Archive for November, 2009

Forex currency trading is making quite a buzz these days. With the rising cost of living, it’s not hard to know why so many people are juggling two to three jobs at a time and turning to the Internet to look for money-making opportunities, one of the most well loved of which is entering the Forex market and trading currency. Some people still have this notion that to be successful in the Forex, one must be an accountant, economist, or a genius at numbers. Contrary to well loved belief, success in the Forex market is now more attainable than ever, thanks to the many tips you can find online. But before you jump on the bandwagon and join the Forex hype, it’s best if you first take a moment to find out what Forex currency trading is and how it works. Forex is really small for Foreign Exchange, a currency market in which one currency is traded for another. It is said to be the largest market in the world. The market consists mostly of currency traders who speculate on movements in exchange rates. In order to earn the profit, which after all is the goal of every Forex trader, they must take advantage of even small fluctuations that occur in exchange rates. The market has a 24-hour trading day that operates throughout the week, which makes it convenient for some traders to work during the day and trade at night. In the Forex market, every pair of currencies makes up an individual product and is normally marked as XXX/YYY, where YYY refers to the ISO 4217 international three-letter code of the currency into which one unit of XXX’s price is expressed. An example of this is to note 1 euro as equivalent to 1. 2045 dollar as the amount translation of EUR/USD. This is how Forex currency trading is determined. Unlike stock markets and future exchanges, when you engage in Forex currency trading, you engage in a form of international bank and an over-the-counter market; this means that in the Forex market, you can’t find any single universal exchange for a specific currency pair. Throughout its operation, individuals trade with Forex brokers, Forex brokers with banks or financial institutions, and financial institutions with financial institutions. Once the European session end, the Asian session or the US session will start; this ensuring that all the currencies of the world can continually trade. Traders, whether individuals or corporations, can react to the news once it breaks, instead of incessantly waiting for the market to open, which is what is required in most other markets out there. These days, with the proliferation of tutorials on Forex currency trading, average people are given the chance to trade currencies as if they are experts on the field. It is simple to learn once you’ve set your heart on making money this way. And you can make money, even while you’re doing nothing, thanks to automated Forex trading bots, which can do the trading for you while you tend to your family, job, or other things.

1. INTRODUCTION:   1. 1           VAT Council of States, the body of State Finance Ministers and Standing Council of Commissioners have agreed that the VAT should be implemented all over India from 1-4-2001. But, subsequently, after taking into consideration the fact that the groundwork is still in progress, the date has been extended to 1-4-2002. One thing is certain that the word ‘VAT’ [Value Added Tax] is a symbol of Globalisation and Liberalisation, which is a universal phenomenon for the current age is bond to be implemented in India.   2. SUCCESSFUL TAX SYSTEM:   2. 1           Among many other things, the successful tax system always tries to avoid cascading effect of the tax. The VAT, being Value Added Tax, it presupposes that, if the tax is levied on sale value, all the taxes paid while making buys as well as all the taxes paid during the process of manufacture or import are to be refunded. The CREDIT method or INVOICE method of VAT system ensures that the taxes shown in the buy bills are given the credit to the dealers. The uncontrolled incidence of tax always shrinks the industry and trade and keeps away from the developing process of the national economy. The tax system has to be neutral so far as its effect on the choice of inputs and outputs for the manufacturer and choice of the goods for a consumer is concerned.   2. 2           At the same time multiplicity of the rates has to be removed in a model system of taxation. That’s why the Finance Ministers Committee has agreed to keep the number of rates to four. Widespread taxation encourages the vertical integration of industries and thus discourages small-scale ancillary industries. Heterogeneity in the structure of tax, that is having different taxes like Sales Tax, Turnover Tax, Surcharge, Additional Tax, makes the system so much complicated that either there is tendency towards evasion or it makes a way for clashes between the administration and the assesses.   3         STEPS TOWARDS VAT:   3. 1             As pointed above VAT Council of States, and Standing Council of Commissioners have agreed that the VAT should be implemented from 1-4-2002. It was also agreed that there should be floor rates common to all the States. Though Maharastra State had introduced the floor rates from 1-1-2000.   But due to the pressure from people they were corrected on 13-1-2000 and 22-1-2000. But some fine-tuning of the classification has yet to be done giving another look at the grouping of the goods in to four-rate categories and floor-rates.   3. 2             Abolition of the tax-related incentives scheme is another step in the direction of bringing VAT in to operation. In fact the States have taken this opportunity to stop the incentives to be given in the name of Backward Area. This will not only raise the revenue of the States but will also place end to the war among the States in the form of harmful competition of reducing tax rates to give tax incentives.   3. 3             Draft model of VAT legislation has been prepared by the National Institute of Public Finance and Policy. The circulation of papers on VAT will certainly be making the atmosphere towards readiness to accept VAT.   4. EXPERIENCE OF VAT IN MAHARASTRA:   4. 1                      During the period from 1-10-1995 to 31-3-1999 Maharastra had VAT in a limited sense. Initially the limit covering the dealers under VAT was Rs. one crore but was brought down on 1-7-1997 to Rs. 40 lacs. Though the additional tax and Turnover Tax was abolished, the rates were over all increased to cover those taxes [most of the goods taxable at 10% were taxed at 13%]. Some 12 industries and 100% export units were allowed the full set-off of the sale tax paid on inputs.   4. 2                      It is said that the VAT was abolished from 1-4-1999 due to fall in the Sales Tax revenue. But the Economists do not agree to such reasoning. Since there was a general recession in the industry during 1996 to 1999, the govt could not have expected the increase in the tax revenue on implementation of VAT. In fact the fall in the tax revenue augmented by the set-off policy of giving refund to manufacturers manufacturing tax-free goods, 100% exporting Units, 12 preferred industries and reduction in the burden of taxes on inputs from 4% to 3% to all manufacturers. The choice to abolish Vat in Maharastra was thus a non-economic one, tinted with political surroundings.   5. CENTRAL SALES TAX:   5. 1                       Central Sales Tax was introduced in India in 1957. Every one knows the chaos made by the different basis for levy of tax on interstate sales, like situs of sale, manufacture or consumption criteria etc. With a view to provide the levy and collection of taxes on interstate sales and to place restrictions on the goods declared as of special importance the Central Sales Tax was brought in. But the main and indirect object of the Central Sales Tax Act was to keep watch on the movement of goods sold in interstate sales and thereby regulate and monitor the interstate trade so as to avoid the evasion of taxes. That is why the rate of tax was only 1% in case of transactions between the registered dealers.   6. HAS CENTRAL SALES TAX OUTLIVED ITS UTILITY?:   6. 1           The rate of Central Sales Tax is now increased to 4%. Thus instead of regulatory object of the Central Sales Tax Act, it has turned in to revenue earning tax. Because of higher rate of tax there is more evasion. The availability of bogus ‘C’ forms and misuse of ‘F’ forms by taking shelter of branch transfers or consignment sales, is the direct result of the higher rate of Central Sales Tax. The higher rate has also affected the national economy, as the goods produced in Indian state are costlier than the goods imported from foreign countries.   6. 2           The levy of Central Sales Tax on the inputs has tendency to increase the cost of production. This also has a cascading effect because the finished goods of one state may be the raw materials for goods being manufactured in other state. Thus the final product has heavy tax burden because no state is willing to refund the tax burden levied by other state. This also results in unbalanced growth of industries without having any relation to the best-suited environment for the production of goods.   6. 3           The incidence of Central Sales Tax is discriminating against the consuming states. The consumers of industrial backward states have to pay the Central Sales Tax on the goods bought from other states. This tax is collected in the coffers of the developed states. Within the semi-federal feature of the Indian Constitution, it is socially unjustified to burden the poor people of the backward state with the tax going to the industrially developed state.   6. 4           Obtaining ‘C’ or ‘D’ forms from any Sales Tax office is very hard processes. In fact obtaing the ‘C’ form is itself a topic for separate and independent article. Misuse of ‘C’ forms has another tale towards evasion of tax. Instead of smoothening the interstate trade, the ‘C’ form hampers the free flow of trade from one state to another.   6. 5           The advantage of the situation like one that is available to the European Common Market is denied to Indian states because of Central Sales Tax. The Central Sales Tax does not allow the states to unite to form the common market that is essential in the wake of Globalisation and Liberalisation.   6. 6           The export trade of India is also affected by the levy of Central Sales Tax. The export is exempted from tax but the inputs required for the goods to be exported is not exempted. The penultimate sale of the goods to be exported is exempt, but the raw materials used for manufacture of the goods to be exported are not exempted. This results in increasing the cost of production which directly affects the export trade.   6. 7           The penultimate sale in the course of export is exempt under Central Sales Tax Act. But to claim such exemption form ‘H’ has to be produced. It is very hard for the dealers selling the goods to exporters to obtain ‘H’ form.   Ordinarily the exporters do not have a confirmed order in hand unless the samples as drawn from the bulk are and shown to the foreign buyers. More over the exporters are reluctant to give ‘H’ form as the details about the foreign importer, mode of dispatch and destination are to be mentioned in ‘H’ form.   7  VAT AND CENTRAL SALES TAX:   7. 1           As discussed in para 6 above the Central Sales Tax needs to be abolished. If it cannot be abolished before 1-4-2002, that is before coming in to force the VAT, the provision to grant refund of the Central Sales Tax paid on the inputs must be made in the VAT. In Canada, the country on whose pattern the ensuing VAT is said to be drafted, there is no tax on the sales made in the course of interstate trade and commerce. Inter state sales are exempt from taxes. It will be also in consonance with the basic thought of VAT that it is a tax on the ‘value added’ and once the tax is levied on the higher value of the sale point, the credit for the all kinds of taxes paid on the buys should be refunded.   8. SERVICE TAX:   8. 1         For the first time in the year 1994 the Service Tax was introduced in India as an associate of Central Excise Act. The telephone service, non-life insurance and Stock Brokers were the first to be brought under the purview of the Service Tax. Since then the net of Service Tax is being widened and today about 41 services are on the list of taxable services. The rate of tax is uniform at 5% of the receipts for the value of taxable service provided by the service provider. The separate registration by the service provider is necessary, which is given by the Central Excise authorities. The Service Tax can be colleted from the clients and has to be paid quarterly to the govt. Failure to follow the procedure and late payment of taxes attract interest, penalty and punishment.   8. 2         The trader or the manufacturer, who will be paying VAT, will ordinarily be paying the Service Tax on the expenses for following services that are directly utilized by him in the process of value addition.   i]   Telephone and Telegraph Charges, Fax charges, Property,Insurance, Courier charges;   ii]  Advertising expenses, Photography and Video shooting charges;   iii] Charges of Consulting Engineer, Architect, Interior decorator, Security agency;   iv]  Charges of Management Consultant, Chartered Accountant, Cost Accountant, Company Secretary,  Market Research Agency, Scientific or Technical  Consultant, Banking and Financial Institution charges, On-line Information Service charges;   v]   Custom House Agency charges, Shipping Line and Container charges, C & F Agency commission paid, Air Travel Agency charges, Automobile Service charges.   8. 3         When all such charges going into the manufacturing or trading expenses bear the Service Tax burden of 5%, levy of VAT on the sale price comprising the said charges will have a cascading effect on the price structure of the commodities. Therefore in a perfect VAT system there is no place for the Service Tax. It has to vacate the place for VAT. If that is not possible, in the larger interest of economic growth, the refund of the Service Tax paid on all kinds of inputs must be given credit in full.   8. 4         In Canada there is GST, which means Goods and Service Tax. It is about 7% and is collected by the Federal or Central Govt. States used to levy RST or VAT at 8%. Now there is only one tax system known as HST [Harmonised Sales Tax]. It is levied at 15%. It is comprehensive tax covering as much as possible at the bases. The tax on services is also included in HST.   9    CENTRAL EXCISE DUTY:   9. 1         The levy of excise duty is undoubtedly claiming the substantial share in value addition process. The present scheme of Modvat is only restricted to the credit and refund of the excise duty paid on the raw material used in manufacture or process resulting in new commodities.   9. 2         When VAT comes into existence, the levy of tax being on the sale price that is on the increased value, to avoid the ill effects of multi-taxation it is essential that the Central Excise Duty paid on the inputs is given credit or is refunded when the VAT is paid on the output.   10  CONCLUSION:   Since VAT will be comprehensive tax levied on the sale price, to avoid its ill effects on the growth of the economy, the abolition of Central Sales Tax and Service Tax must be given a serious thought. If its abolition is not possible then, to be in conformity with the optimal tax theory, it is very essential that all kinds of taxes paid on the inputs must be given credit or be refunded. In this article, the taxes levied by the Central Acts are only considered. What is right of Taxes under Central Acts is also right of the other taxes levied by the States, like Works Contract Tax, Lease Tax, Luxury Tax, Motor Sprit Tax etc. But that will be another tale.

There are times one may not have funds available to pay off a loan they had borrowed. Thus, they may need to borrow another loan to pay off the first one. This is in mortgaging business is known as refinancing. One vital tool one cannot do without in refinance mortgaging is a refinance mortgage calculator. There are two types of refinance mortgage calculators. There are the physical ones and there are those that can be found on the internet in software form. These calculators can help one calculate the amount they could save with the type of loan program they have chosen. When some people go out to get a refinance mortgage, they never know how to calculate the monthly payments and rates they will be required to pay. Refinance mortgage calculators can help one calculate how much they will pay for their mortgage. One cannot expect a refinance mortgage calculator to work effectively if they do not provide it with the relevant information it needs. Such information includes present loan information. The refinance mortgage calculators come with fields such as principal balance field, the annual interest rate field and the monthly payment field. One will need to fill such fields to feed information into the calculator. Other fields on the refinance mortgage calculators are, new loan information, term and closing costs. Excellent refinance mortgage calculators should be quick and effective. They should also be able to compute numerous calculations in the shortest time possible. Another quality of a excellent refinance calculator is that it should be accurate in its calculations. This ensures that the results brought fourth are precise and right and that they could be used to set concrete goals to those that want to buy a refinance mortgage. The calculator should also be portable. For instance, one could carry it to the site where the house stands. One reason for buying refinance calculators is so that the lender can give one the information they need to make wise choice. Prudent homebuyers always go for calculators that contain the relevant information. For simple computation, one will need to buy a calculator that has the necessary fields to help them compute the necessary calculations to get the results they need. The refinance mortgage calculators cost differently according to the brand and need. One should always go for an affordable yet excellent mortgage calculator. Another thing to place in mind is regardless of whether one is getting their refinance calculator from a store or from an online shop, the seller should also be of excellent repute. They can find out which sellers or websites are credible by asking for recommendations from people that have used refinance mortgage calculators from those places before. Refinance mortgage calculators play an instrumental role in helping people choose whether to take the refinance mortgage or not. Another advantage is that they can save people time, as one does not have to manually calculate the figures, since it can be tedious. It would be disastrous if one were to make incorrect calculations in such a transaction. Since most of these calculators are accurate, they can help prevent loss of money on either side.

Should you buy your car or lease it? This is a question that we hear often and as usual, the answer is that “it depends. ” It is also an answer that I could compose an entire book about.

First of all, let me start with the most practical advice from a personal finance perspective which is that you should do either if they involve a new car. A car loses 15% to 20% of its value the first year. This is a huge hit that is better left for someone else to take. With that being said, most of you who know me can know call me a hypocrite because I have not bought a used car since I was in college. There is nothing like pulling away from the dealership in a shiny new vehicle with the seductive new car smell.

Now that we have determined that you are getting a new car against my advice, we can get down to the details of whether you should lease it or buy it. First, you must know that the basic premise of leasing is that it is simply another way to buy the vehicle. You are not renting the vehicle from the manufacturer. Car dealers like leasing cars because it is very simple for them to tinker with the numbers and make a much higher profit. It is vital that you, as the buyer, know how leases are calculated.

To better know how leasing works, reckon of a conventional loan. At the beginning of the loan, you owe the buy price (less any down payment, etc) of the vehicle. At the end of the loan, you owe nothing. A lease is very similar, except at the end of the term, you owe the residual value stated in the lease. At the end of the lease, you must give them this value – either by turning the car in or by paying them the residual value. When you reckon of the lease like this, it is similar a buy with a balloon payment at the end of the term.

Nearly all automobile leases today are closed end leases, and that is what I will discuss here. If you are considering a lease, be sure to confirm that it is a closed end lease before signing. In a closed-end lease, the leasing company bares the risk of the depreciated value because the residual value is set at the onset of the lease. If at the end of the lease, the vehicle is worth more than the preset value, you can still buy the vehicle for the preset residual value. If the vehicle is worth less than the preset value, you have the option to turn the car in and the leasing company takes the hit for the difference.

Advantages to Leasing:

Monthly Cash Flow. Leasing provides better monthly cash flow. If you are an individual that likes the benefits of leveraging yourself and your investments, this can be advantageous. If you can invest the monthly savings into an investment at 15%, 20%, or even more, why would you tie up your funds when you are only saving 7% in interest? That is also right when buying a vehicle and paying cash. Why would someone tie up $35,000 in cash when they can earn much greater returns on that cash? With this being said, most people are not investing in things that consistently give them these returns. In addition, ninety percent of the people that plot to use this leverage at the onset of the lease never do. They end up spending the money on other expenses that have no long-term value. If you plot to use leverage, be sure to set it up immediately and stick to your plot. I do not recommend this for most people because over ninety percent people do not have the will to stick to the investment plot. If this is the case, they are better buying and saving the additional interest that they will have to pay.

Gap insurance. Most leases provide for gap insurance at no additional cost. Simply speaking, gap insurance covers the difference between what you owe on a vehicle and what it is worth. With small or no down payment, this gap will usually exist whether you finance a vehicle traditionally or lease it – although the gap is usually larger when leasing since a smaller part of your monthly payment goes toward reducing your financed balance. If you are in an accident and total your leased vehicle (assuming your lease provides gap insurance), the insurance would cover your equity difference. If you financed the vehicle, you would be required to pay the difference yourself. While this sounds like a huge advantage for leasing, take it with a grain of salt. How often does one really total their car and use the gap insurance? My guess is not that often. While it is usually an advantage toward leasing, I wouldn’t base my choice based on the gap insurance. Although it is not common, there are a few banks that offer gap insurance with traditional loans.

Taxes. If you are using the vehicle in your business, you can deduct a part of the expenses related to it. The Internal Revenue Code limits that amounts you can deduct then you buy a vehicle through Luxury Automobile depreciation limits. These limits vary depending on how long the car has been in service, but range between $2,850 and $5,200 for the first three years that the car is in service. With a lease, you can deduct the full amount of your lease payment (based on your percentage of business use). This deduction can be significantly larger than you can deduct through a buy. I recommend consulting your tax advisor to determine if you qualify and what your deductions may be.

Advantages to Buying

Long-term Cash. Long-term cash outlay is nearly always less with a buy. This is right whether you plot to buy a new car every 3 years or every 10 years. If you plot to keep the vehicle an extended period of time, the cash outlay can be considerably less by buying it. If you are the type of person that wants to have a car that is completely paid for with no payment, traditional financing is the option for you. It is the fastest route to eliminating a monthly payment.

Miles. If you buy the car, you can place as many miles on it that you like. When you lease a vehicle, you are limited in the number of miles that you place on the vehicle. Approximately 10 percent of all leasers exceed their mileage allowance and it is not uncommon for leasers to exceed this allowance by 5,000 miles per year. At 15 cents per mile, this can result in additional payments at the end of the lease well in excess of $2,000. There are many variables that can change related to your annual mileage. Be sure to examine them before deciding to lease a vehicle.

Taxes. If you are using the vehicle in your business, you can deduct a part of the expenses related to it. Section 179 of the Internal Revenue Code allows qualifying businesses to deduct the full cost of equipment buys in the current year (up to $128,000 in 2008 including up to $25,000 for qualifying automobiles). The catch related to cars is that they are typically not considered equipment. For them to qualify, they must be at least 6,000 lbs of yucky vehicle weight (as determined by the manufacturer). If you are searching for an SUV or truck that you will be using in your business, be sure to find out the weight and check with your tax advisor on whether or not your business qualifies.

Buy or Lease?

As you can see, there are advantages and disadvantages to both options. In addition, many of the advantages or disadvantages do not apply to all people. As a general rule of thumb, I believe most people are better off buying the vehicle because most people do not have the financial discipline to make excellent use of the monthly cash flow savings. As with any major choice, I would suggest contacting your tax and financial advisor to help determine which is right for your situation.

I will have saved up £5,000 by the time I turn age 18. I intend to get some of it and start to invest it into penny shares. I want to know if you can become a millionaire by investing into penny stocks, and if this is possible starting with a few thousand, and what to look for in penny stocks before you invest into it as I know that they can be very risky? Please answer for 5 star best answer.