Exchange Traded Funds - ETFs

Let’s make easier to understand what is ETFS: -

Exchange Traded Fund (ETF) is essentially a mutual fund scheme that is Listed and traded on an exchange like stocks. Its performance tracks an index, a commodity or a basket of securities like an index fund. So Generally, ETFs are passively managed funds that have a low expense Ratio compared to actively managed funds. ETFs experience price changes And can be bought or sold throughout the trading day, which allows the Investors to take advantage of intraday price movements.

ETF can be bought or sold just by a call to the broker or through an internet

Trading Account. This provides investors the power to react quickly to Changes in the market and place limit order while trading. ETF can be held

in aDPaccount. Thus, with ETF, one can benefit both from the flexibility of a stock as well as diversification

ETF offers several advantages to investors: -

• Can easily be bought / sold like any other stock on the exchange through a number of terminals across the country.
• Can be bought / sold anytime during market hours at a price close to the actual NAV of  the Scheme.
• No separate form filling. Just a phone call to your broker or a click on the internet
• Ability to put limit orders
• Minimum investment required is one unit
• Enjoy flexibility of a stock and diversification of index fund
• Lower Expense Ratio
• Provides arbitrage between Futures and Cash Market

Types of ETFs available in India:-

Ø   Equity Index ETFs

Equity Index ETFs invest in stocks of underlying Index and attempt to

replicate the performance of the Index. For example Nifty BeES tracks the

Nifty Index. ETFs can also track foreign indices. E.g. Hang Seng BeES

tracks the Hang Seng index or MOSt Shares NASDAQ 100 which tracks

theNASDAQ100 index.

Commodity ETFs

Ø   Commodity ETFs

Commodity ETFs invest in the underlying commodity in the physical

form and hence mirror the performance of the same. There are a number

of Gold ETFs available to investors now. E.g. Axis Gold ETF, Gold BeEs,

HDFCGold ETF, ICICI Prudential Gold ETF etc.

Liquid ETFs

Ø   Liquid ETFs

Liquid ETFs are money market funds that invest in a basket of call

money, short term government securities and money market

instruments. It is an alternative to savings account that gives better

returns than the bank savings account with very little chance of negative

returns. Liquid BeES is the only Liquid ETF available in the market and

launched by Benchmark Mutual Fund.

ETFs v/s Stocks & Mutual Funds:

Particulars/Points of comparison	ETFs	Stocks	Mutual Funds
Real-time trading & pricing throughout market	Yes	Yes	No
Ability to put limit orders	Yes	Yes	No
Can be traded real-time	Yes	Yes	No
Is arbitrage between cash & future market possible	Yes	Yes	No
Is diversification possible with a single unit	Yes	No	yes
Returns at par with market/index	Yes	No	No
Intraday trading	Yes	yes	No
Exit Load	No	No	yes

Particulars ETFs Stocks Mutual Funds

This Article has been authored by Durgesh Joglekar he can be reached at:

joglekar.durgesh@gmail.com

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Extension of last date for compliance of CPE hours requirement for Members holding COP - (31-12-2011)

FOR INFORMATION OF THE MEMBERS

Subject: Extension of last date for complying with the CPE hours requirement for the calendar year 2011 for the members holding COP from 31st December, 2011 to 31st March, 2012 This is for kind information of the members that the Council of the Institute has decided to extend the last date for complying with the CPE hours requirement for the calendar year 2011 for the members holding COP by three months, i.e., upto 31st March, 2012. Secretary CPE Committee of ICAI

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Institutes Publications for CA Exams May, 2012

• To Download  Applicability of the Institute's Pronouncements, Publications for CA Exams May, 2012 Click here
• To Download Case Laws for May 2012 Exam Click here

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Extension of date of submission of service tax half yearly returns

F. No. 137/99/2011 – Service Tax Government of India  Ministry of Finance  Department of Revenue  Central Board of Excise and Customs, New Delhi, the 29th December 2011 ORDER NO 3 /2011 – Service Tax In exercise of the powers conferred by Rule 7(4) of the Service Tax Rules 1994 read with notification No. 48/2011-Service Tax dated 19th October 2011, Central Board of Excise and Customs hereby extends the date of submission of half yearly return for the period April 2011 to September 2011, from 26th December 2011 to 6th January 2012. This is being done in view of the fact that assessees are facing problems inelectronic filing of returns due to various reasons. (Deepankar Aron) Director (Service Tax)  CBEC, New Delhi

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Important Announcement - Non-applicability of Revised Schedule VI for May 2012 Examinations.- ICAI

Important Announcement for PCC/IPCC & Final Students

This is to bring to the attention of students that the Revised Schedule VI to the Companies Act, 1956 issued by the Ministry of Corporate Affairs on 28th February, 2011 pertaining to the preparation of Balance Sheet and Profit and Loss Account under the Companies Act, 1956 for the financial year commencing on or after 1.4.2011 shall not be applicable for the PCC, IPCC and Final examinations to be held in May 2012. Director, Board of Studies

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IPCC Taxation A.Y.2012-13 Updated Material from ICAI

PART I - INCOME-TAX  INCOME-TAX - VOLUME - I

CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6 CHAPTER 7 CHAPTER 8 CHAPTER 9 CHAPTER 10

INCOME-TAX - VOLUME - II

CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6 CHAPTER 7 CHAPTER 8 CHAPTER 9 CHAPTER 10 PART II - SERVICE TAX AND VAT SERVICE TAX AND VAT - VOLUME - I CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6 SERVICE TAX AND VAT - VOLUME - II CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6

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CAs will not be hired less than Nine Lakhs.

Central Council Said No Entry Will be given to the Company in the campus if company will pay less than 9 lakh to CAs
To download this image Click Here

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Syllabus of CA Students

CPT IPCC ATC Final (New)

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Direct tax Code 2011 cleared by Cabinet

• Effective Date : April 1, 2012
• New Direct Tax Code 2011: Major relief for salaried class
• The new provisions under the Direct Tax Code are as follows:
• Tax for income between Rs. 2 lakh – Rs. 5 lakh: 10%
• Tax for income between Rs. 5 lakh – Rs. 10 lakh: 20%
• Tax for income over Rs. 10 lakh: 30%
• Corporate tax has been kept at 30%.
• The limit for exemptions for salaried people is Rs. 2 lakh including resident women, while that for senior citizens is Rs. 2.5 lakh.
• Under the DTC Bill, the annual deduction has been raised to Rs. 1.5 lakh.
• The Government has also proposed to restore back the taxation of retirement savings, in the nature of provident fund contributions and pure life insurance and annuity products, to the Exempt-Exempt-Exempt scheme from the earlier proposition of Exempt-Exempt-Tax scheme
• Wealth tax under the provisions of initial DTC, was required to be paid only on wealth in excess of Rs. 50 crores at a tax rate of 0.25% but on all assets including financial assets i.e. investments in shares. Under the current tax regime, wealth tax is required to be paid @ 1% on wealth in excess of Rs.30 lakhs.
• Currently under the Act, no tax is required to be paid on securities held for more than a year from the date of acquisition and sold on the stock exchange on which securities transaction tax is paid. In addition to this, for securities held for less than one year, the tax liability is restricted to 15%. However, under the DTC, there has been some relief granted to the tax payers by providing for a specified percentage deduction from income / indexation benefit depending on the nature of security on assets held for long term. However, in case of short-term assets, there is no relaxation to the taxpayer and tax will be required to paid as in case of any other ordinary income. 

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Applicability of taxable services for May 2012 and November 2012 Examinations

Professional Competence Examination
It is clarified that in Part  –II : Service tax and VAT of Paper 5 : Taxation, students will not be tested on specific questions covering individual taxable services.

Integrated Professional Competence Examination
It is clarified that in Part –II : Service tax and VAT of Paper 4 : Taxation, students will be examined only in respect of the following taxable services:
1. Practising Chartered Accountant’s services
2. Mandap keeper’s services
3. Commercial training or coaching services
4. Information technology software services 
5. Consulting engineer’s services
6. Business exhibition services
7. Scientific and technical consultancy services
8. Technical testing and analysis services


Final Examinations 
Paper 8 : Indirect Tax Laws
It is clarified that in respect of taxable services covered in the syllabus of Paper 8 : Indirect Tax Laws, students will be examined only in respect of the following taxable services:
• Intellectual Property Services
1. Franchise services
2. Intellectual property services
• Financial services
3. Banking & other financial services
4. Credit rating agency’s services
5. Stock broking services
• Transport of goods services
6. Goods transport agency’s services
7. Courier services
8. Mailing list compilation and mailing services
9. Transport of goods by air services
10. Clearing and forwarding agent’s services
11. Cargo handling services2
12. Custom house agent’s services
13. Storage and warehousing services
14. Transport of goods through pipeline or other conduit
15. Transport of goods by rail services
• Professional Services
16. Practising Chartered Accountant’s services
17. Management or business consultant’s services
18. Technical testing and analysis services
19. Market research agency’s services
20. Legal consultancy services
21. Public relations services
• Real estate & infrastructure services
22. Construction in respect of commercial or industrial buildings or civil structures
23. Construction services in respect of residential complexes
24. Architect’s services
25. Real estate agent’s services
26. Site preparation and clearance, excavation, earthmoving and demolition services
27. Interior decorator’s services
28. Renting of immovable property services
• Business services
29. Business auxiliary services
30. Business support services
31. Manpower recruitment agent’s services
32. Management, maintenance or repair services

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Governmemt Withdrew Companies Bill 2011

Two important bills slated for passage this session have been yanked back from Parliament for fresh tweaks, in another embarrassing climbdown by a government attempting to convey an impression of decisiveness after being pilloried for months over paralysis in policymaking. 
The government withdrew the Companies Bill and Pension Fund Regulatory and Development Authority Bill on Wednesday after the BJP opposed the first and coalition ally Trinamool Congress withdrew its support for the other. 
The passage of the two bills during the ongoing winter session was key to the government's efforts to show it had finally managed to wrest back the initiative after the failure to push FDI in multi-brand retail earlier this month. 

Trinamool leader and West Bengal Chief Minister Mamata Banerjee on Tuesday withdrew her party's backing for the pension bill. In a letter to Finance Minister Pranab Mukherjee, she said her party could not accept the bill in its present form and asked for a fresh review. 

The government had already made substantial changes to its original legislation after initially rejecting recommendations on it by a parliamentary panel. At a meeting with senior BJP leaders on Monday, Mukherjee had agreed to accept the recommendations on the legislation made by the parliamentary standing committee on finance. Accordingly, an amended bill was prepared that fixed foreign investment ceiling at 26% and offered assured returns to subscribers. 

The government, which had thus secured the backing of the BJP for the bill, could have gone ahead with the legislation, but chose not to do so for fear of antagonising an important ally. Strident opposition from Banerjee was also responsible for scuttling FDI in retail. 

While the government had the BJP's support on the pension bill, it did not have as much luck on the Companies Bill as the main Opposition party forced it to send the legislation back to the standing committee on finance headed by senior BJP leader Yashwant Sinha. 

At a meeting with the finance minister on Wednesday morning, BJP leaders Sushma Swaraj, Arun Jaitley and Sinha objected to the government's claim that it had in general accepted the recommendations of the standing committee. 

The BJP leaders also argued that since the government had consulted other stakeholders after the standing committee gave its report on the Companies Bill in August 2010, it should be sent back to the committee again. Despite the seeming setback, the Companies Bill is unlikely to face major obstacles or delays, with the standing committee likely to take it up on January 6. Officials expect it to be presented in Parliament in the budget session. 

Industry was still disappointed. "Industry has waited quite long for this bill. Further delays will create uncertainties especially at the time that national accounts and reports are being finalised," said Rajiv Kumar, director-general of lobby group Ficci. 

The developments over the Pension Bill will represent a bigger setback to the government, dashing its hopes to pitch it as one of its showpiece legislation on financial sector reforms in the current session of Parliament. 

Analysts said the government's inability to shepherd the legislation underscored the lack of coordination within the alliance on policy issues, which could make governance tougher. 
Source:http://economictimes.indiatimes.com/news/politics/nation/government-withdrew-companies-bill-pension-fund-regulatory-and-development-authority-bill/articleshow/11199312.cms

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