TDS (Tax Deducted at Source) refers to the tax collected by the payer on specified types of income while making payments to the payee and subsequently depositing it with the government on behalf of the payee. This system was introduced to reduce tax evasion.This is mandatorily deductible and payable from a wide range of incomes…
Income tax is a tax charged on the annual income of individuals or businesses earned in a financial year. The tax paid by citizens serves as a source of revenue for the government. This money is utilized to fund essential services such as healthcare, infrastructure development and maintenance, salaries and pensions of government employees, and…
The 2025 Budget has proposed making normal income up to ₹12 lakh tax-free under the new tax regime for FY 2025-26. This significant development is a result of revised tax slabs and an enhanced rebate of ₹60,000 under Section 87A. Since the announcement of these changes, there has been considerable confusion regarding the tax implications…
The names “Forward Contract” and “Forward Rate Agreement” (FRA) may sound similar, but they play distinct roles in financial markets, differing in key characteristics and functions. Let’s explore the main differences between these financial instruments. Elements Forward Contract Forward Rate Agreement (FRA) Parties in the Contract Forward contracts are agreements between two parties — buyers…
Currency derivatives are exchange-based futures and options contracts that allow those with a significant exposure to imports or exports, use these contracts to hedge against their exposure to a certain currency. In India, one can use such derivative contracts to hedge against currencies like US Dollar, Euro, U.K. Pound and Yen so as to manage…
Derivatives are financial instruments whose value is derived from an underlying asset or a group of assets. These assets range from stocks, bonds, commodities, currencies, interest rates, or market indices. The derivatives market is a financial marketplace where derivative contracts are bought and sold. Major Users of Derivatives Financial derivatives are used for several purposes,…
A swap is a derivative contract where two parties agree to exchange cash flows or liabilities from different financial instruments over a set period of time. In the other words, a ‘Swap’ is an act of exchanging one thing for another. In derivative market, currencies swap, interest rates swap or commodities swaps are most common. The…
(Look here for repatriation of money abroad from the Sale of property purchased from funds remitted from overseas OR NRE/ FCNR accounts, Sale of property purchased from Rupee Source (while resident in India), Sale of property acquired through inheritance, etc, and permissible sources of funds for an online/offline transfer abroad from an NRO Account .)…
A forward contract is an agreement between two parties to buy or to sell an asset at a specified price on a future date. For example, in foreign exchange market ‘forward contract’ means an exchange agreement between two parties to deliver one currency in exchange for another currency at a forward or future date. Futures…
In a layman’s language, derivative means profit or loss derived from something. The most common derivative instruments used in financial markets are the forward contract, options, forward rate agreement, futures contract, interest rate swaps etc. The characteristic and value of these derivative instruments are derived from underlying assets like currencies, Interest rates, stocks indices, precious…
