The income tax season is fast approaching and many investors who do not understand the basics of income tax planning and filing are going to jeopardize their investments by taking the help of commission trotting agents who will sell them unsuitable products.
This is not going to look good in your overall financial planning. What investors need is an end to end comprehensive information on what the income tax process is, which are the tax saving investment avenues, how you can save tax and earn great returns and last but not the least, how you can file it.
While such information is dished out sparsely on the Internet, Raag Vamdatt has come up with a primer on income tax formula which will help beginners to understand the nuances around income tax step by step.
Personally, I have not seen a comprehensive Internet based multimedia/video primer on income tax before this, so this is a very welcome move to teach investors about basics they want to learn.
The Income Tax Formula contents
Raag Vamdatt’s Income Tax Formula is meant for beginners who want to learn and understand income tax in India and at the same time maximize their tax savings.
The course is divided into 5 modules as below :
Module 1: Understanding the process of income tax
Module 2: Saving Income Tax – A discussion of all the possible tax saving avenues
Module 3: Tax Saving Investment Advice – Where to Invest to Save Tax & Earn Great Returns
Module 4: Filing Income Tax Return
BONUS MODULE: Capital Gains Tax
For each module, Raag has provided the below as well :
A Video
An MP3 Audio sound file that you can download
A Handout PDF document that you can download
A Resource Sheet PDF document that you can download
The video is of high quality and Raag’s commentary in the background is at the right pace. The flow of the video is very smooth and indeed well done. I am glad to see that here is India’s first multimedia primer on Income Tax and it has come out well.
For those who do not want to go with the audio and video version, you can read the handout PDFs as well after printing. The resource sheet PDF is essentially a link to Raag’s website on those articles which the reader can read further to up-skill his knowledge after going through this video. The articles are sequentially placed and you can read them at your leisure.
If you use the video, then you don’t need the audio but I find it useful as I can plug it into my car and learn while I drive ! I keep saying, personal finance is very basic and I don’t miss a chance to over learn. So should you ! Even if you consider yourself an expert, this tool can serve as a ready reckoner for you at any point of time.
Approximate time needed to run through the video course : 1 hour
Cost : Rs 1,999/-
Read more about the Formula here.
Should you buy ? If you prefer not to invest in this product, your ignorance could end up wasting thousands and thousands of rupees for you. So if you are a newbie, try this product, there is a money-back guarantee on it as well with the caveat that the money would be refunded in the form of gift certificates that can be used to buy any product or service from RaagVamdatt.com
I liked the video version best.
Raag has agreed to provide an exclusive 10% discount for the readers of TheWealthWisher.com. This discount is applicable for all the products and services offered by him. Please use the discount code thewealthwisher to get this discount.
Should you have any questions, leave it here and Raag will be happy to answer.
Why should one spend Rs. 2000 on tax planning when full financial plans are available for Rs. 2500 and tax planning for Rs. 750?
http://www.investmentyogi.com/services/Financial-Services.aspx
There are several free tax planning tools. Its good enough for a start while the beginner learns more.
A general comment:
Tax planning should be started at the start of the financial year
not at the fag end. It is poor financial discipline. Financial blogger do not criticize fag end tax planning enough and by sometimes end up promoting such behaviour.
@pattu,
Pattu –
There is a basic difference between what you are comparing and what we are referring to.
I am covering cost of financial plans that is offered in India on a separate article I am doing for NetworkFP.com so wait for that and park the discussion on financial plans till then.
The cost of tax planning at Rs 750 is one in which a tax expert will tell you where to invest for tax planning – he is not going to teach you about income tax which is what the article is about. The cost which Raag talks about is for his course and is not for tax planning – it is a primer. It is education, it is not a 1 time activity of tax planning.
Indeed there are many tools and resources available, those can be tried as well ! So one can try that as well. No one is stopping anyone to try diff things.
I actually did not understand your general comment.
If the issue is around promoting such products, it is better than not promoting. So investors who know nothing will still end up buying crap products in this month of March. With information, they will buy better products.
Let me know what you actually meant and we can take the discussion forward.
@Radhey Sharma, Let me put it in simple words, which I read somewhere; Rs 750 will buy you a fish to eat for one time, Rs 1999 will teach you how to catch a fish for life.
@Radhey Sharma, Pattu, as promised – here is the article –
http://networkfp.com/are-financial-planners-in-india-shooting-at-each-others-feet
@pattu, I think Radhey’s articles here explains well about financial planning, not sure if you have read any before. He always educates readers about SIPs (which itself says not at the fag end) based financial planning, including tax planning as well. Articles here also suggests not to invest in bad products meant only for tax savings.
I mean this article was about educating on tax saving investment, even if one ends up doing it in March, atleast he should not invest money in bad product. I think if one reads article in hurry, might misunderstand it. Take it positively. “Service and knowledge should not be compared based on cost.” This article talks about knowledge / education given for tax planning in a book, correct me if I am wrong.
I am not really aware of the content of this book but is it the right time for this book to come out when DTC is round the corner and it can change the way tax works in India to a significant amount?
@ Vivek:
Fair point about the fish. But I am comparing 1999 with 2500.
Forgot to write below about the DTC impact. Thanks!
@chirag: I am well aware of the fine work Radhey is doing. I also have nothing against Raag. I think he is a smart entrepreneur.
(see below)
@Radhey: My only grouse is his plans have suddenly become quite expensive. He made quite a breakthrough a couple of years back with low pricing. Now its way too expensive. I am sure he has his reasons. But that is irrelevant to the consumer.
Coming to this offer. I am quite well aware of what is being offered. My point is it is over priced considering the options available.
CFPs are always telling us not to self medicate and go to a planner. So for just Rs 500 more (sorry its Rs. 501) I can plan for all my goals and do my tax planning etc.
Why should I bother educating myself paying Rs. 2000? This kit will not help me with my other goals anyway. And anyway its best to combing tax planning with goal planning.
So why pay 2000 for the knowledge when I get the job (the whole job done) for Rs. 501 more?
If a planners product is priced at 10+ K (I know many upto 15 K) I am wiling to invest 2 K in getting an education (although limited in scope). If the planners product is only a touch more why pay for that education? I will go to that planner for 2.5 K and use blogs to further my financial education. I have avoided self medication but still read health articles for free to be aware.
@Chirag
““Service and knowledge should not be compared based on cost.”
Why not? The money is sourced from the same place for both.
My point is for what is being offered it is expensive. I am not saying its a bad product and that its not useful. Raag is a good speaker and I am confident he would have done a good job. I am merely pointing out there are more complete options available.
I am merely pointing this out. You had an option to block my comment. The fact that you didn’t says a lot about your democratic attitude toward financial literacy.
Now coming to the general comment:
Count the no of tax related articles in financial blogs from Dec. to Mar.
Count the no in the rest of the year.
My point is people should be educated in the first few months of the financial year that tax and goal planning should be integrated and done in a disciplined manner month by month.
Writing an article which begins: “So you have got the letter from your accounts section to hand in your tax saving investments. You don’t what to do. Don’t worry read on .. ”
This will get a blog a lot of hits. But does it provide the best financial advice in this regard.
I doubt that. In my view it only promotes last minute lump sum ELSS investments (to name one) with little connection to goals or needs.
Bloggers should do more to educate about tax planning in the first few months of the financial year. This is not a criticism about your blog. This is a general statement.
All that said, if Raag comes up with a “How to do your financial planning” product, I will be happy to sign up for it even its priced way more than a planning service.
Viveks fish analogy would work perfectly here.
@pattu, You have made some valid points Pattu in terms of IT education should start in April and not in Dec. I also agree that if you think you are self-sufficient and do not need a financial planner, you are free to do so. You also have a right to pick one based on your budget and whether or not you feel its worth it.
However, the article is written for general awareness and let people decide if they want to purchase the book or not? In case they are interested they can avail the wealthwisher discount. Some might feel this book is worth it, some might feel it is not, we just got to respect everyone’s choice.
P.S. @Radhey, I think it is a good suggestion to start spreading IT knowledge and investments awareness from the month of April. You can consider implementing it this year.
“we just got to respect everyone’s choice”
Absolutely. I never said such things should not be promoted.
@pattu, Thanks Pattu, you provide a perspective from different angle, which is good for a healthy discussion. Keep writing here to enhance our knowledge base.
@Pattu,
Good to see you here, please continue to post your feedback/comments they are valuable. I have read your posts in other forums and you have a wealth of information on Financial Planning.
Keep up the good work!!!
@Rakesh, Even I have read Pattu’s comments elsewhere and he does bring a wealth of information to each article and a different way to look at them.
Thanks! I am quite the troublemaker! I have learnt quite a bit from blogs such as this.
@pattu,
Pattu, thanks for having a healthy discussion here. Let me try and convince you here about a few things.
“My only grouse is his plans have suddenly become quite expensive.” – To this, financial planners charge fees which they think are directly proportional to the value they bring to the table. That value can seldom be interpreted by a customer. The customer usually thinks that plans should be cheap (& free !) but that is not possible. The consumer looks at the price always in India – not the VALUE and that is where the problem is !
The product could possibly be overpriced, I do not know. It is for an educated person like you but probably not for a novice who knows nothing about investments !
“CFPs are always telling us not to self medicate and go to a planner” – I don’t think CFPs do that, if they did, none of them would start a blog to help investors. Also, educated people like you will do the right planning but others might falter. So we always have to say “Come to us, after all we are running a business” 🙂
By the way, I know financial planners who charge upto 50k and are surviving well so they must be doing things which are better and more valued.
Regarding the time when education on tax planning shoudl start, even if the articles are in JFM for last year, the articles are still there to explore and learn. All a person has to do is find them out and read.
My overall reading of this product is pretty simple, it is good for beginners which is what the article also says and not meant for educated people like you and me. But I am different, I pay to read/buy basic stuff over and over again because I love it. In that sense, the article mentions that the product is a ready reckoner for advanced users.
Anyways, thanks for commenting here. Really loved some extended discussion which was missing for sometime now. This is what I mean by educated contributions.
Dear Radhey,
With respect to this product, I think we both see each other view point. I see what you are saying and I think in the overall scheme of things I agree.
Regarding Raags pricing, I was referring to the sudden jump in pricing and not absolute pricing. I understand the point about value.
In fact pricing from 2.5 K to 50 K is quite disturbing. The question is fast shifting from “Where do I invest, there are so many investments?” to “Who do I go to, there are so many planners with a large fee disparity?”
Just like corrupt agents/advisors who mis-sell products we are going to have planners who may mis-sell their own ability. Already there are a few who are declaring in blogs, “I a MF broker I did CFP just to add value” etc.
An increase in no of CFPs unfortunately does imply an increase in financial literacy.
I dont agree with:
“CFPs are always telling us not to self medicate and go to a planner” – I don’t think CFPs do that, if they did, none of them would start a blog to help investors.
I think its easy enough to find several comparison between a doctor and a CFP.
Search for “doctor financial advisor” etc. you can easily count several pages.
People blog for different motives. Some to genuinely
spread awareness and some only for the visibility. As long as they are competent I dont have a problem with either motive.
My view is that if your financial state is uncomplicated planning can done with enough education. For complex situations a seasoned CFP is necessary.
@pattu, Agreed sir ! Terrific viewpoint !
@pattu, I also preach to self educate and do your own financial planning. But unfortunately not many people would like to go through the pain of self learning. Finance to most is like a taboo and they prefer to rely on experts.
Now many fall prey to so called “experts” who are policy agents, CAs, uncles and advocates [yea you heard me right, I have seen people taking advocates advise for their financial planning]. Now I think CFPs are a better option any day if you tend to rely on experts, even if your financial state is uncomplicated.
@pattu, Mr. Pattu
““Service and knowledge should not be compared based on cost.”
Why not? The money is sourced from the same place for both.
For me, no one can buy my knowledge with money.
Yeah they can buy my service.
It’s my view and obviously can be different from yours. If that sentense hurt you, I am sorry, I didn’t mean that.
Actually for me a good source of knowledge is much more than money.
@Radhey: If possible, I request to remove my earlier comment, don’t want to put it in a negative / opposite way. M sorry.
Dear Chirag,
I am not hurt at all. I understand your point. I think you make a good point. I dont agree with it but I do see the merit in it.
@Chirag, There is no need to be sorry buddy. We are all free to express our viewpoints and you are doing a great job. Keep it up!
@Radhey,
A book for Income tax formula? I would rather leave it to my tax consultant.
@Rakesh, Guys, the article does not say its a book !!!
It’s a video about basics of taxes and how to best plan for it.
@Radhey,
Hmmm, my bad.
I am not sure why would i buy this video, you provide selfless advise us on financial planning and if i have any other queries then we have our forums.
I don’t think this product is for me.
@Rakesh, Agreed it is not meant for people who know all about income tax. It’s for new beginners.
Hi everyone!
I am sorry I am joining the party a little late 🙂
I have read all the comments before this, and instead of replying to each individually, I guess replying to all your concerns together makes more sense…
But first of all, I LOVE this healthy discussion going on here. I mean really, I wish I had more conversations like this on my blog!!
Anyway, coming to the matter at hand…
Timing of investments
I completely agree that tax saving investments should begin at the beginning of the year, and not in the last month. And therefore, financial education should also be tailored accordingly.
This is the ideal situation, and all the good financial bloggers in India are trying to achieve this.
However, the fact remains that the majority of the tax saving investments still happen at the last minute in March. Its my sincere hope that people undergoing this training right now would prevent making last minute mistakes. People going through this in April of course would be able to plan their tax saving investments better for the next year.
If it is any consolation, in the training, I have strongly advocated making investments at the beginning of the financial year!
Pricing of the training
I would go with Vivek’s fish analogy – this training is a one time cost to gain knowledge about income tax and how tax saving investments should be made, whereas the cost of professional tax planning is a lower but recurring cost.
And the training is not just about tax saving investments – its also about making tax saving investments that provide you the best possible returns depending on the time frame that you are looking for the investments. Like Chirag said, the right investments can earn you a lot of money over the years.
Direct Tax Code
Yes, the DTC might change things drastically. Or it might not.
We have seen the DTC code evolve – it started from being a radical change, and has now ended up being just a few changes here and there. Only time will tell what it would end up looking like when it becomes a law.
And that’s the second point – we don’t know when exactly it would come into effect… We do have some dates, but we have seen the dates change in the past…
So, this course should remain valid at least for some time. At the least, it is valid for this tax season. And if there are any changes brought about in the budget for the next year, I plan to incorporate them into the training so that tax planning for the next year can be done better.
Who is this course for?
I would like to stress that like Radhey has mentioned a few times, this training is aimed at the beginner.
I would be honest with you. Who did I have in mind while creating this training? People just entering the workplace. For example, an Engineering gradate just joining a tech company or a recent graduate joining a call center.
These are the people who have surplus money that can be invested. And since they are young, wise investment can generate a LOT of extra wealth for them over the years.
These are also the people who get pressured into making wrong tax saving investments in Feb / March.
I have tried to combine the two – generating wealth and tax saving – so that beginners in the field of taxation and investment can benefit the most.
Pricing of financial plan
I know Pattu rightly said that the consumer is not concerned with the reasons behind the increase in the price of my financial planning service, but let me talk about it since this has already come up in the discussion!
Yes, I did start at a LOW price. At just Rs. 1,999, it was ridiculously priced! I am proud of offering it at that price, and am happy that so many people benefited from it.
However, the more I worked on the plans, the more I knew about the kind of time I was spending on each plan. Remember, the plans I prepare are 100% customized for the client – there is absolutely no software involved, except for Excel that I use for my calculations.
Over time, I had to increase the price of the plans so that they truly reflected the time and effort I spend on them.
Also, when I started out offering plans, it was more of a hobby, and I was using the payment just to filter out people who were action takers and were serious about their finances – so that I could focus on them.
Now that I am doing this full time, I have to earn a reasonable return for the time and effort I am putting in, and hence the change in price.
I know many of you may not care for the reasons, but I have tried to give you my honest reasons…
Concluding thoughts
Once again, thanks a lot guys for the healthy discussion… It also gives me an opportunity to learn more about what you want and what you don’t!
I would be happy to answer your queries and concerns, although it might be with a slight lag. Please bear with me.
@Pattu – I like you talking about the “How to do your financial planning” product… It has set my entrepreneur mind ticking 🙂 At this stage, I don’t know how the planning process can be converted into a product, but you have set me thinking!! Thanks…
And Radhey, you are a true friend… Thanks for watching my back while I was away…
Dear Raag,
Thanks for the detailed response. I can understand the issues behind pricing from your point of view.
Reg. “How to do your own financial planning” I have been working on a (free?!) excel based planning template with a suite of calculators for some time now. Just have one calculator up at
http://thegroundstate.wordpress.com/
so far.
When I started it I was like, “See dear CFPs anyone can do this with time and effort” now I have realized although the above is true there is much more a CFP does on a case by case basis.There is a distinction between financial expertise and financial literacy. In principle the literate can become an expert with a lot of time/effort … in principle.
The whole idea is a proper book+CD and I think it would good if you write it perhaps with the CNBC network like Manish’s book.
@pattu, that’s exactly the problem – many things vary greatly from person to person, and that’s why coming up with a complete “How to do financial planning” book / course is difficult.
I have been thinking about coming up with something that is a common denominator – something that applies to everyone. Let’s see how that turns out!
@pattu, Good one Pattu, it’s quite a comprehensive calculator I must say. I have never seen something in so detail.
What do you do Pattu? Are you from finance background?
Thanks.
Nope. I am an academic with a lot of time!!
http://www.physics.iitm.ac.in/people_files/faculty/pattu.html
I am just too lazy to keep a blog going. Hope to post more regularly this summer.
@pattu, Oh man, you dirtying your hand in physics ! LOL.
Great to see your insight in personal finance. Keep in coming !
@Pattu Sir,
Wow, that’s an amazing profile. How did you venture in to Financial Planning?
Necessity. I found myself in huge debt a few days after my first months salary due to my father illness. So I had to read my way out of the mess. I soon realized that financial math is quite fascinating.
@Pattu,
You have come a long way, to have an impressive profile at 37 and also your knowledge on financial planning.
Way to go….
@pattu, good to know that you are a Physicist. My dad (Arun Vamdatt) was a Prof. of Physics at Veer Narmad South Gujarat University, Surat. He’s now retired.
The calculator looks quite comprehensive, and takes into account all the relevant factors. Will definitely check it out in detail!
Thanks Raag. Good to know about your dad. Please let me know what you think about the calculator. Would be good to have some professional feedback.
@Pattu sir,
That’s an amazing calculator, I had a hunch that you are not an ordinary guy. I have downloaded the calculator and will enter my details and provide you feedback.
Thanks once again.
Thanks. I am as ordinary as the next guy. Perhaps I should be doing physics than spending time here. 🙂
@pattu, Do both sir! You have a finance brain as well, don’t let it go waste 🙂
@Pattu,
Excellent calculator. I entered my figures and got the output, the final outcome was scary though. Will have to work more hard towards retirement planning.
@Rakesh,
Thanks. Even you achieve 75% of the computed corpus. You should be reasonably okay.
It is very scary. Which is why a frugal lifestyle is as important as early investing. One big mistake many do is they calculate based on present lifestyle and down the line when salaries increase they increase their spending. This will lead to hardships upon retirement.
@pattu, Even I tried the calculator and it is indeed a good one, covers lots of parameters. But the end result didn’t scare me, it validated my planning :).
@Vivek K, @ Rakesh
Thanks. I have slightly different versions of this calculator and other goal planners. If you wish to play with them, send me a mail: pattu [AT] iitm.ac.in
@pattu, Sure Pattu, it’d be great to try them. Why don’t you upload them somewhere, I am sure lot of people can benefit from it.
@Vivek K, Upload it right here Pattu with due credit to you !
@pattu,
Pattu – Why don’t you give us tips on how to be frugal…maybe an article or something…
@Pattu,
Yes Please, agree with Radhey, an article would be great.
@Radhey Sharma,
Thanks. Will write something based on my experience. Will
be a good opportunity to hear from others about frugality.
Reg. the calculators will compile what I have and send them to you.
@pattu, That’s great Pattu, waiting eagerly for your calculators and the article. Interacting with you is going to make all of us knowledgeable :).
@Raag Vamdatt – Financial Planning Demystified, Thank you Mr. Raag for coming and clarifying all the points for the readers. It is always good to hear directly from the author what was his/her idea behind launching a book/training module.
Since you have mentioned it clearly this training is for the new entrants I am sure it will benefit them a lot. It concludes our discussion around who should buy this product and who can benefit from it. Of course experienced people can always buy and refresh their basics but I’d be more interested in the DTC module if it changes things drastically.
Meanwhile, good luck for the success of this training!
@Vivek K, thanks… Will keep you posted in case I come up with something on DTC!!
@Raag Vamdatt – Financial Planning Demystified, Pleasure to see your detailed and honest comment here. Very few people do this.
@Chirag, thanks…