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Paradox of 100% income tax in India

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The way our income tax slabs are designed (particularly the tax waivers and tax surcharges), leads us to pay 100% tax on some part of our income.  In order to illustrate this more clearly, below is a plot of the income tax payable as a function of total income. This is calculated based on the latest tax slabs as per 2025 budget, for the income range of 0 to 55 lacs. This does not consider standard deduction. It doesn't look too bad, with tax rising as income is rising, as we may expect. Next, I plotted the percentage tax on incremental income paid for each additional 1000 rupees of income. And this looks as follows. Note the two intervals where tax percentage spikes to 100%. To be clear, the first interval corresponds to income range 12 to 12.73 lacs, and the second interval corresponds to income range 50 to 51.71 lacs. In both cases, it is a significant amount to be paying a 100% tax on. In progressive tax system, you would expect the tax rate to increase as the income increases, ...
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Target Maturity Gilt Funds

Update: Debt funds no longer have the tax advantage effective April 1, 2023. Debt funds are now taxed as ordinary income irrespective of the duration of investment. As a follow up to my earlier post exploring the best investment approach for debt allocation ( https://sandeshgoel.blogspot.com/2023/02/investing-in-gilt-funds-as-compared-to.html ), I set out to find some of the Target Maturity Gilt funds available today. Interestingly, in all the AMC websites I looked at, they don't list these funds in the Debt category. Instead they show up in the Index or Other funds categories, which makes them notoriously hard to find for the uninitiated. I am therefore creating a list of all target maturity gilt funds that I could find for anyone who needs this information. I am only including funds which include G-Secs or SDLs, not PSUs. ICICI Prudential AMC https://www.icicipruamc.com/mutual-fund/other-funds/icici-prudential-nifty-sdl-sep-2026-index-fund---growth https://www.icicipruamc.com/mut...
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Investing in Gilt Funds as compared to FD

Over the last few years, I have internalised the importance of Asset Allocation in planning the personal finances, especially for long term goals such as retirement.  Deciding Asset Allocation There are many formulas for asset allocation that you will find floating around, but what I have realised is that your ideal asset allocation has much more to do with your your behavioural mindset than anything else. For example, it is often said that if you are young you should have most of your investible surplus invested in equities. But, if you do that without fully understanding the associated risks and the patience needed to achieve optimal returns, you may end up doing even worse than fixed deposits. That's because we, as humans, are primarily driven by fear and greed when it comes to investments. This leads us to buy equities when they are expensive (since there is a lot of hype) and sell them when they are cheap (since there is a lot of gloom), the exact opposite of what we need to b...
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Personal Finance in Bullets

Here’s some of the personal financial planning wisdom that I have gathered over the years put into bullet points Spend what you have left after saving, not the other way around Save at least 10% of your paycheck, go as high as 30% if your income allows it Start saving as early as possible, preferably from the first paycheck   Create a contingency fund, equivalent to at least 6 months expenses, put this in a liquid mutual fund Get life insurance (at least 5-10 times your annual salary, it won’t look that high 10 years down the road) Get medical insurance (go for at least 10 lakh limit) Don’t keep any high interest loans (credit card loan is an absolute no, repay car/bike loans as soon as possible) Home loan is okay if it is for your first home (taking loan for second home is like investing, there are other simpler ways to investment, see below) After all of the above, if you have extra savings, create a long term portfolio You should not touch this for at leas...
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Comments RE: TRAI Consultation Paper on Differential Pricing for Data Services

Following are my comments in reference to the consultation paper on differential pricing release by TRAI available at the following URL: http://www.trai.gov.in/ WriteReaddata/ ConsultationPaper/Document/CP- Differential-Pricing-09122015. pdf I think the consultation paper does a very good job of laying out the current landscape by outlining the benefits as well as pitfalls of the current differential pricing schemes being advertised by TSPs (Telecom Service Providers). I would like to compliment the TRAI for the same. I would like to strongly oppose allowing any such differential pricing schemes.  The TSP's and platform providers are pushing these schemes very strongly, under the veil of altruism, without getting into the real motives behind this. This is what makes all these attempts disingenuous and hard to trust. The dream of digital india and connecting the next billion of our population needs to be fulfilled as soon as possible. And it is the responsibility...
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What to see in a leader ...

Don't trust a leader who says he will favour you because of your religion, caste or creed. Such a person has favouritism build into their character. True, he may favour you over other caste and religion, but only when convenient. He will favour himself above everyone else, his family above every other family, his relatives and friends over everyone else, and if there are favours left to dole out, he will favour his caste and religion above everyone else. This is what we have seen our political leaders do over all these years. This is basically what the "VIP" culture is all about. The "closer" you are to the leaders, the better treated you are. Instead, look for a leader who promises to be fair and balanced. Look for a leader who promises to do the right thing. He is the leader who you can trust to make decisions in national interest and your interest. He is the leader who will fight for your justice, so that that when you are at the receiving end of an unfa...
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NOIDA Lok Sabha Elections 2014

Following is a link of a list of all 24 candidates in the fray for NOIDA seat for Lok Sabha elections fo 2014. The affidavit submitted by each candidate is also linked to each candidate's name. The affidavit includes declaration of income, assets and any criminal cases for the candidate and immediate family. http://affidavitarchive.nic.in/DynamicAffidavitDisplay/CANDIDATEAFFIDAVIT.aspx?YEARID=May-2014+%28+GEN+%29&AC_No=13&st_code=S24&constType=PC The elections are on Apr 10, 2014. The website of Chief Electoral Officer of UP is  http://ceouttarpradesh.nic.in/ . Following is a snapshot for quick reference.  
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