This Story is about a man who once upon a time was selling Hotdogs by the roadside.
He was illiterate, so he never read newspapers.
He was hard of hearing, so he never listened to the radio.
His eyes were weak, so he never watched television.
But enthusiastically, he sold lots of hotdogs.
He was smart enough to offer some attractive schemes to increase his sales.
His sales and profit went up..
He ordered more a more raw material and buns and use to sale more.
He recruited few more supporting staff to serve more customers.
He started offering home deliveries. Eventually he got himself a bigger and better stove.
As his business was growing, the son, who had recently graduated from College, joined his father.
Then something strange happened.
The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible.
The domestic situation is even worse. We should be prepared for the coming bad times."
The man thought that since his son had been to college, read the papers, listened to the radio and watched TV.
He ought to know and his advice should not be taken lightly.
So the next day onwards, the father cut down his raw material order and buns, took down the colorful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic.
He reduced his staff strength by giving layoffs.
Very soon, fewer and fewer people bothered to stop at his hotdog stand..
And his sales started coming down rapidly, same is the profit.
The father said to his son, "Son, you were right".
"We are in the middle of a recession and crisis. I am glad you warned me ahead of time."
Moral of The Story:
It's all in your MIND! And we actually FUEL this recession much more than we think we do!!!!!!!!!! !!
Friday, March 27, 2009
Thursday, March 12, 2009
The revival of 1930's
In the six months since the financial crisis exploded with the collapse of New York investment bank Lehman Brothers, the world economy has been gripped by the greatest economic crisis since the Great Depression of the 1930s. U.S. and European banks have admitted a trillion dollars in losses, while the banking system of Iceland totally collapsed. Almost all of the major economies of the world, with the exception of China, have started to contract, with millions of workers losing their jobs and businesses going bankrupt right and left. Hardest hit for now are the new capitalist economies of eastern Europe, who are being slammed by their dependence on borrowing from foreign bankers, falling exports and plunging currencies.
Here in the United States, the news is grim. The housing market continues to fall, with prices down more than 20% and new housing starts off a staggering 80% from the peak in January 2006. Monthly job losses continue to climb, with more than four million jobs lost since the recession began, most of those in the last four months. The unemployment rate in January was 7.6%, up from 4.7% before the recession began. A growing number of big corporations like Circuit City have given up the ghost and liquidated, while hundreds and thousands of smaller businesses are going under. State and local governments are raising taxes and cutting services, adding to the woes of working people.
The financial crisis continues despite the U.S. Federal Reserve Bank lending some $1.5 trillion, and the Federal government pumping hundreds of billions more into ailing financial companies. The companies given the most government aid, from insurance giant American International Group (AIG), to the former world’s largest bank, Citigroup, have had to come back for a second round of bailout money and will need a third round soon. Bank losses continue to rack up as unemployment and business bankruptcies climb, and may come to $2 or $3 trillion more.
As the recession and financial crisis tighten their grip on the economy, the U.S. and other governments are desperately trying to turn the tide. With U.S. interest rates lowered to almost zero, and trillions of dollars of financial aid to big banks unable to stem the crisis, there is talk of ‘nationalization’ of some banks, a stunning turnaround for a system wedded to deregulation just two years ago. There are also early signs that the Federal Reserve has had to crank up their electronic printing presses to pump more money into the economy, an act of desperation that could lead to much higher inflation down the road.
A $790 billion economic stimulus package was signed into law in February. But despite the big numbers, the actual impact will be at best to take the edge off the recession. $90 billion will go to household making six-digit incomes. Much of the rest of the tax cuts and new spending will be largely offset by tax increases and budget cuts by state and local governments. Working people will benefit from more money for unemployment benefits, health insurance and schools. But even the optimist official forecast is for two more years of unemployment even higher than it is today.
Another problem is that the government’s attempts to make businesses profitable again can actually hurt the economy. The bank bailout last October let banks collect interest on the money that they stash away with the Federal Reserve. Previously, these ‘reserves’ paid no interest, giving banks an incentive to lend. But now banks can make a profit by not lending, and hundreds of billions of dollars are piling up in banks even as small businesses and working people are starved for credit.
The fundamental problem is that there is a crisis of overproduction. Big businesses can produce more than people can buy. At some point, enough businesses will be closed that the others will become profitable and the economy and profits will start to grow again. Mainstream economists say that this will happen later this year, assuming that no other crisis erupts - and this is a big if! But even if and when the economy begins to grow, there will be little relief for working people.
Take, for example, the auto industry. All around the world, car companies can produce millions more cars than they can sell. The U.S. government has given billions of dollars in loans to General Motors and Chrysler, and is considering more aid for them, their parts suppliers and auto finance companies. But these loans have the goal of a ‘viable’ industry, which means even more plant closings, layoffs, and wage and benefit cuts. When enough plants will be closed the companies will be profitable at a lower level of sales. But what about the hundreds of thousands of auto, auto parts and auto dealer workers who have lost their jobs? What about the tens of thousands of retirees whose benefits have been slashed? These jobs and benefits are not coming back.
Here in the United States, the news is grim. The housing market continues to fall, with prices down more than 20% and new housing starts off a staggering 80% from the peak in January 2006. Monthly job losses continue to climb, with more than four million jobs lost since the recession began, most of those in the last four months. The unemployment rate in January was 7.6%, up from 4.7% before the recession began. A growing number of big corporations like Circuit City have given up the ghost and liquidated, while hundreds and thousands of smaller businesses are going under. State and local governments are raising taxes and cutting services, adding to the woes of working people.
The financial crisis continues despite the U.S. Federal Reserve Bank lending some $1.5 trillion, and the Federal government pumping hundreds of billions more into ailing financial companies. The companies given the most government aid, from insurance giant American International Group (AIG), to the former world’s largest bank, Citigroup, have had to come back for a second round of bailout money and will need a third round soon. Bank losses continue to rack up as unemployment and business bankruptcies climb, and may come to $2 or $3 trillion more.
As the recession and financial crisis tighten their grip on the economy, the U.S. and other governments are desperately trying to turn the tide. With U.S. interest rates lowered to almost zero, and trillions of dollars of financial aid to big banks unable to stem the crisis, there is talk of ‘nationalization’ of some banks, a stunning turnaround for a system wedded to deregulation just two years ago. There are also early signs that the Federal Reserve has had to crank up their electronic printing presses to pump more money into the economy, an act of desperation that could lead to much higher inflation down the road.
A $790 billion economic stimulus package was signed into law in February. But despite the big numbers, the actual impact will be at best to take the edge off the recession. $90 billion will go to household making six-digit incomes. Much of the rest of the tax cuts and new spending will be largely offset by tax increases and budget cuts by state and local governments. Working people will benefit from more money for unemployment benefits, health insurance and schools. But even the optimist official forecast is for two more years of unemployment even higher than it is today.
Another problem is that the government’s attempts to make businesses profitable again can actually hurt the economy. The bank bailout last October let banks collect interest on the money that they stash away with the Federal Reserve. Previously, these ‘reserves’ paid no interest, giving banks an incentive to lend. But now banks can make a profit by not lending, and hundreds of billions of dollars are piling up in banks even as small businesses and working people are starved for credit.
The fundamental problem is that there is a crisis of overproduction. Big businesses can produce more than people can buy. At some point, enough businesses will be closed that the others will become profitable and the economy and profits will start to grow again. Mainstream economists say that this will happen later this year, assuming that no other crisis erupts - and this is a big if! But even if and when the economy begins to grow, there will be little relief for working people.
Take, for example, the auto industry. All around the world, car companies can produce millions more cars than they can sell. The U.S. government has given billions of dollars in loans to General Motors and Chrysler, and is considering more aid for them, their parts suppliers and auto finance companies. But these loans have the goal of a ‘viable’ industry, which means even more plant closings, layoffs, and wage and benefit cuts. When enough plants will be closed the companies will be profitable at a lower level of sales. But what about the hundreds of thousands of auto, auto parts and auto dealer workers who have lost their jobs? What about the tens of thousands of retirees whose benefits have been slashed? These jobs and benefits are not coming back.
Wednesday, August 27, 2008
Personal finance
We come across some business terms each day. Due to our reluctance we overlook them. But they are of utmost importance for us. Some of these are defined here, go through them.
Whether you have anything to do with business or not they are useful.
What is Income Tax?
The government spends money on different things like infrastructure, education, public healthcare, etc. For this, it needs to first get the money, so that it can spend.The government gets money from people and businesses in the country. There are various duties and taxes levied on income, goods and services. The tax levied on incomes of people and businesses is called income tax.
Some Definitions----
While talking about Income Tax, there are certain terms that we keep hearing about very often. Here is an explanation of some of these terms :
Financial Year (FY)
The financial information is reported on a yearly basis, and the year for which this information is reported is called a Financial Year, or FY in short. The actual start and end of a financial year varies from country to country. The financial year in India starts on 1st April every year, and ends on 31st March of the following year. Thus, the last financial year in India (for which companies would soon start reporting their incomes) started on1st April 2007, and ended on 31st March 2008. This is usually denoted as FY 07-08, or FY 08.
Assessment Year (AY)
Income from a particular financial year is assessed for incometax in the following year. The financial year in which this assessment takes place is called the Assessment Year (AY). Thus, we file the income tax returns for the Financial Year 07-08 (or FY 07-08) in the Assessment Year is 08-09 (or, AY 08-09).
Previous Year (PY)
In an assessment year, the income from the year preceding it is assessed for income tax. This year is called the PreviousYear, or PY in short. So, simply speaking, Previous Year is the financial year for which your income is being assessed.Thus, we file the income tax returns for the Financial Year 07-08 (or FY 07-08) in the Assessment Year is 08-09 (or, AY 08-09). For Assessment Year 08-09, the Previous Year is 2007-08(PY 07-08).
Rate of Income Tax
As we saw, the income we earn is subject to income tax by the government. The rate of income tax is different for different income levels, and thus, the income tax that you pay depends on your total earnings in a given year. These slabs are also different for men, women and senior citizens.
Following are the income tax slabs for men for FY 2007-08:
Income less than 1,50,000 : 0%
Income from 1,50,001 to 2,50,000 : 10%
Income from 2,50,001 to 5,00,000 : 20%
Income above 5,00,001 : 30%
Following are the income tax slabs for women for FY 2007-08:
Income less than 1,85,000 : 0%
Income from 1,85,001 to 2,50,000 : 10%
Income from 2,50,001 to 5,00,000 : 20%
Income above 5,00,001 : 30%
Following are the income tax slabs for Senior Citizens for FY2007-08:
Income less than 2,25,000 : 0%
Income from 2,25,001 to 2,50,000 : 10%
Income from 2,50,001 to 5,00,000 : 20%
Income above 5,00,001 : 30%
Apart from this, there is an educational cess of 3%.
This is to be added to the total income tax liability after computation of income tax. Also, if the total income for the year is more than Rs. 10Lakhs, there is a surcharge of 10% - this is also to be added to the total income tax liability after computation of income tax.
How to Save Income Tax (Deductions Under Section 80C)
No one likes to pay tax - after all, it is our hard earned money! But there are different ways in which we can reduce our income tax liability.The most important of these are deductions permitted under section 80C of the income tax act. The government encourages certain types of savings – mostly, long term savings for your retirement – and therefore, offers you tax breaks on such savings. Sec 80C of the Income Tax Act is the section that deals with these tax breaks. It states that qualifying investments, up to a maximum of Rs.1 Lakh per year, are deductible from your income. This means that your income gets reduced by this investment amount (up to Rs. 1 Lakh), and you end up paying no tax on it at all! This benefit is available to everyone, irrespective of their income levels. Thus, if you are in the highest tax bracket of 30%, and you invest the full Rs. 1 Lakh, you save tax of Rs. 30,000. Isn’t this great?
Some of the the qualifying investments u/s 80C are:-
Provident Fund (PF), Voluntary Provident Fund (VPF), Public Provident Fund (PPF), Life Insurance Premiums, Investments in Equity Linked Savings Scheme (ELSS) of mutual funds
and Home Loan Principal Repayment.
How to Save Income Tax Using a Home Loan
Income Tax can also be saved if you have taken a home loan. The EMI that you pay towards your home loan consists of two portions – the principal amount, and the interest for the homeloan. Although both these components help you save tax, the tax treatment of these two is different.
Income Tax treatment of Principal Repayment: The Principal Repayment for home loans is included in Section 80C of the Income Tax Act as one of the permissible investments. This means that principal repayment up to Rs. 1 Lakh is totally deductible from your income if you have not made anyother investments under section 80C. There is only one condition here – principal repayment can be considered as a valid investment under section 80C only if it is made for a self occupied house. That is, you should beliving in the house for which you are making the principalrepayment. The only exclusion is if the house is not in thecity in which you are working – in which case you can claim the principal repayment as an investment under sec 80C even if you are not living in the house.
Income Tax treatment of Interest Payment: The interest you pay as the part of your EMI is considered an expense under the head “Income from House Property”, and is deductible up to a maximum of Rs. 1.5 Lakhs under Section 24 of the Income Tax Act. The interest amount would appear as a negative amount underthe head “Income from House Property”, and would thus be deductible from your total income under Sec 24. The best part is that there is no restriction of “self occupied property” for claiming the tax break on interest paidunder sec 24. In fact, if you have rented out the house, and the rent you receive is more than Rs. 1.5 Lakhs per year, ALL interest paid (even if it is more than Rs. 1.5 Lakhs) is deductible from the rent received – provided that the interest paid is not more than the rent received.
Whether you have anything to do with business or not they are useful.
What is Income Tax?
The government spends money on different things like infrastructure, education, public healthcare, etc. For this, it needs to first get the money, so that it can spend.The government gets money from people and businesses in the country. There are various duties and taxes levied on income, goods and services. The tax levied on incomes of people and businesses is called income tax.
Some Definitions----
While talking about Income Tax, there are certain terms that we keep hearing about very often. Here is an explanation of some of these terms :
Financial Year (FY)
The financial information is reported on a yearly basis, and the year for which this information is reported is called a Financial Year, or FY in short. The actual start and end of a financial year varies from country to country. The financial year in India starts on 1st April every year, and ends on 31st March of the following year. Thus, the last financial year in India (for which companies would soon start reporting their incomes) started on1st April 2007, and ended on 31st March 2008. This is usually denoted as FY 07-08, or FY 08.
Assessment Year (AY)
Income from a particular financial year is assessed for incometax in the following year. The financial year in which this assessment takes place is called the Assessment Year (AY). Thus, we file the income tax returns for the Financial Year 07-08 (or FY 07-08) in the Assessment Year is 08-09 (or, AY 08-09).
Previous Year (PY)
In an assessment year, the income from the year preceding it is assessed for income tax. This year is called the PreviousYear, or PY in short. So, simply speaking, Previous Year is the financial year for which your income is being assessed.Thus, we file the income tax returns for the Financial Year 07-08 (or FY 07-08) in the Assessment Year is 08-09 (or, AY 08-09). For Assessment Year 08-09, the Previous Year is 2007-08(PY 07-08).
Rate of Income Tax
As we saw, the income we earn is subject to income tax by the government. The rate of income tax is different for different income levels, and thus, the income tax that you pay depends on your total earnings in a given year. These slabs are also different for men, women and senior citizens.
Following are the income tax slabs for men for FY 2007-08:
Income less than 1,50,000 : 0%
Income from 1,50,001 to 2,50,000 : 10%
Income from 2,50,001 to 5,00,000 : 20%
Income above 5,00,001 : 30%
Following are the income tax slabs for women for FY 2007-08:
Income less than 1,85,000 : 0%
Income from 1,85,001 to 2,50,000 : 10%
Income from 2,50,001 to 5,00,000 : 20%
Income above 5,00,001 : 30%
Following are the income tax slabs for Senior Citizens for FY2007-08:
Income less than 2,25,000 : 0%
Income from 2,25,001 to 2,50,000 : 10%
Income from 2,50,001 to 5,00,000 : 20%
Income above 5,00,001 : 30%
Apart from this, there is an educational cess of 3%.
This is to be added to the total income tax liability after computation of income tax. Also, if the total income for the year is more than Rs. 10Lakhs, there is a surcharge of 10% - this is also to be added to the total income tax liability after computation of income tax.
How to Save Income Tax (Deductions Under Section 80C)
No one likes to pay tax - after all, it is our hard earned money! But there are different ways in which we can reduce our income tax liability.The most important of these are deductions permitted under section 80C of the income tax act. The government encourages certain types of savings – mostly, long term savings for your retirement – and therefore, offers you tax breaks on such savings. Sec 80C of the Income Tax Act is the section that deals with these tax breaks. It states that qualifying investments, up to a maximum of Rs.1 Lakh per year, are deductible from your income. This means that your income gets reduced by this investment amount (up to Rs. 1 Lakh), and you end up paying no tax on it at all! This benefit is available to everyone, irrespective of their income levels. Thus, if you are in the highest tax bracket of 30%, and you invest the full Rs. 1 Lakh, you save tax of Rs. 30,000. Isn’t this great?
Some of the the qualifying investments u/s 80C are:-
Provident Fund (PF), Voluntary Provident Fund (VPF), Public Provident Fund (PPF), Life Insurance Premiums, Investments in Equity Linked Savings Scheme (ELSS) of mutual funds
and Home Loan Principal Repayment.
How to Save Income Tax Using a Home Loan
Income Tax can also be saved if you have taken a home loan. The EMI that you pay towards your home loan consists of two portions – the principal amount, and the interest for the homeloan. Although both these components help you save tax, the tax treatment of these two is different.
Income Tax treatment of Principal Repayment: The Principal Repayment for home loans is included in Section 80C of the Income Tax Act as one of the permissible investments. This means that principal repayment up to Rs. 1 Lakh is totally deductible from your income if you have not made anyother investments under section 80C. There is only one condition here – principal repayment can be considered as a valid investment under section 80C only if it is made for a self occupied house. That is, you should beliving in the house for which you are making the principalrepayment. The only exclusion is if the house is not in thecity in which you are working – in which case you can claim the principal repayment as an investment under sec 80C even if you are not living in the house.
Income Tax treatment of Interest Payment: The interest you pay as the part of your EMI is considered an expense under the head “Income from House Property”, and is deductible up to a maximum of Rs. 1.5 Lakhs under Section 24 of the Income Tax Act. The interest amount would appear as a negative amount underthe head “Income from House Property”, and would thus be deductible from your total income under Sec 24. The best part is that there is no restriction of “self occupied property” for claiming the tax break on interest paidunder sec 24. In fact, if you have rented out the house, and the rent you receive is more than Rs. 1.5 Lakhs per year, ALL interest paid (even if it is more than Rs. 1.5 Lakhs) is deductible from the rent received – provided that the interest paid is not more than the rent received.
Thursday, August 7, 2008
The Blog's promises
Being in the realm of news, I am in contact of the outside world each moment. Whether it is Barack Obama's speech at Illinois or the Indian politicians waving money in parliament, I am through the news every time, every day.
As a budding journalist I come across to so many terms that need to be DEFINED. They need some of our precious time to be spent with them and when we do the same they come with us and are stored in our minds. These 'tiny terms' keep storing and later ignite our minds. And as we know only an ignited mind has the power to bring a revolution. So, come with me and start a journey where we will collect these 'tiny terms'. I promise you to make the journey as delightful as possible.
This was one aspect of this blog, there will be much more here. Like,
What's happening in the media. Who has been shown the door and who dared to say goodbye to his editor boss.
Here will be you and me writing and commenting on each story that happens in this world.
One more thing as I said I am on business desk, so you will also be served some investment related recipes but with spices to make them more tasty. Promise…..
Come and comment.
As a budding journalist I come across to so many terms that need to be DEFINED. They need some of our precious time to be spent with them and when we do the same they come with us and are stored in our minds. These 'tiny terms' keep storing and later ignite our minds. And as we know only an ignited mind has the power to bring a revolution. So, come with me and start a journey where we will collect these 'tiny terms'. I promise you to make the journey as delightful as possible.
This was one aspect of this blog, there will be much more here. Like,
What's happening in the media. Who has been shown the door and who dared to say goodbye to his editor boss.
Here will be you and me writing and commenting on each story that happens in this world.
One more thing as I said I am on business desk, so you will also be served some investment related recipes but with spices to make them more tasty. Promise…..
Come and comment.
Books keep me engage
I think, the day has come to share opinion with you all. From now onwards I will be here writing on varied topics including articles that will reflect my view on the day to day happenings.I assure you all a whole new experience on your visit to this blog. OK, now some words describing myself.....At this moment my fingers are running on the keyboard owned by a hindi newspaper Dainik Bhaskar...........yes you got it right, I am an employee here and occupying the post of Business Desk Incharge. My association with the company is proving fruiteful and hope to achieve some more milestones in the days to follow.I started my career with Dainik Jagran as junior sub editor and the tie lasted for a year. Am a great believer of myself. Always seeking a change that will put my foot forward towards my goal.The best part of mine is my age. I took it early and reaping the benefits now. While being on the journey i took something from the every giant i met on my way. Spent time with two media groups, took out the juice from there and when i felt i have got enough, bid them farewell.Books keep me engage.I can push myself to extremes and never believe in tomorrow, whatever to be done should be done at the moment.
Subscribe to:
Posts (Atom)
Posts
