Equity has begun to outperform gold

A year ago, gold, at Rs 27,385 per 10 grams was not only expensive but a lucrative investment bet given the kind of run-up seen in its prices ever since the financial meltdown of 2008. Taking cue from its historic run-up, many investors had thronged to buy gold then that eventually crossed Rs 32,000 per grams in September '12, prompting investors to buy even more of the yellow metal anticipating even better returns.

Today, a year down the line, these investors have nothing much to cheer about. The consistent correction in the prices of the yellow metal over the past six months has resulted in mediocre 6 per cent returns for those who invested in the yellow metal a year ago. BSE sensex, on the other hand, has risen by over 9.2 per cent during this period while mutual fund  investing in large and mid cap stocks, generated 8.36 per cent on an average, during this period.

To put it simply, after having emerged as a strong hedge against Inflation and a Contra investment option to Equity markets over past five years, gold has begun to mellow down sending strong signal to those obsessed with the yellow metal that is probably is the time to look beyond. It probably is time, once again, to consider Equities  for a larger part of one's investment portfolio after providing for risk-free investment options like bank fixed deposits, PPF and other similar products.

While many investors may be perturbed by the recent crash in the mid-cap stocks, market analysts suggest that the crash was more peculiar for stocks with relatively weaker balance sheets or where pledged shares were getting sold in bulk. Stocks of companies with fairly strong balance sheets and visible growth models continued to do well even during the market crash.

Thus, even as the S&P BSE small cap and midcap indices fell by 15 per cent and 8 per cent respectively in the past three months, the average decline in the NAV of the midcap mutual fund schemes was lower at 5.4 per cent. Gold too declined by close to 5.4 per cent during this period. However, S&P BSE Sensex generated over 1 per cent gains in the past three months, outperforming the gold returns by healthy margins.

Your I-T returns may require disclosure of all assets

The intention was mainly to get information about those HNIs who had not been paying wealth tax

Many high-networth individuals (HNIs) have not been declaring all their assets to avoid paying wealth tax. That bliss is set to end soon, with the finance ministry planning to make it mandatory for individuals and Hindu undivided families (HUFs) to report assets and liabilities in income-tax (I-T) return forms.

Senior officials in the ministry said this could be notified soon. "Last year, reporting of assets and liabilities was made mandatory for individuals with foreign assets. This year, it might be extended to Indian assets," said an official.

The official added the intention was mainly to get information about those
HNIs who had not been paying wealth tax. This year, wealth tax collections are likely to be Rs 866 crore - much less than the Budget estimate of Rs 1,244 crore. For 2013-14, the finance ministry has set a collection target of Rs 950 crore.

While declaring the assets, the individual or HUF might have to provide the value of assets on the basis of acquisition cost. For instance, if a house or car was bought in 1998, the cost of the property or the vehicle at the time of purchase would have to be mentioned.

Last year, the new disclosure for foreign assets was introduced in ITR2, ITR3 and ITR4, wherein the government asked whether the taxpayer had "any asset outside India or signing authority in any account located outside India". Individuals with foreign assets cannot file ITR1, which is used by individuals with income from salary/pension, one house and income from other houses. The disclosure provision for domestic assets might be made in all four ITR forms.

This proposal is primarily aimed at checking tax evasion and boosting collections. In the Union Budget, the government has levied a surcharge of 10 per cent on annual taxable income above Rs 1 crore and imposed tax deducted at source on transfer of immovable property costing more than Rs 50 lakh.

Wealth tax is charged at one per cent of the value of assets exceeding Rs 30 lakh and does not include one residential property and financial assets.

Source : BS