of people further increasing the liquidity crunch in the market. On the other hand if they increase the price of products, this would make people to buy less, further decreasing the consumption of their products.

There are many more indirect impacts of inflation, like depreciating currency, low GDP, etc. I would not go into all of these impacts here in this article. But as you would see most people only think that inflation is impacting them directly by burning a hole in their pockets, but its impact is not only on individuals but on the contrary it impacts the whole economic system of the country. In a nutshell the inflation should always be moderate and under control. 

Friday, 29 June 2012


Tax Slabs for AY 2013-14 (FY 2012-13)

Income tax slab (in Rs.) Tax
0 to 2,00,000 No tax
2,00,001 to 5,00,000 10%
5,00,001 to 10,00,000 20%
Above 10,00,000 30%

India Income tax slabs 2012-2013 for Female tax payers

Income tax slab (in Rs.)
Tax
0 to 2,00,000 No tax
2,00,001 to 5,00,000 10%
5,00,001 to 10,00,000 20%
Above 10,00,000 30%

India Income tax slabs 2012-2013 for Senior citizens (Aged 60 years but less than 80 years)

Income tax slab (in Rs.)
Tax
0 to 2,50,000 No tax
2,50,001 to 5,00,000 10%
5,00,001 to 10,00,000 20%
Above 10,00,000 30%

India Income tax slabs 2012-2013 for very senior citizens (Aged 80 and above)

Income tax slab (in Rs.)
Tax
0 to 5,00,000 No tax
5,00,001 to 10,00,000 20%
Above 10,00,000 30%


Thursday, 28 June 2012


NEFT & RTGS


While doing online money transfer you must have heard the terms NFT and RTGS. Ever wondered what exactly these terms are and what’s the difference between them. If No then perhaps you should spend a few minutes to read below and hopefully your basic queries would be answered.

NEFT and RTGS are the two different means of transferring money between banks in India. Important thing to note here is that this is only for domestic transfers.

RTGS stands for Real Time Gross Settlement, it is a fund transfer mechanism which allows the money transfer between two banks on a ‘real time’ and on ‘gross’ basis. I will explain these terms a bit later.

NEFT stands for National Electronic Funds Transfer which is an online system for transferring funds between financial institutions. This is not done in real time but is done at predetermined fixed times.
The main difference between the 2 modes of transfer are listed below :

• The basic and most important difference between RTGS and NEFT is in their definitions itself. RTGS is based on gross settlement in real time while NEFT is based on bulk settlement at a predetermined time in future. In RTGS settlement is done in real time meaning immediately after processing of the remitting bank, while in NEFT the transfer is done in batches at specific times of the day. So NEFT is not based on individual transactions but rather is a bulk transaction between one bank to the other at a defined time of the day while RTGS is done based on individual transactions and in real time.  

• RTGS is the fastest money transfer system through the banking system as it is done in real time.

• Another major difference between the RTGS and NEFT is the amount which could be transferred. RTGS is a mechanism to transfer an amount of over  ` 2 lakhs ie the minimum amount to be remitted through RTGS is ` 2 lakhs. There is no upper limit for RTGS transactions. While  NEFT is used mainly to transfer funds below ` 2 lakhs, however, there is no maximum limit for transfers through NEFT.

So though NEFT and RTGS both are meant to perform the same function which is to transfer money. However the amount and the quickness differentiates them. Also the banks charges certain fees on both type of transactions. For international transfers each bank may have a different mode or vendor for transactions.