Overview of Income Tax Act of 1961
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…
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Marginal Tax Relief for Resident Individuals with Income Slightly Above ₹12 Lakh in FY 2025-26
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…
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Overview: Forward Contract and Forward Rate Agreement (FRA)
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…
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What are currency derivatives?
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…
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Who are the Users of Derivatives?
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,…
SWAP transactions in capital and Forex Market
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…
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